U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB/A
Amendment No. 2
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUER
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
J-BIRD MUSIC GROUP LTD.
(Name of Small Business Issuer in its charter)
Pennsylvania 06-1411727
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
396 Danbury Road, Wilton, Connecticut 06897
(Address of Principal Executive Offices and Zip Code)
Issuer's Telephone Number: (203) 761-9393
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $0.001
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TABLE OF CONTENTS
ITEM NUMBER AND CAPTION Page
Part I 1
1. Description of Business 1
2. Management's Discussion and Analysis or Plan of 8
Operations
3. Description of Properties 12
4. Security Ownership of Certain Beneficial Owners and 13
Management
5. Directors, Executive Officers, Promoters and Control 14
Persons
6. Executive Compensation 15
7. Certain Relationships and Related Transactions 16
8. Description of Securities 16
Part II 16
1. Market Price of and Dividends on the Registrant's 16
Common Equity and Related Stockholder Matters
2. Legal Proceedings 17
3. Changes in and Disagreements with Accountants 17
4. Recent Sales of Unregistered Securities 18
5. Indemnification of Directors and Officers 23
Part F/S 24
Financial Statements 24
Part III 24
1. Index to Exhibits 24
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Reference is made to the quarterly report on Form 10-QSB of J-
Bird Music Ltd., for the quarter ended September 30, 1998, filed
with the Securities and Exchange Commission (the "Quarterly
Report"), which is incorporated herein by this reference. The
Quarterly Report contains the most recent interim financial
information on the Company beginning on page 3, and Management's
Discussion and Analysis of Financial Condition and Results of
Operations for the applicable period beginning on page 10, which
should be read in conjunction with the historical information
presented herein.
PART I
ITEM 1 - BUSINESS.
GENERAL
J-Bird Music Group LTD ("the Company") was incorporated in the
State of Pennsylvania on June 7, 1991. J-Bird is authorized by
its articles of incorporation to issue 25,000,000 shares of
$0.001 par value of common stock, of which 13,837,795 shares were
outstanding as of September 30, 1998.
J-Bird Music Group LTD was formerly known as Caltron, Inc. The
name was changed on October 8, 1997 upon acquiring J-Bird
Records, Inc., the first World Wide Web Recording Label TM.
Prior to acquiring J-Bird Records, Inc., the Company was in the
business of developing and producing electron beam sterilization
and ozone production equipment. Upon management's decision to
realign its business by acquiring J-Bird Records, it sold its
interests in these businesses, with the exception of a five
percent (5%) equity interest in Feild Technologies,LLC("FTL").
BACKGROUND
From June 7, 1991 until November 15, 1995, the Company had no
operations, owned no properties and was inactive.
On November 15, 1995, the Company entered into an agreement with
a company called Laminar Fluid Controls ("Laminar") under which
the Company purchased seven patents relating to fluid control
technologies and equipment. Laminar assigned all of its rights,
title and interest in said patents to the Company and in return
received 100,000 shares of the Company's common stock. Laminar's
valves solve many problems such as eliminating pressure spikes in
hydraulic lines, regulating precise pressures and flows, and
providing long lasting operation in many applications which
currently wear out valves in days or weeks.
On April 22, 1997, the Company entered into an Option Agreement
with Feild Technologies,LLC ("FTL"), a company based in Bangor,
Maine. Under this agreement, the Company merged all seven
domestic and foreign valve patents, previously acquired from
Laminar, into FTL for a five percent (5%) equity position in FTL.
In the event the Company does not receive distributions of at
least $100,000 on or before December 31, 2000, it shall be
entitled to increase its interest in FTL from 5% to 10%, and the
other members' interests in FTL shall be reduced on a basis
proportionate to their relative interests. FTL is an operating
company run by the original inventor of the patented valve
technology. FTL owns a number of fluid control ideas and is in
the process of obtaining additional patents. On May 3, 1996, the
Company entered into an agreement with Rhode Island Renal
Institute ("RIRI") and Brooks Porter ("Porter"). RIRI and Porter
entered into a Development and Investment Agreement ("D&I
Agreement") and pursuant to the D&I Agreement, RIRI agreed to
provide financial support, clinical testing facilities and
supplies to Porter to assist his development of the Renal Ozone
Sterilization System ("ROSS"). Under the agreement with the
Company, RIRI and Porter assigned to the Company the right to
manufacture and distribute ROSS, and any other interests or
rights created by the D & I Agreement between or among Porter and
RIRI. In accordance with the agreement between the Company and
RIRI, RIRI received One Hundred Twenty-five Thousand (125,000)
shares of restricted common stock of the Company.
ROSS is a dialyzer sterilization technology currently in
development stage. The technology involves the generation of
ozonated water and the use of this water as the dialyzer
sterilant. The device is used to generate the ozonated water and
use the ozonated water to sterilize filters in kidney dialysis
machines. The use of this ozonated water to sterilize said
filters is the subject of a patent application which has been
filed by RIRI and Porter.
