UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FIRST SUNRISE, INC.
(Name of small business issuer in its charter)
Delaware 6770
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
200 East 89th Street, New York, New York 10128 (212) 876-8578
(Address and telephone number of principal executive offices)
200 East 89th Street, 44th Floor, New York, New York 10128
(Address of Principal place of business or intended principal
place of business)
Schonfeld & Weinstein, L.L.P., 63 Wall Street, Suite 1801, New York, NY
(212)344-1600
(Name, address, and telephone number of agent for service)
Copies to:
Andrea I. Weinstein, Esq.
Schonfeld & Weinstein, L.L.P.
63 Wall Street, Suite 1801
New York, New York 10005
(212) 344-1600
Robert S. Schneider, Esq.
Graham & James, L.L.P.
21st Floor
885 Third Avenue
New York, New York 10022-4802
Tel:(212) 848-1000
Approximate date of proposed sale to the public as soon as practicable after
the effective date of this Registration Statement and Prospectus.
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended (the "Securities Act")
or until the registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
CALCULATION OF REGISTRATION FEE
No registration fee is due on a Reconfirmation Offering under Rule 419.
Cross Reference Sheet
Showing the Location In Prospectus of
Information Required by Items of Form SB-2
Part I. Information Required in Prospectus
Item
No. Required Item Location or Caption
1. Front of Registration Statement Front of Registration
and Outside Front Cover of Statement and outside
Prospectus front cover of Prospectus
2. Inside Front and Outside Back Inside Front Cover Page
Cover Pages of Prospectus of Prospectus and Outside
Front cover Page of Prospectus
3. Summary Information and Risk Prospectus Summary;
Factors High Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Prospectus Summary -
Price Determination of Offering
Price; Risk Factors
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution Not Applicable
9. Legal Proceedings Legal Proceedings
10. Directors, Executive Officers, Management
Promoters and Control Persons
11. Security Ownership of Certain Principal Shareholders
Beneficial Owners and Management
Part I Information Required in Prospectus Caption in Prospectus
12. Description of Securities Description of Securities
13. Interest of Named Experts and Legal Opinions; Experts;
Counsel
14. Disclosure of Commission Position Statement as to
on Indemnification for Securities Indemnification
Act Liabilities
15. Organization Within Last Management, Certain
Five Years Transactions
16. Description of Business Business
17. Management's Discussion and Management's Discussion and
and Analysis or Plan of Analysis
Operation
18. Description of Property Not Applicable
19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Stock and Prospectus Summary
Related Stockholder Matters
21. Executive Compensation Executive Compensation
22. Financial Statements Financial Statements
PROSPECTUS
FIRST SUNRISE, INC.
(a Delaware corporation)
RECONFIRMATION OFFER
This prospectus relates to the reconfirmation offer of 100,000 shares of
common stock of First Sunrise, Inc. ("FSI," "We" of "Us")sold in FSI's initial
public offering. Pursuant to Rule 419 of the Securities Act of 1933,
shareholders representing at least 80% of FSI's maximum offering proceeds
($40,000) must elect to reconfirm their investments (the "Reconfirmation
Offer"). (See "INVESTORS RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419").
Pursuant to Rule 419, each purchaser of common stock in FSI's initial public
offering shall have no fewer than 20 business days and no more than 45
business days from the effective date of the post-effective amendment to
notify FSI in writing that the Rule 419 investor elects to remain an investor.
If FSI has not recorded such written notification by the 20th business day
following the post- effective amendment, funds held in the escrow account
shall be sent by first class mail or other equally prompt means to the Rule
419 investors within five business days. Once a Rule 419 investor has sent
his/her letter of reconfirmation to FSI, such letter of reconfirmation may not
be revoked.
Pursuant to an Agreement and Plan of Merger between FSI and Platinum
Executive Search, Inc., a corporation organized and existing under the
laws of State of New York ("PES"), dated July 21, 1999, PES shall be merged
into FSI with FSI as the surviving entity. Thus, on the effective date of the
merger, all PES shareholders shall become shareholders of FSI as a result of
the merger.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING
AT PAGE .
THE FSI SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
We have filed with the Commission a registration statement on Form
SB-2 under the Securities Act with respect to the common shares subject to
the reconfirmation offer hereto. This prospectus does not contain all the
information set forth in the Registration Statement and its exhibits and
schedules. For further information with respect to FSI and our securities,
we refer you to the Registration Statement, exhibits and schedules.
Additional information about FSI, is available upon request from
Schonfeld & Weinstein, L.L.P., 63 Wall Street, Suite 1801, New York, New York
10005. Additional information about PES may be obtained by contacting Graham
& James, L.L.P., 885 Third Avenue, 21st Floor, New York, New York 10022-4802,
Attn: Robert S. Schneider, Esq.
No. Of Shares Offering
sold in initial Price Per Gross Proceeds Proceeds paid Net
Proceeds
public offering Share to the Company out for expenses in Escrow
100,000 $.50 $50,000 $5,000 $45,000
(1)10% of the offering proceeds of our initial public offering ($5,000) were
released to us pursuant to Rule 419. The $5,000 remains in a separate
account.
The Date of this Prospectus is .
The following are FSI's expenses for its initial public offering(1):
Escrow Fee.......................................................$ 0
Securities and Exchange Commission Registration Fee..............$ 100.00
Legal Fees.......................................................$ 18,000.00
Accounting Fees..................................................$ 2,000.00
Printing and Engraving...........................................$ 250.00
Blue Sky Qualification Fees and Expenses.........................$ 750.00
Miscellaneous....................................................$ 400.00
Transfer Agent Fee...............................................$ 500.00
TOTAL......................................................$22,000.00(3)
The following are FSI's estimated expenses for the reconfirmation
offering (2):
Securities and Exchange Commission Registration Fee.. ........$ 0
Legal Fees....................................................$ 45,000.00(2)
Accounting Fees...............................................$ 10,000.00(2)
Printing and Engraving........................................$ 2,500.00(2)
Miscellaneous.................................................$ 500.00(2)
Transfer Agent Fees...........................................$ 1,500.00(2)
TOTAL...........................................................$ 59,500(2)
(1) Have been/will be paid by FSI
(2) Have been/will be paid by PES
(3) This amount was paid by funds received in our private placement which took
place between April 28, 1997 and August 15, 1997.
TABLE OF CONTENTS
Page #
PROSPECTUS SUMMARY
INVESTORS' RIGHTS AND SUBSTANTIVE PROTECTION
UNDER RULE 419
RISK FACTORS
MERGER
USE OF PROCEEDS
SELECTED FINANCIAL DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
BUSINESS
MANAGEMENT
CERTAIN TAX CONSIDERATIONS
DESCRIPTION OF SECURITIES
PRINCIPAL SHAREHOLDERS
CERTAIN TRANSACTIONS
PLAN OF DISTRIBUTION
LEGAL MATTERS
EXPERTS
FIRST SUNRISE, INC. FINANCIAL STATEMENTS
PLATINUM EXECUTIVE SEARCH INC. FINANCIAL STATEMENTS
RENAISSANCE LEADERSHIP, INC. FINANCIAL STATEMENTS
STRUPP INVESTMENTS, LLC FINANCIAL STATEMENTS
FIRST SUNRISE, INC. AND
PLATINUM EXECUTIVE SEARCH INC. PROFORMA CONDENSED
BALANCE SHEET AND STATEMENT OF OPERATIONS
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
prospectus and is qualified by the more detailed information and consolidated
financial statements (including notes thereto) appearing elsewhere in this
prospectus. Investors should carefully consider the information set forth
under the heading "Risk Factors". Unless otherwise indicated, the capital
structure, the number of shares outstanding and the per share data and
information in this Prospectus have been adjusted to give effect to the
merger described herein.
First Sunrise, Inc.
FSI was incorporated in the State of Delaware on April 28, 1997 for the
sole purpose of acquiring or merging with an unspecified operating business.
FSI has no operating assets and has not engaged in any business
activities, other than to seek out and investigate other businesses for
potential merger or acquisition.
On June 9, 1998, FSI commenced a "blank check" offering pursuant to Rule
419 which generated $50,000 in gross proceeds from approximately 200 different
investors. Pursuant to Rule 419, all of the gross proceeds from that
offering, less 10%, and the FSI shares purchased by the Rule 419 investors,
are being held in escrow pending (i) distribution of a prospectus to each of
them describing any prospective business acquisition by FSI and (ii) the
subsequent confirmation of at least 80% of the shares owned by the Rule 419
Investors that they elect to remain investors. (See "INVESTORS RIGHTS AND
SUBSTANTIVE PROTECTION UNDER RULE 419").
The executive offices of FSI are located at 200 East 89th Street, 44thFloor
New York, New York 10121. The telephone number is (212) 876-8578.
Platinum Executive Search, Inc.
PES was incorporated in the State of New York on May 28, 1999. PES was
formed to serve as a holding company for entities engaged in all aspects of
human resources. Since its incorporation, PES has sought to acquire a variety
of human resource firms that specialize in various industries, and personnel
with experience in human resources in each respective industry. While it has
had no revenues to date, PES anticipates commencing operations by December
1999.
PES believes that with its experienced management team and other key
employees experienced in various segments of the human resource industry, it
will be able to compete with other companies in each respective segment. PES
expects to commence operations by focusing on companies or practices in
various areas including: (i) executive search; (ii) legal profession; (iii)
technology and information systems; (iv) benefit and compensation consulting
and design; (v) leadership training; and (vi) temporary services. According
to the 1998 Olsten Forum, 45% of all companies report that they are
understaffed and 57% predict they will be understaffed in the coming year.
PES believes it is statistics such as these that have contributed to the
growth of the executive search industry over the last decade. PES believes
that several trends will contribute to the continued growth of the executive
search industry:
increased demand for managers
globalization of business and economy
increased outsourcing of recruitment functions
use of advanced technology in businesses.
Currently, PES is focusing on a growth strategy of acquiring other
firms, businesses and executives in these sectors. As an example, the
executive search industry is highly fragmented and consists of approximately
4,000 firms. PES intends to focus on those firms with revenues of $5,000,000
and less.
The executive offices of PES are located at 342 Madison Avenue, Suite
1500, New York, New York 10173. PES's phone number is (212) 687-8063.
Reconfirmation Offering Conducted in Compliance with Rule 419
FSI is a blank check company and, consequently, this reconfirmation
Offering is being conducted in compliance with the Commission's Rule 419. The
Rule 419 investors have certain rights and will receive the substantive
protection provided by the rule. To that end, the securities purchased by
investors and the funds received in our initial public offering are deposited
and held in an escrow account established pursuant to Rule 419 (the "Escrow
Account"), and shall remain in the escrow account until an acquisition meeting
specific criteria is completed. Before the acquisition can be completed and
before the deposited funds and deposited securities can be released to FSI and
the Rule 419 investors, respectively we must take the following steps:
Update the registration statement with a post-effective amendment.
Within five business days after the effective date of the post-
effective amendment, we must furnish the Rule 419 investors with the
prospectus. This prospectus must contain the terms of a reconfirmation
offer and information regarding the proposed acquisition candidate and
its business, including audited financial statements.
According to Rule 419, investors must have no fewer than 20 and no more
than 45 business days from the effective date of the post-effective amendment
to decide to reconfirm their investment and remain an investor or,
alternately, require the return of their investment, minus up to 10% of their
investment. Each Rule 419 investor shall have 20 business days from the date
of this prospectus to reconfirm his/her investment in FSI. Any Rule 419
investor not making any decision within this 20 business day period will
automatically have his/her investment funds returned. The rule further
provides that if we do not complete an acquisition meeting the specified
criteria within 18 months of the effective date of its initial public
offering, all of the deposited funds in the escrow account must be returned to
Rule 419 investors. (See "Investors' Rights and Substantive Protection Under
Rule 419 - - Reconfirmation Offering.")
Reconfirmation Offer
This prospectus relates to a reconfirmation by FSI shareholders of their
investments in FSI. Rule 419 states that, the proceeds of our initial public
offering and the securities purchased in that offering, both of which are
currently held in escrow, will not be released from the escrow account until
(1)FSI executes an agreement for an acquisition or merger meeting certain
criteria.
(2) a post-effective amendment which includes the terms of the reconfirmation
offer, as well as information about the merger agreement and audited financial
statements is filed.
(3) FSI conducts a reconfirmation offer and shareholders representing 80% of
FSI's initial public offering proceeds elect to reconfirm their investments.
This 80% shall be computed twenty (20) business days after the effective date
of this post-effective amendment.
Once an investor has sent his/her letter of reconfirmation to FSI, such
letter of reconfirmation may not be revoked. In the event the Rule 419
investors do not vote to reconfirm the offering, the deposited funds shall be
returned to investors on a pro rata basis. Such funds will be returned within
5 business days of failure to approve the merger.
Terms of the Merger Agreement
The terms of the merger are set forth in the merger agreement and
consummation of the merger is conditioned upon, among other things, the
acceptance of the reconfirmation offer by holders of at least 80% of the
shares owned by the Rule 419 investors. (See "PROSPECTUS SUMMARY -
Reconfirmation Offer"). As a result of the consummation of the merger, PES
will be merged into FSI, with FSI as the Surviving Entity. Upon consummation
of the merger,
each shareholder who holds shares of FSI's common stock registered in
the registration statement declared effective by the Securities and
Exchange Commission on June 9, 1998, and who accepts the reconfirmation
offer shall continue to hold his or her share certificate(s)
representing FSI's registered common stock.
Each holder of registered common stock who rejects the reconfirmation
offer will be paid his or her pro rata share of the amount in the escrow
account or approximately $.45 per share. In the event the escrowed
funds exceed $45,000 at the consummation of the merger, those funds
shall be distributed on a pro rata basis to those FSI shareholders who
reject the reconfirmation offering. At the effective date of the
merger, 100% of the issued and outstanding shares of PES shall be
canceled. FSI registered common stock shall be forward split 1 for
1.96648, and FSI unregistered common stock will be reverse split 1 for
.3634383. After these stock splits, FSI will issue 5,555,475 shares of
common stock and 740,000 shares of convertible preferred stock to PES
shareholders and 325,000 options to acquire 325,000 shares of stock to
existing PES option holders. After the effective date, current FSI
shareholders and their designees shall own 414,711 shares, representing
6% of the surviving entity and former PES shareholders will own
5,555,475 shares of FSI common stock, which, after exercise of 325,000
options and conversion of 740,000 shares of preferred stock, will
represent 94% of the issued and outstanding common stock. (See
"MERGER"- Terms and Conditions of
Merger, and "Certain Transactions")
Recent Developments
Our board of directors believes that the merger represents a good
investment opportunity for our shareholders and recommends that the Rule 419
investors elect to accept the reconfirmation offering. Our Board of Directors
recommends that Rule 419 investors, when determining whether or not to
reconfirm their investments, also consider, PES's working capital and recent
acquisitions(See "MERGER"- Terms and Conditions of Merger).
The Merger Agreement was approved by the directors and shareholders of
PES by written consent dated as of July 1, 1999. The merger agreement was
confirmed by the written consent of the directors of FSI on August 12, 1999.
Accounting Treatment
Although FSI is the legal surviving corporation, for accounting
purposes, the merger is treated as a purchase business acquisition of FSI by
PES (a reverse acquisition) and a recapitalization of PES. PES is the
acquirer for accounting purposes because the former PES stockholders received
the larger portion of the common stockholder interests and voting rights
retained by the former FSI stockholders. Because PES is the acquirer for
accounting purposes under APB Opinion No. 16, the Surviving Entity shall adopt
PES's fiscal year end, December 31.
High Risk Factors
Investments in the securities of FSI are highly speculative, involve a
high degree of risk, and only persons who can afford the loss of their entire
investment should vote to reconfirm their investments. (See "RISK FACTORS.")
Use of Proceeds
In its initial public offering, FSI generated $50,000 in proceeds. 10%
($5,000) of the deposited funds was released to FSI prior to this
reconfirmation offering. (See "Investors' Rights and Substantive Protection
Under Rule 419 - Reconfirmation Offering.")
FSI intends to use this sum for expenses incurred in the offering,
including, but not limited to, accounting expenses, transfer agent fees,
printing fees and certificates of good standing. The remaining $45,000 will
remain in the non-interest-bearing escrow account maintained by Atlantic
Liberty Savings Bank, which bank acts as escrow agent. No portion of the
deposited funds has been or will be expended to merge PES into FSI. The
deposited funds will be transferred to FSI pursuant to the merger agreement if
and when a business combination is effected. (See "USE OF PROCEEDS.")
Certain Income Tax Consequences
In management's opinion, the merger is intended to qualify as a
"tax-free reorganization" for purposes of the United States federal income tax
so that stockholders of FSI and PES subject to United States tax will not
recognize gain or loss from the transaction. In addition, the transaction is
not intended to result in the recognition of gain or loss to either PES or FSI
in the respective jurisdictions where each of them is subject to taxation. NO
OPINION OF COUNSEL NOR A RULING FROM THE INTERNAL REVENUE SERVICE HAS BEEN
OBTAINED IN REFERENCE TO THE FOREGOING. THE FOREGOING IS FOR GENERAL
INFORMATION ONLY AND FSI STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS
TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TRANSACTION TO THEM.
INVESTORS' RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419
Deposit of Offering Proceeds and Securities
Rule 419 requires that in a blank check offering, offering proceeds,
after deduction for underwriting commissions, underwriting expenses and
dealer allowances, and the securities purchased by investors in such an
offering, be deposited into an escrow or trust account governed by an
agreement which contains certain terms and provisions specified by the rule.
Under Rule 419, the deposited funds and deposited securities will be released
to FSI and to the 419 investors, respectively, only after FSI has met the
following three basic conditions:
FSI must execute an agreement(s) for an acquisition or merger meeting
certain prescribed criteria.
FSI must file a post-effective amendment to its registration statement
which includes the terms of a reconfirmation offer. The post-effective
amendment must also contain information regarding the acquisition or
merger candidate(s)and its business(es), including audited financial
statements.
FSI must conduct the reconfirmation offer and satisfy all of the
prescribed conditions, including the condition that a certain minimum
number of investors must elect to remain investors.
After FSI submits a signed representation to the escrow agent that the
requirements of Rule 419 have been met, and after the acquisition or merger is
consummated, the escrow agent can release the deposited funds and deposited
securities.
Accordingly , FSI has entered into an escrow agreement with
Atlantic Liberty Savings Bank (the "Escrow Agent") which provides that:
(1) The proceeds are to be deposited into the escrow account maintained
by the escrow agent promptly upon receipt. Rule 419 permits 10% of the
deposited funds to be released to FSI prior to the reconfirmation offering.
The deposited funds and any dividends or interest thereon, if any, are to be
held for the sole benefit of the investors and can only be invested
in bank deposits, in money market mutual funds or federal government
securities or securities for which the principal or interest is guaranteed by
the federal government.
(2) All securities issued in connection with the offering and any other
securities issued with respect to such securities, including securities
issued with respect to stock splits, stock dividends or similar rights are to
be deposited directly into the escrow account promptly upon issuance. The
identity of the investors are to be included on the stock certificates or
other documents evidencing the deposited securities. The deposited
securities held in the escrow account are to remain as issued and are to be
held for the sole benefit of the investors' who retain the voting rights, if
any, with respect to the deposited securities held in their names. The
deposited securities held in the escrow account may not be transferred,
disposed of nor any interest created therein other than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations order
as defined by the Internal Revenue Code of 1986 or Table 1 of the Employee
Retirement Income Security Act.
Prescribed Merger Criteria
Rule 419 requires that before the deposited funds and the deposited
securities can be released, FSI must first execute an agreement to acquire an
acquisition candidate(s) or merge with a merger candidate(s) meeting certain
specified criteria. The agreement(s) must provide for the acquisition(s),
merger(s) of a business(es) or assets for which the fair value of the business
represents at least 80% of the maximum offering proceeds. The agreement(s)
must include, as a condition precedent to their consummation, a requirement
that the number of investors representing 80% of the maximum offering proceeds
must elect to reconfirm their investment. For purposes of the offering, the
fair value of the business(es) or assets to be acquired must be at least
$40,000 (80% of $50,000). Based on its proforma financial statements, PES has
a fair value in excess of $40,000. (See "PES Financial Statements.")
Post-Effective Amendment
Once the agreement(s) governing the acquisition(s), or merger(s) of a
business(es) meeting the above criteria has been executed, Rule 419 requires
FSI to update the registration statement with a post-effective
amendment. The post-effective amendment must contain information about
The proposed acquisition candidate(s) and its business(es), including
audited financial statements,
the results of this Reconfirmation Offering and
the use of the funds disbursed from the Escrow Account. The
post-effective amendment must also include the terms of the
reconfirmation offer mandated by Rule 419. The reconfirmation offer
must include certain prescribed conditions which must be satisfied
before the Deposited Funds and Deposited Securities can be released from
the Escrow Account.
Reconfirmation Offering
The reconfirmation offer must commence after the effective date of the
post-effective amendment. According to Rule 419, the terms of the
reconfirmation offer must include the following conditions:
(1) The prospectus contained in the post-effective amendment will be
sent to each Rule 419 investor whose securities are held in the escrow account
within 5 business days after the effective date of the post-effective
amendment.
(2) Each investor will have no fewer than 20 and no more than 45
business days from the effective date of the post-effective amendment to
notify FSI in writing that the investor elects to remain a Rule 419 investor.
The reconfirmations will be tabulated 20 business days from the effective
date. Rule 419 investors who submit their letter of reconfirmation to FSI
shall not have the right to revoke such letter.
(3) If FSI does not receive written notification from an investor within
20 business days following the effective date, the pro rata portion of the
deposited funds (and any related interest or dividends) held in the Escrow
Account on such Rule 419 Investor's behalf will be returned to the investor
within 5 business days by first class mail or other equally prompt means.
(4) The acquisition(s) will be consummated only if a minimum number of
Rule 419 investors representing 80% of the maximum offering proceeds equaling
$40,000 elect to reconfirm their investment.
(5) If a consummated acquisition has not occurred by December 9, 1999
(18 months from the date of original prospectus), the deposited funds held in
the escrow account shall be returned to all Rule 419 Investors on a pro rata
basis within 5 business days by first class mail or other equally prompt
means.
Release of Deposited Securities and Deposited Funds
The deposited funds and deposited securities may be released to FSI and
the Rule 419 investors, respectively, after:
(1) The escrow agent has received a signed representation from FSI and
any other evidence acceptable by the escrow agent that:
(a) FSI has executed an agreement for the acquisition of or merger
with a target business for which the fair market value of the business
represents at least 80% of the maximum offering proceeds and has filed the
required post-effective amendment;
(b) The post-effective amendment has been declared effective, the
mandated reconfirmation offer having the conditions prescribed by Rule 419
has been completed and that FSI has satisfied all of the prescribed conditions
of the reconfirmation offer.
(2) The acquisition of, or merger with, a business (including shareholder
approval of the merger or acquisition) with the fair value of at least 80%
of the maximum proceeds.
RISK FACTORS
Investment in the securities offered hereby involves a high degree of
risk. Prospective investors should carefully consider, together with the
other information appearing in this Prospectus, the following factors, among
others, in evaluating PES and its business before reconfirming their
investments in FSI.
We can only merge with one company
If this merger is consummated, FSI will be involved in no other business
combination. This lack of diversification may subject our shareholders to
economic fluctuations within those industries in which PES conducts business.
PES's business is centered around essentially one industry: human
resources. As of the date of this prospectus, PES has not had any sales
revenues. Any lack of demand for services to be rendered by PES would have a
material adverse effect on PES's business, operating results and financial
condition.
PES will rely on key existing and future personnel.
PES's success will depend to a large degree upon the efforts and
abilities of its officers and key management employees, John Mazzuto,
President, and James J. Strupp, Chairman of the Board. The loss of the
services of one or more of its key employees could have a material adverse
effect on PES's business prospects and potential earning capacity. PES has
entered into employment agreements with both Mr. Mazzuto and Mr. Strupp. PES
has no key person life insurance on either Mr. Mazzuto Mazzuto or Mr. Strupp.
PES will need to continue to recruit and retain additional members of senior
management to manage anticipated growth, but there can be no assurance that
PES will be able to recruit or retain additional members of senior management
on terms suitable to PES. (See "Management - Directors, Executive Officers
and Other Key Employees.")
We may not be able to grow at a rapid pace.
We will be pursuing an aggressive growth strategy, the success of which
will depend in large part upon our ability to:
develop and expand our business
acquire existing human resources companies involved in new segments of
the industry
acquire experienced personnel.
Even if we are successful in enhancing profitability after acquiring
additional companies, there can be no assurance as to how long a period of
time accomplishing such profitability will take or the levels of future
profitability that can be achieved. Acquisitions involve a number of risks,
including the diversion of management's attention, issues related to
the assimilation of the operations and personnel of the acquired businesses,
and potential adverse effects on operating results. There can be no assurance
that PES will find attractive acquisition candidates in the future, that
acquisitions can be consummated on acceptable terms, that any acquired
companies can be integrated successfully into PES's operations or that any
such acquisitions will not have an adverse effect on the PES's financial
condition or results of operations.
Successful achievement of the PES's expansion plans will depend in part
upon an ability to:
Select and compete successfully in new markets
Hire, train and retain qualified personnel
Acquire existing businesses.
PES may incur significant start-up costs in connection with entering
new markets. There can be no assurance that it will achieve its planned
expansion goals on a timely basis, if at all, or manage its growth
effectively. Failure to expand or manage its growth could have a material
adverse effect on its financial condition or results of operations.
See "Business - Growth Strategy," and "Management's Discussion and Analysis
of Financial Conditions and Results of Operations".
Former PES shareholders will own a majority of the shares after the merger.
After consummation of the merger, including the stock splits, the current
shareholders of PES will control the vote of 94% of FSI's issued and
outstanding common shares. As a result, the former PES shareholders will have
the ability to control the outcome of substantially all issues submitted to
FSI's shareholders. (See "PRINCIPAL SHAREHOLDERS" and "MERGER- Terms and
Conditions of the Merger Agreement")
A confirmation of the investment in the common stock will result in an
immediate substantial dilution of the investor's investment.
The holders of the restricted common shares of FSI have acquired their
interest in FSI at an average cost per share which was significantly less than
that which the public investors paid for their securities. Consequently, the
public investors will bear the majority of the risk of any loss that may be
incurred in FSI's operations.
There is no public market for our securities.
Prior to the closing of the merger, there will have been no public
trading market for FSI's common stock. Given the small size of the
initial public offering, the relatively minimal public float, and lack of
participation of a professional underwriter, there is only a very limited
likelihood of any active and liquid public trading market developing for the
shares. If such a market does develop, the price of FSI's common stock may be
volatile. Thus, investors run the risk that they will never be able to sell
their shares. In any event, there are additional state securities laws
preventing resale transactions. No potential market makers have been
solicited by FSI. There can be no assurances that any broker will ever agree
to make a market in FSI's securities. (See "DESCRIPTION OF SECURITIES")
We may need additional financing.
In order to achieve and maintain our planned growth rate after the
merger, we may have to obtain bank financing or sell additional debt or equity
(or hybrid) securities in public and private financing. In addition, we may
incur debt or issue equity securities in order to finance acquisitions. Any
such financing could dilute the interests of current shareholders. There can
be no assurance that any such additional financing will be available or, if it
is available, that it will be in such amounts and on such terms as will be
satisfactory to us.
We will face intense competition.
The market for human resource firms is fragmented and highly
competitive, and competition is increasing substantially. PES and its
holdings compete with other human resource and executive search firms both
regionally and nationally. Other competitors, some of which may have greater
financial and other resources than PES, may also enter the markets in which
PES currently operates or intends to expand. There can be no assurance that
PES will be able to compete successfully against these competitors.
We have not declared dividends and we do not anticipate doing so.
FSI has not paid any dividends and does not contemplate or anticipate
paying any dividends on its common stock in the foreseeable future.
We arbitrarily set the offering price of the shares offered in our
initial public offering.
The price at which the FSI's shares were offered to the public in FSI's
initial public offering was arbitrarily determined by FSI. There is no
relationship between the initial offering price of the shares to FSI's assets,
book value, net worth or other economic or recognized criteria of value. In
no event should the offering price be regarded as an indication of any future
market price of the securities.
Possible Future Rule 144 Sales
There are currently 700,000 FSI restricted common shares issued
and outstanding. 600,000 of these shares are "restricted securities" as
defined by Rule 144 of the Securities Act. Under Rule 144, restricted
securities which have been beneficially owned for at least one year may be
sold in brokers' transactions or directly to market makers, subject to certain
quantity and other limitations. Generally, under Rule 144 a person may sell,
in any three-month period, an amount equal to the greater of (i) the average
weekly trading volume, if any, of the common stock during the four calendar
weeks preceding the sale or (ii) 1% of the company's outstanding common stock.
After the merger and subsequent stock splits, FSI will have outstanding
6,911,853 shares of Common Stock, including 196,648 shares held in escrow
(100,000 before the stock splits) and converted shares of preferred stock (1
share of preferred converts to .833333 shares of common stock) and exercise of
all outstanding options. Shares beneficially owned for two years by
non-affiliates of the Company may be sold without regard to these quantity or
other limitations. The possibility of sales of substantial amounts of such
stock could have a depressive effect on the price of the common stock in any
market which may develop.
Conflicts of Interest.
FSI's officers and directors are engaged in various business ventures.
Thus, there may be conflicts of interest in the allocation of time between
FSI's business and such other businesses. These activities may conflict with
the interests of FSI. As a result of their other interests, they may
personally benefit from decisions or recommendations made with respect to the
business of FSI. Whereas conflicts may arise, management is aware of its
fiduciary duty to FSI and will act in good faith and endeavor on an equitable
basis to resolve any conflicts which may arise, on an equitable basis.
Caution to Public Investors.
For all of the aforesaid reasons, and others set forth herein, these
securities involve a high and substantial degree of risk. Any public
investor considering reconfirming his/her investment in FSI should be aware
of these and other factors as set forth in this prospectus. No public
investor considering reconfirming his/her investment in FSI should do so if
he/she anticipates a need for immediate return on his investment.
Reconfirmation should only be made by investors who can afford to absorb a
total loss and have no need for immediate return on their investments.
We will be Depending on qualified personnel and key individuals.
Upon completion of the Merger, FSI's officers and directors will resign,
and new officers and directors will be appointed. Neither FSI nor PES can
assure current FSI shareholders of the qualifications of such persons to run a
publicly owned company. PES is dependent on certain key officers, employees
and directors. Additionally, the success of companies held by PES will be
dependent in, large part, on individuals who manage those companies. The loss
of the services of any of such persons during this period could adversely
affect FSI's prospects. See "MANAGEMENT - Directors and Executive Officers."
There was no independent valuation of the shares in the merger transaction.
The number of FSI shares to be issued pursuant to the merger agreement
was determined by negotiation between PES and FSI and does not necessarily
bear any relationship to PES's asset value, net worth or other established
criteria of value and should not be considered indicative of the actual value
of PES. Furthermore, neither PES nor FSI has obtained either an appraisal of
PES's or FSI's securities or an opinion that the Merger is fair from a
financial perspective.
Failure of sufficient number of investors to reconfirm their investments
will result in the merger not being consummated.
The merger cannot be consummated unless, the Rule 419 investors
representing 80% of the maximum offering proceeds elect to reconfirm their
investments. Rule 419 investors must affirmatively elect to reconfirm their
investments; no response within the twenty business day period FSI must grant
its shareholders to reconfirm will be viewed as a vote not to reconfirm. If,
after completion of this reconfirmation offering, a sufficient number of Rule
419 Investors do not reconfirm their investment, the merger will not be
consummated. In such event, none of the deposited securities held in escrow
will be issued and the deposited funds will be returned to Rule 419 Investors
on a pro rata basis. As a consequence, since FSI expects to use the 10%
allowed to it pursuant to Rule 419, the Rule 419 investors will be returned
only 90% of their invested funds.
Penny Stock Regulation
Broker-dealer practices in connection with transactions in "penny-stock"
are regulated by certain penny stock rules adopted by the Securities and
Exchange Commission. Penny stocks generally are equity securities with a
price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system). The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
regarding penny stocks and the nature and level of risks in the penny stock
market. The broker-dealer also must provide the customer with current bid and
offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from such rules the broker-dealer must make a
special written determination that the penny stock is a suitable investment
for the purchaser and receive the purchaser's written agreement to the
transaction. These disclosure requirements may have the effect of reducing
the level of trading activity in the secondary market for a stock that becomes
subject to the penny stock rules. If FSI's Common Stock becomes subject to
the penny stock rules, investors in this offering may find it more difficult
to sell their shares.
MERGER
Background of the Merger Agreement
FSI was organized on April 28, 1997 under the laws of the State of
Delaware in order to provide a vehicle to acquire or merge with a business
or company. On June 9, 1998, FSI commenced a "blank check" offering
pursuant to Rule 419 promulgated under the Securities Act. The purpose of the
offering was to cause FSI to become a publicly held reporting company under
the Securities Exchange Act of 1934. The offering was successful in raising
$50,000 in gross proceeds from Rule 419 investors. Pursuant to Rule 419,
$45,000 of the net proceeds from that offering, and 100,000 FSI shares
purchased by the Rule 419 investors, were placed in escrow pending
distribution of a prospectus to each of the Rule 419 investors
describing any prospective business acquisition by FSI and
the subsequent reconfirmation by the holders of at least 80% of the
shares owned by the Rule 419 investors that they have elected to remain
investors.
In the event approval of the merger is not obtained from at least 80% of
the Rule 419 investors, then the shares deposited in the Rule 419 Escrow
account will not be released to the Rule 419 investors. Instead, the $45,000
net offering proceeds in the Rule 419 Escrow will be released to the Rule 419
investors in proportion to their investment, at approximately $.45 per share.
In the event the escrowed funds exceed $45,000 at the consummation of the
merger, the excess funds shall be returned on a pro rata basis to those
registered common shareholders rejecting the reconfirmation offer. The Rule
419 Investors paid $.50 per share in FSI's initial public offering.
Pursuant to Rule 419, the value of PES must represent at least 80% of
the maximum offering proceeds, or $40,000. Based upon its proforma financial
statements, PES has a business value of not less than $40,000.
(See "Platinum Executive Search, Inc. Financial Statements.")
Terms and Conditions of Merger Agreement
STOCKHOLDERS OF FSI WISHING TO OBTAIN A COPY OF THE MERGER AGREEMENT, WHICH IS
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE, MAY OBTAIN ONE WITHOUT CHARGE
BY WRITING TO SCHONFELD & WEINSTEIN, L.L.P. ATTENTION: JOEL SCHONFELD, 63
WALL STREET, SUITE 1801, NEW YORK, NEW YORK 10005.
Pursuant to the merger agreement, PES will be merged into FSI.
Consummation of the merger is conditioned upon, among other things,
reconfirmation by holders of least 80% of the shares owned by the Rule 419
investors. Upon consummation of the merger, (i) FSI shall institute a 1 for
.3634303 reverse stock split of its restricted common stock, and a 1 for
1.96648 forward stock split of shares issued in its initial public offering
and currently held in escrow, after which 5,555,475 shares of common stock and
740,000 shares of convertible preferred stock shall be issued to former PES
shareholders and 325,000 options to acquire 325,000 shares of common stock
shall be issued to former option holders of PES. Each shareholder who holds
shares of FSI common stock registered pursuant to a registration statement
declared effective by the Securities and Exchange Commission on June 9, 1998
prior to the merger and who accepts the reconfirmation offer shall, after
consummation of the merger and subsequent stock split, hold 1.96648 shares for
every 1 share held prior to the merger and subsequent stock split. PES will
merge into FSI with FSI as the surviving entity. The merger is intended to
be consummated in such a manner as to be tax-free to all parties involved
under Internal Revenue Code Section 368(a)(1)(A) Each Rule 419 investor who
rejects the reconfirmation offer will be paid his or her pro rata share of the
amount in the escrow account of approximately $.45 per share. Consummation of
the merger is not subject to any governmental approvals.
As a result of the stock splits, the 100,000 shares currently held in escrow
shall become 196,648 shares of FSI registered common stock, and the
600,000 restricted common stock shall become 218,063.
The result of the merger, assuming that 80% of the FSI stockholders
reconfirm their investments, is that former PES shareholders shall own 94% of
the surviving entity while current FSI shareholders and their designees shall
own 6% of FSI. (See "Certain Transactions")
Stockholders of FSI desiring to accept the reconfirmation offer are
directed to sign the enclosed Letter of Reconfirmation form and return it
to Schonfeld & Weinstein, L.L.P., 63 Wall Street, Suite 1801, New York, New
York 10005, attention: Andrea I. Weinstein, who will forward each Letter of
Reconfirmation to Atlantic Liberty Savings, FSI's escrow agent. Any FSI
stockholder who fails to return his or her form so that it is received by
Ms. Weinstein by (20 business days from the date hereof) will be
deemed to have rejected the reconfirmation offer and will automatically be
sent a check within five business days representing his or her pro rata share
of the funds in the Escrow Account for the benefit of the Rule 419 investors.
Certain Income Tax Consequences
The merger is intended to qualify as a "tax-free reorganization" for
purposes of the United States federal income tax so that stockholders of
FSI and PES will not recognize gain or loss from the transaction.
In addition, the transaction is not expected to result in the recognition of
gain or loss to either FSI or PES in the respective jurisdictions
where each of them is subject to taxation. NO OPINION OF COUNSEL NOR A
RULING FROM THE INTERNAL REVENUE SERVICE HAS BEEN OBTAINED IN REFERENCE TO THE
FOREGOING. THE FOREGOING IS FOR GENERAL INFORMATION ONLY AND FSI
STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO THEM.
Fees and Expenses
Shareholders of PES shall bear all costs and expenses incurred in
connection with the merger and the reconfirmation offering, since the only
funds available to FSI are the $45,000 in cash held in escrow pursuant to Rule
419, none of which may be used by either FSI or PES prior to the consummation
of the Merger.
USE OF PROCEEDS
The gross proceeds of FSI's initial public offering was $50,000.
Pursuant to Rule 15c2-4 under the Securities Exchange Act of 1934, all of
those proceeds must be held in escrow until all of the shares are sold.
Pursuant to Rule 419, after all of the shares are sold, 10% of the deposited
funds ($5,000) may be released from escrow to FSI. FSI requested the release
of this 10%. To date, none of these funds have been expended for accounting
fees. Upon the consummation of the merger and the reconfirmation, which
reconfirmation offering must precede such consummation, pursuant to Rule 419,
$5,000 (plus any interest or dividends received, but less any portion
disbursed to FSI pursuant to Rule 419(b)(2)(C)(vi) and any amount returned to
investors who did not reconfirm their investment pursuant to Rule 419 or
approximately $45,000)will be released to PES.
SELECTED FINANCIAL DATA
(All amounts expressed in US$)
First Sunrise, Inc.:
January 1, 1998 to January 1, 1999 to
December 31, 1998 June 30, 1999
Net Income from Operations $ 0 $ 0
Total Current Assets $ 55,668 $ 55,503
Other Assets $ 0 $ 0
Total Assets $ 55,668 $ 55,503
Total Current Liabilities $ 7,250 $ 8,100
Long-term Liabilities $ 0 $ 0
Dividends $ 0 $ 0
Total Stockholders equity $ 48,418 $ 47,403
Platinum Executive Search, Inc. March 25, 1999 (date of inception) to
June 30, 1999
Net Income from Operations $ 0
Total Current Assets $ 502,931
Other Assets $ 0
Total Assets $ 502,931
Total Liabilities $ 593,181
Total Current Liabilities $ 593,181
Dividends $ 0
Total Stockholders equity(deficit) $ (90,250)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FIRST SUNRISE, INC.
General
FSI was organized under the laws of the State of Delaware on April 20,
1997. Since inception, the primary activity of FSI has been directed to
organizational efforts, and obtaining initial financing and conducting its
initial public offering pursuant to which FSI offered and sold 100,000 shares
of common stock at $.50 per share. Pursuant to Rule 419, the proceeds of
FSI's initial public offering ($50,000) less 10% ($5,000) have been placed in
escrow pending consummation of a merger or acquisition. (See "INVESTORS'
RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419"). In the event no merger or
acquisition is consummated within eighteen (18) months from the effective date
of FSI's initial public offering. FSI shall return investors' money, less
$5,000, on a pro rata basis.
FSI was organized for the purposes of creating a corporate vehicle to
seek, investigate and, if such investigation warranted, engaging in business
combinations presented to it by persons or firms who or which desire to
employ FSI's funds in their business or to seek the perceived advantages of
a publicly-held corporation. FSI's principal business objective is
to seek long-term growth potential in a business combination venture rather
than to seek immediate, short-term earnings.
FSI does not currently engage in any business activities which provide
any cash flow. FSI's business is sometimes referred to as a "blank check"
company because investors entrust their investment monies to FSI's management
before they have a chance to analyze any ultimate use to which their money may
be put. Although substantially all of the deposited funds of this offering are
intended to be utilized generally to effect a business combination, such
proceeds are not otherwise being designated for any specific purposes.
Pursuant to Rule 419, prospective investors who invest in FSI will have an
opportunity to evaluate the specific merits or risks of only the business
combination management decides to enter into.
Management anticipates that it may be able to effect only one potential
business combination, due primarily to FSI's limited financing.
Results of Operations
FSI's public offering was declared effective on June 9, 1998. FSI
offered a total of 100,000 shares at an offering price of $.50 per share, for
an aggregate of $50,000.00. On December 1, 1998, FSI closed on 100,000 shares
for a total gross proceeds of $50,000.00. Pursuant to Rule 419 of the
Securities Act, net proceeds of $45,000.00 together with all securities
issued are being held in escrow pending the consummation of an acquisition or
merger. After the closing of the merger, the business of FSI will be the
business of PES. (See "BUSINESS - PES"). The resources of PES will be the
resources available to FSI to fulfill the business purpose of marketing,
managing and acquiring human resource firms. PES believes the combined cash
resources and available credit of PES and FSI will be sufficient to run
operations for one year.
At June 30, 1999, FSI's current assets amounted to $55,503, while
current liabilities amounted to $7,250. In addition, FSI's general and
administrative expenses amounted to $1,015 for the period ended June 30, 1999.
In the event approval of the merger is not obtained from at least 80% of
the Rule 419 investors, then the shares deposited in the Rule 419 escrow will
not be released to the Rule 419 investors. Instead, the $45,000 net offering
proceeds in the Rule 419 escrow will be released to the Rule 419 investors in
proportion to their investment, at approximately $.45 per share. In the
event the escrowed funds exceed $45,000 at the consummation of the merger,
the excess funds shall be returned on a pro rata basis to those registered
common shareholders rejecting the reconfirmation offer. The Rule 419
investors paid $.50 per share in FSI's initial public offering.
PLATINUM EXECUTIVE SEARCH, INC.
PES is a development stage company intending to act as a holding company in
the human resource industry. PES was incorporated in the State of New York on
March 25, 1999 for the purpose of helping business executives search for and
find employment. PES's objective is to maximize shareholder value by
embarking upon a strategy to establish itself as a leader in the human
resources industry. PES intends to commence such strategy by acquiring firms
and hiring key employees experienced in human resources and executive search.
The following presentation of management's discussion and analysis of PES's
financial condition should be read in conjunction with PES's financial
statements and notes thereto, as well as other financial information contained
in this prospectus. (See "BUSINESS PES")
Overview
Through the acquisition of existing human resource firms and the hiring of
management and other key personnel experienced in human resources, PES intends
to achieve sales revenues by December 1999.
On August 15, 1999, PES acquired Renaissance Leadership, Inc., a leadership
development and training firm. Founded in 1978, Renaissance has served over
35,000 managers and executives. Renaissance has over 200 corporate clients
including AT&T, American Express, Merill Lynch and Bell Atlantic. PES
purchased Renaissance for $1,500,000 broken down as follows: 75,000 shares of
redeemable common stock 300,000 shares of convertible preferred stock
(eligible to be converted into 250,000 shares of common stock), and 375,000
shares of common stock.
On August 31, 1999, PES acquired Strupp Investments, L.L.C., a human resource
firm known as "Success." Success specialized in the placement of executive
assignments for senior management in various industries. The purchase of
Success was valued at $500,000, broken down as follows: 25,000 shares of
redeemable common stock, 100,000 shares of preferred stock (eligible to be
converted into 208,833 shares of common stock), and 125,000 shares of common
stock.
For purposes of acquisition prior to the merger with FSI, PES is
valuating its common stock at $2.00 per share.
Renaissance Leadership, Inc.
Renaissance Leadership, Inc. is a human resource n executive search firm
specializing in leadership management located in Easton, Maryland.
Year ended December 31,1998 compared to year ended December 31, 1997.
Year ended
December 31
1998 1997
Net sales and other
operating income $1,085,224 $1,092,023
Cost of goods sold $ 315,392 $ 357,908
Selling, general,
and administrative experience $ 796,790 $ 611,188
Net income (loss) $ (23,308) $ 125,612
Net sales for the year ended December 31, 1998 were $1,085,224 compared
to $1,092,023 in 1997, a decrease of $6,799 (.6%). Cost of goods sold
decreased by $42,516 (11.9%) from 1997 to 1998, and cost of goods sold as a
percentage of net sales decreased from 32.8% in 1997 to 29.1% in 1998 as a
result of additional expenses for outside consulting.
Selling, general and administrative expenses for the year ended December
31, 1998 were $796,790, and $611,188 for the year ended December 31, 1997, an
increase of $185,602. Selling, general and administrative expenses as a
percentage of net sales increased from 56% in 1997 to 73.4% in 1998. This
increase was attributed to increased compensation and related expenses.
Six months ended June 30, 1999.
For the six months period ended June 20, 1999, Renaissance had net sales
and other operating income of $459,593. Cost of goods sold was $111,615, and
selling general and administrative experiences were $335,673. For this six
months period, net income was $13,530.
Strupp Investments, LLC
Strupp Investments, LLC is a New Jersey corporation doing business as
"Success." Incorporated in July 1998, Success is in the business of
recruiting executive personnel. James J. Strupp, an officer, director and
shareholder of PES is a principal of Strupp.
For the year ended June 30,1999, Strupp had revenues of $289,628.
General and Administrative Expenses were $306,434. Strupp had a net loss of
($16,720) for the year ended June 30, 1999.
<PAGE>
PES
Three Month Period Ended June 30, 1999
Three Month Period
Ended June 30, 1999
Net Sales $ 0
Cost of Sales $ 0
General and Administrative Expenses $ 143,108
Net Income (loss) $ (143,250)
For the three month period ended June 30. 1999, PES had no sales revenues and
operating expenses of $143,108. At June 30, 1999, PES had total assets of
$502,931 consisting of $500,445 cash, and $2,486 in property and equipment,
and total liabilities of $593,181, consisting of $93,181 in accounts payable
and a $500,000 line of credit. PES had $143,108 of general and administrative
expenses consisting of marketing and other general office expenses. PES has
entered into an agreement with a commercial bank allowing for a $500,000 line
credit. The amount outstanding on the line of credit at June 30, 1999 was
$500,000.
BUSINESS
FIRST SUNRISE, INC.
General
FSI was organized under the laws of the State of Delaware on April 28,
1997. Since inception, the primary activity of FSI has been directed to
organizational efforts, and obtaining initial financing and conducting its
initial public offering pursuant to which FSI offered and sold 100,000 shares
of common stock at $.50 per share. Pursuant to Rule 419, the proceeds of
FSI's initial public offering ($50,000) less 10% ($5,000) have been placed in
escrow pending consummation of a merger or acquisition. In the event no
merger or acquisition is consummated within eighteen (18) months from the
effective date of FSI's initial public offering (December 9, 1999), FSI shall
return investors' money, on a pro rata basis.
FSI was organized for the purposes of creating a corporate vehicle to seek,
investigate and, if such investigation warranted, engaging in business
combinations presented to it by persons or firms who or which desire to
employ FSI's funds in their business or to seek the perceived advantages of a
publicly-held corporation. FSI's principal business objective is to
seek long-term growth potential in a business combination venture rather than
to seek immediate short-term earnings.
FSI does not currently engage in any business activities which provide
any cash flow. FSI's business is sometimes referred to as a "blank check"
company because investors entrust their investment monies to FSI's management
before they have a chance to analyze any ultimate use to which their money may
be put. Although substantially all of the deposited funds of this offering are
intended to be utilized generally to effect a business combination, such
proceeds are not otherwise being designated for any specific purposes.
Pursuant to Rule 419, prospective investors who invest in FSI will have an
opportunity to evaluate the specific merits or risks of only the business
combination management decides to enter into.
Management anticipates that it may be able to effect only one potential
business combination, due primarily to FSI's limited financing.
PLATINUM EXECUTIVE SEARCH, INC.
General
PES was incorporated pursuant to the laws of the State of New York on
March 25, 1999.
PES was founded to enter the human resource industry through the
acquisition of existing firms, and hiring employees with experience in this
industry. PES has acquired two such firms: Renaissance Leadership, a
leadership development firm specializing in the financial services industry,
with annual sales of over $1,000,000, acquired August 15, 1999; and Strupp
Investments, L.L.P., (known as "Success"), a firm specializing in executive
search, acquired August 30, 1999. James J. Strupp, an officer of PES, is
director and shareholder of PES, is a principal of Success. Additionally, as
of August 30, 1999, PES has entered into employment agreements with three
individuals, each of whom brings with him/her years of experience in executive
search and an established client base. PES expects to achieve operating
revenues by December 1999.
HUMAN RESOURCE SEARCH INDUSTRY
Overview
Although PES will be involved with many different segments of human resources,
it expects that executive search will comprise a large portion of its
business. According to Kennedy Information, worldwide executive search
industry revenue grew at a 20% compound annual growth rate, from approximately
$3.5 billion in 1993 to $7.3 billion in 1997. The executive search industry
is separated into two distinct markets: retained search firms and contingency
search firms.
Retained search firms generally concentrate on searches for positions with
annual compensation of $150,000 or more for large public and private
corporations, government agencies, educational organizations and high growth
start-up companies. Retained search firms also have the capability to provide
their clients with local and international knowledge of the managerial market
within their client's industry, as well as a sophisticated network of relevant
industry contacts. Retained search firms typically charge a fee for their
services equal to approximately one-third of the annual cash compensation for
the position being filled and bill for their services in three installments
irrespective of whether a position has been filled.
Contingency search firms generally concentrate on searches for positions with
annual compensation of $150,000 or less. These firms are most commonly hired
to fill middle and lower management positions of small to medium-sized
companies. Unlike retained search firms, contingency search firms are
compensated only when a position is filled. Accordingly, revenues generated
by a contingency search firm typically are more volatile than revenues
generated by a retained search firm. For this reason, contingency search
firms often cannot invest as many resources as retained search firms in a
search assignment. Contingency search firms typically charge a fee for their
services equal to approximately one-third of annual cash compensation for the
position being filled.
The executive search industry is highly fragmented, consisting of
approximately 4,000 retained and contingency search firms in 1997. According
to Kennedy Information, the ten largest retained search firms accounted for
only 11% of the global search industry in 1997. In 1997, more than 80% of
retained search firms and approximately 90% of contingency search firms
generated less than $2 million each in annual revenues.
INDUSTRY TRENDS
PES believes that a number of favorable trends will contribute to the
continued growth of the human resource industry in general, and the executive
search industry in particular, including: (i) the globalization of business;
(ii) the demand for managers with broader skills; (iii) the increasing
outsourcing of recruitment functions; and (iv) the use of advanced technology
to accelerate the identification and assessment of candidates. PES believes
that within the next six months, it will be well positioned relative to these
key industry trends.
Globalization of Business. As the world markets continue to integrate into
one global economy, more companies are required to supplement internal talent
with experienced senior executives who can operate effectively in a global
economy. The rapidly changing and competitive environment increasingly
challenges multinational and local companies to identify qualified executives
with the right combination of skills, experience and cultural compatibility.
This globalization of business, including the expansion in new markets, has
led companies to look beyond their particular region for management talent and
to identify local executives in the regions where they are doing business.
Demand for Managers with Broader Qualifications. According to a recent global
study conducted by Korn Ferry International, Developing Leadership for the
21st Century, companies are seeking broader qualifications for executive
positions. In many instances, these candidates cannot be found within a
client's organization despite training, rotation programs and succession
planning. Thus, PES expects that the executive search business will continue
to grow as companies increasingly turn to executive search firms to identify
qualified executives.
Increasing Outsourcing of Recruitment Functions. Recent economic factors are
requiring companies to focus on core competencies and to out source
recruitment functions to providers who can efficiently provide high quality
recruitment services. Moreover, the trend towards globalization and the
current shortage of qualified management-level candidates have made
identifying and recruiting exceptional candidates more difficult. Companies
are increasingly relying on experienced global executive search firms to
address their management recruitment needs. By hiring executive search firms,
companies can expect to: (i) access a diverse and highly qualified field of
candidates on an as-needed basis; (ii) reduce the costs required to maintain
and train a recruiting department in a rapidly changing industry; (iii)
benefit from the most updated information on the industry and specific
geographic markets; (iv) access leading search technology and software; and
(v) maintain management focus on strategic business issues.
Use of Advanced Technology. Technology is having an increasing impact on the
search industry. Global systems and the ability to create comprehensive
worldwide databases are fundamentally changing the search process and moving
the emphasis of the search business from candidate identification to candidate
assessment and placement. In addition, the Internet is creating efficient
ways to identify and recruit from the broad middle-management market, with
Internet technology expected to have applicability to senior-level searches in
the near future. At the same time, new barriers to entry into the executive
search industry critical to serve client's needs globally.
In response to these industry trends, PES is seeking to acquire firms and
individuals to enable PES to assist it in becoming a leader in the human
resources industry. PES believes that through its acquisitions of firms
focusing on various segments in the human resources industry, it will be able
to draw on individuals' expertise in specific regions, industries and
functions. PES is focusing on acquisitions in the following industry
segments: executive coaching and counseling; temporary services; training and
organization development; information technology and executive search.
Current employees of PES have experience in advanced technology, health care,
pharmaceutical, entertainment, fashion/retail, and professional services.
Some of PES's employees have years of experience in searches for functional
positions such as members of boards of directors, chief executive officers,
chief financial officers and chief information officers.
PES believes that the experience of its key personnel will allow it to benefit
from growth in outsourcing of recruitment functions. PES seeks not only to
provide middle and senior level management employees to corporations, but to
become a provider of recruitment services for all levels of management.
PES intends to develop a strong technology infrastructure to assist it in
searching for and placing executives in the many industry segments it hopes to
service. PES expects that, through its firm acquisitions and key employees,
it will commence operations will a large data base of qualified personnel.
GROWTH STRATEGY
Currently, PES is seeking to expand primarily through the pursuit of strategic
acquisition.
PES will continue to make selected acquisitions that support its growth
strategy, and develop and enhance its presence in key markets. While PES
intends to acquire businesses in various segments of the human resource
industry, it is aware that one of the largest components of such industry is
executive search. According to Kennedy Information, the executive search
industry is highly fragmented and consists of approximately 4,000 firms, the
ten largest of which accounted for only 11% of the global executive search
industry revenues in 1997. By focusing on smaller firms ($5,000,000 in annual
sales revenues and less), PES expects to be able to create a niche in the
industry. Since its formation, PES has been evaluating opportunities to
expand its business through acquisitions, and engaging in discussions with
potential targets, as well as with individuals with experience in various
segments of the human resource industry. Since its incorporation PES has made
two acquisitions and hired three key employees. The company views strategic
acquisitions as the key component of its long term growth strategy and intends
to seek to accelerate its pace of acquisitions to the extent appropriate
opportunities become available.
Industry Segment/Functional Specialization
PES has hired and intends to hire key personnel specializing in various
industry segments. Such personnel will be equipped with the knowledge and
contacts each has built during his/her career in such industries and markets.
PES will count on such personnel to bring an in-depth understanding of the
market conditions and strategic and management issues faced by clients within
a specific industry. PES intends to continue expansion of its industry
segment specialization through additional strategic hiring and selected
acquisitions.
Further, PES has hired and intends to hire employees with experience in
placing executives in certain functions, such as boards of directors, chief
executive officers and other senior executive and financial officers.
Competition
PES is a start up company in the human resource, an industry dominated by
several large international firms such as Korn/Ferry International, Heidrick &
Struggles International, Inc., Spencer Stuart & Associates, Russel Reynnolds
Associates and Egon Zehnder International. PES will be competing primarily
with smaller and mid size executive search firms, as well with firms that
specialize in specific regional, industry or functional searches.
The executive search industry is comprised of approximately 4,000 retained and
contingency search firms. According to Kennedy Information, the top ten
search firms represent only 11% of the industry. To date there have been few
barriers to entry in the executive search business, which explains in part the
highly fragmented nature of the industry. However, the globalization of world
economies, combined with the increased availability and application of
sophisticated technologies and comprehensive databases, will likely raise the
barriers to entry. PES believes that the industry will experience
consolidation. New competitors, such as technology-oriented companies, will
be drawn to the executive search business by the growing worldwide demand for
qualified management employees, the fragmentation of the industry and the
ability to leverage their existing technology and databases to enter the
market.
Facilities
PES intends to lease space at 342 Madison Avenue, New York, New York. PES
believes that these premises will be adequate for its current needs and for
its first two years of operation.
Legal Proceedings
PES is not a party to any legal proceedings which it believes could materially
effect its business
Intellectual Property
Other than its trade name and the trade names of Renaissance and Success, PES
does not possess any intellectual property.
Employees
PES currently has three full time employees. PES's employees do not
belong to any unions. Management of PES enjoys good working relationships
with its employees.
Year 2000
PES's current computer system has been updated to comply with any
issues relating to the upcoming change in the century. PES does not
anticipate incurring significant expense with regard to Year 2000 issues.
MANAGEMENT
Directors and Executive Officers
Set forth below is certain information regarding the directors and
executive officers of FSI and PES. The officers and directors of FSI are
expected to resign upon consummation of the merger.
FSI
Set forth below is information regarding the officers and directors of
the FSI.
Name Age Position with FSI
Eng Chye Low (1) 61 President, Director
200 East 89th Street
New York, New York 10128
Steven Wainick (1) 41 Secretary, Director
64 Tamarack Street
Islip, New York 11751
Rene Kunz 38 Director
Hochwachtrsrasse 31
8400 Winterthur
Switzerland
____________________
(1) May be deemed "Promoters" of the FS1, as that term is defined under the
Securities Act of 1933.
BIOGRAPHY
Eng Chye Low, President and a director of the Company, has been president of
Seacom, Inc., a New York based real estate management company, since 1980.
Mr. Low is a graduate of the University of Malaya. He has been president and
a director of the Company since May 1997. Mr. Low is the former president of
Jackson Holding Corp., a blank check company which merged with China energy
Resources Corporation in June 1996. (See "Other Blank Check Companies.")
Steven Wainick, Vice President, Secretary and a director of the Company, was
Vice- President of Metro Tag and Label company, a manufacturer of tags and
labels, from 1978 to 1994. Since 1994, Mr. Wainick has been President of
Metro Tag and Label Company. He attended Nassau Community College and
University of Miami. He has been secretary and a director of the Company
since May 1997. Mr. Wainick is the former vice president of Mandi of Essex,
Ltd., a blank check company which merged with CityScape Financial Corp. On
April 27, 1994. (See "Other Blank Check Offering.")
Rene Kunz, director of the Company, has been assistant vice president of
Winterthur Insurance, Located in Winterthur, Switzerland, since 1991. He has
been a director of the Company since May 1997.
PES
Set forth below is information regarding the officers and directors of
PES:
Name Age Position with the Company
James J. Strupp 56 Chief Executive Officer
Chairman of the Board
John D. Mazzuto 50 President, Chief Financial Officer
Director
Robert J. Casper 55 Director
Biography
James J. Strupp has been Chief Executive Officer and Chairman of the Board
since March 1999. From 1984 to 1987, and 1991 to the present, Mr. Strupp has
been senior vice president-human resources of International Specialty
Products, Inc., a GAF corporate affiliate, where he was responsible for the
total human resources of the $750 million specialty chemical company. He
served as executive vice president and partner of Bastion Industries/LendLease
Trucks, Inc. from 1987 to 1991, and Vice President - Human Resources USA of
Estee Lauder Corp. from 1981 to 1984. He has served in executive capacities
for Seatrain Lines, Inc., Hertz Corporation, Mobil, and Chrysler Corporation.
Mr. Strupp co-founded the Dr. Martin Luther King Education Center in Kankakee,
Illinois. He is a graduate of Marquette University.
John D. Mazzuto has been President, Chief Financial Officer and a director of
PES since March 1999. Since 1991, Mr. Mazzuto has served as a consultant for
various companies. He has specialized in consulting troubled companies,
assisting them in financial analysis and debt restructuring. From 1989 to
1991, he worked for Asian Oceanic Group, first as head of New York Corporation
finance, then as President of the New York subsidiary and Group Managing
Director of the parent. Mr. Mazzuto was employed by Chemical bank from 1971
to 1989 in various capacities, including managing director of corporate
finance, manager of business units and vice president. He is a graduate of
Yale University.
Robert J. Casper has been a director of PES since August 1999. Since 1994,
Mr. Casper has been President and Chief Executive Officer of R.J. Casper &
Associates. From 1988 to 1994, worked for US Life Corporation, an insurance
holding company, serving as President and Chief Operating Officer from 1993 to
1994 where he coordinated, directed and executed all hands-on managerial,
administrative and marketing functions to ensure efficient and profitable
operations. US Life Corporation is a publicly held corporation. He has
served on the boards of directors of US Life Corporation, All American Life,
Old Line Life, United States Credit Life and United States Equity Sales. Mr.
Casper is a graduate of the University of Wisconsin and The Wharton School of
Business.
Executive Compensation
FSI
FSI has not compensated any officers, directors or employees to
date.
PES
The following summary compensation table sets forth compensation
information for services performed during the fiscal year to end December 31,
1999 by PES's executive officers.
SUMMARY COMPENSATION TABLE
Name and Principal Fiscal Annual
Position Year Compensation(1)(2)
James J. Strupp 1999 $150,000
John Mazzuto 1999 $120,000
_________________
(1) Includes salary and bonus.
(2) These amounts represent salary for six months of 1999.
PES has entered into employment agreements with both James J. Strupp and John
D. Mazzuto.
Pursuant to PES's five year employment agreement with Mr. Strupp, Mr. Strupp
shall receive an annual salary of $300,000, with an annual increase of $15,000
plus an amount equal to the increase in the Consumer Price Index as published
by the U.S. Government multiplied by the then existing salary every year
commencing January 1, 2000. Based on performance, Mr. Strupp is eligible for
an annual bonus of $75,000 for fiscal year 1999, and an annual bonus for each
fiscal year end of an amount not less than seven percent (7%) of the pre-tax
income of PES. Mr. Strupp shall be entitled to a transaction bonus for each
acquisition in the amount of $100,000, payable at each closing in stock or
cash, at his option. With each new executed letter of intent between PES and
an acquisition target, Mr. Strupp will be eligible for 100,000 options to
purchase 100,000 shares of PES common stock. The stock options will be prices
as of the date of the completion of the acquisition by PES of the target
company, are fully vested on their date of issuance and may be exercised for
ten years. Mr. Strupp shall also receive a company car, car phone and
portable phone.