On July 28, 1997, the Company signed a letter of intent with a
private investor group to sell its interest in the ROSS
technology to said investor group. This agreement called for the
Company to assign all of its rights, title and interest in the
patent pending and the ROSS project to a newly formed company
called the ROSS Corporation in exchange for the return of
1,375,000 shares of the Company's common stock. The ROSS
Corporation, using the letter of intent, offered to exchange one
share of ROSS Corporation stock for one share of stock of the
Company. This exchange offer was open to all shareholders of the
Company on a first come, first served basis. The exchange offer
was for the period between July 28, 1997 and December 15, 1997.
The ROSS Corporation was not able to get commitments for the
required 1,375,000 shares of the Company's common stock and the
offer was revoked on December 15, 1997. The letter of intent
thereafter expired and became null and void.
In December, 1997, the ROSS Corporation signed an agreement with
the Company where the ROSS Corporation is going to buy the
Company's interest in the ROSS project for $500,000 and have
executed said Agreement and promissory note for that amount. In
connection with this transaction the Company recognized a loss of
$1,810,000.
On June 14, 1996, the Company entered into an agreement with a
company called Applied Advanced Technologies, Inc. ("AAT") and an
individual named Tovi Avnery ("Avnery") to acquire an interest in
AAT and for AAT to acquire an equity interest in the Company.
Under the terms of this Agreement, the Company received an
interest in the rights, title and interest in and to an electron
beam technology. Under this agreement, the Company was to
advance a total of Three Hundred Thousand ($300,000) dollars to
AAT in three installments of One Hundred Thousand ($100,000)
dollars, AAT received a total of $350,000. In return, the
Company received One Hundred Fourteen Thousand Five Hundred Forty-
six (114,546) shares of common stock of AAT, representing forty-
five (45%) percent ownership in the company. Avnery also
received One Hundred Thirty Thousand (130,000) shares of
restricted common stock of the Company.
The electron beam technology developed by AAT can apply to the
fields of sterilization, ozone generation, fuel atomization,
curing inks and coatings, treatment of various surfaces, and
hazardous waste cleanup. The electron beam technology is a
method of generating electrons in a vacuum, accelerating them
into a beam, and then projecting the beam into air through a thin
membrane or "window". The proprietary feature of the technology
is a newly developed window technology and the unique simplified
and compact design of the system.
On April 18, 1997, the Company and AAT entered into an agreement
whereby AAT was to buy back the Company's equity position in AAT,
conditional upon approval of financing. If the transaction was
completed, the Company would have received $4,000,000 for its
equity position in AAT. On May 21, 1997, the Company was advised
by AAT that it had been unable to secure the potential financing
under the April 18, 1997 Agreement to buy back the Company's
equity position in AAT. A dispute arose over certain monthly
payments and the Company and AAT agreed to go to arbitration,
pursuant to their Letter Agreement dated June 14, 1996, to
clarify the terms of the Letter Agreement and to determine
whether the Company was obligated to continue funding AAT's
research and development operations. Through mediation, the
Company decided to conclude its relationship with AAT.
On July 15, 1997, the Company and AAT entered into a Memorandum
of Understanding. In accordance with this Memorandum of
Understanding, AAT will pay to the Company $350,000 plus
interest, not to exceed $500,000, by July 31, 1999. In
September, 1997, the Company executed a Release and Assignment of
Interest in AAT, to be held in escrow until said monies owed to
the Company have been paid in full. The Company and AAT entered
into a Pledge Agreement in favor of the Company, wherein AAT
permitted the pledge of all issued and outstanding shares of
capital stock of AAT, as well as its patent/patent pending in a
certain Electron Beam Accelerator, to secure AAT's obligation to
make certain deferred payments to the Company under a certain
Promissory Note of even date. AAT also executed a Release and
Assignment of Interest in the Company. All shares of common
stock of the Company owned by AAT or Avnery are to be returned to
the Company.
On July 28, 1997, the Company entered into a Letter of Intent
with J-Bird Records, Inc., a Connecticut corporation. On October
7, 1997, the Company entered into a Stock Purchase Agreement with
the shareholders of J-Bird Records, Inc. to exchange their shares
of J-Bird Records for the equivalent number of shares of the
Company. The total number of shares exchanged in this
transaction was 4,475,000. Upon entering into these agreements,
the Company acquired J-Bird Records, Inc. On October 8, 1997, the
Company changed its name to J-Bird Music Group LTD. J-Bird
Records, Inc., is a wholly owned subsidiary of J-Bird Music Group
LTD.
J-Bird Records, Inc.("J-Bird") is the first World Wide Web
Recording Label TM. The Company was officially launched on
November 1, 1996 to market, distribute and sell music via a new
medium - the Internet. At its Website, located at http://www.j-
birdrecords.com, the Company attracts and signs recording artists
through its on-line office and promotes, markets and sells their
recordings through its on-line record store.