Pursuant to PES's five year employment agreement with Mr. Mazzuto, Mr. Mazzuto
shall receive an annual salary of $240,000, with an annual increase of $10,000
plus an amount equal to the increase in the Consumer Price Index as published
by the U.S. Government multiplied by the then existing salary every year
commencing January 1, 2000. Based on performance, Mr. Mazzuto is eligible for
an annual bonus of $55,000 for fiscal year 1999, and an annual bonus for each
fiscal year end of an amount not less than four percent (4%) of the pre-tax
income of PES. Mr. Mazzuto shall be entitled to a transaction bonus for each
acquisition in the amount of $60,000, payable at each closing in stock or
cash, at his option. With each new executed letter of intent between PES and
an acquisition target, Mr. Mazzuto will be eligible for 70,000 options to
purchase 70,000 shares of PES common stock. The stock options will be priced
as of the date of the completion of the acquisition by PES of the target
company, are fully vested on their date of issuance and may be exercised for
ten years. Mr. Mazzuto shall also receive a car phone and portable phone.
1999 Stock Option Plan
The PES 1999 Stock Option Plan provides for the granting of incentive stock
options, non-qualified stock options and stock appreciation rights. It is
administered by PES's Board of Directors. Directors, officers and other
executive, managerial, and other employees of PES or its subsidiaries will be
eligible to participate under this plan with respect to incentive stock
options, non-qualified stock options and SARs, and all independent contractors
rendering services to PES or its subsidiaries are eligible to participate
under the plan with respect to non-qualified stock only, but no director of
PES or its subsidiaries is eligible to receive an incentive stock option or
SAR appurtenant thereto unless he/she is also aan employee of PES or a
subsidiary of PES in a class eligible to receive incentive stock options. The
aggregate number os shares of PES common stock which may be issued or
delivered upon exercise of all incentive stock options and non-qualified stock
options granted under this plan can not exceed 5,000,000 shares. Option
prices for incentive stock options shall not be less than 100% and for non-
qualified stock options not less than 85% of the fair market value of such
shares on the date on which the option was granted.
As of the date of this prospectus, there are 325,000 options outstanding.
DESCRIPTION OF SECURITIES
FSI
Common Stock
FSI is authorized to issue twenty million (20,000,000) shares of common
stock, $.001 par value per share, of which 700,000 shares were issued
and outstanding as of the date of this prospectus. 600,000 shares were
issued to eight (8) shareholders in 1997. FSI relied on an exemption
pursuant to Section 4(2) of the Securities Act of 1933, when issuing these
shares. The 700,000 shares includes the 100,000 shares of registered common
stock subject to the reconfirmation offering. Each outstanding share of common
stock of FSI is entitled to one vote, either in person or by proxy, on all
matters that may be voted upon by the owners thereof at meetings of the
stockholders.
The holders of FSI common stock (i) have equal ratable rights to
dividends from funds legally available therefor, when, as and if declared by
the Board of Directors of FSI; (ii) are entitled to share ratably in all of
the assets of FSI available for distribution to holders of common stock upon
liquidation, dissolution or winding up of the affairs of FSI; (iii) do not
have preemptive, subscription or conversion rights, or redemption or sinking
fund provisions applicable thereto; and (iv) are entitled to one on-cumulative
vote per share on all matters on which stockholders may vote at all meetings
of stockholders.
All shares of registered common stock which are the subject of this
reconfirmation offering, when issued, will be fully paid for and
non-assessable, with no personal liability attaching to the ownership
thereof. The holders of shares of common stock of FSI do not have
cumulative voting rights, which means that the holders of more than 50% of
such outstanding shares voting for the election of directors can elect all of
the directors of FSI if they so choose and, in such event, the holders of the
remaining shares will not be able to elect any of FSI's directors. At the
completion of the reconfirmation offering, the present officers and directors
and present shareholders of FSI and their designees, will beneficially own 6%
of the then outstanding shares, with the former PES shareholders in possession
of 94% of FSI's stock. (See "MERGER-Terms and Conditions of Merger" and
"Certain Transactions").
Reports to Stockholders
FSI intends to continue to furnish its stockholders with annual reports
containing audited financial statements as soon as practicable at the end of
each fiscal year. FSI's fiscal year ends on December 31.
Non-Cumulative Voting
The holders of shares of FSI Common Stock do not have cumulative
voting rights, which means that the holders of more than 50% of such
outstanding shares, voting for the election of directors, can elect all of
the directors to be elected, if they so chose. In such event, the holders of
the remaining shares will not be able to elect any of FSI's directors. FSI's
current shareholders, including those FSI shareholders who are also
shareholders of PES, will own 6% of the common shares outstanding after the
merger. (See "Certain Transactions.")
Dividends
FSI was only recently organized, has no earnings, and has paid no
dividends to date. Since FSI was formed as a blank check company with its
only intended business being the search for an appropriate business
combination, FSI does not anticipate having any earnings until such time that
a business combination is reconfirmed by the stockholders. However, there are
no assurances that upon the consummation of a business combination,
FSI will have earnings or issue dividends. Therefore, it is not
expected that cash dividends will be paid to stockholders until after a
business combination is reconfirmed.
Transfer Agent
FSI has appointed Oxford Transfer Co., 115 North Maryland Avenue, Suite
130, Glendale, California as the Transfer Agent for FSI.
PES
Common Stock
PES is authorized to issue 10,000,000 shares of common stock, $.01 par
value, of which 5,555,475 shares were issued and outstanding as of the date of
this prospectus. Each outstanding share of common stock of FSI is entitled
to one vote, either in person or by proxy, on all matters that may be voted
upon by the owners thereof at meetings of the stockholders.
The holders of shares of PES do not have cumulative voting rights, which
means that the holders of more than 50% of such outstanding shares, voting for
the election of directors, can elect all of the directors to be elected, if
they so chose. In such event, the holders of the remaining shares will not be
able to elect any of PES's directors. PES's current shareholders will own
94% of the common shares outstanding after the merger.
Preferred Stock
PES is authorized to issue 10,000,000 shares of preferred stock, $.01
par value. Of the authorized preferred stock, 5,000,000 shares are designated
as Series A Convertible Preferred Stock, par value $.01. Holders of Series A
Preferred Stock are entitled to receive when, as and if declared by the Board
of Directors, annual dividends payable in cash, out of funds legally available
for such purpose, or at the option of PES, in kind, at the rate of 6% per
share per annum, and this amount shall be non-cumulative. If PES elects to
pay in kind, such dividends shall be paid in additional duly authorized fully
paid and non-assessable shares of Series A Preferred Stock. Dividends on the
Series A Preferred Stock shall be paid in preference to dividends paid on the
common stock.
The holders of Series A Preferred Stock shall not be entitled to any
voting rights, except for action which alters the rights, preferences or
privileges of the Series A Preferred Stock materially or increases the
authorized number of shares of common stock. Holders of Series A Preferred
Stock have the right to convert the Series A Preferred Stock into shares of
common stock pursuant to certain provisions.
There are currently 740,000 shares of preferred stock outstanding.
Dividends
PES has paid no dividends to date.
Transfer Agent
PES intends to appoint American Stock Transfer as its Transfer Agent after the
merger.
PRINCIPAL SHAREHOLDERS
FSI
The following table sets forth certain information regarding the
beneficial ownership of the FSI's common stock as of the date of this
Prospectus by (i) each person known to FSI to beneficially own 5% or
more of FSI's Common Stock, (ii) each director of FSI and (iii) all directors
and executive officers of FSI as a group. All information with respect to
beneficial ownership has been furnished to FSI by the respective director,
executive officer or 5% shareholder, as the case may be.
Amount and Nature of Amount and Nature of
Beneficial Ownership Beneficial Ownership
Prior to the Merger(1) After the Merger (2)
Number Percent Number Percent
Saul Gelernter (5) 100,000 14.29% 36,343.83 .523%
76-23 168th Street
Flushing, NY 11366
Steven Wainick (1) (4) (5) 100,000 14.29% 36,343.83 .523%
64 Tamarack Street
Islip, NY 11571
Sanford Lurie (5) 100,000 14.29% 36,343.83 .523%
201 West 89th Street
New York, NY 10024
Rene Kunz (1) (4) (5) 100,000 14.29% 36,343.83 .523%
Hochwachtrsrasse 31
8400 Winterthur
Switzerland
Gary L. Heller (5) 50,000 7.14% 18,171.915 .263%
7641 66TH Street
Penellas Park, FL 33781
Victor Weinstein,
L.L.P. 50,000 (3) (5) 50,000 7.14% 18,171.915 .263%
280 Carol Close
Tarrytown, NY 10591
Schonfeld &Weinstein,
L.L.P. 50,000 (3) (5) 50,000 7.14% 18,171.915 .263%
63 Wall Street, Ste.1801
New York, NY 10005
Eng Chye Low (1) (4) (5) 50,000 7.14% 18,171.915 .263%
200 East 89th Street
New York, NY 10128
Total Officers
and Directors
(3 Persons) 250,000 35.71% 90,859.575 1.315%
Total 600,000 85.71% 218,062.98 3.155%
(1) May be deemed "Promoters" of the Company, as that term is defined
under the Securities Act of 1933.
(2) Mr. Weinstein is the father of Andrea I. Weinstein of Schonfeld &
Weinstein, L.L.P., special counsel to FSI.
(3) Mr. Schonfeld and Ms. Weinstein are the principals of Schonfeld &
Weinstein, L.L.P., special counsel to FSI. Ms. Weinstein's father,
Vic Weinstein, is a shareholder of the FSI.
(4) Mr. Low is President and a director of FSI. Mr. Wainick is
Treasurer, Secretary and a director of FSI. Mr. Kunz is a director of FSI.
(5) Beneficial owner has sole voting power and sole investment power as
to shares owned in FSI.
(1) Based on 6,911,853 shares to be outstanding after the merger; after
the stock splits and conversion of preferred stock.
PES
The following table sets forth certain information regarding the
beneficial ownership of the PES's Common Stock as of the date of this
Prospectus by (i) each person known to PES to beneficially own 5% or more
of PES's Common Stock, (ii) each director of PES and (iii) all directors and
executive officers of PES as a group. All information with respect to
beneficial ownership has been furnished to PES by the respective director,
executive officer or 5% shareholder, as the case may be.
Amount and Nature of Amount and Nature of
Beneficial Ownership Beneficial Ownership
Prior to the Merger After the Merger 1(2)
Number Percent Number Percent
Name/Address
Beneficial
Owner
James J. Strupp
63 Ashland Road
Summit, NJ 07901 2,170,000 39.1% 2,170,000 31.40%
John D. Mazzuto
54 First Neck Lane
Southampton, NY 11968 2,170,000 39.1% 2,170,000 31.40%
Robert Casper 25,000(3) .45% 25,000(3) .36%
407 Pine Street
Red Bank, NJ 07701
Total Officers
and Directors(3 Persons) 4,365,000 78.57% 4,365,000 63.15%
(1) Based on 6,911,853 shares to be outstanding after the merger, after
the stock splits and conversion of preferred stock.
(2) The 5,555,475 post-stock split shares of FSI and 740,000 shares of
preferred stock (each share of preferred stock convertible into .83333 shares
of common stock)to be issued upon consummation of the Merger shall be
distributed to current PES shareholders on a pro-rata basis.
(3)Includes 15,000 options to purchase 15,000 shares of common stock.
CERTAIN TRANSACTIONS
FSI was incorporated in Delaware on April 28, 1997. Between April
18, 1997 and August 15, 1997 FSI issued 600,000 shares of common stock to
eight (8) persons. On June 9, 1998, FSI's initial public offering was
declared effective by the Securities and Exchange Commission. Pursuant to
this offering, 100,000 shares of common stock were offered at $.50 per share
on a "best efforts, all or nothing basis." As a result of the public offering,
$50,000.00 was raised. This offering closed on December 1, 1998.
<PAGE>
LEGAL MATTERS
An opinion as to the validity of the securities offered hereby has
been passed upon for FSI by Schonfeld & Weinstein, L.L.P., 63 Wall
Street, Suite 1801, New York, New York, counsel to FSI. Schonfeld &
Weinstein, L.L.P. is a shareholder of FSI. No proceeds of FSI's initial
public offering were paid to Schonfeld & Weinstein, L.L.P.
EXPERTS
The balance sheet of FSI as of December 31, 1997, and the related statements
of operations, changes in stockholders' deficit and cash flows for
the initial period from April 28, 1997 (date of incorporation) December 31,
1997 included in this Prospectus and incorporated by reference in the
registration statement, have been audited by The B & B Group, LLC, independent
auditors.
The balance sheet of FSI as of December 31, 1998, and the related statements
of operations, changes in stockholders' deficit and cash flows for the period
from January 1, 1998 through December 31, 1998 included in this Prospectus and
incorporated by reference in the registration statement, have been audited by
Ahearn, Jasco + Company, P.A., independent auditors, as stated in their report
appearing in this prospectus and incorporated by reference in the registration
statement, and are included and incorporated by reference in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
The balance sheet of PES as of June 30, 1998, and the related statements of
operations, changes in stockholders' deficit and cash flows for the period
from March 25, 1999 (date of inception) through June 30, 1999 included in this
Prospectus and incorporated by reference in the registration statement, have
been audited by Ahearn, Jasco + Company, P.A., independent auditors, as stated
in their report appearing in this prospectus and incorporated by reference in
the registration statement, and are included and incorporated by reference in
reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
The balance sheet of Strupp Investments, LLC as of June 30, 1999, and the
related statements of operations, changes in stockholders' deficit and cash
flows for the period from July 1, 1999 through June 30, 1999 included in this
Prospectus and incorporated by reference in the registration statement, have
been audited by Christina Stylianou., independent auditor, as stated in her
report appearing in this prospectus and incorporated by reference in the
registration statement, and are included and incorporated by reference in
reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
The balance sheet of Renaissance Leadership, Inc. as of December 31, 1998 and
December 31, 1997, and the related statements of operations, changes in
stockholders' deficit and cash flows for the period from January 1, 1998
through December 31, 1998, and January 1, 1997 through December 31, 1997
included in this Prospectus and incorporated by reference in the registration
statement, have been audited by J. Michael Connolly, independent auditor, as
stated in his report appearing in this prospectus and incorporated by
reference in the registration statement, and are included and incorporated by
reference in reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.
LITIGATION
FSI knows of no litigation pending, threatened or contemplated,
or unsatisfied judgements against it, or any proceedings in which it is a
party. FSI knows of no legal actions pending or threatened or judgements
entered against FSI's officer and directors in their capacity as such.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Articles of Incorporation of FSI provide indemnification of directors
and officers and other corporate agents to the fullest extent permitted
pursuant to the laws of Delaware. The Articles of Incorporation also
limit the personal liability of FSI's directors to the fullest extent
permitted by the Delaware Law. The Delaware General Corporations Law contains
provisions entitling directors and officers of FSI to indemnification from
judgments, fines amounts paid in settlement and reasonable expenses, including
attorney's fees, as the result of an action or proceeding in which they may be
involved by reason of being or having been a director or officer of FSI,
provided said officers or directors acted in good faith.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling FSI
pursuant to the foregoing provisions, or otherwise, FSI has been informed that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by FSI of expenses incurred or paid by a
director, officer or controlling person of FSI 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, FSI
will, unless in the opinion of its counsel, the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
FURTHER INFORMATION
FSI 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 regulations of the Commission.
For further information with respect to FSI 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 or at the
Commission's web site: www.sec.gov. 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.]
<PAGE>
FIRST SUNRISE, INC.
(A development stage company)
INDEX TO FINANCIAL STATEMENTS
Page
REPORT OF INDEPENDENT AUDITORS F-2
FINANCIAL STATEMENTS
Balance Sheets F-3
Statements of Operations F-4
Statement of Changes in Stockholders' Equity F-5
Statements of Cash Flows F-6
NOTES TO FINANCIAL STATEMENTS F-7 through F-9
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of
First Sunrise, Inc.
We have audited the accompanying balance sheet of First Sunrise, Inc. (the
"Company"), a development stage company, as of December 31, 1998, and the
related statements of operations, changes in stockholders' equity, and cash
flows for the year then ended. 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 the Company as of December
31, 1998, and the results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles.
/s/ Ahearn Jasco + Company, P.A.
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
<PAGE>
Pompano Beach, Florida
August 13, 1999
<PAGE>
FIRST SUNRISE, INC.
(A development stage company)
BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
6/30/99 12/31/98
(Unaudited)
ASSETS
CURRENT ASSET - Cash and cash equivalents $5,503 $5,668
RESTRICTED CASH 50,000 50,000
TOTAL $55,503 $55,668
LIABILITIES AND STOCKHOLDERS' EQUITY
ACCOUNTS PAYABLE $8,100 $7,250
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value; 20,000,000 shares
authorized; 700,000 shares issued and outstanding
at June 30, 1999; 600,000 issued and outstanding
at December 31, 1998 700 700
Additional paid-in capital 54,300 54,300
Deficit accumulated during the development stage (7,597) (6,582)
STOCKHOLDERS' EQUITY, NET 47,403 48,418
TOTAL $55,503 $55,668
See notes to financial statements.
F-3
<PAGE>
FIRST SUNRISE, INC.
(A development stage company)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND THE YEAR ENDED DECEMBER 31, 1998
6/30/99 12/31/98
(Unaudited)
REVENUE $- $-
GENERAL AND ADMINISTRATIVE EXPENSES 1,015 4,832
LOSS BEFORE INCOME TAX PROVISION (1,015) (4,832)
PROVISION FOR INCOME TAXES - -
NET LOSS $(1,015) $(4,832)
PER SHARE AMOUNTS (Basic and diluted):
Net loss per common share outstanding $(0.0015) $(0.0081)
COMMON SHARES OUTSTANDING AT
JUNE 30, 1999 AND DECEMBER 31, 1998 700,000 600,000
See notes to financial statements.
F-4
<PAGE>
FIRST SUNRISE, INC.
(A development stage company)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND THE YEAR ENDED DECEMBER 31, 1998
6/30/99 12/31/98
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,015) $(4,832)
Item not affecting cash flow from operations:
Accounts payable 850 3,000
NET CASH USED IN OPERATING ACTIVITIES (165) (1,832)
CASH FLOWS FROM INVESTING ACTIVITY:
Increase in restricted cash - (50,000)
CASH FLOWS FROM FINANCING ACTIVITY:
Sales of common stock - 50,000
NET DECREASE IN CASH AND CASH EQUIVALENTS (165) (1,832)
CASH AND CASH EQUIVALENTS, beginning of period 5,668 7,500
CASH AND CASH EQUIVALENTS, end of period $5,503 $5,668
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $- $-
Cash paid for income taxes $- $-
See notes to financial statements.
F-6
<PAGE>
FIRST SUNRISE, INC.
(A development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND THE YEAR ENDED DECEMBER 31, 1998
Deficit
Accumulated
Additional during the
Common Paid-in Development
Stock Capital Stage Total
STOCKHOLDERS' EQUITY,
December 31, 1997 $600 $26,400 $(1,750) $25,250
Sale of 100,000 shares of stock,
net of deferred offering
costs of $22,000 100 27,900 - 28,000
Net loss for the year ended
December 31, 1998 - - (4,832) (4,832)
STOCKHOLDERS' EQUITY,
December 31, 1998 700 54,300 (6,582) 48,418
Net loss for the six months
ended June 30, 1999
(unaudited) - - (1,015) (1,015)
STOCKHOLDERS' EQUITY, June 30,
1999 (unaudited) $700 $54,300 $(7,597) $47,403
See notes to financial statements.
F-5
<PAGE>
FIRST SUNRISE, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
AND THE YEAR ENDED DECEMBER 31, 1998
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
First Sunrise, Inc. (the "Company"), a development stage company, was
organized on April 28, 1997 as a "blank check" company, under Rule 419 of the
Securities Act of 1933, which plans to look for a suitable business to merge
with or acquire. Operations since incorporation have consisted primarily of
obtaining the first capital contribution by the insiders, coordinating
activities regarding the SEC registration of the company, and selling stock
pursuant to Rule 419.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Deferred Offering Costs
Deferred offering costs, which were incurred in anticipation of the
Company completing a Rule 419 registration statement, were deferred until the
registration was completed in December 1998.
Income Taxes
The Company accounts for income taxes in accordance with the Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
which requires the recognition of deferred tax liabilities and assets at
currently enacted tax rates for the expected future tax consequences of events
that have been included in the financial statements or tax returns. A
valuation allowance is recognized to reduce the net deferred tax asset to an
amount that is more likely than not to be realized. The tax provision shown
on the accompanying statement of operations is zero since the deferred tax
asset generated from the net operating loss is offset in its entirety by a
valuation allowance.
Cash and Cash Equivalents
Cash and cash equivalents, if any, include all highly liquid debt
instruments with an original maturity of three months or less at the date of
purchase.
Fair Value of Financial Instruments
Cash, accounts payable and other current liabilities are recorded in the
financial statements at cost, which approximates fair market value because of
the short-term maturity of those instruments.
NOTE 3 - STOCKHOLDER'S EQUITY
The Company was duly organized under the laws of the State of Delaware.
The Company has authorized 20,000,000 shares of common stock at $.001 par
value. Through December 31, 1997, the Company had raised $27,000 through a
subscription agreement.
FIRST SUNRISE, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
AND THE YEAR ENDED DECEMBER 31, 1998
NOTE 3 - STOCKHOLDER'S EQUITY (continued)
During the period which ended in December 1998, the Company completed
its public offering of common stock. The Company sold 100,000 shares at $0.50
per share, raising $50,000 of funds which are restricted under Rule 419 (see
Note 4).
NOTE 4 - RULE 419 REQUIREMENTS
Rule 419 requires that offering proceeds after deduction for
underwriting commissions, underwriting expenses and deal allowances issued be
deposited into an escrow or trust account (the "Deposited Funds" and
"Deposited Securities", respectively) governed by an agreement which contains
certain terms and provisions specified by the Rule. Under Rule 419, the
Deposited Funds and Deposited Securities will be released to the company and
to the investors, respectively, only after the company has met the following
three basic conditions. First, the company must execute an agreement(s) for
an acquisition(s) meeting certain prescribed criteria. Second, the company
must file a post-effective amendment to the registration statement which
includes the terms of a reconfirmation offer that must contain conditions
prescribed by the rules. The post-effective amendment must also contain
information regarding the acquisition candidate(s) and its business(es),
including audited financial statements. The agreement(s) must include, as a
condition precedent to their consummation, a requirement that the number of
investors representing 80% of the maximum proceeds must elect to reconfirm
their investments. Third, the company must conduct the reconfirmation offer
and satisfy all of the prescribed conditions, including the condition that
investors representing 80% of the Deposited Funds must elect to remain
investors. The post-effective amendment must also include the terms of the
reconfirmation offer mandated by Rule 419. The reconfirmation offer must
include certain prescribed conditions which must be satisfied before the
Deposited Funds and Deposited Securities can be released from escrow. After
the company submits a signed representation to the escrow agent that the
requirements of Rule 419 have been met and after the acquisition(s) is
consummated, the escrow agent can release the Deposited Funds and Deposited
Securities. Investors who do not reconfirm their investments will receive the
return of a pro-rata portion thereof; and in the event investors representing
less than 80% of the Deposited Funds reconfirm their investments, the
Deposited Funds will be returned to the investors on a pro-rata basis.
NOTE 5 - LOSS PER COMMON SHARE
Net loss per common share outstanding, as shown on the statement of
operations, is based on the number of common shares outstanding at each
balance sheet date. Weighted average shares outstanding was not computed
since it would not be meaningful in the circumstances, as all shares issued
during the periods were for initial capital or were issued pursuant to Rule
419. Therefore, the total shares outstanding at the end of each period was
deemed to be the most relevant number of shares to use for purposes of this
disclosure.
FIRST SUNRISE, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
AND THE YEAR ENDED DECEMBER 31, 1998
NOTE 5 - LOSS PER COMMON SHARE (continued)
For future periods, the Company will utilize the treasury stock method
for computing earnings per share, and will compute a weighted average number
of shares outstanding once additional shares of stock are issued to new
shareholders. Under the treasury stock method, the dilutive effect of
outstanding stock options and other convertible securities for determining
primary earnings per share is computed using the average market price during
the fiscal period, whereas the dilutive effect of outstanding stock options
and convertible securities for determining fully diluted earnings per share is
computed using the market price as of the end of the fiscal period, if greater
than the average market price.
NOTE 6 - RELATED PARTY TRANSACTIONS
Transactions with Shareholders
During 1998, the Company advanced $1,832 for legal fees to the law firm
of Schonfeld & Weinstein, LLP, who is also a shareholder of the Company.
Office Facilities
A shareholder of the Company provides office facilities to the Company
at no charge.
NOTE 7 - MERGER AGREEMENT WITH PLATINUM EXECUTIVE SEARCH
On July 21, 1999, the Company and Platinum Executive Search, Inc.
("PES") entered into a merger agreement, pursuant to which PES will be merged
into the Company, with the Company as the surviving entity (reverse merger for
accounting purposes). Consummation of the merger is conditioned upon, among
other things, reconfirmation by holders of least 80% of the shares owned by
the Rule 419 investors. Upon consummation of the merger, the Company shall
institute a 1 for .3634383 reverse stock split of its restricted common stock
and a 1 for 1.96648 forward stock split of shares issued in its initial public
offering and currently held in escrow, after which 5,555,475 shares of common
stock and 740,000 shares of convertible preferred stock shall be issued to
former PES shareholders in the same proportion said shareholders held shares
of common and convertible preferred stock of PES, and 325,000 options to
acquire 325,000 shares of common stock shall be issued to former option
holders of PES in the same proportion said option holders held options to
acquire PES stock. Each shareholder who holds shares of the Company's common
stock registered pursuant to a registration statement declared effective by
the Securities and Exchange Commission on June 8, 1998 prior to the merger and
who accepts the reconfirmation offer shall, after consummation of the merger
and subsequent stock split, hold 1.96648 shares for every 1 share held prior
to the merger and subsequent stock split. The merger is intended to be
consummated in such a manner as to be tax-free to all parties involved under
Internal Revenue Code Section 368(a)(1)(A). Each Rule 419 investor who
rejects the reconfirmation offer will be paid his or her pro rata share of the
amount in the escrow account of approximately $.45 per share. Consummation of
the merger is not subject to any governmental approvals.
FIRST SUNRISE, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
AND THE YEAR ENDED DECEMBER 31, 1998
NOTE 7 - MERGER AGREEMENT WITH PLATINUM EXECUTIVE SEARCH (continued)
As a result of the stock splits, the 100,000 shares currently held in
escrow shall become 196,648 share of the Company's registered common stock and
the 600,000 shares of restricted common stock shall become 218,063 shares.
The result of the merger, assuming that 80% of the Company's Rule 419
stockholders reconfirm their investments, is that former PES shareholders
shall own 94% of the surviving entity while the Company's current shareholders
and their designees shall own 6% of the surviving entity.
FIRST SUNRISE, INC.
(A development stage company)
CONTENTS
Independent Auditors' Report
Financial Statements:
Balance Sheet
Statement of Operations
Statement of Cash flows
Notes to Financials Statements
THE B & B GROUP, LLP
54 Wheeler Avenue. Pleasantville, New York 100570
(914) 741-5555. (9140 347-4444
Fax (914) 741-5556
Rosanna Bell, CPA
Franklin M. Boykoff, CPA
______
Joseph J. Leggio, CPA
William A. Colasanti, CPA
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
First Sunrise, Inc.
New York, New York
We have audited the accompanying balance sheet of First Sunrise, Inc., a
development stage company, as of December 31, 1997 and the related statements
of operations, stockholders, equity and cash flows for the period April 28,
1997 (Inception) to December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Sunrise, Inc., a
development stage company, as of December 31, 1997, and the results if its
operations and its cash flows for the period April 28, 1997 (Inception) to
December 31, 1997 in conformity with generally accepted accounting principles.
The B & B Group, LLP
Certified Public Accountants
Dated: February 14, 1998
Pleasantville, New York
<PAGE>
FIRST SUNRISE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
CURRENT ASSETS:
Cash $ 7, 500
Total current assets 7,500
OTHER ASSETS:
Deferred registration costs 22,000
Total assets $ 29,500
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,250
Total current liabilities 4,250
SHAREHOLDERS' EQUITY:
Common stock, .001 par value, 20,000,000 authorized,
600,000 issued and outstanding (Note 1.) 600
Additional paid in capital (Note 1.) 26,400
Deficit accumulated during development stage <1,750>
Total shareholders' equity 25,250
Total liabilities and shareholders; equity $ 29,500
See notes to financial statements.
<PAGE>
FIRST SUNRISE, INC.
(A development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD APRIL 28, 1997 ( INCEPTION) TO DECEMBER 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ <1,750>
Adjustments to reconcile net loss to
net cash provided by operating activities:
Increase in accounts payable 4,250
Net cash provided by operating activities 2,500
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in deferred registration costs <22,000>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock 27,000
Net increase in cash 7,500
Cash, beginning of period 0
Cash, end of period $ 7,500
======
See notes to financial statements.
<PAGE>
FIRST SUNRISE, INC.
(a development stage company)
STATEMENT OF OPERATIONS
FOR THE PERIOD APRIL 28, 1997 (INCEPTION) TO DECEMBER 31, 1997
REVENUE $ 0
OPERATING EXPENSES:
Professional fees $ 1,750
Net loss $ <1,750>
=======
EARNING PER SHARE:
Net loss per common share $ 0
=======
Weighted average number of share $600,000
=======
See notes to financial statements.
FIRST SUNRISE, INC.
(a development stage company)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD APRIL 28, 1997 (INCEPTION) TO DECEMBER 31, 1997
SHARES AMOUNT
Initial sale of stock
April 28, 1997 600,000 $27,000
Deficit accumulated
during development stage <1,750>
600,000 $27,250
See notes to financial statements.
FIRST SUNRISE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 28, 1997 (INCEPTION) TO DECEMBER 31, 1997
1. ORGANIZATION OF THE COMPANY
FIRST SUNRISE INC. (the "COMPANY"), was organized under the State of Delaware
on April 28, 1997. The Company was organized as a vehicle to acquire or
merge with a business or company, (the "Target Business") (a "Business
Combination"). Management believes that the Company's characteristics as an
enterprise with liquid assets, nominal liabilities, and flexibility in
structuring will make the Company an attractive combination candidate. None
of the Company's officers, directors, promoters, their affiliates or
associates have had any preliminary contact or discussions and there are no
present plans, proposals, arrangements or understandings with any
representative of the owners of any business regarding the possibility of an
acquisition or merger transaction. The Company does not intend to engage in
the business of investing, reinvesting or trading in securities as its
primary business or pursue any business which would render the Company an
"investment company" pursuant to the Investment Company Act of 1940.
Since organization of the Company, its activities have been limited to the
sale of initial shares in connection with its organization and its
preparation in producing a registration statement and prospectus for its
initial public offering. The Company will not engage in any substantive
commercial business following the offering.
2. SIGNIFICANT ACCOUNTING POLICIES
Deferred registration costs
Costs incurred in connection with the companies anticipated public offering
are deferred and will be charged against shareholders equity upon successful
compilation of the offering. If the offering is not consummated, deferred
costs will be charged to expense.
<PAGE>
FIRST SUNRISE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 28, 1997 (INCEPTION) TO DECEMBER 31, 1997
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Loss per share of common stock
Loss per share of common stock is calculated by dividing net loss by the
weighted average number of shares of common stock and common stock
equivalents, if dilutive, outstanding during each of the periods presented.
In addition, when an initial public offering is contemplated, common stock
and common stock equivalents issued by the Company at a price less than the
estimated initial public offering price during the twelve months immediately
preceding the anticipated initial filing of the offering are treated as
outstanding for all periods presented, using the treasury stock method.
Recent accounting pronouncements
During February, 1997 the FASB issued SFAS No. 128 "Earnings Per Share" which
replaces the presentation of primary earnings per share ("EPS") with basic
EPS. It also requires dual presentation of basic and diluted EPS. SFAS No.
128 is effective for periods ending after December 15, 1997. The Company
believes the adoption of this pronouncement will not have a material effect
on the financial statements.
During June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income", which establishes standards for
reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and distributions
to owners. Among other disclosures, SFAS 130 requires that all items that
are required to be recognized under current accounting standards as components
of comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements.
<PAGE>
FIRST SUNRISE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 28, 1997 (INCEPTION) TO DECEMBER 31, 1997
Recent accounting pronouncements (continued)
SFAS 130 is effective for financial statements for periods beginning after
December 15, 1997 and requires comparative information for earlier years to
be restated. Because of the recent issuance of this standard, management has
been unable to fully evaluate the impact, if any, the standard may have on
future financial statement disclosures. Results of operations and financial
position, however, will be unaffected by implementation of this standard.
3. ADDITIONAL INFORMATION
The Board of Directors passed a resolution authorizing the Management of the
Company to initiate steps to make a public offering of the Company's
securities, in order to raise additional capital of up to $50,000.00.
Management was granted authority to file a Registration statement on form
SB-2 with the Securities and Exchange Commission and to register the
securities in any state jurisdictions that management felt was required and
appropriate. It was furthermore resolved , that the public offering would
consist of 100,000 shares of common stock, $.001 par value per share, to be
offered at $.50 per share. The shares are being offered by the company on a
"best effort, all or none basis".
<PAGE>
<PAGE>
PLATINUM EXECUTIVE SEARCH, INC.
(A development stage company)
INDEX TO FINIANCIAL STATEMENTS
Page
REPORT OF INDEPENDENT AUDITORS F-2
FINANCIAL STATEMENTS
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Stockholders' Equity F-5
Statement of Cash Flows F-6
NOTES TO FINANCIAL STATEMENTS F-7
through F-10
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of
Platinum Executive Search, Inc.
We have audited the accompanying balance sheet of Platinum Executive Search,
Inc. (the "Company"), a development stage company, as of June 30, 1999, and
the related statements of operations, changes in stockholders' equity, and
cash flows for the period March 25, 1999 (date of incorporation) through June
30, 1999. 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 Platinum Executive Search,
Inc. as of June 30, 1999, and the results of its operations and its cash flows
for the period March 25, 1999 (date of incorporation) through June 30, 1999 in
conformity with generally accepted accounting principles.
AHEARN, JASCO + COMPANY,P.A.
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
Pompano Beach, Florida
August 25, 1999
<PAGE>
PLATINUM EXECUTIVE SEARCH, INC.
(A development stage company)
BALANCE SHEET
JUNE 30, 1999
ASSETS
CURRENT ASSET - Cash and cash equivalents $500,445
PROPERTY AND EQUIPMENT, net 2,486
TOTAL $502,931
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $93,181
Line of credit 500,000
TOTAL CURRENT LIABILITIES 593,181
STOCKHOLDERS' DEFICIT:
Preferred stock, $.01 par value; 10,000,000 shares authorized,
5,000,000 shares designated Series A; none issued -
Common stock, $.01 par value; 10,000,000 shares
authorized; 4,050,000 shares issued and outstanding 40,500
Additional paid-in capital 17,500
Deficit accumulated during the development stage (143,250)
Less: Subscribed stock (5,000)
STOCKHOLDERS' DEFICIT, NET (90,250)
TOTAL $502,931
See notes to financial statements.
F-3
<PAGE>
PLATINUM EXECUTIVE SEARCH, INC.
(A development stage company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 25, 1999
(date of incorporation) THROUGH JUNE 30, 1999
REVENUES $-
GENERAL AND ADMINISTRATIVE EXPENSES 143,108
LOSS ON OPERATIONS (143,108)
INTEREST EXPENSE (142)
LOSS BEFORE INCOME TAX PROVISION (143,250)
PROVISION FOR INCOME TAXES -
NET LOSS $(143,250)
PER SHARE AMOUNTS:
Net loss per common share outstanding $(0.035)
COMMON SHARES OUTSTANDING AT JUNE 30, 1999 4,050,000
See notes to financial statements.
F-4
<PAGE>
PLATINUM EXECUTIVE SEARCH, INC.
(A development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 25, 1999
(date of incorporation) THROUGH JUNE 30, 1999
Deficit
Accumulated
Additional During the
Common Paid-in Development Subscribed
Stock Capital Stage Stock Total
STOCKHOLDERS' EQUITY,
March 25, 1999 $- $- $- $- $-
Issuance of 550,000
shares of founders
stock 5,500 - - (5,000) 500
Sale of 3,500,000
shares of common
stock 35,000 17,500 - - 52,500
Net loss for the
period ended June
30, 1999 - - (143,250) - (143,250)
STOCKHOLDER' EQUITY,
June 30, 1999 $40,500 $17,500 $(143,250) $(5,000) $(90,250)
<PAGE>
PLATINUM EXECUTIVE SEARCH, INC.
(A development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 25, 1999
(date of incorporation) THROUGH JUNE 30, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(143,250)
Items not affecting cash flow from operations:
Compensation paid in stock 500
Depreciation 312
Accounts payable 93,181
NET CASH USED IN OPERATING ACTIVITIES (49,257)
CASH FLOWS FROM INVESTING ACTIVITY - Purchase of
equipment (2,798)
CASH FLOWS FROM FINANCING ACTIVITIES:
Line of credit borrowings 500,000
Sales of common stock 52,500
NET CASH PROVIDED BY FINANCING ACTIVITIES 552,500
CASH AND CASH EQUIVALENTS BALANCE AT JUNE 30, 1999 $500,445
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $142
Cash paid during the period for income taxes $-
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITY:
Stock issued for services $500
See notes to financial statements.
F-6
<PAGE>
PLATINUM EXECUTIVE SEARCH, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 25, 1999
(date of incorporation) THROUGH JUNE 30, 1999
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Platinum Executive Search, Inc. was incorporated in the State of New
York on March 25, 1999 for the purpose of helping business executives search
for and find employment. Planned operations have not yet commenced as the
Company is in the development stage; therefore, the accompanying financial
statements should not be regarded as typical for normal operating periods.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income Taxes
The Company accounts for income taxes in accordance with the Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
which requires the recognition of deferred tax liabilities and assets at
currently enacted tax rates for the expected future tax consequences of events
that have been included in the financial statements or tax returns. A
valuation allowance is recognized to reduce the net deferred tax asset to an
amount that is more likely than not to be realized. The tax provision shown
on the accompanying statement of operations is zero, as the deferred tax asset
that is generated from the net operating loss is offset in its entirety by a
valuation allowance.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid debt instruments
with an original maturity of three months or less at the date of purchase.
Property and Equipment
Property and equipment is recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the assets. Useful
lives range from five to seven years. Accumulated depreciation at June 30,
1999 totaled $312.
Fair Value of Financial Instruments
Cash, accounts payable and other current liabilities are recorded in the
financial statements at cost, which approximates fair market value because of
the short-term maturity of those instruments.
Statement of Comprehensive Income
A statement of comprehensive income has not been included, per SFAS 130,
"Reporting Comprehensive Income," as the Company has no items of other
comprehensive income.
PLATINUM EXECUTIVE SEARCH INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 25, 1999
(date of incorporation) THROUGH JUNE 30, 1999
NOTE 3 - PROPOSED MERGER WITH FIRST SUNRISE, INC.
On July 21, 1999, the Company and First Sunrise, Inc. ("FSI") entered
into a merger agreement, pursuant to which the Company will be merged into
FSI, with FSI as the surviving entity (reverse merger for accounting
purposes). Consummation of the merger is conditioned upon, among other
things, reconfirmation by holders of least 80% of the 100,000 shares of FSI
common stock owned by the FSI Rule 419 investors. Upon consummation of the
merger, FSI shall institute a 1 for .3634383 reverse stock split of its
restricted common stock and a 1 for 1.96648 forward stock split of shares
issued in its initial public offering and currently held in escrow, after
which 5,555,475 shares of common stock and 740,000 shares of convertible
preferred stock shall be issued to former Company shareholders in the same
proportion said shareholders held shares of common and convertible preferred
stock of the Company, and 325,000 options to acquire 325,000 shares of common
stock shall be issued to former option holders of the Company in the same
proportion said option holders held options to acquire the Company's stock.
Each shareholder who holds shares of FSI common stock registered pursuant to a
registration statement declared effective by the Securities and Exchange
Commission on June 9, 1998 prior to the merger and who accepts the
reconfirmation offer shall, after consummation of the merger and subsequent
stock split, hold 1.96648 shares for every 1 share held prior to the merger
and subsequent stock split. The merger is intended to be consummated in such
a manner as to be tax-free to all parties involved under Internal Revenue Code
Section 368(a)(1)(A). Each FSI Rule 419 investor who rejects the
reconfirmation offer will be paid his or her pro rata share of the amount in
the FSI escrow account of approximately $.45 per share. Consummation of the
merger is not subject to any governmental approvals.
The result of the merger, assuming that 80% of FSI Rule 419 stockholders
reconfirm their investments, is that former shareholders of the Company shall
own 94% of the surviving entity while current FSI shareholders and their
designees shall own 6% of the surviving entity.
NOTE 4 - STOCKHOLDER'S EQUITY
The total number of shares of capital stock which the Company has the
authority to issue is 20,000,000 shares, consisting of 10,000,000 shares of
Preferred Stock having a par value of $.01 per share and 10,000,000 shares of
Common Stock having a par value of $.01 per share.
Common Stock
All shares of Common Stock are identical with each other in every
respect, and the holders thereof are entitled to one vote for each share of
Common Stock upon all matters upon which the shareholders have the right to
vote. From March through June 1999, the Company issued 4,050,000 shares of
Common Stock. 30,000 shares of common stock have been reserved for options
that will be issued to a consulting firm for services upon completion of the
merger with First Sunrise, Inc.
Preferred Stock
The Board of Directors of the Company is authorized, subject to the
limitations prescribed by law, to provide for the issuance of shares of
Preferred Stock in series and, by filing articles of amendment pursuant to the
applicable law of the State of New York, to establish from time to time the
number of shares of Preferred Stock to be included in each such series and to
determine and fix the designations, powers, preferences and rights of the
shares of each such series (including without limitation the voting rights,
dividend rights and preferences, liquidation rights and preferences, and
conversion rights, if any, thereof) and the qualifications, limitations, and
restrictions thereof. As of June 30, 1999, 10,000,000 shares of preferred
stock was authorized.
PLATINUM EXECUTIVE SEARCH INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 25, 1999
(date of incorporation) THROUGH JUNE 30, 1999
NOTE 4 - STOCKHOLDER'S EQUITY (continued)
In May 1999, after filing an amendment to its Articles of Incorporation
establishing a series of Preferred Stock designated as "Series A Preferred
Stock" (the "Series A Preferred Stock"), the Company authorized 5,000,000
shares, but no preferred stock has been issued as of June 30, 1999. Except as
otherwise provided by law, shares of the Series A Preferred Stock have no
voting rights. Holders of Series A Preferred Stock are entitled to receive
annual dividends, if declared by the Board of Directors, at the rate of 6% per
share per annum in cash. Dividends on Series A Preferred Stock are paid in
preference to the dividends paid on common stock. In the event of
liquidation, dissolution or winding-up of the Company, holders of the Series A
Preferred Stock are entitled to receive the value of the stock before any
distribution may be made to holders of Common Stock or any Preferred Stock
ranking junior to Series A Preferred Stock as to liquidation preferences.
The Company may at any time call for all shares of Series A Preferred
Stock to be converted to Common Stock when the closing bid price of the Common
Stock exceeds $3.00 for at least 20 days in any 30 consecutive trading day
period. The Company is required to give the holders of Series A Preferred
Stock not less than twenty days or more than sixty days prior notice of any
such conversion.
From and after May 1999, each and every share of Series A Preferred
Stock may, at the option of the holder thereof, be converted into a number of
shares of Common Stock equal to the number of shares which results from
dividing the Conversion Price in effect at the time of conversion into the
average price per share paid for the shares, on a fully diluted basis,
determined in accordance with generally accepted accounting principles.
NOTE 5 - PENDING ASSET ACQUISITIONS
In August 1999, the Company entered into agreements to purchase the
stock of two companies. The two purchase agreements were separately
negotiated. The transactions have not closed and are subject to the
completion of certain matters including due diligence. Management believes
that the two companies have an aggregate fair market value of approximately
$2,000,000. For accounting purposes, these asset acquisitions will be
recorded using the fair value of the common stock issued by the Company at the
date consummated.
The issuance of shares of common stock in connection with the two asset
acquisitions will not result in a change in control of the Company. On a
pro-forma basis, if the two asset acquisitions had been consummated as of June
30, 1999 then, as of that date, three persons would have each owned more than
5% of the Company's outstanding voting stock, with the largest single person
owning 46% of the Company's outstanding voting stock. The current directors
and management are in a position to effectively control the affairs of the
Company and management believes that any new shareholders will allow
management to further the Company's operating plan. Management is not aware
of any voting arrangements or understandings among any of the Company's
potential shareholders.
PLATINUM EXECUTIVE SEARCH INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM MARCH 25, 1999
(date of incorporation) THROUGH JUNE 30, 1999
NOTE 6 - LOSS PER COMMON SHARE
Net loss per common share outstanding, as shown on the statement of
operations, is based on the number of common shares outstanding at June 30,
1999. Weighted average shares outstanding was not computed since it would not
be meaningful in the circumstances, as all shares issued during the period
from incorporation through June 30, 1999 were issued to two individuals and
one corporation. Therefore, the total shares outstanding at the end of the
year was deemed to be the most relevant number of shares to use for purposes
of this disclosure.
For future periods, the Company will utilize the treasury stock method
for computing earnings per share, and will compute a weighted average number
of shares outstanding once additional shares of stock are issued to new
shareholders. Under the treasury stock method, the dilutive effect of
outstanding stock options and other convertible securities for determining
primary earnings per share is computed using the average market price during
the fiscal period, whereas the dilutive effect of outstanding stock options
and convertible securities for determining fully diluted earnings per share is
computed using the market price as of the end of the fiscal period, if greater
than the average market price.
NOTE 7 - LINE OF CREDIT AGREEMENT
Effective June 30, 1999, the Company signed an agreement with a
commercial bank allowing for a $500,000 line of credit. The amount
outstanding on the line of credit at June 30, 1999 is $500,000. Interest is
charged at the prime rate.
NOTE 8 - RELATED PARTY TRANSACTIONS
Substantially all of the accounts payable at June 30, 1999 are owed to
shareholders of the Company. A shareholder of the Company has provided office
facilities to the Company at no charge.
<PAGE>
RENAISSANCE LEADERSHIP, INC.
FINANCIAL REPORT
DECEMBER 31, 1998 and 1997
T A B L E O F C O N T E N T S
Page
INDEPENDENT AUDITOR'S REPORT ON THE
FINANCIAL STATEMENTS 3
FINANCIAL STATEMENTS
Balance Sheets 4
Statements of Income 5
Statements of Stockholders' Equity 6
Statements of Cash Flows 7
Notes to Financial Statements 8 - 9
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Renaissance Leadership, Inc.
Easton, Maryland
I have audited the accompanying balance sheets of Renaissance Leadership, Inc.
(an S-Corporation) as of December 31, 1998 and 1997, and the related
statements of income, stockholders' equity, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Renaissance Leadership, Inc.
as of December 31, 1998 and 1997 and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
J. Michael Connolly
Centreville, Maryland
August 13, 1999
<PAGE>
Renaissance Leadership, Inc.
Balance Sheets
December 31, 1998 and 1997
ASSETS
1998 1997
CURRENT ASSETS
Cash $109,852 $174,000
Accounts receivable 64,147 110,948
Total current assets 173,999 284,948
PROPERTY AND EQUIPMENT, at cost
Machinery and equipment 175,901 164,958
Less accumulated depreciation 118,658 112,558
Net property and equipment 57,243 52,400
Total Assets $231,242 $337,348
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $23,893 $29,327
Deferred Income - 52,364
Total current liabilities 23,893 81,691
STOCKHOLDERS' EQUITY
Common stock (authorized 100,000 shares; issued
and outstanding 100 shares) 2,500 2,500
Retained earnings 204,849 253,157
Total stockholders' equity 207,349 255,657
Total Liabilities and Stockholders'
Equity $231,242 $337,348
<PAGE>
Renaissance Leadership, Inc.
Statements of Income
Years Ended December 31, 1998 and 1997
1998 1997
Net sales and other operating income $1,085,224 $1,092,023
Cost of goods sold 315,392 357,908
Gross profit 769,832 734,115
Selling, general, and administrative
expenses 796,790 611,188
Operating income (loss) (26,958) 122,927
Financial income 3,650 2,685
Net income (loss) $(23,308) $125,612
<PAGE>
Renaissance Leadership, Inc.
Statement of Shareholders' Equity
Year Ended December 31, 1998 and 1997
Common Retained
Stock Earnings Total
Balance, December 31, 1996 $2,500 $160,045 $162,545
Net income - 125,612 125,612
Shareholders Distributions - (32,500) (32,500)
Balance, December 31, 1997 2,500 253,157 255,657
Net loss - (23,308) (23,308)
Shareholders Distributions - (25,000) (25,000)
Balance, December 31, 1998 $2,500 $204,849 $207,349
<PAGE>
Renaissance Leadership, Inc.
Statements of Cash Flows
Years Ended December 31, 1998 and 1997
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(23,308) $125,612
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 6,100 12,811
Changes in assets and liabilities:
(Increase) decrease in:
Trade receivable 46,801 (49,532)
Increase (decrease) in:
Accounts payable and
accrued expenses (5,434) (992)
Deferred income (52,364) 48,056
Net cash provided by (used in) operating
activities (28,205) 135,955
CASH FLOWS USED IN INVESTING ACTIVITIES:
Shareholder distribution (25,000) (32,500)
Cash purchases of property and equipment (10,943) (6,939)
Net cash used in investing activities (35,943) (39,439)
CASH FLOWS USED IN FINANCING ACTIVITIES: - -
Net increase (decrease) in cash (64,148) 96,516
Cash at beginning of year 174,000 77,484
Cash at end of year $109,852 $174,000
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $- $-
Interest paid $- $-
<PAGE>
RENAISSANCE LEADERSHIP, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies
Business Description
The Company, located in Easton, Maryland, is primarily engaged in marketing
and team building seminars and programs.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less
to be cash equivalents.
Concentration of Credit Risk
In the normal course of business, the Company extends unsecured credit to
clients principally in the United States.
Off Balance Sheet Risk
The Company maintains cash and cash equivalents at several financial
institutions. The accounts are insured by the Federal Deposit Insurance
Corporation (FDIC) up to $100,000.00 per financial institution. In addition,
the banks have pledged collateral against certain deposit accounts. At
December 31, 1998 and 1997 the Company had $41,593 and $104,136 in excess of
the FDIC limit.
Allowance for Doubtful Accounts
Management believes all trade receivables are fully collectible and therefore
no provision has been made for an allowance for doubtful accounts.
Depreciation
Depreciation is provided on the straight-line method over the estimated
useful lives of the depreciable assets as follows:
Equipment 7 years
Computer and Transportation Equipment 5 years
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Deferred Income
The Company records deferred income when advanced payments are received for
seminars that will occur in the subsequent year.
Income Taxes
Since the Company is an S-Corporation, income taxes are generally assessed at
the shareholder level and not at the corporate level, therefore, no accrual
has been reflected in this financial statement.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash in banks and
accounts receivable. The carrying amounts for cash and cash equivalents and
accounts receivable approximate fair value due to the short-term nature of
these instruments.
See Independent Auditor's Report
RENAISSANCE LEADERSHIP, INC.
NOTES TO FINANCIAL STATEMENTS
Note 2. Operating Lease Commitments
The Company leases its facilities under lease agreements through November
2000. Rent expense for the years ended December 31, 1998 and 1997 was $28,227
and $30,550. Future minimum lease payments are as follows:
1999 $19,800
2000 18,150
2001 -
2002 -
2003 -
Note 3. Pension Plan
The Company has a defined contribution (money purchase) pension plan covering
all full time employees twenty one years old who have provided two years of
service. After two years, the employee is vested an additional 20% each year
and fully vested in the sixth year. Contributions are limited to 15% of the
employee's salary not to exceed $30,000 per employee. Company contributions
were $48,599 and $44,148 for the years ended December 31, 1998 and 1997.
Note 4. Subsequent Activity
In January 1999 the Company distributed its retained earnings of $204,849 to
its shareholders who subsequently loaned this balance to the Company on a
demand note at 7% interest only, due annually. In addition, $13,530 was
distributed and loaned back during June 1999. The outstanding balance of
loans from shareholders at June 30, 1999 was $218,379.
See Independent Auditor's Report
<PAGE>
RENAISSANCE LEADERSHIP, INC.
FINANCIAL REPORT
JUNE 30, 1999
T A B L E O F C O N T E N T S
Page
ACCOUNTANT'S REPORT ON THE
FINANCIAL STATEMENTS 3
FINANCIAL STATEMENTS
Balance Sheet 4
Statement of Income 5
Statement of Stockholders' Equity 6
Statement of Cash Flows 7
Notes to Financial Statements 8 - 9
<PAGE>
ACCOUNTANT'S REPORT
Renaissance Leadership, Inc.
3 Goldsborough Street, #201
Easton, Maryland 21601
I have compiled the accompanying balance sheet of Renaissance Leadership, Inc.
(an S-Corporation) as of June 30, 1999 and the related statements of income
and retained earnings and cash flows for the six months then ended, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management (the owners). I have not
audited or reviewed the accompanying financial statements and, accordingly, do
not express an opinion or any other form of assurance on them.
J. Michael Connolly
Centreville, Maryland
August 13, 1999
<PAGE>
Renaissance Leadership, Inc.
Balance Sheets
June 30, 1999
ASSETS
CURRENT ASSETS
Cash $136,926
Accounts receivable 90,809
Total current assets 227,735
PROPERTY AND EQUIPMENT, at cost
Machinery and equipment 175,901
Less accumulated depreciation 121,563
Net property and equipment 54,338
Total Assets $282,073
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $61,194
Loans from shareholders 218,379
Total current liabilities 279,573
STOCKHOLDERS' EQUITY
Common stock (authorized 100,000 shares; issued
and outstanding 100 shares) 2,500
Total stockholders' equity 2,500
Total Liabilities and Stockholders' Equity $282,073
<PAGE>
Renaissance Leadership, Inc.
Statements of Income
Six Months Ended June 30, 1999
Net sales and other operating income $459,593
Cost of goods sold 111,615
Gross profit 347,978
Selling, general, and administrative
expenses 335,673
Operating income 12,305
Financial income 1,225
Net income $13,530
<PAGE>
Renaissance Leadership, Inc.
Statement of Shareholders' Equity
Six Months Ended June 30, 1999
Common Retained
Stock Earnings Total
Balance, December 31, 1998 $2,500 $204,849 $207,349
Net income - 13,530 13,530
Shareholders distributions - (218,379) (218,379)
Balance, June 30, 1999 $2,500 $- $2,500
<PAGE>
Renaissance Leadership, Inc.
Statement of Cash Flows
Six Months Ended June 30, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $13,530
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 2,905
Changes in assets and liabilities:
(Increase) decrease in:
Trade receivable (26,662)
Increase (decrease) in:
Accounts payable and
accrued expenses 37,301
Loans from shareholder 218,379
Net cash provided by operating activities 245,453
CASH FLOWS USED IN INVESTING ACTIVITIES:
Shareholder distributions (218,379)
Net cash used in
investing activities (218,379)
CASH FLOWS USED IN FINANCING ACTIVITIES: -
Net increase in cash 27,074
Cash at beginning of year 109,852
Cash at June 30, 1999 $136,926
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $-
Interest paid $-
<PAGE>
RENAISSANCE LEADERSHIP, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies
Business Description
The Company, located in Easton, Maryland, is primarily engaged in marketing
and team building seminars and programs.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less
to be cash equivalents.
Concentration of Credit Risk
In the normal course of business, the Company extends unsecured credit to
clients principally in the United States.
Off Balance Sheet Risk
The Company maintains cash and cash equivalents at several financial
institutions. The accounts are insured by the Federal Deposit Insurance
Corporation (FDIC) up to $100,000.00 per financial institution. In addition,
the banks have pledged collateral against certain deposit accounts. At June
30, 1999, the Company had $36,926 in excess of the FDIC limit.
Allowance for Doubtful Accounts
Management believes all trade receivables are fully collectible and therefore
no provision has been made for an allowance for doubtful accounts.
Depreciation
Depreciation is provided on the straight-line method over the estimated
useful lives of the depreciable assets as follows:
Equipment 7 years
Computer and Transportation Equipment 5 years
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Deferred Income
The Company records deferred income when advanced payments are received for
seminars that will occur in the subsequent year.
See Accountant's Report
RENAISSANCE LEADERSHIP, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies - Continued
Income Taxes
Since the Company is an S-Corporation, income taxes are generally assessed at
the shareholder level and not at the corporate level, therefore, no accrual
has been reflected in this financial statement.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash in banks and
accounts receivable. The carrying amounts for cash and cash equivalents and
accounts receivable approximate fair value due to the short-term nature of
these instruments.
Note 2. Operating Lease Commitments
The Company leases its facilities under lease agreements through November
2000. Rent expense for the six months ended June 30, 1999 was $10,922.
Future minimum lease payments are as follows:
1999 $19,800
2000 18,150
2001 -
2002 -
2003 -
Note 3. Pension Plan
The Company has a defined contribution (money purchase) pension plan covering
all full time employees twenty one years old who have provided two years of
service. After two years, the employee is vested an additional 20% each year
and fully vested in the sixth year. Contributions are limited to 15% of the
employee's salary not to exceed $30,000 per employee. Company contributions
were $-0- for the six months ended June 30, 1999.
Note 4. Subsequent Activity
In January 1999 the Company distributed its retained earnings of $204,849 to
its shareholders who subsequently loaned this balance to the Company on a
demand note at 7% interest only due annually. In addition, $13,530 was
distributed and loaned back during June 1999. The outstanding balance of
loans from shareholders at June 30, 1999 was $218,379.
See Accountant's Report
STRUPP INVESTMENTS, LLC
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30th, 1999
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
And Members of
Strupp Investments, LLC
I have audited the accompanying balance sheet of Strupp Investments,LLC, as of
June 30th, 1999, and the related statements of operations and retained
earnings, and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted this audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provided a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Strupp Investments, LLC, as
of June 30th, 1999, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
Christina Stylianou
CERTIFIED PUBLIC ACCOUNTANT
Astoria, New York
August 30th, 1999
<PAGE>
STRUPP INVESTMENTS, LLC
BALANCE SHEET
AS OF JUNE 30TH, 1999
ASSETS
Current Assets
Cash in Bank $ 267
Accounts Receivable $ 119,705
TOTAL $ 119,972
Fixed Assets
Equipment ( Net of Depreciation) $ 2,928
Other Assets
Security Deposits $ 23,889
TOTAL ASSETS $ 146,789
=======
LIABILITIES & LIMITED LIABILITY COMPANY EQUITY
Current Liabilities
Accounts Payable $ 28,206
Payroll Taxes Payable $ 2,546
Loan from LLC Member $ 7,757
TOTAL $ 38,509
Equity in Limited Liability Company $ 125,000
Retained Earnings (Accumulated Deficit)
($ 16,720)
Total Equity
$ 108,280
TOTAL LIABILITIES & LIMITED
LIABILITY COMPANY EQUITY $ 146,789
========
See independent auditor's report and accompanying notes which are an integral
part of the financial statements.
<PAGE>
STRUPP INVESTMENTS, LLC
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEAR ENDED JUNE 30TH, 1999
Revenue $ 289,628
Interest Income $ 86
General and Administrative Expenses ($ 306,434)
Net Loss Before Income Taxes ($ 16,720)
Provision for Income Taxes -0-
Net Loss
($ 16,720)
Retained Earnings ( Accumulated Deficit)
Beginning of Year -0-
Ending of Year
($ 16,720)
See independent auditor's report and accompanying notes which are an integral
part of the financial statements.
<PAGE>
STRUPP INVESTMENTS, LLC
STATEMENT OF LIMITED LIABILITY COMPANY'S EQUITY
FOR THE YEAR ENDED JUNE 30TH, 1999
Equity Retained
Value Earnings Total
(Accumulated Deficit)
Balance as of inception -0- -0-
(7/1/98)
Contribution of Capital $ 125,000
Net Loss ($16,720) ($ 16,720)
Balance as of June
30th, 1999 $ 125,000 ($16,720) ($108,280)
See independent auditor's report and accompanying notes which are an integral
part of the financial statements.
<PAGE>
STRUPP INVESTMENTS, LLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30TH, 1999
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss ($ 16,720)
Adjustments to Reconcile Net Loss to Net Cash
Used in Operating Activities:
Depreciation $ 732
(Increase) Decrease In:
Accounts Receivable ( $ 119,705 )
Increase (Decrease) In:
Accounts Payable and other Current Liabilities $ 38,509
NET CASH FLOWS FROM OPERATING ACTIVITIES: $ ( 97,184)
CASH FLOW FROM INVESTING ACTIVITIES :
Purchase of Equipment $ 3,660
Security Deposits $ 23,889
TOTAL FROM INVESTING ACTIVITIES $ ( 27,549)
CASH FLOW FROM FINANCING ACTIVITIES:
Contribution of Capital $ 125,000
Net Increase in Cash $ 267
Cash at Beginning of Year $ -0-
Cash at End of Year $ 267
========
See independent auditor's report and accompany notes which are an integral
part of the financial statements.
<PAGE>
STRUPP INVESTMENTS, LLC
NOTES TO FINANCIAL STATEMENS
FOR THE YEAR ENDED JUNE 30TH, 1999
NOTE 1-GENERAL
Strupp Investments, LLC., (the "Company"), was established under the laws of
the state of New Jersey on July 1st, 1998 and it is currently doing business
as "Success".
The Company is in the business of recruiting executive personnel.
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company uses the accrual basis of accounting and financial reporting, in
accordance with generally accepted accounting principles and the cash basis
for tax purposes.
Use of Estimates
In preparing financial statements in conformity with Generally Accepted
Accounting Principals, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual
results could differ form these estimates.
Income Tax
The Company accounts for income taxes on a cash basis and it has elected to be
treated as a partnership for income tax purposes, accordingly income taxes are
generally assessed at the member level and not at the Company level,
therefore no accrual has been reflected in this financial statement.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid debt instruments with an
original maturity of three months or less at the date of purchase.
Property and Equipments
Property and equipment is recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the assets. Useful
lives range from five to seven years. Accumulated depreciation at June 30th,
1999 totaled $ 732.
Fair Value of Financial Instruments
Cash, accounts payable and other current liabilities are recorded in the
financial statements at cost, which approximates fair market value because of
the short-term maturity of those instruments.
STRUPP INVESTMENTS, LLC
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30TH, 1999
NOTE 3 - LEASES
The Company currently has an operating lease for telephone equipment with
Wasco Funding Corp., for 36 months at $ 304.11 month.
NOTE 4 - RENTAL SPACE
The Company occupies space at 342 Madison Avenue at $ 56,595 per annum from
Oct 1st, 1999 to September 30th, 2003, with a security deposit of $ 18,866.
The Company has also leased as of June 10th, 1999 office space in Parsippany,
NJ for 3 years at $ 32,800.50 per annum with a security deposit of $ 5,023.
NOTE 5- SUBSEQUENT EVENTS
In July 1999, the Company entered into 3 lease agreements with Highland
Capital Corp., for the equipment and furniture in the Parsippany Office. All
three leases were for 60 month periods at a total of $ 1,873.05 per month.
NOTE 6- RELATED PARTY TRANSACTIONS
A member of the Company made a non interest hearing demand loan of $ 7,757 to
the Company.
NOTE 7- EQUITY
The Company has membership capital with two owners currently owning 100%(99%
for one and 1% for the other ) and are treating it as partnership capital.
<PAGE>
EXHIBIT - PRO FORMA FINANCIAL INFORMATION
The following Pro Forma Combined Financial Information as of December 31, 1998
and the year then ended and as of June 30, 1999 and for the six months then
ended for First Sunrise, Inc. and comparable periods for the Combined
Companies has been prepared to reflect the combined financial position and the
results of operations of First Sunrise, Inc.(First Sunrise), Platinum
Executive Search, Inc.(Platinum), Renaissance Leadership, Inc.(Renaissance)
and Strupp Investments, LLC (Strupp) as if the combination, described in
Note 1, had been effective as of December 31, 1998 and January 1, 1998 (for
one year operations), June 30, 1999, January 1, 1999 (for six months
operations), respectively. The acquisitions of Renaissance and Strupp by
Platinum and the reverse acquisition of First Sunrise by Platinum have been
accounted for as purchases and the excess of purchase price over fair value of
assets acquired, $1,889,220 if the acquisitions had all occurred as of June
30, 1999, will be reflected as an intangible asset and will be amortized over
twenty years.
The Pro Forma Combined Financial Information is unaudited and not necessarily
indicative of the consolidated results which actually would have occurred
ifthe combination had been consummated at the beginning of the periods
presented, nor does it purport to represent the future financial position and
results of operations for future periods.
Pro Forma Historical Financial Information for First Sunrise, Inc. and
Combined Companies
Balance Sheet Platinum Renaissance Strupp Adjustments Combined
6/30/99 12/31/98 6/30/99
Cash $500,445 $109,852 $267 $610,564
Accts. Rec. $64,147 $119,705 $183,852
PP&E $2,486 $57,243 $2,928 $62,657
Intangibles $1,889,220(a)(b) $1,889,220
Other Assets $23,889 $23,889
Assets $502,931 $231,242 $146,789 $2,770,182
Payables $93,181 $23,893 $30,752 $147,826
Due to Owners $7,757 $204,849(a) $212,606
Due to Bank $500,000 $500,000
Liabilities $593,181 $23,893 $38,509 $860,432
Common Stock $40,500 $2,500 ($2,500)(a) $40,500
Preferred Stock
Addl Paid In $17,500 $2,000,000(a)(b) $2,017,500
Ret. Earn
(deficit ($143,250) $204,849 ($16,720) ($188,129)(a)(b) ($143,250)
Subscribed
Stock ($5,000) ($5,000)
Members Equity $125,000 ($125,000)(b) $0
Equity
(Deficit) ($90,250) $207,349 $108,280 $1,909,750
Liab. & Equity $502,931 $231,242 $146,789 $2,770,182
Balance Sheet First Sunrise Adjustments Combined
12/31/98
Cash $5,668 $616,232
Other Assets $50,000 $73,889
Assets $55,668 $2,825,850
Payables $7,250 $155,076
Liabilities $7,250 $867,682
Common Stock $700 ($35,230)(c) $5,970
Preferred Stock $740(c) $740
Addl Paid In $54,300 $27,908(c) $2,099,708
Ret. Earn
(deficit) ($6,582) $6,582(c) ($143,250)
Subscribed Stock ($5,000)
Members Equity $0
Equity (Deficit) $48,418 $1,958,168
Liab. & Equity $55,668 $2,825,850
The accompanying notes and management's assumptions to the Pro Forma Combined
Financial Information are an integral part of these statements
Pro Forma Historical Financial Information for First Sunrise, Inc. and
Combined Companies
Operations Platinum Renaissance Strupp Adjustments Combined
3 mo. ended Year ended Year ended
6/30/99 12/31/98 6/30/99
Revenue $1,085,224 $289,628 $1,374,852
Cost of Goods
Sold $315,392 $315,392
SG&A expenses $143,108 $796,790 $306,434 $1,246,332
Amortization $94,461(a)(b) $94,461
Other Inc.
(Exp.) ($142) $3,650 $86 $3,594
Net Gain
(Loss) ($143,250) ($23,308) ($16,720) ($277,739)
Operations First Sunrise Adjustments Combined
Year ended
12/31/98
Revenue $1,374,852
Cost of Goods Sold $315,392
SG&A expenses $4,832 $1,251,164
Amortization $94,461
Other Inc. (Exp.) $3,594
Net Gain
(Loss) ($4,832) ($282,571)
The accompanying notes and management's assumptions to the Pro Forma Combined
Financial Information are an integral part of these statements
Pro Forma Interim Financial Information for First Sunrise, Inc. and Combined
Companies
Balance Sheet Platinum Renaissance Strupp Adjustments Combined
6/30/99 6/30/99 6/30/99
Cash $500,445 $136,926 $267 $637,638
Accts. Rec. $90,809 $119,705 $210,514
PP&E $2,486 $54,338 $2,928 $59,752
Intangibles $1,889,220(a)(b) $1,889,220
Other Assets $23,889 $23,889
Assets $502,931 $282,073 $146,789 $2,821,013
Payables $93,181 $61,194 $38,509 $192,884
Due to Owners $218,379 $218,379
Due to Bank $500,000 $500,000
Liabilities $593,181 $279,573 $38,509 $911,263
Common Stock $40,500 $2,500 ($2,500)(a) $40,500
Preferred Stock
Addl Paid In $17,500 $2,000,000(a)(b) $2,017,500
Ret. Earn
(deficit ($143,250) ($16,720) $16,720 (b) ($143,250)
Subscribed
Stock ($5,000) ($5,000)
Members Equity $125,000 ($125,000)(b) $0
Equity
(Deficit) ($90,250) $2,500 $108,280 $1,909,750
Liab. &
Equity $502,931 $282,073 $146,789 $2,821,013
Balance Sheet First Sunrise Adjustments Combined
6/30/99
Cash $5,503 $643,141
Other Assets $50,000 $73,889
Assets $55,503 $2,876,516
Payables $8,100 $200,984
Liabilities $8,100 $919,363
Common Stock $700 ($35,230)(c) $5,970
Preferred Stock $740(c) $740
Addl Paid In $54,300 $26,893(c) $2,098,693
Ret. Earn
(deficit) ($7,597) $7,597(c) ($143,250)
Subscribed Stock ($5,000)
Members Equity $0
Equity
(Deficit) $47,403 $1,957,153
Liab. & Equity $55,503 $2,876,516
The accompanying notes and management's assumptions to the Pro Forma Combined
Financial Information are an integral part of these statements
Pro Forma Interim Financial Information for First Sunrise, Inc. and Combined
Companies
Operations Platinum Renaissance Strupp Adjustments Combined
3 mo. ended 6 mo. ended 6 mo. ended
6/30/99 6/30/99 6/30/99
Revenue $459,593 $226,428 $686,021
Cost of Goods Sold $111,615 $111,615
SG&A expenses $143,108 $335,673 $207,934 $686,715
Amortization $47,231(a)(b) $47,231
Other Inc.
(Exp.) ($142) $1,225 $86 $1,169
Net Gain
(Loss) ($143,250) $13,530 $18,580 ($111,140)
Operations First Sunrise Adjustments Combined
6 mo. ended
6/30/99
Revenue $686,021
Cost of Goods Sold $111,615
SG&A expenses $1,015 $687,730
Amortization $47,231
Other Inc. (Exp.) $1,169
Net Gain (Loss) ($1,015) ($112,155)
The accompanying notes and management's assumptions to the Pro Forma Combined
Financial Information are an integral part of these statements
First Sunrise, Inc. and Combined Companies
As of December 31, 1998 and for the year then ended as of June 30, 1999 and
for the six months then ended for First Sunrise, Inc.; as of comparable
periods for the Combined Companies
NOTES AND MANAGEMENT'S ASSUMPTIONS TO THE
PRO FORMA COMBINED FINANCIAL INFORMATION
continued on Proforma notes.doc starting with 1. Basis of Presentation
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
The Delaware General Corporation Law, as amended, provides for the
indemnification of the Company's officers, directors and corporate employees
and agents under certain circumstances as follows:
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE. - (a) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had reasonable cause
to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless and
only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstance of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney's fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made (1)
by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
(e) Expenses incurred by an officer or director in defending any civil,
criminal, administrative or investigative action, suit or proceeding may be
paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the corporation as authorized in this
section. Such expenses including attorneys' fees incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as the
board of directors deems appropriate.
(f) The indemnification and advancement expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under this section.
(h) For purposes of this Section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent
corporation including absorbed in a consolidation of merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers and employees or agents so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation as
he would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan;
and references to "serving at the request of the corporation" shall include
any service as a director, officer, employee or agent of the corporation
which imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its participants,
or beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to
in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors, and administrators of such person.
Article XI of the Company's By-laws provides for the indemnification of the
company's officers, directors, and corporate employees and agents under
certain circumstances as follows:
Article XI provides that the Company will hold harmless and will indemnify
all officers, directors, employees and agents of the Company against all
expense, liability and loss reasonably incurred or suffered by such person in
its connection as such with the Company. The Company shall indemnify any such
person seeking indemnification in connection with a proceeding initiated by
such person (except against the Company) only if such proceeding was
authorized by the Company's Board of Directors.
If a claim under the above paragraph is not paid in full by the Company
within 30 days after a written claim has been received by the Company, the
claimant may at anytime thereafter bring suit against the Company to recover
the unpaid amount of the claim. If the claimant is successful, it is entitled
to be paid the expense of prosecuting such claim, as well.
Notwithstanding any limitations in other sections of the By-laws, the Company
will, to the fullest extend permitted by Section 145 of the General
Corporation Law of Delaware, indemnify any and all persons whom it has the
power to indemnify against any and all of the expense, liabilities and loss,
and this indemnification shall not be deemed exclusive of any other rights to
which the indemnities may be entitled under any By-law, agreement, or
otherwise, both as to action in his/her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and administrators of such persons.
The Company may, at its own expense, maintain insurance to protect itself and
any director, officer, employee or agent of the Company against any such
expense, liability or loss, whether or not the Company would have the power
to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
Item 25. Expenses of Issuance and Distribution
The other expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered are estimated as
follows:
Escrow Fee............................................$ - 0 -
Securities and Exchange Commission
Registration Fee..................................... $ 100.00
Legal Fees........................................... $18,000.00
Accounting Fees...................................... $ 2,000.00
Printing and Engraving............................... $ 250.00
Blue Sky Qualification Fees and Expenses............. $ 750.00
Miscellaneous........................................ $ 350.00
Transfer Agent Fee................................... $ 500.00
TOTAL.......................................................... $22,000.00
Item 26. Recent Sales of Unregistered Securities
FSI issued 600,000 shares on between April 28, 1997 and August 15, 1997 to its
initial stockholders for $27,000. FSI relied on an exemption from registration
contained in Section 4(2) of the Securities Act of 1933. Each purchaser in
this offering was sophisticated and had access to information about FSI.
Name/Address
Consideration Shares
Beneficial of Common Price
Owner Stock Purchased(2) Paid
Saul Gelernter 100,000 $4,500.00
76-23 168th Street
Flushing, NY 11366
Steven Wainick(1)(3) 100,000 $4,500.00
64 Tamarack Street
Islip, NY 11571
Sandford Lurie 100,000 $4,500.00
201 West 89th Street
New York, NY 10024
Rene Kunz(1)(3) 100,000 $4,500.00
Hochwachtrsrasse 31
8400 Winterthur
Switzerland
Gary Heller 50,000 $2,250.00
7641 66th Street
Penellas, FL
Victor Weinstein(4) 50,000 $2,250.00
280 Carol Close
Tarrytown, NY 10591
Schonfeld & Weinstein,
L.L.P.(5) 50,000 $2,250.00
63 Wall Street
New York, NY 10005
Eng Chye Low(1) 50,000 $2,250.00
200 East 89th Street
New York, NY 10128
___________
(1) May be deemed "Promoters" of FSI, as that term is defined
under the Securities Act of 1933.
(2) These Shares were sold under the exemption of Section 4(2) of the
Securities Act of 1933.
(3) Mr. Low is President and a director of FSI. Mr. Wainick is
Treasurer, Secretary and a director of FSI. Mr. Kunz is a director
of FSI.
(4) Mr. Weinstein is the father of Andrea I. Weinstein of Schonfeld &
Weinstein, L.L.P., special counsel to FSI.
(5) Mr. Schonfeld and Ms. Weinstein are the principals of Schonfeld &
Weinstein, L.L.P., special counsel to FSI. Ms. Weinstein's father, Vic
Weinstein, is a shareholder of FSI.
Neither FSI nor any person acting on its behalf offered or sold the
securities by means of any form of general solicitation or general
advertising.
Each purchaser represented in writing that he/she acquired the securities for
his own account. A legend was placed on the certificates stating that the
securities have not been registered under the Act and setting forth the
restrictions on their transferability and sale. Each purchaser signed a
written agreement that the securities will not be sold without registration
under the Act or exemption therefrom.
EXHIBITS
Item 27.
2.0 Agreement and Plan of Merger
3.1(a) Certificate of Incorporation of First Sunrise, Inc. *
3.1(b) Certificate of Incorporation of Platinum Executive Search, Inc.
3.2(a) By-Laws of First Sunrise, Inc. *
3.2(b) By-Laws of Platinum Executive Search, Inc.
4.1 Specimen Certificate of Common Stock. *
4.6 Form of Escrow Agreement. *
5.0 Opinion of Counsel.
24.0 Accountant's Consent to Use Opinion.
24.1 Counsel's Consent to Use Opinion.
99.0 Written Agreement Between Management and First Sunrise, Inc.**
* As filed with original Registration Statement on Form SB-2.
** As filed with Amendment No. 1 to Registration Statement on Form SB-2.
Item 28.
UNDERTAKINGS
The registrant undertakes:
(1) To file, during any period in which offers or sales are being made,
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a) (3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
Effective Date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement, including
(but not limited to) any addition or deletion of managing underwriter;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be treated as a new
registration statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) To deposit into the Escrow Account at the closing, certificates in such
denominations and registered in such names as required by the Company to
permit prompt delivery to each purchaser upon release of such securities from
the Escrow Account in accordance with Rule 419 of Regulation C under the
Securities Act. Pursuant to Rule 419, these certificates shall be deposited
into an escrow account, not to be released until a business combination is
consummated.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to any provisions contained in its Certificate of
Incorporation, or by-laws, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment 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, 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 indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of New York, State of New York, on September 2, 1999.
FIRST SUNRISE, INC.
BY: Eng Chye Low
Eng Chye Low, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
and on the dates stated.
Eng Chye Low Dated September 2, 1999
Eng Chye Low
President, Secretary
Steven Wainick Dated September 2, 1999
Steven Wainick
Treasurer, Secretary, Director
Dated
Rene Kunz
Director
<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FIRST SUNRISE, INC.
AND
PLATINUM EXECUTIVE SEARCH, INC.
Executed the 21st of July, 1999
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER by and between First Sunrise, Inc., a Delaware
corporation, ("FSI") and Platinum Executive Search, Inc., a New York
corporation ("PES").
WHEREAS, the respective Boards of Directors of FSI and PES, deem it advisable
for the mutual benefit of FSI and PES, and their respective shareholders, that
PES be merged into FSI (the "Merger"), and have approved this Agreement and
Plan of Merger (the "Agreement"); and
WHEREAS, the respective Boards of Directors of FSI and PES have unanimously
resolved to recommend to their respective shareholders acceptance of the
Merger contemplated herein.
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and for the purpose of
setting forth certain terms and conditions of the Merger, and the mode of
carrying the same into effect, PES and FSI hereby agree as follows:
ARTICLE 1
MERGER AND ORGANIZATION
SECTION 1.1 The Merger. As of the Effective Date (as hereinafter defined),
subject to the terms and conditions hereof, PES shall be merged with and into
FSI as soon as practicable through FSI's acquisition of 100% of PES's issued
and outstanding shares of common stock in exchange for shares of common stock
of FSI, the surviving entity (the "Surviving Entity"). Immediately after
consummation of the Merger and stock splits as described in Section 2.1
hereof, the Surviving Entity shall be and continue as a public entity, and
shall have issued and outstanding, 5,970,186 shares of common stock, 740,000
shares of preferred stock convertible into 616,667 shares of common stock at
the ratio of 1 share of preferred = 0.833333 shares of common, and options to
acquire 325,000 shares of common stock at the exercise price of $2.00 per
share:
(i) 5,555,475 shares of common stock and 740,000 shares of convertible
preferred stock to be held by former PES shareholders, in each case in
proportion to the amount that each of said shareholders previously held shares
of common stock or convertible preferred stock of PES, as the case may be, and
options to acquire 325,000 shares of additional common stock at the exercise
price of $2.00 per share to be held by the former option holders of PES, in
proportion to the amount of optioned shares that each such option holder
previously held (collectively representing 94% of the Surviving Entity on the
basis of the exercise of the options and the conversion of the preferred into
common, for a total of 5,555,475 + 325,000 + 616,667 or 6,497,142 shares of
common);
(ii) 196,648 (representing 2.84508% of the Surviving Entity) to be held by
the former public shareholders of FSI (who prior to the stock split held
100,000 such shares), in proportion to the amount that each of said
shareholders previously held such public shares of common stock of FSI;
(iii) 152,949 (representing 2.21284% of the Surviving Entity) to be held by
the former insiders of FSI (who prior to the stock split held 600,000 shares
of FSI stock), in the same proportion that each of said shareholders
previously held such shares of FSI stock; and
(iv) 65,114 (representing 0.94206% of the Surviving Entity) to be held by
Schonfeld & Weinstein, L.L.P.
FSI and PES are herein sometimes referred to as the "Constituent
Corporations." The Merger is to be done in such a manner as to be tax-free to
all parties involved.
SECTION 1.2. Effect of Merger. The parties agree to the following provisions
with respect to the Merger:
(a) Name of Surviving Corporation. After the Merger and on the Effective
Date (as defined in Section 1.2(e) hereof), the name of the Surviving Entity
shall become Global Sources Limited.
(b) Articles of Incorporation. The Articles of Incorporation of FSI as in
effect immediately prior to the Effective Date shall on the Effective Date be
amended and restated to read in a manner that is substantially similar to the
Certificate of Incorporation of PES (with revisions made to take into account
any differences between New York and Delaware law) immediately prior to the
Effective Date, except that the authorized common stock shall be increased to
50,000,000 shares, with a par value of $.001 per share.
(c) By-Laws. The By-Laws of FSI as in effect immediately prior to the
Effective Date shall be amended and restated on the Effective Date to text
that is substantially similar to the text of the By-laws of PES (with
revisions made to take into account any differences between New York and
Delaware law) immediately prior to the Effective Date.
(d) Corporate Organization. All of the issued and outstanding shares of
common, redeemable common and preferred stock of PES and options to acquire
PES stock shall be acquired by FSI. The Surviving Entity shall thenceforth be
responsible for all the liabilities and obligations of each of the Constituent
Corporations, with the effect set forth in the appropriate provisions of
Delaware law and the appropriate provisions of New York law.
(e) Filing of Articles of Merger and Amendment to Articles of Association.
If this Agreement is duly approved by each of the Constituent Corporations in
accordance with the appropriate provisions of Delaware law and the appropriate
provisions of New York law and the respective Articles or Certificate of
Incorporation and By-laws of the Constituent Corporations and not terminated
pursuant to Article 8 hereof, and approved by the shareholders of FSI pursuant
to Rule 419 under Regulation C of the Securities Act of 1933, as amended
("Rule 419"), as soon as practicable after all other conditions to the Merger
set forth in Article 6 hereof shall have been satisfied or waived, and after
FSI 's Post-Effective Amendment filed pursuant to Rule 419 has been declared
effective by the Securities and Exchange Commission and FSI 's shareholder
reconfirmation has been successfully completed and the closing of this
Agreement (the date upon which all of the foregoing conditions have been
fulfilled herein referred to as the "Effective Date") has taken place, the
Merger shall be consummated and Articles of Merger, to which this Agreement
shall be appended, shall be filed with the appropriate New York governmental
agency and an amendment to FSI 's Articles of Association shall be filed with
the Delaware Secretary of State. The Closing of this Agreement shall take
place at the offices of Schonfeld & Weinstein, L.L.P., 63 Wall Street, New
York, New York 10005, or at such other time, place or date as the parties may
mutually agree.
(f) Further Assurances. If at any time after the Effective Date, the
Surviving Entity shall consider or be advised that any deeds, bills of sale,
assignments or assurances or any other acts or things are necessary, desirable
or proper (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Entity, its right, title or interest in, to or under any of the
rights, properties or assets of the Constituent Corporations acquired or to be
acquired as a result of the Merger, or (b) otherwise to carry out the purposes
of this Agreement, the Constituent Corporations agree that the Surviving
Entity and its proper officers and directors shall be authorized to execute
and deliver, in the name and on behalf of the Constituent Corporations, all
such deeds, bills of sale, assignments and assurances and do, in the name and
on behalf of the Constituent Corporations, all such other acts and things
necessary, desirable or proper to best perfect or confirm its right, title or
interest in, to or under any of the rights, properties or assets of the
Constituent Corporations acquired or to be acquired as a result of the Merger
and otherwise to carry out the purposes of this Agreement.
(g) Upon consummation of the Merger, the current officers and directors of FSI
shall resign, and a minimum of three (3) directors shall be appointed to the
Surviving Entity, which directors shall nominate officers of the Surviving
Entity, subject to shareholder approval.
ARTICLE 2
THE MERGER
SECTION 2.1 Conversion of Shares in the Merger.
(a) Issuance of New Shares. On the Effective Date, and upon the acquisition
of 100% of all shares of common stock of PES, the 100,000 shares of FSI's
common stock purchased pursuant to FSI's initial public offering and held in
escrow pursuant to Rule 419 under Regulation C of the Securities Act of 1933,
as amended ("Rule 419), shall be forward split 1 : 1.96648 (becoming 196,648
shares), and the 600,000 shares of issued and outstanding FSI common stock in
the hands of insider shareholders of FSI or their designees of shall be
reverse split 1 : 0.3634383 (becoming 218,063 shares) (collectively, the
"Stock Split"), and FSI shall then issue 5,555,475 shares of its authorized
common stock and 740,000 shares of its convertible preferred stock to former
PES shareholders, in the same proportion said shareholders held shares of
common and convertible preferred stock of PES, and shall issue options to
acquire 325,000 shares of common to the former option holders of PES in the
same proportion said option holders held options to acquire PES stock.
Following the Stock Split, FSI shareholders shall hold 414,711 shares of FSI
common stock, 196,648 of which shall be held by purchasers of FSI's initial
public offering, and 218,063 of which shall be held by the inside shareholders
of FSI or their designees, including Schonfeld and Weinstein, L.L.P. Thus,
after the Effective Date and the Stock Split, the Surviving Entity shall have
issued and outstanding 5,970,186 shares of common stock and 740,000 shares of
preferred stock convertible into 616,667 shares of common stock, and options
for the issuance of an additional 325,000 shares of common stock exercisable
at the issue price of $2.00 per share.
SECTION 2.2 Further Transfer of Stock. The former PES shareholders may
distribute their shares of the Surviving Entity as they determine in
accordance with any and all applicable state and federal securities laws, and
shall provide counsel to FSI with a notice setting forth the manner of
distribution at the time of closing for delivery to the Transfer Agent (as
hereafter defined).
SECTION 2.3 Release of Shares and Funds from Escrow. Pursuant to Rule 419,
certificates representing the shares of common stock purchased in FSI's
initial public offering declared effective by the United States Securities and
Exchange Commission on June 8, 1998, as well as the funds used to purchase
said shares, are being held in escrow pending consummation of the Merger (the
"Deposited Securities" and the "Deposited Funds," respectively). FSI has
eighteen (18) months from and after the date of effectiveness of FSI's initial
public offering in which to consummate the Merger. If the Merger is not
consummated within that time, the Deposited Securities and Deposited Funds
shall be returned to FSI and FSI shareholders, respectively. Pursuant to Rule
419, Deposited Securities shall be released to shareholders and Deposited
Funds released to FSI following effectiveness of a Post-Effective Amendment
and a reconfirmation offering pursuant to which FSI shareholders representing
a minimum of 80% of the offering proceeds of FSI 's initial public offering
($40,000) reconfirm their investments.
SECTION 2.4 Surrender of Certificates. (a) FSI has designated Transfer. Com,
as Transfer Agent (the "Transfer Agent") hereunder. Immediately following
effectiveness of the Post-Effective Amendment and shareholder reconfirmation
offering, the Transfer Agent shall have mailed and/or made available to each
FSI shareholder and each former PES shareholder a notice and letter of
transmittal advising such holder of the effectiveness of the Post-Effective
Amendment and shareholder reconfirmation, and the procedure for surrendering
PES stock to the Transfer Agent. PES shall immediately turn in PES common
stock certificates to the Transfer Agent. Upon the surrender to the Transfer
Agent of such certificates, together with a letter of transmittal, duly
executed and completed in accordance with the instructions thereon, and after
the Stock Split, the Transfer Agent shall promptly convert and issue 5,555,475
shares of authorized common stock, 740,000 shares of convertible preferred
stock, and options for the issuance of 325,000 shares of common stock
exercisable at $2.00 per share to former PES shareholders and option holders
in proportion to their respective holdings of the corresponding classes of PES
stock or options in exchange for 100% of the authorized and outstanding shares
of PES and options to acquire 325,000 shares of PES common stock. Until so
surrendered and exchanged, each certificate theretofore representing shares
shall represent in the case of Dissenter's Shares, the right to seek appraisal
pursuant to the laws of the state of incorporation of the Constituent
Corporation in which the holder owns stock (if such right has been perfected).
For purposes hereof, the term "Dissenter's Shares" shall mean all shares of
FSI common stock which shall constitute "dissenting shares" within the meaning
of the Delaware General Corporation Law.
(b) At the Effective Date, the Stock Split shall become effective, and each
holder of FSI public common stock issued before the Effective Date, i.e., the
100,000 shares held in escrow pursuant to Rule 419, shall surrender his/her
stock certificate to the Transfer Agent and the Transfer Agent shall issue
such holder 1.96648 shares of the Surviving Entity's common stock for each
share of FSI common stock held before the Merger and Stock Split.
(c) At the Effective Date, the Stock Split shall become effective, and each
holder of FSI common stock issued before the Effective Date and held by
insider shareholders of FSI or their designees, i.e., the 600,000 shares
issued and outstanding and not held in escrow pursuant to Rule 419, shall
surrender his/her stock certificate to the Transfer Agent and the Transfer
Agent shall issue such holder 0.3634383 shares of the Surviving Entity's
common stock for each share of FSI common stock held before the Merger and
Stock Split.
SECTION 2.5 Transfer Agent. Prior to the Offering, FSI shall have made such
arrangements to insure that an adequate number of its shares of common stock
have been deposited with the Transfer Agent as necessary in sufficient time to
permit prompt distribution against surrender of PES stock certificates as
provided hereunder.
ARTICLE 3
ADDITIONAL AGREEMENTS IN CONNECTION WITH THE MERGER
SECTION 3.1 Confidentiality; Inconsistent Activities. Unless and until this
Agreement has been terminated in accordance with its terms, and excluding any
actions taken in connection with PES's acquisition of Human Resource Firms (as
defined below), neither PES nor FSI will (i) solicit or encourage, directly or
indirectly, any inquiries or proposals to acquire any shares of capital stock
of PES or FSI or any significant portion of the total assets of either
Constituent Corporation or any subsidiary or division of either of the
Constituent Corporations (whether by merger, purchase of assets, tender offer
or other similar transaction); (ii) afford any third party which may be
considering the acquisition of any shares of capital stock of PES or FSI or
any significant portion of the total assets of either Constituent Corporation,
access to the properties, books or records of either Constituent Corporation
except as required by mandatory provisions of law; or (iii) enter into any
discussions or negotiations for, or enter into any agreement which provides
for, the sale of any shares of capital stock of PES or FSI or any significant
portion of the total assets of PES or FSI to a person other than in connection
with the transactions contemplated herein. For purposes of this Agreement,
"Human Resource Firms" shall include executive search firms, human resource
firms and other types of entities commonly associated therewith.
SECTION 3.2 Best Efforts. Subject to the terms and conditions hereof, each of
the parties hereto agrees to use its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary to
satisfy the other conditions of Closing set forth herein.
SECTION 3.3 Conduct of Business by Each of the Constituent Corporations
Pending the Merger. PES and FSI covenant and agree that, prior to the
Effective Date, unless PES or FSI, respectively, shall otherwise agree in
writing and except as contemplated by this Agreement:
(a) the business of each of the Constituent Corporations shall be conducted
only in the ordinary and usual course and consistent with its past practice,
and neither PES nor FSI shall purchase or sell (or enter into any agreement to
so purchase or sell) any properties or assets or make any other changes in the
operations of PES or FSI, respectively, taken as a whole except for PES's
purchase of additional Human Resource Firms and the issuance of, agreement to
issue or grant of options to acquire any shares of PES, whether common,
redeemable common or convertible preferred, in connection therewith;
(b) Neither Constituent Corporation shall (i) amend its Articles of
Incorporation or By-Laws, (ii) change the number of authorized or outstanding
shares of its capital stock, except as set forth in Section 2 hereof, or (iii)
declare, set aside or pay any dividend or other distribution or payment in
cash, stock or property, except as provided in Section 3.13 below or as
elsewhere designated herein;
(c) Except in the ordinary course of business, neither Constituent
Corporation shall (i) issue, grant, sell or pledge or agree or propose to
issue, grant, sell or pledge any shares of, or rights of any kind to acquire
any shares of, its capital stock (ii) incur any indebtedness other than in the
ordinary course of business, (iii) acquire directly or indirectly by
redemption or otherwise any shares of its capital stock of any class or (iv)
enter into or modify any contact, agreement, commitment or arrangement with
respect to any of the foregoing, except as stated in Section 2.1 of this
Agreement and except for PES's issuing shares and options in transactions
involving the acquisition of Human Resource Firms, and except as set forth in
Schedule 3.3(c) attached hereto;
(d) Each Constituent Corporation shall use its best efforts to preserve
intact its business organization, to keep available the services of its
current officers and key employees, and to preserve the good will of those
having business relationships with it;
(e) Except in the ordinary course of business, neither PES nor FSI shall (i)
increase the compensation payable or to become payable by it to any of its
officers or directors, (except as part of the acquisition of stock or assets
of Human Resource Firms), (ii) make any payment or provision with respect to
any bonus, profit sharing, stock option, stock purchase, employee stock
ownership, pension, retirement, deferred compensation, employment or other
payment plan, agreement or arrangement for the benefit of its employees
(except as part of the acquisition of stock or assets of Human Resource
Firms), (iii) grant any stock options or stock appreciation rights or permit
the exercise of any stock appreciation right where the exercise of such right
is subject to its discretion (except as part of the acquisition of stock or
assets of Human Resource Firms), (iv) make any change in the compensation to
be received by any of its officers, or adopt, or amend to increase
compensation or benefits payable under, any collective bargaining, bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund or arrangement for the benefit of employees (except as part of the
acquisition of stock or assets of Human Resource Firms), (v) enter into any
agreement with respect to termination or severance pay, or any employment
agreement or other contract or arrangement with any officer or director or
employee of PES or FSI, respectively, with respect to the performance of
personal services that is not terminable without liability by it on thirty
days' notice or less (except as part of the acquisition of stock or assets of
Human Resource Firms), (vi) increase benefits payable under its current
severance or termination, pay agreements or policies or (vii) make any loan or
advance to, or enter into any written contract, lease or commitment with, any
of its officers or directors;
(f) Except in the ordinary course of business, neither PES nor FSI shall
assume, guarantee, endorse or otherwise become responsible for the obligations
of any other individual, firm or corporation or make any loans or advances to
any individual, firm or corporation, other than obligations and liabilities
assumed by PES in connection with its acquisition of Human Resource Firms;
(g) Except in the ordinary course of business, neither PES nor FSI shall make
any investment of a capital nature either by purchase of stock or securities,
contributions to capital, property transfers or otherwise, or by the purchase
of any property or assets of any other individual, firm or corporation, except
for PES's acquisition of Human Resource Firms;
(h) Neither PES nor FSI shall reduce its cash or short term investments or
their equivalent, other than to meet cash needs arising in the ordinary course
of business, consistent with past practices, or in performing its obligations
under this Agreement;
(i) Except in the ordinary course of business and/or in connection with PES'
acquisition of Human Resource Firms, neither PES nor FSI shall enter into an
agreement to do any of the things described in clauses (a), (b), (c), (e),
(f), (g) and (h); and
(j) Each Constituent Corporation shall comply with all Federal, state, local
and other governmental (domestic or foreign) laws, statutes, ordinances,
rules, regulations (including all applicable securities laws), orders, writs,
injunctions, decrees, awards or other requirements of any court or other
governmental or other authority applicable to each of them or their respective
assets or to the conduct of their respective businesses, and use their best
efforts to perform all obligations under all contracts, agreements, licenses,
permits and undertakings without default.
Notwithstanding subparagraph (c)(i) of this Section 3.3 or any other provision
of this Agreement to the contrary, various shareholders of PES hold stock
options to acquire 325,000 additional shares of stock in PES. Such option
rights shall survive the merger of PES into FSI and the parties hereto agree
that they shall become, upon the merger, options held by such persons to
acquire 325,000 shares of the common stock of the Surviving Entity at the
exercise price of $2.00 per share.
SECTION 3.4 Access and Information.
(a) PES shall afford to FSI and its accountants, counsel and other
representatives full access, during normal business hours throughout the
period prior to the Effective Date, to all of the properties, books,
contracts, commitments and records (including but not limited to tax returns)
of PES and, during such period, PES shall furnish promptly to FSI (i) a copy
of each report, schedule and other document filed or received by it pursuant
to the requirements of federal or state securities laws, and (ii) all other
information concerning the business, properties and personnel of PES that may
reasonably be requested by FSI. PES notes, however, that purchase agreements
and related documents for the acquisition of various Human Resource Firms are
still in preparation and negotiation, and its bylaws have not, as of the date
hereof, been amended to reflect certain changes therein previously approved by
the PES Board of Directors. As a result, such documents will not be available
in final form immediately following the execution of this Agreement. However,
PES will make such contracts, documents or other instruments available for
review by FSI as and when they become finalized (but in any event, in the case
of its bylaws, within two weeks following the date of execution of this
Agreement. In the event of the termination of this Agreement, FSI will, and
will cause its representatives to, deliver to PES all documents, work papers
and other material, and all copies thereof, obtained by it or on its behalf
from PES as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof, and will hold in confidence all
confidential information, and will not use any such confidential information,
until such time as such information is otherwise publicly available or as it
is advised by counsel that any such information or document is required by law
to be disclosed. If this Agreement is terminated, FSI will deliver to PES all
documents so obtained by it or, if PES requests or gives its prior written
consent to FSI's request, FSI will destroy all documents in the possession or
under the control of FSI. Any such destruction pursuant to the foregoing must
be confirmed by FSI in writing to PES, such confirmation to include a list of
the destroyed materials.
(b) FSI shall afford to PES and its accountants, counsel and other
representatives full access, during normal business hours throughout the
period prior to the Effective Date, to all of the properties, books,
contracts, commitments and records (including but not limited to tax returns)
of FSI and, during such period, FSI shall furnish promptly to PES (i) a copy
of each report, schedule and other document filed or received by it pursuant
to the requirements of federal or state securities laws, and (ii) all other
information concerning the business, properties and personnel of FSI that may
reasonably be requested. In the event of the termination of this Agreement,
PES will, and will cause its representatives to, deliver to FSI all documents,
work papers and other material, and all copies thereof, obtained by it or on
its behalf from FSI as a result of this Agreement or in connection herewith,
whether so obtained before or after the execution hereof, and will hold in
confidence all confidential information, and will not use any such
confidential information, until such time as such information is otherwise
publicly available or as it is advised by counsel that any such information or
document is required by law to be disclosed. If this Agreement is terminated,
PES will deliver to FSI all documents so obtained by it or, if FSI requests or
gives its prior written consent to PES' request, PES will destroy all
documents in its possession or under the control of PES. Any such destruction
pursuant to the foregoing must be confirmed by PES in writing to FSI, such
confirmation must include a list of the destroyed materials.
SECTION 3.5 Notice of Actions and Proceedings. PES shall promptly notify
FSI, and FSI shall promptly notify PES of any claims, actions, proceedings or
investigations commenced or, to the best of its knowledge, threatened,
involving or affecting PES or FSI or any of their property or assets, or, to
the best of its knowledge, against any employee, consultant, director, officer
or shareholder, in his, her or its capacity as such, of PES or FSI which, if
pending on the date hereof, would have been required to have been disclosed in
writing pursuant to Section 4.4 hereof or which relates to the consummation of
the Merger or the transactions contemplated hereby.
SECTION 3.6 Notification of Certain Other Matters. PES shall give prompt
notice to FSI, and FSI shall give prompt notice to PES of:
(a) any notice of, or other communication relating to, a default or event
which, with notice or lapse of time or both, would become a default, received
by PES or FSI subsequent to the date of this Agreement and prior to the
Effective Date, under any agreement, indenture or instrument material to the
financial condition, properties, business or results of operations of PES or
FSI taken as a whole to which PES or FSI is a party or is subject;
(b) any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement; and
(c) any material adverse change in the financial condition, properties,
businesses or results or operations of PES or FSI, or the occurrence of an
event which, so far as reasonably can be foreseen at the time of its
occurrence, would result in any such change.
SECTION 3.7 Shareholder Meeting of PES. PES shall, at a meeting of its
shareholders duly called by the Board of Directors of PES, to be held as soon
as practicable following execution of this Agreement, present the following
proposal for the authorization and approval of the shareholders of PES and
recommend their adoption by the shareholders:
(a) ratification of this Agreement and authorization of the consummation of
the Merger contemplated herein.
SECTION 3.8 Filing of Post-Effective Amendment. Upon signing this Merger
Agreement and obtaining shareholder approval pursuant to a special meeting of
shareholders, FSI shall promptly file with the Securities and Exchange
Commission a Post-Effective Amendment reflecting the Merger as required by
Rule 419.
SECTION 3.9 Reconfirmation Offering. Within five (5) business days of
effectiveness of the Post-Effective Amendment, FSI shall issue a
reconfirmation offering to its shareholders. Pursuant to Rule 419, the Merger
will be consummated only if a minimum number of investors representing 80% of
the maximum offering proceeds of FSI 's initial public offering ($40,000)
elect to reconfirm their investments.
SECTION 3.10 Other Agreements of FSI. FSI shall file with the Securities and
Exchange Commission any appropriate statements or requirements within the
Securities Act of 1933 and the Securities Exchange Act of 1934, as amended,
with respect to the Merger, obtain any consents, amendments to or waivers
under the terms of any of FSI 's arrangements required by the transactions
contemplated by this Agreement, and defend any lawsuits or other legal
proceedings, whether judicial or administrative and whether brought
derivatively or on behalf of third parties (including governmental agencies or
officials), challenging this Agreement, or the consummation of the
transactions contemplated hereby (provided that the maximum amount that FSI
shall be required to spend on such lawsuits or proceedings shall be $5,000 in
the aggregate).
SECTION 3.11 FSI Shareholder Consent. FSI shall obtain written consent of
two-thirds of its shareholders to take the following actions:
(a) ratification of this Agreement and authorization of the consummation of
the Merger contemplated herein;
(b) ratification or approval of the amendment of FSI's articles of
incorporation as provided in Section 3.13 hereof and filing of an amendment
thereto in the manner required by Delaware law effecting such changes prior to
the Effective Date of the Merger contemplated herein;
(c) the differential reverse and forward stock splits of FSI's common stock
to take place on the Effective Date, as described in Section 2.1 hereof, but
prior to issuing 5,55,475 shares of common stock and 740,000 shares of
convertible preferred stock to the shareholders of PES and options to acquire
325,000 shares of common stock at the exercise price of $2.00 per share to the
option holders of PES;
(d) issuance of 5,555,475 shares of common stock and 740,000 shares of
convertible preferred stock to the shareholders of PES and options to acquire
325,000 shares of common stock at the exercise price of $2.00 per share to the
option holders of PES after FSI's Stock Split; and
(e) the tender of resignations of the directors of FSI, whose resignations
are contingent on the consummation of the Merger, and which shall occur on the
Effective Date.
SECTION 3.12 Competing Transactions. Neither Constituent Corporation shall
take any action, directly or indirectly, to negotiate, cause, promote,
authorize or agree to any transactions competing or interfering with any of
the transactions contemplated by this Agreement.
SECTION 3.13 Amendment of FSI's Articles of Incorporation. Prior to the
Effective Date, the Articles of Incorporation and, if necessary, the relevant
provisions of FSI's By-Laws, shall be amended to change the capitalization of
FSI by creating a class of 740,000 shares of preferred stock of FSI, having a
par value of $.001 per share and convertible into common stock of FSI at the
ratio of 1 share of preferred to 0.833333 shares of common, and having other
characteristics identical to those of PES convertible preferred.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF FSI
FSI represents and warrants to, and agrees with PES as follows:
SECTION 4.1 Organization and Good Standing. FSI is a duly incorporated and
validly existing corporation in good standing under the laws of the state of
its incorporation, with all requisite power and authority (corporate and
other) to own and use its properties and conduct its business, and is duly
qualified and in good standing as a foreign corporation authorized to do
business under the laws of each jurisdiction where such qualification is
required.
SECTION 4.2 Authorization; Binding Agreement. FSI has the corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and to carry out the transactions contemplated hereby.
This Agreement has been duly and validly authorized, executed and delivered by
FSI, and subject to any requisite approval of the Merger by the shareholders
of FSI, including a shareholder reconfirmation pursuant to Rule 419,
constitutes a valid and binding agreement of FSI in accordance with its terms.
SECTION 4.3 Capitalization. As of the date hereof, the authorized capital
stock of FSI consists of 20,000,000 shares of common stock, par value $.001
per share. Between April 28, 1997 and August 15, 1997 FSI issued 600,000
shares of common stock to eight (8) inside shareholders. FSI's public
offering, whereby 100,000 shares of common stock were sold at $.50 per share,
closed on December 1, 1998. As of the date hereof, 700,000 shares of common
stock are outstanding, 100,000 of which are currently held in escrow. All of
the outstanding non-escrowed shares of capital stock of FSI have been duly
authorized and validly issued and are fully paid and nonassessable. FSI is
not aware of any voting trusts, voting agreements or similar understandings
applicable to the Shares. FSI does not have any outstanding options,
warrants, subscriptions or other rights, agreements or commitments, which
either; (a) obligates FSI to issue, sell or transfer any shares of the capital
stock of FSI or (b) restricts the transfer of or otherwise relates to the
shares of its common stock, except for the 100,000 shares of common stock
currently held in escrow pending consummation of a business combination
pursuant to Rule 419. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to FSI.
SECTION 4.4 Litigation. Except as may be disclosed in the SEC Filings (as
defined in Section 4.5 hereof), or to PES in writing on or prior to the date
hereof, as of the date hereof there are no claims, actions, proceedings, or
investigations pending or, to the best knowledge of FSI, threatened against
FSI or to the best of FSI knowledge, pending or threatened against any
employee, consultant, director, officer or shareholder, in his, her or its
capacity as such, before any court or governmental or regulatory authority or
body which, if decided adversely, could materially and adversely affect the
financial condition, business, prospects or operations of FSI. As of the date
hereof, neither FSI nor any of its property is subject to any order, judgment,
injunction or decree.
SECTION 4.5 Financial Statements and Reports. FSI has provided PES with true
and complete copies of (a) FSI's most recent audit, (b) copies of FSI 's
Registration Statement on Form SB-2 and Prospectus which was declared
effective by the Securities and Exchange Commission on June 8, 1998, (c) all
other reports, statements and registration statements filed by it with the
Securities and Exchange Commission since June 8, 1998. The reports, statements
and registration statements referred to in the immediately preceding sentence
including any that are filed subsequent to the date hereof and prior to the
effective date are referred to in the Agreement as the "SEC Filings." As of
their respective dates, the SEC Filings did 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 in light of the
circumstances under which they were made, not misleading. The financial
statements of FSI included in the SEC Filings were prepared by an independent
certified public accountant in accordance with generally accepted accounting
principles applied on a consistent basis (except as otherwise noted in such
statements) and present fairly the financial position, results of operations
and changes in financial position of FSI as of the dates and for the periods
indicated subject, in the case of unaudited interim financial statements, to
normal year-end adjustments and any other adjustments described therein. On
the Effective Date, FSI will have approximately $45,000, consisting of the
proceeds from FSI 's initial public offering, currently held in escrow. FSI
has no liabilities (including, without limitation, unasserted claims, matured
or unmatured, absolute, contingent or otherwise, except as otherwise set forth
in this Agreement, that, in accordance with FSI's prior practice are required
to be reflected and are not reflected or are in excess of the amounts
reflected in the Financial Statements. The Financial Statements reflect all
necessary adjustments and reserves for losses and contingencies. Since
December 31, 1998, FSI has not suffered any material adverse change in its
business, operations, financial condition or prospects.
SECTION 4.6 Absence of Certain Changes or Events. Except as set forth in the
SEC Filings, or as disclosed to PES in writing, (a) there has not been any
change or any development involving a prospective change, which has affected
or may affect materially and adversely the business, assets or prospects or
the financial position or the results of operations of it and its
subsidiaries taken as whole; and (b) FSI has not incurred any indebtedness for
money borrowed, or purchased or sold any material amount of assets, other than
in the ordinary course of business, or entered into any other transaction
other than in the ordinary course of business.
SECTION 4.7 Absence of Breach. Except as may be disclosed to PES in writing
on or prior to the date hereof, the execution, delivery and performance by FSI
of this Agreement, and the performance by FSI of its obligations hereunder,
will not:
(a) subject to the appropriate approval by FSI 's shareholders, conflict with
or result in a breach of any of the provisions of its Articles of
Incorporation or By-Laws;
(b) subject to obtaining the governmental and other consents referred to in
Section 4.8 hereof, contravene any law, rule or regulation of any state or of
the United States or any political subdivision thereof or therein, or any
order, writ, judgment, injunction, decree, determination or award currently in
effect, which, singly or in the aggregate, would have a material adverse
effect on FSI; or
(c) conflict in any respect with or result in a breach of or default under any
indenture, loan or credit agreement relating to money borrowed or conflict in
any respect with or result in a breach of or default under any other
indenture, mortgage, lien, lease, agreement, contract or instrument to which
FSI is a party or by which it or any of its properties may be affected or
bound, which, singly or in the aggregate, would have a material adverse effect
on FSI.
SECTION 4.8 Governmental and Other Consents, etc. Subject to the requisite
shareholder approval and any required filings with the Securities and Exchange
Commission, no consent, waiver, approval, license or authorization of or
designation, declaration or filing with any governmental agency or authority
or other public persons or entities in the United States on the part of FSI is
required in connection with the execution or delivery by FSI of this Agreement
or the consummation by the Company of the transactions contemplated hereby
other than (i) filings in the State of Delaware in accordance with state law
thereof and in the State of New York in accordance with the state law thereof,
(ii) filings under state securities "Blue Sky" or anti-takeover laws and (iii)
filings with applicable national securities exchange.
SECTION 4.9 Benefits Plans. Except as disclosed in the SEC Filings or as
disclosed in writing to PES before the date hereof, FSI does not have any
employment agreement with any executive officer of FSI, any employee, former
employee or consultant or any incentive compensation, deferred compensation,
profit sharing, stock option, stock bonus, stock purchase, savings,
consultant, retirement, pension or other "fringe benefit" plan or arrangement
with or for the benefit of any officer, employee, former employee or
consultant.
SECTION 4.10 Employment Contracts. Except as disclosed in the SEC Filings or
as disclosed in writing to PES on or prior to the date hereof, FSI is not a
party to any collective bargaining agreement or any other agreement with
employees of FSI or any of the subsidiaries as a group.
SECTION 4.11 ERISA. FSI has no employee benefit plans, as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). No employee benefit plan of an ERISA Affiliate (as hereinafter
defined) is covered by Title IV of ERISA. No prohibited transaction (as
defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code")) or breach of a fiduciary duty under ERISA
has occurred with respect to any plan of an ERISA Affiliate. No action, suit
or proceeding, hearing, or investigation of the assets of any plan of an ERISA
Affiliate is pending or threatened. None of the directors or officers or
employees of FSI has any knowledge of any basis for any such action, suit,
proceeding, hearing or investigation. There has been no waived or unwaived
"accumulated funding deficiency" within the meaning of Section 302(a)(2) of
ERISA with respect to any plan of an ERISA Affiliate. "ERISA Affiliate" shall
mean an organization (whether or not incorporated) which is under common
control, or a member of an affiliated service group, with FSI and, with FSI,
is treated as a single employer under Section 414(b), (c), (m) or (o) of the
Internal Revenue Code.
SECTION 4.12 Transactions With Management. Except as disclosed in the SEC
Filings or to PES in writing on or before the date hereof, FSI is not now a
party to any material contract, lease, loan or commitment with or to any
officer or director, or person owning more than 5% of the outstanding common
stock of FSI or any subsidiary of FSI or any affiliate or associate of such
officer, director or person.
SECTION 4.13 Tax Returns and Payments. All tax returns, federal, state,
local, foreign and other, (including all federal tax returns and reports for
each fiscal year of FSI through the fiscal year ended December 31, 1998)
required to be filed by and/or on behalf of FSI in respect of any taxes
(including all foreign, federal, state, county and local income, ad valorem,
excise, sales, use, transfer and other taxes and assessments) have been filed
or will be filed by the Effective Date, and all taxes due and payable thereon,
or otherwise due and payable by FSI, have been paid or will be filed and or
paid by the Effective Date. There are no deficiency assessments against FSI
with respect to any foreign, federal, state, local or other taxes. There are
no outstanding agreements or waivers extending the period of limitation
applicable for assessment or collection for any federal, state, local or
foreign tax, or for the filing of any tax return, in respect of FSI for any
period. Neither the federal tax returns nor any state, county, local or
foreign tax returns of FSI have in the past been examined by the Internal
Revenue Service or any other taxing authority. Copies of all federal, state,
local and foreign tax returns or reports of FSI filed since 1994 and prior to
the date hereof have heretofore been made available to PES. All tax returns
filed by or on behalf of FSI are true, correct and complete in all material
respects. All taxes that FSI is or was required to withhold or collect
(including payroll taxes) have been duly withheld, or collected, and paid to
the proper governmental authority or will have been paid to the proper
governmental authority by the Effective Date.
SECTION 4.14 Contracts. Except for this Agreement and any contracts and
agreements related hereto, and any Immaterial Contracts (as hereafter
defined), FSI is not a party to or bound by any agreements, contracts, notes,
mortgages, deeds of trust, indentures, property and equipment leases and
licenses (the "Contracts"). An "Immaterial Contract" is any contract or
agreement, other than a subscription, option or other agreement affecting the
stock ownership in FSI or the Surviving Entity, that (i) prior to the
Effective Date does or will not have any material adverse affect on the assets
or liabilities or business of FSI, and (ii) on or after the Effective Date
will have no material adverse affect on the assets, liabilities or business of
the Surviving Entity.
SECTION 4.15 Accounts, Powers of Attorney. There are no persons holding a
power of attorney on behalf of FSI. Schedule 4.15 lists the names and
addresses of each bank or other financial institution in which FSI has an
account, deposit or safe-deposit box, including the number of each such
account, deposit and safe-deposit box.
SECTION 4.16 Insurance. There are no insurance policies maintained by or on
behalf of FSI in effect on the Effective Date.
SECTION 4.17 No Subsidiaries or Joint Ventures. FSI does not own, directly
or indirectly, beneficially or of record, or have any obligation to acquire,
any stock of, or other equity or ownership interest in, any person. FSI is
not a party to and does not own any interest in any joint venture.
SECTION 4.18 Minute Books. All minute books of FSI have been or will be made
available to PES for review.
SECTION 4.19 Absence of Certain Changes, Etc. FSI has not entered into any
transactions or contracts, or amended any contracts, which might have a
material adverse effect on the financial condition of FSI. FSI has not
incurred any indebtedness for borrowed funds or entered into material
capitalized lease obligations. FSI has not cancelled any claim or right of
material value on sold, leased, transferred, suffered any lien to arise upon,
or otherwise disposed of any assets. FSI has not paid any dividend or
distributed any property in respect of its corporate stock.
SECTION 4.20 Rule 419 under Regulation C of the Securities Act of 1933. FSI
has fully complied in its organization and operations with Rule 419 under
Regulation C of the Securities Act of 1933.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PES
PES, represents and warrants to, and agrees with FSI as follows:
SECTION 5.1 Organization and Good Standing. PES is a duly incorporated and
validly existing corporation in good standing under the laws of the state of
its incorporation, with all requisite power and authority (corporate and
other) to own its properties and conduct its businesses, and is duly qualified
and in good standing as a foreign corporation authorized to do business under
the laws of each jurisdiction where such qualification is requested.
SECTION 5.2 Authorization; Binding Agreement. PES has the requisite
corporate power and authority to execute and deliver this Agreement. This
Agreement has been duly and validly authorized, executed and delivered by PES
and, subject to requisite approval of the Merger by the shareholders of PES in
accordance with New York law, constitutes a valid and binding agreement of PES
in accordance with its terms.
SECTION 5.3 Absence of Breach. The execution, delivery and performance by
PES of this Agreement, and the performance by PES of its obligations
hereunder, do not (i) conflict with or result in a breach of any of the
provisions of its articles of incorporation or by-laws, (ii) subject to
obtaining the governmental and other consents referred to in Section 5.4
hereof, contravene any law, rule or regulation of any state or of the United
States or any political subdivision thereof or therein, or any order, writ,
judgment, injunction, decree, determination or award currently in effect,
which, singly or in the aggregate, would have a material adverse effect on
PES, (iii) conflict in any respect with or result in a breach of or default
under any indenture, loan or credit agreement (appropriate waivers having been
obtained) or any other agreement or instrument to which PES is a party or by
which PES properties may be affected or bound, which, singly or in the
aggregate, would have a material adverse effect on PES.
SECTION 5.4 Governmental and Other Consents, etc. Subject to the requisite
Board of Directors approval, no material consent, approval or authorization of
or designation, declaration or filing with any governmental agency or
authority or other public persons or entities in the United States on the part
of PES is required in connection with the execution delivery by PES of this
Agreement or the consummation by PES of the transaction contemplated hereby
other than (i) filings in the state of Delaware in accordance with the laws of
that state and in [the State of New York] in accordance with the laws of that
state, (ii) filings under state securities "Blue Sky" or anti-takeover laws,
and (iii) filings with the Securities and Exchange Commission and any
applicable national securities exchange.
SECTION 5.5. Financial Statements. PES shall provide FSI with certified
consolidated financial statements (including the notes thereto) which have
been prepared by an independent certified public accountant in accordance with
generally accepted accounting principles (as in effect from time to time)
applied on a consistent basis and which present fairly the consolidated
financial position, results of operations and changes in financial position of
PES.
SECTION 5.6. Capitalization. As of the Effective Date, PES will have
acquired Human Resource Firms which, in the aggregate, have a minimum of
$1,000,000.00 in capital value.
SECTION 5.7 Litigation. Except as may be disclosed to FSI in writing on or
prior to the date hereof, as of the date hereof there are no claims, actions,
proceedings, or investigations pending or, to the best knowledge of PES,
threatened against PES or to the best of PES knowledge, pending or threatened
against any employee, consultant, director, officer or shareholder, in his,
her or its capacity as such, before any court or governmental or regulatory
authority or body which, if decided adversely, could materially and adversely
affect the financial condition, business, prospects or operations of PES. As
of the date hereof, neither PES nor any of its property is subject to any
order, judgment, injunction or decree, which materially and adversely affects
the financial condition, business, prospects or operations of PES.
SECTION 5.8 Absence of Certain Changes or Events. Except as disclosed to FSI
in writing, (a) there has not been any change or any present development
involving a prospective change, which has affected or may affect materially
and adversely the business, assets or prospects or the financial position or
the results of operations of PES and its subsidiaries taken as whole; and (b)
PES has not incurred any indebtedness for money borrowed, or purchased or sold
any material amount of assets, other than in the ordinary course of business,
or entered into any other transaction other than in the ordinary course of
business.
SECTION 5.9 Tax Returns and Payments. All tax returns, federal, state, local,
foreign and other, (including all federal tax returns and reports for each
fiscal year of PES through the fiscal year ended December 31, 1998) required
to be filed by and/or on behalf of PES in respect of any taxes (including all
foreign, federal, state, county and local income, ad valorem, excise, sales,
use, transfer and other taxes and assessments) have been filed or will be
filed by the Effective Date, and all taxes due and payable thereon, or
otherwise due and payable by PES, have been paid or will be filed and or paid
by the Effective Date. There are no deficiency assessments against PES with
respect to any foreign, federal, state, local or other taxes. There are no
outstanding agreements or waivers extending the period of limitation
applicable for assessment or collection for any federal, state, local or
foreign tax, or for the filing of any tax return, in respect of PES for any
period. Neither the federal tax returns nor any state, county, local or
foreign tax returns of PES have in the past been examined by the Internal
Revenue Service or any other taxing authority. Copies of all federal, state,
local and foreign tax returns or reports of PES filed since its formation and
prior to the date hereof have heretofore been made available to FSI. All tax
returns filed by or on behalf of FSI are true, correct and complete in all
material respects. All taxes that PES is or was required to withhold or
collect (including payroll taxes) have been duly withheld, or collected, and
paid to the proper governmental authority or will have been paid to the proper
governmental authority by the Effective Date.
SECTION 5.10 Accounts, Powers of Attorney. There are no persons
holding a power of attorney on behalf of PES. Schedule 5.10 lists the names
and addresses of each bank or other financial institution in which PES has an
account, deposit or safe-deposit box, including the number of each such
account, deposit and safe-deposit box.
SECTION 5.11 Minute Books. All minute books of PES have been or will be
made available to FSI for review.
ARTICLE 6
CONDITIONS
SECTION 6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Date of the following conditions:
(a) this Agreement and the transactions contemplated hereby having been
approved and adopted at or prior to the Effective Date by the requisite vote
of the shareholders of each company as required by applicable law; and
(b) no preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States or any
foreign jurisdiction preventing the consummation of the Merger shall be in
effect.
SECTION 6.2 Conditions to Obligation of FSI to Effect the Merger. The
obligation of FSI to effect the Merger shall be subject to the fulfillment at
or prior to the Effective Date of the following conditions any one or more of
which (except Section 6.2(h) and (i)) may be waived by FSI:
(a) PES shall have performed in all material respects its agreements
contained in this Agreement required to be performed on or prior to the
Effective Date including those specified in Section 5.5 herein;
(b) PES shall have performed in all material respects its agreements
contained in this Agreement required to be performed on or prior to the
Effective Date, including the surrender of 100% of its issued and outstanding
stock and options to FSI upon FSI 's issuance of 5,555,475 shares of common
stock, 740,000 shares of convertible preferred stock and options to acquire
325,000 shares of common stock at the exercise price of $2.00 per share to the
shareholders and option holders of PES after FSI's Stock Split;
(c) the representations and warranties of PES set forth in this Agreement
shall be true and correct in all material respects on and as of the Effective
Date as if made on and as of such date, except as contemplated or permitted by
this Agreement;
(d) PES shall have delivered a certificate of its President or its Chairman
of the Board to the effect set forth in paragraphs (a), (b) and (c) of this
Section 6.2;
(e) PES shall have delivered to FSI copies of resolutions duly adopted by its
Board of Directors approving the execution and delivery of this Agreement,
such resolutions being certified by the Secretary;
(f) No action or preceding before any court or governmental or regulatory
authority or body, United States, federal or state or foreign, shall have been
instituted (and be pending) or threatened by any government or governmental
authority, which seeks to prevent or delay the consummation of the Merger or
which challenges any of the terms or provisions of this Agreement;
(g) No order issued by any United States federal or state or foreign
governmental or regulatory authority or body of by any court of competent
jurisdiction nor any statute, rule, regulation or executive order promulgated
or enacted by any United States federal or state or foreign governmental
authority which prevents the consummation of the Merger shall be in effect;
(h) PES acknowledges that the Post-Effective Amendment filed with the
Securities and Exchange Commission after this Agreement is signed must be
declared effective by the Securities and Exchange Commission and the
shareholder reconfirmation offering contained therein shall have been approved
by investors representing a minimum of 80% of the proceeds of FSI 's initial
public offering, i.e., $40,000;
(i) The aggregate fair market value of the companies acquired by PES shall be
at least $1,000,000.
(j) FSI shall have received an opinion dated the effective date of the Merger
by Graham & James, counsel to PES, satisfactory to FSI, in substantially the
following form:
i) PES is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of New York and has the corporate power
to own all of its properties and assets and carry on its business in all
material respects as it is now being conducted, and is qualified to do
business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification;
ii) The execution and delivery by PES of this Agreement and the consummation
of the transactions contemplated by this Agreement in accordance with the
terms hereof will not conflict with or result in a breach of any term or
provision of PES's certificate of incorporation or by-laws or constitute a
default or to the best of its knowledge give rise to a right of termination,
cancellation or acceleration under any material mortgage, indenture, deed of
trust, license agreement, or other obligation or violate any court order,
writ, injunction or decree applicable to PES, or its properties or assets;
iii) This Agreement has been duly and validly authorized, executed and
delivered and constitutes the legal and binding obligation of PES, except as
limited by bankruptcy and insolvency laws and by others laws affecting the
rights of creditors generally; and
iv) There are no actions, suits or proceedings pending, or to the best
knowledge of such counsel without having conducted any independent
investigation, threatened by or against PES or affecting PES or its
properties, at law or in equity, before any court or any other governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of
any kind.
SECTION 6.3 Conditions to the Obligation of PES to Effect the Merger. The
obligation of PES to effect the Merger shall be subject to the fulfillment at
or prior to the Effective Date of the following conditions, any one or more of
which may be waived by PES:
(a) The representations and warranties of FSI set forth in this Agreement
shall be true and correct in all material respects on and as of the Effective
Date as if made on and as of such date, except as contemplated or permitted by
this Agreement;
(b) Except to the extent such consents are not required at the Effective
Date, FSI shall have received the consents or exemptions, or made the filings,
as the case may be, referred to in Section 5.4;
(c) FSI shall have delivered a certificate of its President to the effect set
forth in paragraphs (a) and (b) of this Section 6.3;
(d) FSI shall have delivered to PES copies of resolutions duly adopted by
the Board of Directors of the Company approving the execution and delivery of
this Agreement, such resolutions being certified by the Secretary of the
Company;
(e) No action or proceeding before any court or governmental or regulatory
authority or body, United States federal or state or foreign, shall have been
instituted (and be pending or threatened) by any government or governmental
authority, which seeks to prevent or delay the consummation of the Merger or
which challenges any of the terms or provisions of this Agreement;
(f) No order issued by any United States federal or state or foreign
governmental or regulatory authority or body, or by any court of competent
jurisdiction nor any statute, rule, regulation, or executive order promulgated
or enacted by any United States, federal, or state or foreign government or
governmental authority, which prevented the consummation of the Merger or
materially and adversely affects the business, financial condition, or
operations of FSI shall be in effect;
(g) The shareholders of FSI upon the Effective Date of the Merger shall have
duly approved the amendment of FSI's articles of incorporation as required by
Section 3.13, the Merger, the Stock Split, and the issuance of 5,555,475
shares of common stock, 740,000 shares of convertible preferred stock and
options to acquire 325,000 shares of common stock at the exercise price of
$2.00 per share to the shareholders and option holders of PES after the Stock
Split, pursuant to a reconfirmation offering in which shareholders
representing a minimum of $40,000 of the proceeds from FSI 's initial public
offering elect to reconfirm their investment, and the amendment to FSI's
articles of incorporation required by Section 3.13 hereof shall have been duly
filed;
(h) PES shall have received an opinion of its tax counsel, advisor or
accountant that the Merger to be consummated by the terms of this Agreement
qualifies as a tax-free reorganization as defined under the Internal Revenue
Code of 1986, as amended.
(i) PES shall have received an opinion dated the effective date of this
Merger by Schonfeld & Weinstein, 63 Wall Street, Suite 1801, New York, New
York 10005, counsel to FSI, satisfactory to PES, in substantially the
following form:
i) FSI is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power
to own all of its properties and assets and carry on its business in all
material respects as it is now being conducted, and is qualified to do
business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification;
ii) The execution and delivery by FSI of this Agreement and the consummation
of the transactions contemplated by this Agreement in accordance with the
terms hereof will not conflict with or result in a breach of any term or
provision of FSI's certificate of incorporation or by-laws or constitute a
default or give rise to a right of termination, cancellation or acceleration
under any material mortgage, indenture, deed of trust, license agreement, or
other obligation or violate any court order, writ, injunction or decree
applicable to FSI, or its properties or assets;
iii) The authorized capitalization of FSI consists of 20,000,000 shares of
common stock, and 740,000 shares of preferred stock convertible into 616,667
shares of common stock, each with a par value $.001 per share. As of the date
of this Agreement, there are 700,000 shares of common stock issued and
outstanding, including the 100,000 shares being held in escrow pending
consummation of the Merger, as per Rule 419. As of the Effective Date, after
the Stock Split and subsequent issuance of 5,555,475 shares of common stock,
740,000 shares of convertible preferred stock and options to acquire 325,000
shares of common stock at the exercise price of $2.00 per share to the
shareholders and option holders of PES, there will be 5,970,186 shares of
common stock, 740,000 shares of convertible preferred stock and options to
acquire 325,000 shares of common stock at the exercise price of $2.00 per
share outstanding;
iv) This Agreement has been duly and validly authorized, executed and
delivered and constitutes the legal and binding obligation of FSI, except as
limited by bankruptcy and insolvency laws and by others laws affecting the
rights of creditors generally; and
v) There are no actions, suits or proceedings pending, or to the best
knowledge of such counsel without having conducted any independent
investigation, threatened by or against FSI or affecting FSI or its
properties, at law or in equity, before any court or any other governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of
any kind.
vi) FSI has made or will make all filings that it is required to make with
the Securities Exchange Commission under the Securities Act of 1933 and the
Exchange Act of 1934 and all of such filings were true, complete and accurate.
vii) FSI's initial public offering complied with the special registration
procedures for offerings by "blank check companies" as set forth in Rule 419
under Regulation C of the Securities Act of 1933.
viii) The escrow account required to be maintained under Rule 419 under
Regulation C of the Securities Act of 1933 meets the requirements of such rule
and has been maintained in compliance with the requirements set forth in such
rule.
(i) Deliberately Left Blank;
(j) FSI shall have net cash, including the Deposited Funds, of $45,000 on
the Effective Date;.
(k) On the Effective Date, the Deposited Funds held in escrow from FSI 's
initial public offering shall be released to FSI. FSI shall then immediately
deposit such funds, plus any additional funds held by FSI, into a trust
account with Schonfeld & Weinstein, L.L.P. to be disbursed to the Surviving
Entity; and
(l) FSI shall have delivered to PES resignations of all of its current
officers and directors.
SECTION 6.4 Waiver of Condition; Right to Proceed. Unless stated otherwise
herein, if any of the conditions to the obligations of PES and FSI specified
in Sections 6.2 and 6.3 hereof have not been satisfied (excluding Sections
6.2(g), (h) and (i)), PES or FSI, as the case may be, in addition to any other
rights which may be available to them or it, shall have the right to waive
such conditions and to proceed with the Merger (subject to satisfaction of the
other conditions contained herein, unless also waived).
ARTICLE 7
RULE 419 REQUIREMENTS
SECTION 7.1 Merger Criteria. Pursuant to Rule 419 under Regulation C of the
Securities Act of 1933, as amended ("Rule 419"), the fair market value of PES
must represent at least 80% of the maximum offering proceeds of FSI 's initial
public offering, i.e., PES's fair market value must be at least $40,000 (80% x
$50,000). If the fair market value of PES is determined by FSI to be less
than $40,000, this Agreement shall terminate immediately.
SECTION 7.2 Post-Effective Amendment. Once the Merger Agreement has been
executed, FSI shall update its registration statement with a Post-Effective
Amendment. The Post-Effective Amendment shall contain updated information
concerning FSI and information about PES and its business, including audited
financial statements; and the results of FSI 's initial public offering. The
Post-Effective Amendment shall also include the terms of the reconfirmation
offer mandated by Rule 419. The reconfirmation offer shall include certain
prescribed conditions which must be satisfied before Deposited Securities can
be released from escrow. If the Post-Effective Amendment is not declared
effective by the Securities and Exchange Commission and/or the reconfirmation
offering is not complete within 18 months of the date of effectiveness of FSI
's initial public offering (i.e., by December 8, 1999), this Agreement shall
terminate automatically.
SECTION 7.3 Reconfirmation Offering. The reconfirmation offer must commence
after the effective date of the Post-Effective Amendment. Pursuant to Rule
419, the terms of the reconfirmation offer shall include the following
conditions:
(a) The prospectus contained in the Post-Effective Amendment will be sent to
each investor whose securities are held in the Escrow Account within 5
business days after the effective date of the Post-Effective Amendment;
(b) Each investor will have no fewer than 20 and no more than 45 business
days from the effective date of the Post-Effective Amendment to notify FSI in
writing that the investor elects to remain an investor;
(c) If FSI does not receive written notification from an investor within 20
business days following the effective date of the Post-Effective Amendment,
the pro rata portion of the Deposited Funds (and any related interest or
dividends) held in escrow on such investor's behalf will be returned to the
investor within 5 business days by first class mail or other equally prompt
means;
(d) The Merger will be consummated only if a minimum number of investors
representing 80% of the maximum offering proceeds ($40,000) elect to reconfirm
their investment; and
(e) If the Merger has not been consummated by December 8, 1999 (18 months
from the date of the prospectus), the Deposited Funds held in escrow shall be
returned to all investors on a pro rata basis within 5 business days by first
class mail or other equally prompt means, and this Agreement shall be declared
null and void.
SECTION 7.4 Release of Deposited Funds and Deposited Securities. The
Deposited Funds and Deposited Securities may be released to FSI and the
investors in FSI 's initial public offering, respectively, after:
(a) The Escrow Agent has received a signed representation from FSI and any
other evidence acceptable by the Escrow Agent that:
(i) FSI has executed an agreement for the Merger of a business for which the
par value of the business represents at least 80% of the maximum offering
proceeds and has filed the required Post-Effective Amendment; and
(ii) The Post-Effective Amendment has been declared effective, the mandated
reconfirmation offer having the conditions prescribed by Rule 419 has been
completed, and FSI has satisfied all of the prescribed conditions of the
reconfirmation offer.
(b) The Merger of a business with the fair value of at least 80% of the
maximum proceeds is consummated.
ARTICLE 8
TERMINATION
SECTION 8.1 Board Action. This Agreement may be terminated at any time by
mutual consent of the Boards of Directors of FSI and PES.
SECTION 8.2 Certain Dates. In the event that FSI shall not have received
certified financial statements from PES and/or this Agreement is not executed
by both parties by July 19, 1999, or FSI has not received executed purchase
agreements and other reasonable proof of PES' acquisition (or agreements to
acquire) Human Resource Firms with collective minimum annual revenues of at
least $1 million by August 30, 1999, this Agreement may be terminated by
either party upon written notice, whether before or after approval of the
Merger thereof by the holders of the requisite number of shares of FSI. This
Agreement shall terminate automatically if the Merger has not been consummated
by December 8, 1999, eighteen (18) months from the effective date of FSI 's
initial public offering, which consummation includes a declaration of
effectiveness by the Securities and Exchange Commission of FSI's
Post-Effective Amendment and successful completion of a shareholder
reconfirmation offering, pursuant to which shareholders representing less than
80% of the proceeds from FSI 's initial public offering vote to reconfirm
their investments.
SECTION 8.3 Audited Financial Statements. In the event that PES's audited
financial statements are materially and adversely inconsistent with the PES
unaudited financial statements annexed hereto and incorporated herein by
reference, FSI shall have the right to unilaterally terminate this Agreement
by the Board of Directors of FSI notifying PES and its counsel, Graham &
James, of such termination. Such notice shall be sent to PES and its United
States counsel prior to the Effective Date.
SECTION 8.4 Effect of Termination. In the event of the termination of this
Agreement, this Agreement shall thereafter become void and have no effect and
no party hereto shall have any liability to any other party hereto or its
shareholders or directors or officers in respect thereof, except for the
obligations of the parties hereto in Section 9.2 hereof and the last sentences
of paragraphs (a) and (b) of Section 3.4 hereof (providing for the return or
destruction of documents) .
ARTICLE 9
GENERAL AGREEMENTS
SECTION 9.1 Cooperation. Each of the parties hereto shall cooperate with the
other in every reasonable manner in carrying out the transactions contemplated
herein, and in delivering all documents and instruments deemed reasonably
necessary or useful by counsel for either party hereto.
SECTION 9.2 Funds. Each party shall incur all its own costs and expenses in
connection with this Agreement and the transactions contemplated hereby.
After the consummation of the Merger, all expenses will be incurred by the
Surviving Entity.
SECTION 9.3 Survival of Representations and Warranties. All representations
and warranties in this Agreement or in any instrument or certificate delivered
pursuant to this Agreement delivered on or prior to the Effective Date shall
survive the consummation of the Merger.
SECTION 9.4 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered by
messenger, transmitted by telex or telegram or mailed by registered or
certified mail, postage prepaid, as follows:
(a) If to FSI, to:
Eng-Chye Low
200 East 89th Street
New York, New York 10028
With a copy to:
Joel Schonfeld, Esq.
Schonfeld & Weinstein, L.L.P.
63 Wall Street, Suite 1801
New York, New York 10005
(b) If to PES, to:
John D. Mazzuto
Platinum Executive Search, Inc.
342 Madison Avenue, Suite 1500
New York, New York 10173
(212) 687-8063
(212) 808-4126 (fax)
With a copy to:
Robert S. Schneider, Esq.
Graham & James LLP
885 Third Avenue
New York, NY 10022
(212) 848-1080
Fax (212) 688-2449
The date of any such notice shall be the date hand delivered or otherwise
transmitted or mailed.
SECTION 9.5 Amendment. This Agreement (including the documents and
instruments referred to herein or therein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof, (b) is not intended to confer upon any other person any rights or
remedies hereunder, and (c) shall not be assigned by operation of law or
otherwise. This Agreement may be amended or modified in whole or in part to
the extent permitted by New York law at any time, by an agreement in writing
executed in the same manner as this Agreement after authorization to do so by
the Board of Directors of PES and FSI.
SECTION 9.6 Waiver. At any time prior to the Effective Date, the parties
hereto may (a) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (b) waive any inaccuracies in the
representation and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid is set forth in an instrument in
writing signed on behalf of such party.
SECTION 9.7 Brokers. PES and FSI represent and warrant that no broker,
finder or investment banker is entitled to any brokerage, finder's or other
fee or commission in connection with the Merger, except as stated herein or
elsewhere in writing.
SECTION 9.8 Publicity. So long as this Agreement is in effect, the parties
hereto shall not issue or cause the publication of any press release or other
announcement with respect to the Merger or this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld or
delayed where such release or announcement is required by applicable law.
SECTION 9.9 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.10 Successors and Assigns. This Agreement shall be binding upon
and insure to the benefit of and enforceable by the respective successors and
assigns of the parties hereto.
SECTION 9.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 9.12 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
SECTION 9.13 Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach hereof, shall finally be settled by
arbitration in the State of New York in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon
the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
SECTION 9.14 Adjustment of Stock Splits. The parties hereto recognize that
by virtue of PES' negotiation for the acquisition of Human Resource Firms, the
number of shares of common and convertible preferred stock of PES actually
issued and outstanding immediately prior to the Merger may vary from the
numbers used in this Agreement, and intend that all numbers of shareholdings
and option rights in the Surviving Entity shall be appropriately adjusted
based on any such changes in PES holdings, in the following manner: The
shareholding split between former PES and former FSI shareholders shall be 94%
and 6% respectively, calculated on the basis of assuming the full conversion
of the convertible preferred into common and the complete exercise of options
to acquire common, and the respective percentage holdings of the former FSI
shareholders or their designees shall be as follows: 2.84508% for the public
shareholders; 2.21284% for the insiders, and 0.94206% for Schonfeld &
Weinstein. Notwithstanding the foregoing, in no event shall the number of
shares of PES common or convertible preferred decrease by more than 10 percent
of 5,555,475 and 740,000, respectively (not collectively, but for each of the
common and the preferred separately), without the prior written consent of
FSI.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
COUNTERPART SIGNATURE PAGE TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FIRST SUNRISE INC.
AND
PLATINUM EXECUTIVE SEARCH, INC.
IN WITNESS WHEREOF the parties have executed this Agreement by their duly
authorized officers on the 21st day of July, 1999.
FIRST SUNRISE, INC.
By:
President
PLATINUM EXECUTIVE SEARCH, INC.
By: ____
Name: John Mazzuto
Title: President
By: ___________________
Name: James J. Strupp
Title: Chairman
SCHEDULE 3.3(c)
Permitted exceptions to prohibitions against issuing, granting, selling or
pledging or agreeing or proposing to issue, grant, sell or pledge any shares
of, or rights of any kind to acquire any shares of, a Constituent Entity's
capital stock (ii) incurring any indebtedness other than in the ordinary
course of business, (iii) acquiring directly or indirectly by redemption or
otherwise any shares of a Constituent Entity's capital stock of any class or
(iv) entering into or modify any contact, agreement, commitment or arrangement
with respect to any of the foregoing.
Permitted Exceptions for PES:
NONE
Permitted Exceptions for FSI:
NONE
SCHEDULE 4.15
List of names and addresses of each bank or other financial institution in
which FSI has an account, deposit or safe-deposit box, including the number of
each such account, deposit and safe-deposit box.
Account Name & Address Account or Box Number
SCHEDULE 5.10
List of names and addresses of each bank or other financial institution in
which PES has an account, deposit or safe-deposit box, including the number of
each such account, deposit and safe-deposit box.
Account Name & Address Account or Box Number
<PAGE>
CERTIFICATE OF INCORPORATION
OF
PLATINUM EXECUTIVE SEARCH, INC.
Pursuant to Section 402 of the Business Corporation Law
I, the undersigned, a natural person of at least 18 years of age, for
the purpose of forming a corporation under Section 402 of the Business
Corporation Law of the State of New York hereby certify.
FIRST: The name of the corporation is:
PLATINUM EXECUTIVE SEARCH, INC.
SECOND: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under Article IV
of the Business Corporation Law, except that it is not formed to
engage in any act or activity requiring the consent or approval of
any state official, department, board, agency or other body
without such consent or approval first being obtained.
THIRD: The office of the corporation is to be located in the County of
SUFFOLK State of New York.
FOURTH: The aggregate number of shares which the corporation shall have
the authority to issue is TWO HUNDRED, each of which shall be
common stock with no par value.
FIFTH: The Secretary of State is designated as agent of the corporation
upon whom process against it may be served. The post office
address to which the Secretary of State shall mail a copy of any
process against the corporation served upon him is:
C/O HOWARD POLLACK
7 PENN PLAZA, RM 316
NEW YORK, NY 10001
SIXTH: No director of the corporation shall have personal liability to
the corporation or to its shareholders for damages for any
breaches of duty in such capacity, provided, however, that the
provision shall not eliminate or limit:
(a) the liability of any director of the corporation if a
judgment or other final adjudication adverse to him
establishes that his acts or omissions were in bad faith or
involved intentional misconduct or a knowing violation of
law or that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled or,
with respect to any director of the corporation, that his
acts violated Section 719 of the Business Corporation Law of
the State of New York, or
(b) the liability of a director for any act or omission prior to
the final adoption of this article.
SEVENTH: The holders of any of the corporation's equity shares shall be
entitled to preemptive rights in accordance with the provisions of
BCL section 622.
IN WITNESS WHEREOF, the undersigned incorporator has executed this certificate
of incorporation.
03/25/99.
S/ Sharon Babala
Sharon Babala, Incorporator
Blumberg Excelsior Corporate
488 Broadway
Albany, New York 12207
<PAGE>
CERTIFICATE OF AMENDMENT
of the
CERTIFICATE OF INCORPORATION
of
PLATINUM EXECUTIVE SEARCH, INC.
Under Section 805 of the Business Corporation Law
The undersigned, being the Chief Executive Officer and the Chairman of the
Board of Directors of PLATINUM EXECUTIVE SEARCH, INC. (the "Corporation"), in
order to amend the Corporation's Certificate of Incorporation, does hereby
certify that:
FIRST: The name of the Corporation is Platinum Executive Search, Inc.
SECOND: The Certificate of Incorporation of the Corporation was filed with
the Department of the State of the State of New York on March 25, 1999.
THIRD: Pursuant to the Business Corporation Law, Paragraph Fourth of the
Certificate of Incorporation of the Corporation, relating to the aggregate
number of shares which the Corporation shall have authority to issue, the par
value thereof, and the classes into which such shares are divided, is hereby
amended (1) to increase the aggregate number of shares that the Corporation
has authority to issue from 200 shares of common stock, no par value per
share, to 20,000,000 shares, of which 10,000,000 shall be common stock and
10,000,000 shall be preferred stock, $.01 par value per share (the "Preferred
Stock"), (2) to change the par value of the Common Stock from no par value per
share to $.01 par value per share (the "Common Stock"), and (3) to create the
class of Preferred Stock in addition to the existing class of Common Stock, as
approved by the Corporation's board of directors and shareholders.
FOURTH: Pursuant to the Business Corporation Law, Paragraph Fourth of the
Certificate of Incorporation of the Corporation, relating to the aggregate
number of shares which the Corporation shall have authority to issue, the par
value thereof, and the classes into which such shares are divided, is hereby
amended to add a provision stating the number, designation, relative rights,
preferences and limitations of a new series of Preferred Stock, as fixed by
the Corporation's Board of Directors, which shall be designated as Series A
Convertible Preferred Stock, par value $ .01 per share, and to set forth in
full the text of such provision.
FIFTH: Pursuant to the Business Corporation Law, the Certificate of
Incorporation of the Corporation is hereby amended to add a new Paragraph
Eighth to provide for indemnification by the Corporation of certain persons,
including the directors and officers of the Corporation.
SIXTH: In order to effect the amendments described in sections Third and
Fourth above, Paragraph Fourth of the Certificate of Incorporation is hereby
amended to read, in its entirety, as follows:
The aggregate number of shares which the Corporation shall have the authority
to issue shall be 20,000,000, of which 10,000,000 shares shall be preferred
stock, $.01 par value per share ("Preferred Stock"), issuable in series, and
10,000,000 shares shall be common stock, par value $.01 per share ("Common
Stock"). All shares of the Preferred Stock shall be issued in series and
shall be entitled to preference in the distribution of dividends or assets or
both. The Board of Directors of the Corporation, before issuance, shall have
the authority to establish and designate series of the Preferred Stock and to
fix the variations in the relative rights, preferences and limitations of
shares of the Preferred Stock as between such shares and shares of the Common
Stock and as between shares of different series of the Preferred Stock.
Series A Convertible Preferred Stock.
The Corporation is hereby authorized to establish a series of Preferred Stock
of the Corporation of the designation and number of shares, and having the
relative rights, preferences and limitations thereof as set forth below:
(a) Designation and Amount. The shares of such series shall be designated
as "Series A Preferred Stock", par value $.01 per share (the "Series A
Convertible Preferred Stock"), and the number of shares constituting such
series shall be 5,000,000. Such series is referred to herein as the "Series A
Preferred Stock".
(b) Dividends and Distributions. The holders of Series A Preferred Stock
shall be entitled to receive when, as and if declared by the Board of
Directors annual dividends payable in cash, out of funds legally available for
such purpose, or at the option of the Corporation, in kind, at the rate of 6%
per share per annum (computed on the basis of a 360-day year of twelve 30 day
months), and this amount shall be non-cumulative. If the Corporation elects
to pay in kind, such dividends shall be paid in additional duly authorized,
fully paid and non-assessable shares of Series A Preferred Stock. Dividends
on the Series A Preferred Stock shall be paid in preference to dividends paid
on the Common Stock.
(c) Voting Rights. The holders of Series A Preferred Stock shall not be
entitled to any voting rights, except that consent of the holders of at least
a majority of the Series A Preferred Stock shall be required for any action
which :
(i) alters or changes the rights, preferences or privileges of the
Series A Preferred Stock materially and adversely; or
(ii) increases the authorized number of shares of common stock;
(d) Conversion at the Option of the Holders. The holders of Series A
Preferred Stock shall have the right, at any time and at their sole option and
election, to convert the shares of Series A Preferred Stock into shares of
Common Stock, pursuant to the following provisions:
(i) Conversion Price. The Series A Preferred Stock shall be convertible into
shares of Common Stock equal to the number of shares which results from
dividing the Conversion Price (as hereinafter defined) in effect at the time
of conversion into the average price per share paid for the shares (the
"Average Subscriber Price"). Initially, the ratio between the Conversion
Price and the Average Subscriber Price shall be 2.4:2. Such initial
Conversion Price shall be subject to adjustment as hereinafter provided.
(ii) Mandatory Conversion. The Corporation, at its option, may at any
time cause the Series A Preferred Stock to be converted in whole, or in part,
on a pro rata basis, into fully paid and non-assessable shares of Common Stock
in the event that the closing bid price as established by the primary market
maker for the Company of the Common Stock shall have exceeded $3.00 for at
least 20 trading days in any 30 consecutive trading day period ending three
(3) days prior to the date of notice of conversion. Any shares of Series A
Preferred Stock so converted shall be treated as having been surrendered by
the holder thereof for conversion on the date of such mandatory conversion
(unless previously converted at the option of the holder).
No greater than 60 nor fewer than 20 days prior to the date of any such
mandatory conversion, notice by first class mail, postage prepaid, shall be
given to the holders of record of the Series A Preferred Stock to be convened,
addressed to such holders at their last addresses as shown on the stock
transfer books of the Corporation. Each such notice shall specify the date
fixed for conversion and the place or places for surrender of shares of Series
A Preferred Stock.
Any notice which is mailed as herein provided shall be conclusively presumed
to have been duly given by the Corporation on the date deposited in the mail,
whether or not the holder of the Series A Preferred Stock receives such
notice; and failure properly to give such notice by mail, or any defect in
such notice, to the holders of the shares to be converted shall not affect the
validity of the proceedings for the conversion of any other shares of Series A
Preferred Stock. On or after the date fixed for conversion as stated in such
notice, each holder of shares called to be converted shall surrender the
certificate evidencing such shares to the Corporation at the place designated
in such notice for conversion. Notwithstanding that the certificates
evidencing any shares properly called for conversion shall not have been
surrendered, the shares shall no longer be deemed outstanding and all rights
whatsoever with respect to the shares so called for conversion (except the
right of the holders to convert such shares upon surrender of their
certificates therefor) shall terminate.
(iii) Mechanics of Conversion. Before any holder of the Series A Preferred
Stock shall be entitled to convert the same into full shares of Common Stock,
he shall surrender the certificate or certificates therefore, duly endorsed,
at the office of the Corporation or of any transfer agent for such stock, and
shall give written notice to the Corporation at such office that he elects to
convert the same. The Corporation shall, as soon as practicable thereafter,
issue and deliver to such holder, at such office and in his name as shown on
such surrendered certificate or certificates, a certificate or certificates
for the number of shares of Common Stock into which such converted shares of
stock were convertible on the Conversion Date, as hereinafter defined. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of the Series A Preferred
Stock (the "Conversion Date"). The person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock as of
the Conversion Date.
(iv) Conversion Price Adjustments. The Conversion Price shall be subject to
adjustment from time to time as follows:
(1) Common Corporation Stock Issued at Less Than the Conversion Price. If
the Corporation shall issue any Common Stock other than Excluded Stock (as
hereinafter defined) without consideration or for a consideration per share
less than the Conversion Price in effect immediately prior to such issuance,
the Conversion Price in effect immediately prior to each such issuance shall
immediately (except as provided below) be reduced to the lowest price per
share at which additional shares of Common Stock have been issued or sold or
at which the Corporation has agreed to so issue and sell.
For the purposes of any adjustment of the Conversion Price pursuant to clause
(1), the following provisions shall be applicable:
a. Cash. In the case of the issuance of Common Stock for cash, the amount of
the consideration received by the Corporation shall be deemed to be the amount
of the cash proceeds received by the Corporation for such Common Stock before
deducting therefrom any discounts, commissions, taxes or other expenses
allowed, paid or incurred by the Corporation for any underwriting or otherwise
in connection with the issuance and sale thereof.
b. Consideration Other Than Cash. In the case of the issuance of Common
Stock (otherwise than upon the conversion of shares of capital stock or other
securities of the Corporation) for a consideration in whole or in part other
than cash, including securities acquired in exchange therefor (other than
securities by their terms so exchangeable), the consideration other than cash
shall be deemed to be the fair value thereof as determined in good faith by
the Board of Directors, irrespective of any accounting treatment; provided
that such fair value as determined by the Board of Directors shall not exceed
the aggregate Current Market Price (as defined below) of the shares of Common
Stock being issued as of the date the Board of Directors authorizes the
issuance of such shares. The "Current Market Price" per share of Common Stock
shall be deemed to be the closing bid price as established by the primary
market maker for the Company or, in the event that the Common Stock is not
traded on a securities exchange, Nasdaq, or over-the-counter, the fair value
as determined in good faith by the Board of Directors, irrespective of any
accounting treatment.
c. Options and Convertible Securities. In the case of the issuance of (A)
options, warrants or other rights to purchase or acquire Common Stock (whether
or not at the time exercisable), (B) securities by their terms convertible
into or exchangeable for Common Stock (whether or not at the time so
convertible or exchangeable) or options, warrants or rights to purchase such
convertible or exchangeable securities (whether or not at the time
exercisable):
i. The aggregate maximum number of shares of Common Stock deliverable upon
exercise of such options, warrants or other rights to purchase or acquire
Common Stock shall be deemed to have been issued at the time such options,
warrants or rights were issued and for a consideration equal to the
consideration (determined in the manner provided in subclauses a. and b.
above), if any, received by the Corporation upon the issuance of such options,
warrants or rights plus the minimum purchase price provided in such options,
warrants or rights for the Common Stock covered thereby;
ii. The aggregate maximum number of shares of Common Stock deliverable upon
conversion of or in exchange for any such convertible or exchangeable
securities, or upon the exercise of options, warrants or other rights to
purchase or acquire such convertible or exchangeable securities and the
subsequent conversion or exchange thereof, shall be deemed to have been issued
at the time such securities were issued or such options, warrants or rights
were issued and for a consideration equal to the consideration, if any,
received by the Corporation for any such securities and related options,
warrants or rights (excluding any cash received on account of accrued interest
or accrued dividends), plus the additional consideration (determined in the
manner provided in subclauses a. and b. above), if any, to be received by the
Corporation upon the conversion or exchange of such securities, or upon the
exercise of any related options, warrants or rights to purchase or acquire
such convertible or exchangeable securities and the subsequent conversion or
exchange thereof;
iii. On any change in the number of shares of Common Stock deliverable upon
exercise of any such options, warrants or rights or conversion or exchange of
such convertible or exchangeable securities or any change in the consideration
to be received by the Corporation upon such exercise, conversion or exchange,
including, but not limited to, a change resulting from the antidilution
provisions thereof, the Conversion Price as then in effect shall forthwith be
readjusted to such Conversion Price as would have been obtained had an
adjustment been made upon the issuance of such options, warrants or rights not
exercised prior to such change, or of such convertible or exchangeable
securities not converted or exchanged prior to such change, upon the basis of
such change;
iv. On the expiration or cancellation of any such options, warrants or
rights, or the termination of the right to convert such convertible or
exchangeable securities, if the Conversion Price shall have been adjusted upon
the issuance thereof, the Conversion Price shall forthwith be readjusted to
such Conversion Price as would have been obtained had an adjustment been made
upon the issuance of such options, warrants, rights or such convertible or
exchangeable securities on the basis of the issuance of only the number of
shares of Common Stock actually issued upon the exercise of such options,
warrants or rights, or upon the conversion or exchange of such convertible or
exchangeable securities; and
v. If the Conversion Price shall have been adjusted upon the issuance of any
such options, warrants, rights or convertible or exchangeable securities, no
further adjustment of the Conversion Price shall be made for the actual
issuance of Common Stock upon the exercise, conversion or exchange thereof;
(provided, however, that no increase in the Conversion Price shall be made
pursuant to subclauses i. and ii. of this subclause c.).
(2) Excluded Stock. "Excluded Stock" shall mean (A) shares of Common Stock
issued or reserved for issuance by the Corporation as a stock dividend payable
in shares of Common Stock, or upon any subdivision or split-up of the
outstanding shares of Common Stock or Series A Preferred Stock, or upon
conversion of shares of Series A Preferred Stock and (B) up to 15% of the
outstanding shares of Common Stock to be issued to key employees, consultants,
and advisors of the Corporation as part of an employee stock option plan,
together with any such shares that are repurchased by the Corporation and
reissued to any such employee, consultant or advisor. All shares of Excluded
Stock which the Corporation has reserved for issuance shall be deemed to be
outstanding for all purposes of computations hereof.
(3) Stock Dividends, Subdivisions, Reclassifications or Combinations. If
the Corporation shall (i) declare a dividend or make a distribution on its
Common Stock in shares of its Common Stock, (ii) subdivide or reclassify the
outstanding shares of Common Stock in to a greater number of shares, or (iii)
combine or reclassify the outstanding Common Stock into a smaller number of
shares, the Conversion Price in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that the
holder of any shares of Series A Preferred Stock surrendered for conversion
after such date shall be entitled to receive the number of shares of Common
Stock which he would have owned or been entitled to receive had such Series A
Preferred Stock been converted immediately prior to such date. Successive
adjustments in the Conversion Price shall be made whenever any event specified
above shall occur.
(4) Other Distributions. In case the Corporation shall fix a record date
for the making of a distribution to all holders of shares of its Common Stock
(i) of shares of any class other than its Common Stock or (ii) of evidence of
indebtedness of the Corporation or any subsidiary or (iii) of assets
(excluding cash dividends or distributions, and dividends of distributions
referred to in Subsection 3 above, or (iv) of rights or warrants (excluding
those referred to in above), in each such case the Conversion Price in effect
immediately prior thereto shall be reduced immediately thereafter to the price
determined by dividing (1) an amount equal to the difference resulting from
(A) the number or shares of Common Stock outstanding on such record date
multiplied by the Conversion Price per share on such record date, less (B) the
fair market value (as determined in good faith by the Board of Directors,
whose determination shall be conclusive) of said shares or evidences of
indebtedness or assets or rights or warrants to be so distributed, by (2) the
number of shares of Common Stock outstanding on such record date. Such
adjustment shall be made successively whenever such a record date is fixed.
In the event that such distribution is not so made, the Conversion Price then
in effect shall be readjusted, effective as of the date when the Board of
Directors determines not to distribute such shares, evidence of indebtedness,
assets, rights or warrants, as the case may be, to the Conversion Price which
would then be in effect if such record date had not been fixed.
(5) Consolidation, Merger, Sale, Lease or Conveyance. In case of any
consolidation with or merger of the Corporation with or into another
corporation, or in case of any sale, lease or conveyance to another
corporation of the assets of the Corporation as an entirety or substantially
as an entirety, each share of Series A Preferred Stock shall after the date of
such consolidation, merger, sale, lease or conveyance be convertible into the
number of shares of stock or other securities or property (including cash) to
which the Common Stock issuable (at the time of such consolidation, merger,
sale, lease or conveyance) upon conversion of such share of Series A Preferred
Stock would have been entitled upon such consolidation, merger, sale, lease or
conveyance; and in any such case, if necessary, the provisions set forth
herein with respects to the rights and interests thereafter of the holders of
the shares of Series A Preferred Stock shall be appropriately adjusted so as
to be applicable, as nearly as may reasonably be, to any shares of stock or
other securities or property thereafter deliverable on the conversion of the
shares of Series A Preferred Stock.
(6) Rounding of Calculations; Minimum Adjustment. All calculations
hereunder shall be made to the nearest cent or to the nearest one hundredth
(1/100th) of a share, as the case may be. No adjustment in the Conversion
Price shall be made if the amount of such adjustment would be less than $0.05,
but in any such amount shall be carried forward and an adjustment with respect
thereto shall be made at the time of and together with any subsequent
adjustment which, together with such amount and any other amount or amounts so
carried forward, shall aggregate $0.05 or more.
(7) Timing of Issuance of Additional Common Stock Upon Certain Adjustments.
In any case in which the provisions hereof shall require that an adjustment
shall become effective immediately after a record date for an event, the
Corporation may defer until the occurrence of such event (A) issuing to the
holder of any share of Series A Preferred Stock converted after such record
date and before the occurrence of such event the additional shares of Common
Stock issuable upon such conversion by reason of the adjustment required by
such event over and above the shares of Common Stock issuable upon such
conversion before giving effect to such adjustment and (B) paying to such
holder any amount of cash in lieu of a fractional share of Common Stock;
provided that the Corporation, upon request, shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares, and such cash, upon the occurrence of the
event requiring such adjustment.
(e) Liquidation, Dissolution or Winding-Up. Upon any liquidation,
dissolution or winding-up of the Corporation, holders of shares of Series A
Preferred Stock shall be entitled to receive, after due payment of the debts
and other liabilities of the Corporation, before any distribution may be made
to holders of Common Stock, a liquidating distribution in the amount of the
Original Purchase Price per share.
(f) Reacquired Shares. Any shares of Series A Preferred Stock converted or
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of preferred stock of the Corporation and may be reissued as part of a
new series of preferred stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions or restrictions on issuance
set forth in the Certificate of Incorporation of the Corporation.
(g) Transfer of Shares. No transfer of any shares of Series A Preferred
Stock shall be made unless such transfer is made pursuant to an effective
registration statement under the 1933 Act, and effective registration or
qualification under applicable state securities laws, or is made in a
transaction which does not require such registration or qualification. In the
event that such a transfer is made within three years from the date of
original issue of such shares and without registration or qualification, (i)
the Corporation may require, in order to assure compliance with such laws,
that the holder of shares of Series A Preferred Stock desiring to effect the
transfer and such holder's prospective transferee each certify to the
Corporation in writing the facts surrounding the transfer, and (ii) the
Corporation may require an opinion of counsel satisfactory to it that such
transfer may be made without such registration or qualification, which
certification and opinion of counsel shall not be an expense of the
Corporation. The Corporation is not obligated to register or qualify the
shares of Series A Preferred Stock under the 1933 Act or any other securities
law or to take any action not otherwise required hereunder to permit the
transfer of such shares of Series A Preferred Stock without registration or
qualification.
SEVENTH: In order to effect the amendments described in section Fifth
above, the Certificate of Incorporation is hereby amended to add a new
Paragraph Eighth, as follows:
The corporation shall, to the fullest extent permitted by Article 7 of the
Business Corporation Law, as the same may be amended and supplemented,
indemnify any and all persons whom it shall have the power to indemnify under
said Article from and against any and all of the expenses, liabilities, or
other matters referred to in or covered by said Article, and the
indemnification provided herein shall not be deemed exclusive of any other
rights to which any person may be entitled under any by-law, resolution of
shareholders, resolution of directors, agreement or otherwise, as permitted by
said Article, as to action in any capacity in which they served at the request
of the corporation.
EIGHTH: The foregoing amendments to the Certificate of Incorporation were
authorized by the unanimous written consent of the holders of all of the
outstanding shares of the Corporation entitled to vote. Said authorization
being subsequent to the affirmative vote of the Board of Directors of the
Corporation.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of Amendment
on this _____ day of May 1999.
James J. Strupp, Chief Executive Officer and Chairman of the Board of
Directors
<PAGE>
BY - LAWS
OF
PLATINUM EXECUTIVE SEARCH INC.
(a New York corporation)
__________
ARTICLE I
SHARES AND SHAREHOLDERS
1. CERTIFICATES REPRESENTING SHARES. Certificates representing shares of
Platinum Executive Search Inc. (the "Corporation") shall set forth thereon the
statements prescribed by Sec.508, and, where applicable, by Sec. 505, 616, 620,
709,and 1002, of the Business Corporation Law (the "BCL") and by any other
applicable provision of law and shall be signed by the Chairman or a
Vice-Chairman of the Board of Directors, if any, or by the President or a
Vice-President and by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer and may be sealed with the corporate seal or a
facsimile thereof. The signatures of the officers upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation itself or its employee,
or if the shares are listed on a registered national security exchange. In
case any officer who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of its issue.
A certificate representing shares shall not be issued until the full amount of
consideration therefor has been paid, except as Sec.504 of the BCL may otherwise
permit.
The Corporation may issue a new certificate for shares in place of any
certificate theretofore issued by it, alleged to have been lost or destroyed,
and the Board of Directors may require the owner of any lost or destroyed
certificate, or his legal representative, to give the Corporation a bond
sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss or destruction of any such
certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS. The Corporation may issue certificates for
fractions of a share where necessary to effect transactions authorized by the
BCL which shall entitle the holder, in proportion to his fractional holdings,
to exercise voting rights, receive dividends, and participate in liquidating
distributions; or it may pay in cash the fair value of fractions of a share as
of the time when those entitled to receive such fractions are determined; or
it may, subject to the provisions of Sec. 509 of the BCL, issue scrip in
registered or bearer form over the manual or facsimile signature of an officer
of the Corporation or of its agent, exchangeable as therein provided for full
shares, but such scrip shall not entitle the holder to any rights of a
shareholder except as therein provided.
3. SHARE TRANSFERS. Upon compliance with provisions restricting the
transferability of shares, if any, transfers of shares of the Corporation
shall be made only on the share record of the Corporation by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the Corporation or with a
transfer agent or a registrar, if any, and on surrender of the certificate or
certificates for such shares properly endorsed and the payment of all taxes
due thereon.
4. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the
shares of common stock of the Corporation ("Common Stock") are exchanged for
or changed into other stock or securities, cash and/or any other property,
then in any such case each share of Series A preferred stock of the
Corporation ("Series A Preferred Stock") shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
5. RECORD DATE FOR SHAREHOLDERS. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or to express consent to or dissent from any
proposal without a meeting, or for the purpose of determining shareholders
entitled to receive payment of any dividend or the allotment of any rights, or
for the purpose of any other actions, the directors may fix, in advance, a
date as the record date for any such determination of shareholders. Such date
shall not be more than sixty days nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. If no
record date is fixed, the record date for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders shall be at the
close of the business on the day next preceding the day on which notice is
given, or, if no notice is given, the day on which the meeting is held; the
record date for determining shareholders for any purpose other than that
specified in the preceding clause shall be at the close of business on the day
on which the resolution of the directors relating thereto is adopted. When a
determination of shareholders of record entitled to notice of or to vote at
any meeting of shareholders has been made as provided in this paragraph, such
determination shall apply to any adjournment thereof, unless directors fix a
new record date under this paragraph for the adjourned meeting.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of shareholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "shareholder" or "shareholders"
refers to an outstanding share or shares and to a holder or holders of record
of outstanding shares when the Corporation is authorized to issue only one
class of shares, and said reference is also intended to include any
outstanding share or shares and any holder or holders of record of outstanding
shares of any class upon which or upon whom the Certificate of Incorporation
confers such rights where there are two or more classes or series of shares or
upon which or upon whom the BCL confers such rights notwithstanding that the
Certificate of Incorporation may provide for more than one class or series of
shares, one or more of which are limited or denied such rights thereunder.
7. SHAREHOLDER MEETINGS.
(a) TIME. A meeting of shareholders shall be held annually for the election
of directors and the transaction of other business on a date fixed by or under
the by-laws. A failure to hold the annual meeting on the date so fixed or to
elect a sufficient number of directors to conduct the business of the
Corporation shall not work a forfeiture or give cause for dissolution of the
Corporation, except as provided in paragraph (c) of Sec.1104 of the BCL
(Petition in case of deadlock among directors or shareholders).
(b) PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of New York, as the directors may, from
time to time, fix. Whenever the directors shall fail to fix such place, or,
whenever shareholders entitled to call a special meeting shall call the same,
the meeting shall be held at the office of the Corporation in the State of New
York.
(c) CALL. Annual meetings may be called by the directors or by any officer
instructed by the directors to call the meeting. Special meetings may be
called in like manner except when the directors are required by the BCL to
call a meeting, or except when the shareholders are entitled by the BCL to
demand the call of a meeting.
(d) NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written notice of
all meetings shall be given, stating the place, date, and hour of the meeting,
and, unless it is an annual meeting, indicating that it is being issued by or
at the direction of the person or persons calling the meeting. The notice of
an annual meeting shall state that the meeting is called for the election of
directors and for the transaction of other business which may properly come
before the meeting, and shall (if any other action which could be taken at a
special meeting is to be taken at such annual meeting) state the purpose or
purposes. The notice of a special meeting shall in all instances state the
purpose or purposes for which the meeting is called; and, at any such meeting,
only such business may be transacted which is related to the purpose or
purposes set forth in the notice. If any action is proposed to be taken which
would, if taken, entitle shareholders to receive payment for their shares, the
notice shall include a statement of that purpose and to that effect and shall
be accompanied by a copy of Sec. 623 of the BCL or an outline of its material
terms. A copy of the notice of any meeting shall be given, personally or by
first class mail, not less than ten days nor more than sixty days before the
date of the meeting, unless the lapse of the prescribed period of time shall
have been waived, to each shareholder at his record address or at such other
address which he may have furnished by request in writing to the Secretary of
the Corporation. In lieu of giving a copy of such notice personally or by
first class mail as aforesaid, a copy of such notice may be given by third
class mail not fewer than twenty-four nor more than sixty days before the date
of the meeting. Notice by mail shall be deemed to be given when deposited,
with postage thereon prepaid, in a post office or official depository under
the exclusive care and custody of the United States post office department.
Notice of a meeting need not be given to any shareholder who submits a signed
waiver of notice before or after the meeting in accordance with the provisions
of Sec. 606 of the BCL. The attendance of a shareholder at a meeting, in person
or by proxy, without protesting prior to the conclusion of the meeting the
lack of notice of such meeting shall constitute a waiver of notice by him.
(e) ADJOURNMENT. If (i) a meeting is adjourned to another time or place and
(ii) an announcement of the time and place to which the meeting is adjourned
is made at the meeting at which adjournment is taken, then it shall not be
necessary to give notice of the adjourned meeting and at the adjourned meeting
any business may be transacted that might have been transacted on the original
date of the meeting. However, if after such adjournment, the directors fix a
new record date for the adjourned meeting, a notice of the adjourned meeting
shall be given to each shareholder of record.
(f) SHAREHOLDER LIST AND CHALLENGE. A list of shareholders as of the record
date, certified by the Secretary or other officer responsible for its
preparation or by a transfer agent, if any, shall be produced at any meeting
of shareholders upon the request thereat or prior thereto of any shareholder.
If the right to vote at any meeting is challenged, the inspectors of an
election, if any, or the person presiding thereat, shall require such list of
shareholders to be produced as evidence of the right of the persons challenged
to vote at such meeting and all persons who appear from such list to be
shareholders entitled to vote thereat may vote at such meeting.
(g) CONDUCT OF MEETING. Meetings of the shareholders shall be presided over
by one of the following officers in the order of seniority and if present and
acting - Chairman of the Board, if any, the Vice-Chairman of the Board, if
any, the President, a Vice-President, or, if none of the foregoing is in
office and present and acting, by a chairman to be chosen by the shareholders.
The Secretary of the Corporation, or should the Secretary be absent, an
Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present, the chairman of the
meeting shall appoint a secretary of the meeting.
(h) PROXY REPRESENTATION. Every shareholder may authorize another
person or persons to act for him by proxy in all matters in which a
shareholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or
dissent without a meeting. Every proxy must be signed by the shareholder or
his attorney-in-fact. No proxy shall be valid after the expiration of eleven
months from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the shareholder executing it,
except as otherwise provided by the BCL.
(i) QUORUM. Except for a special election of directors pursuant to Sec. 603(b)
of the BCL, and except as herein otherwise provided, the holders of a majority
of the outstanding shares shall constitute a quorum at a meeting of
shareholders for the transaction of any business. When a quorum is once
present to organize a meeting, it is not broken by the subsequent withdrawal
of any shareholders. The shareholders present may adjourn the meetings
despite the absence of a quorum.
(j) VOTING. Each share shall entitle the holder thereof to one vote. In
the election of directors, a plurality of the votes cast shall elect. Any
other action shall be authorized by a majority of the votes cast except where
the BCL prescribes a different proportion of votes.
8. SHAREHOLDER ACTION WITHOUT MEETINGS. Whenever shareholders are required
or permitted to take any action by vote, such action may be taken without a
meeting on written consent, setting forth the action so taken, signed by the
holders of all shares.
9. ACTIVITIES REQUIRING A 66.7% VOTE OF THE STOCKHOLDERS.
Pursuant to Article II of these By-Laws, the Board of Directors shall
manage the day-to-day activities of the Corporation. All other actions shall
require the 66.7% vote of the stockholders. By way of illustration and not
limitation, the following shall constitute actions that fall outside the scope
of day-to-day activities of the Corporation and shall require the 66.7% vote
of all of the stockholders:
(i) Amend the Articles of Incorporation or the By-Laws of the
Corporation;
(ii) Do any action in contradiction of these By-Laws or which would
make it impossible to carry on the ordinary business of the Corporation,
except as otherwise permitted by these By-Laws;
(iii) Elect an additional director to the Board of Directors;
(iv) Remove a director from the Board of Directors;
(v) Confess a judgment against the Corporation:
(vi) Approve a voluntary dissolution of the Corporation;
(vii) Approve a merger, consolidation or other reorganization of the
Corporation;
(viii) Authorize or approve a fundamental change in the business of the
Corporation, including the acquisition of another corporate entity or the sale
of all or substantially all of the Corporation's assets;
(ix) Borrow funds in the name of the Corporation from any third party;
(x) Guarantee any loans made by any third party;
(xi) Lend Corporation funds to any natural person or to any legal or
commercial entity;
(xii) Enter into, amend or terminate any contract with an affiliate of the
Corporation; and
(xiii) Cause the Corporation to enter into any contract calling for
payments to be made to or by the Corporation of a total amount exceeding
$5,000 or calling for performance by the Corporation for a period exceeding
one year unless such contract is contemplated in the budget and the business
plan of the Corporation.
ARTICLE II
GOVERNING BOARD
1. FUNCTIONS AND DEFINITIONS. The business of the Corporation shall be
managed under the direction of a governing board, which is herein referred to
as the "Board of Directors" or "directors" notwithstanding that the members
thereof may otherwise bear the titles of trustees, managers, or governors or
any other designated title, and notwithstanding that only one director legally
constitutes the Board. The word "director" or "directors" likewise herein
refers to a member or to members of the governing boards notwithstanding the
designation of a different official title or titles. The use of the phrase
"entire board" herein refers to the total number of directors which the
Corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. Each director shall be at least eighteen
years of age. A director need not be a shareholder, a citizen of the United
States, or a resident of the State of New York. The initial Board of
Directors shall consist of two persons. Subject to the foregoing limitation
and except for the first Board of Directors, such number may be fixed from
time to time by action of the shareholders or of the directors, or, if the
number is not so fixed, the number shall be one. The number of directors may
be increased or decreased by action of shareholders or of the directors,
provided that any action of the directors to effect such increase or decrease
shall require the vote of a majority of the entire Board. No decrease shall
shorten the term of any incumbent director.
3. ELECTION AND TERM. The first Board of Directors shall be elected by the
incorporator or incorporators and shall hold office until the first annual
meeting of shareholders and until their successors have been elected and
qualified. Thereafter, directors who are elected at an annual meeting of
shareholders, and directors who are elected in the interim by the shareholders
to fill vacancies and newly created directorships, shall hold office until the
next annual meeting of shareholders and until their successors have been
elected and qualified; and directors who are elected in the interim by the
directors to fill vacancies and newly created directorships shall hold office
until the next meeting of shareholders at which the election of directors is
in the regular order of business and until their successors have been elected
and qualified. In the interim between annual meetings of shareholders or of
special meetings of shareholders called for the election of directors, newly
created directorships and any vacancies in the Board of Directors, including
vacancies resulting from the removal of directors for cause or without cause,
may be filled by the vote of the remaining directors then in office, although
less than a quorum exists.
4. MEETINGS.
(a) TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
(b) PLACE. Meetings shall be held at such place within or without the State
of New York as shall be fixed by the Board.
(c) CALL. No call shall be required for regular meetings for which the time
and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, of the President, or of a
majority of the directors in office.
(d) NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed by these
by-laws. Written, oral, or any other mode of notice of the time and place
shall be given for special meetings in sufficient time for the convenient
assembly of the directors thereat. The notice of any meeting need not specify
the purpose of the meeting. Any requirement of furnishing a notice shall be
waived by any director who signs a waiver of notice before or after the
meeting, or who attends the meeting without protesting, prior thereto or at
its commencement, the lack of notice to him.
(e) QUORUM AND ACTION. A majority of the entire Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided such
majority shall constitute at least one-third of the entire Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as herein otherwise provided, the
act of the Board shall be the act, at a meeting duly assembled, by vote of a
majority of the directors present at the time of the vote, a quorum being
present at such time.
(f) CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the President,
if present and acting, or any other director chosen by the Board, shall
preside.
5. REMOVAL OF DIRECTORS. Any or all of the directors may be removed for
cause or without cause by the shareholders. One or more of the directors may
be removed for cause by the Board of Directors.
6. COMMITTEES. The Board of Directors may, by resolution adopted by a
majority of the entire Board of Directors, designate from their number an
Executive Committee and other committees, each consisting of one or more
directors, each of which, to the extent provided in the resolution designating
it or in the Corporation's certificate of incorporation or these by-laws,
shall have the authority of the Board of Directors with the exception of any
authority the delegation of which is prohibited by Sec. 712 of the BCL.
7. WRITTEN ACTION. Any action required or permitted to be taken by the
Board of Directors or by any committee thereof may be taken without a meeting
if all of the members of the Board of Directors or of any committee thereof
consent in writing to the adoption of a resolution authorizing the action.
The resolution and the written consents thereto by the members of the Board of
Directors or of any such committee shall be filed with the minutes of the
proceedings of the Board of Directors or of any such committee.
8. TELEPHONIC MEETINGS. Any one or more members of the Board of Directors
or of any committee thereof may participate in a meeting of said Board or of
any such committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time, participation by such means shall constitute
presence in person at the meeting.
ARTICLE III
OFFICERS
1. APPOINTMENT. The directors may elect or appoint a Chairman of the Board
of Directors, a President, one or more Vice-Presidents, a Secretary, one or
more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, and
such other officers as they may determine. The President may but need not be
a director. Any two or more offices may be held by the same person. When all
of the issued and outstanding shares of the Corporation are owned by one
person, such person may hold all or any combination of offices.
2. TERM. Unless otherwise provided in the resolution of election or
appointment, each officer shall hold office until the meeting of the Board of
Directors following the next annual meeting of shareholders and until his
successor has been elected and qualified.
3. POWERS AND DUTIES. Officers shall have the powers and duties defined in
the resolutions appointing them.
4. REMOVAL. The Board of Directors may remove any officer for cause or
without cause.
ARTICLE IV
STATUTORY NOTICES TO SHAREHOLDERS
The directors may appoint the Treasurer or other fiscal officer and/or the
Secretary or any other officer to cause to be prepared and furnished to
shareholders entitled thereto any special financial notice and/or any
financial statement, as the case may be, which may be required by any
provision of law, and which, more specifically, may be required by Sec. 510,
511, 515, 516, 517, 519, and 520 of the BCL.
ARTICLE V
BOOKS AND RECORDS
The Corporation shall keep correct and complete books and records of account
and shall keep minutes of the proceedings of the shareholders, of the Boards
of Directors, and/or any committee which the directors may appoint, and shall
keep at the office of the Corporation in the State of New York or at the
office of the transfer agent or registrar, if any, in said State, a record
containing the names and addresses of all shareholders, the number and class
of shares held by each, and the dates when they respectively became the owners
of records thereof. Any of the foregoing books, minutes, or records may be in
written form or in any other form capable of being converted into written form
within a reasonable time.
ARTICLE VI
INDEMNIFICATION
1. INDEMNIFICATION. The Corporation shall indemnify to the fullest extent
now or hereafter provided for or permitted by law each person involved in, or
made or threatened to be made a party to, any action, suit, claim or
proceeding, arbitration, alternative dispute resolution mechanism,
investigation, administrative or legislative hearing or any other actual,
threatened, pending or completed proceeding, whether civil or criminal, or
whether formal or informal, and including an action by or in the right of the
Corporation or any other corporation, or any partnership, joint venture,
trust, employee benefit plan or other enterprise, whether profit or non-profit
(any such entity, other than the Corporation, being hereinafter referred to as
an "Enterprise"), and including appeals therein (any such process being
hereinafter referred to as a "Proceeding"), by reason of the fact that such
person, such person's testator or intestate (i) is or was a director or
officer of the Corporation, or (ii) while serving as a director or officer of
the Corporation, is or was serving, at the request of the Corporation, as a
director, officer, or in any other capacity, any other Enterprise, against any
and all judgments, fines, penalties, amounts paid in settlement, and expenses,
including attorneys' fees, actually and reasonably incurred as a result of or
in connection with any Proceeding, or any appeal therein, except as provided
in Section 2 of this Article.
2. CERTAIN EXCEPTIONS. No indemnification shall be made to or on behalf of
any such person if a judgment or other final adjudication adverse to such
person establishes that such person's acts were committed in bad faith or were
the result of active and deliberate dishonesty and were material to the cause
of action so adjudicated, or that such person personally gained in fact a
financial profit or other advantage to which such person was not legally
entitled. In addition, no indemnification shall be made with respect to any
Proceeding initiated by any such person against the Corporation, or a director
or officer of the Corporation, other than to enforce the terms of this
Article, unless such Proceeding was authorized by the Board of directors.
Further, no indemnification shall be made with respect to any settlement or
compromise of any Proceeding unless and until the Corporation has consented to
such settlement or compromise.
3. PROCEDURE. Written notice of any Proceeding for which indemnification
may be sought by any person shall be given to the Corporation as soon as
practicable. The Corporation shall then be permitted to participate in the
defense of any such proceeding or, unless conflicts of interest or position
exist between such person and the Corporation in the conduct of such defense,
to assume such defense. In the event that the Corporation assumes the defense
of any such Proceeding, legal counsel selected by the Corporation shall be
acceptable to such person. After such an assumption, the Corporation shall
not be liable to such person for any legal or other expenses subsequently
incurred unless such expenses have been expressly authorized by the
Corporation. In the event that the Corporation participates in the defense of
any such Proceeding, such person may select counsel to represent such person
in regard to such a Proceeding; however, such person shall cooperate in good
faith with any request that common counsel be utilized by the parties to any
Proceeding who are similarly situated, unless to do so would be inappropriate
due to actual or potential differing interests between or among such parties.
4. PRESUMPTION. In making any determination regarding any person's
entitlement to indemnification hereunder, it shall be presumed that such
person is entitled to indemnification, and the Corporation shall have the
burden of proving the contrary.
5. EXCLUSIVITY. The rights to indemnification and advancement of expenses
granted by or pursuant to this Article (i) shall not limit or exclude, but
shall be in addition to, any other rights which may be granted by or pursuant
to any statute, corporate charter, by-law, resolution of shareholders or
directors or agreement; (ii) shall be deemed to constitute contractual
obligations of the Corporation to any director or officer who serves in a
capacity referred to in Section 1 of this Article at any time while this
Article is in effect; (iii) shall continue to exist after the repeal or
modification of this Article with respect to events occurring prior thereto;
and (iv) shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the estate, spouse, heirs,
executors, administrators or assigns of such person. It is the intent of this
Article to require the Corporation to indemnify the persons referred to herein
for the aforementioned judgments, fines, penalties, amounts paid in
settlement, and expenses, including attorney's fees, in each and every
circumstance in which such indemnification could lawfully be permitted by
express provisions of by-laws, and the indemnification required by this
Article shall not be limited by the absence of an express recital of such
circumstances.
6. INSURANCE. Except to the extent expressly prohibited by New York
Business Corporation Law, the Corporation, at its expense, may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of any other entity,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such.
ARTICLE VII
CORPORATE SEAL
The corporate seal, if any, shall be in such form as the Board of Directors
shall prescribe.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be subject to
change from time to time, by the Board of Directors.
ARTICLE VIII
AMENDMENTS
These By-Laws may be altered or repealed, and new By-Laws may be adopted, at
any annual meeting of the stockholders or at any special meeting thereof by
the affirmative vote of a majority of the stock issued and outstanding and
entitled to vote thereat, or by the affirmative vote of a majority of the
Board of Directors, at any regular meeting of the Board of Directors, or at
any special meeting of the Board of Directors.
<PAGE>
September 2, 1999
Securities and Exchange Commission
Washington, D.C.
Re: First Sunrise Inc.
To Whom It May Concern:
First Sunrise Inc.(the "Company") is a corporation duly incorporated and
validly existing and in good standing under the laws of the state of Nevada.
The Company has full corporate powers to own its property and conduct its
business, as such business is described in the prospectus. The Company is
qualified to do business as a foreign corporation in good standing in every
jurisdiction in which the ownership of property and the conduct of business
requires such qualification.
This opinion is given in connection with the reconfirmation of one hundred
thousand (100,000) Shares of Common Stock, offered at a price of $.50 per
Share, for sale in the Company's initial public offering and currently held in
escrow pursuant to Rule 419.
We have acted as counsel to the company in connection with the preparation of
the Post-Effective Amendment to the Registration Statement on Form SB-2,
pursuant to which such Shares are being reconfirmed and, in so acting, we have
examined the originals and copies of the corporate instruments, certificates
and other documents of the Company and interviewed representatives of the
Company to the extent we deemed it necessary in order to form the basis for
the opinion hereafter set forth. In such examination we have assumed the
genuineness of all signatures and authenticity of all documents submitted to
me as certified or photo copies. As to all questions of fact material to this
opinion which have not been independently established, we have relied upon
statements or certificates of officers or representatives of the Company.
All of the 100,000 Shares currently offered for reconfirmation are now
authorized and issued, and held in escrow pursuant to Rule 419.
Based upon the foregoing, we are of the opinion that the 100,000 Shares of
Common Stock of the Company currently held in escrow are legally issued, fully
paid and non-assessable and there will be no personal liability to the owners
thereof.
The undersigned hereby consents to the use of this opinion in connection with
such Registration Statement and its inclusion as an exhibit accompanying such
Registration Statement.
Very truly yours,
SCHONFELD & WEINSTEIN, L.L.P.
SCHONFELD & WEINSTEIN, L.L.P.
JS:ed
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement of First Sunrise, Inc. on
Form SB-2 of our Report of Independent Auditors dated August 13, 1999 on the
financial statements of First Sunrise, Inc. for the year ended December 31,
1999 appearing in the Prospectus, which is part of this Registration
Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
Pompano Beach, Florida
September 2, 1999
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement of First Sunrise, Inc. on
Form SB-2 of our Report of Independent Auditors dated August 25, 1999, on the
financial statements of Platinum Executive Search, Inc. appearing in the
Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
Pompano Beach, Florida
September 2, 1999
CONSENT OF INDEPENDENT AUDITORS
I consent to the use in this Registration Statement of First Sunrise, Inc. on
Form SB-2 of my Report of Independent Auditor for Renaissance Leadership, Inc.
dated August 13, 1999 appearing in this Prospectus, which is part of this
Registration Statement.
I also consent to the reference to me under the heading "Experts" in such
Prospectus.
J. Michael Connolly, CPA
J. Michael Connolly
Certified Public Accountant
Centreville, Maryland
September 3, 1999
CONSENT OF INDEPENDENT AUDITOR
We consent to the use in this Registration Statement of First Sunrise, Inc. on
Form SB-2 of our Report of Independent Auditors for Strupp Investments, LLC
dated August 30, 1999appearing in the Prospectus, which is part of this
Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
Christina Stylianou
Certified Public Accountant
Astoria, New York
September 3, 1999
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement of First Sunrise, Inc. on
Form SB-2 of our Report of Independent Auditors dated February 14, 1998 on the
financial statements of First Sunrise, Inc. appearing in the Prospectus, which
is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
The B & B Group, LLP
The B & B Group, LLP
Certified Public Accountants
Pleasantvile, New York
September 2, 1999
<PAGE>
To The Board of Directors of
First Sunrise Inc.
Re: First Sunrise Inc.
SCHONFELD & WEINSTEIN, L.L.P. does hereby consent to the use of our opinion
dated September 2, 1999, to First Sunrise Inc. to be used and filed in
connection with the SB-2 Registration Statement and Prospectus, as filed with
the Securities and Exchange Commission.
Schonfeld & Weinstein, L.L.P.
SCHONFELD & WEINSTEIN, L.L.P.
Dated: September 2, 1999