The Company's Website provides a comprehensive entertainment and
information resource enabling users to search and sample music
and artist information interactively through sound and graphics,
including on-line "sound stations" for each artist and the J-Bird
on-line "radio station". When an artist signs a recording
contract with the Company, such artist's music is posted on the
Company's Website in digital form for downloading using either
Real Audio TM or Shockwave TM "plug-ins". The Website contains a
webpage for each of the Company's artists. Users who are
interested in the music they sample may purchase it immediately
on-line. Users can also obtain information on specific artists
and related concert tours, music events and other promotions and
read recent articles on the favorite J-Bird artists. J-Bird
designs, produces and distributes CD's on-line and in the
traditional retail chains around the country. Artists, either
new or established, who want more control over the production and
distribution of their music, select and contract with J-Bird. J-
Bird and the artists then share in the proceeds of the CD sales.
By giving tens of millions of Internet users worldwide access to
the music of these artists, J-Bird fills a niche not addressed by
radio, music videos, and traditional music retailers.
Each new artist that signs with J-Bird is required to submit a
master recording, sample art work and pay a nominal fee of
currently $1,250 for which the artist automatically receives 125
CDs to sell for $10 each in order to recoup their investment.
The artist can also elect to purchase 1,000 CDs upon signing at
$2.25 each and the set up fee of $1,250 is waved. The artist
executes a Recording Contract with J-Bird which requires the
artist to produce one compilation of music for J-Bird during the
three year term of their contract. Pursuant to the Recording
Contract, J-Bird has the exclusive rights, in perpetuity, to
manufacture, advertise, sell and distribute such compilation. In
return, the artist receives a 12% royalty on the sales of all CDs
produced. If the artist enters into a recording contract with
another record label during the three-year term, J-Bird will
receive a royalty of 2% of all sales for the first album produced
by such artist with such new record label. J-Bird currently has
260 artists in the J-Bird catalogue.
J-Bird has chosen the Internet as its primary marketing vehicle
because the Internet provides a low-cost method of providing,
displaying and selling different styles and genres of music to a
worldwide audience. The Internet also allows J-Bird to target
sales to the largest music-buying population, the 15 to 24 age
group, which also represents the highest concentration of
Internet users. J-Bird's Website offers content-rich music genre
sites for rock, pop, alternative, country, urban, rap, jazz,
gospel, classical and world music, through the combination of
audio, graphics, and text. J-Bird's genre and artist web pages
allow users to target music and information based on personal
interests. J-Bird believes that this approach provides a
stimulating and entertaining on-line environment which
establishes a community atmosphere and promotes consumer-driven
product sales. J-Bird believes that the Company's business will
greatly benefit from the growth of the Internet.
The Company believes that on-line sales of recorded music will
compliment the traditional retail channel and will expand overall
music sales because of the on-line medium's ability to capitalize
on the ongoing shift in demographics of music buyers; to reach a
growing international consumer market and to offer the consumer
easier access to a broad range of titles. J-Bird also believes
that the ability to gather and process data resulting from
customer purchases and usage will facilitate targeted promotional
efforts in the highly segmented recorded music market. The
Internet also provides access to international markets for
recorded music which are growing faster than the U.S. market.
In addition, the Company gathers important information about
demographics and consumer preferences from users of its Website.
This information permits the Company to target subsequent
promotions to a particular customer group or geographic area.
The Company believes that this practice will enable the Company
to market its artists in an efficient, cost-effective manner by
targeting the most likely buyers for such artists music. In the
future, the Company expects to promote its artists through the
use of its radio station and on-line "chat-rooms" intended to
spark interest in a particular music genre or artist. The
Company believes that its strategy of interactive sales on the
Internet combined with targeted promotions will enable it to
build a loyal customer base.
Traditional record companies typically incur high promotional and
other costs in the distribution of their music, providing a
strong disincentive to sign unproven bands. J-Bird's low-cost
approach of relying upon listeners' interests, which has already
attracted over 250 new artists to the J-Bird label, will continue
to do so, and will allow the Company to compete on a cost-
effective basis with other record companies. The Company feels
that the use of its interactive Website, its on-line radio
station, and its targeted advertising, promotion and
distribution, creates a new medium for the music industry that
permits it to reach music buyers throughout the world and that
has the potential to shift the way music is marketed to
consumers.
In November, 1997, J-Bird announced that three of it's recording
artists were featured on the Pepsiworld.com Website for the
months of November and December. Pepsi's new generation of web
clients are able to view videos, listen to sound samples, get
biographical information and link directly to the J-Bird Records
web site to purchase CDs.
Also in November, 1997, J-Bird announced that AudioNet added
twenty five (25) J-Bird recording artists to their on-line CD
Jukebox. AudioNet is a pioneer in the music industry in helping
artists promote and sell their music through broadcasting on the
Web.
J-Bird also competes in the distribution and sale of recorded
music directly with established record label companies and with
other music producers and distributors, including Polygram, Time
Warner, EMI, Columbia and Phillips. In November, J-Bird was
approached by Navarre Corporation ("Navarre"). J-Bird entered
into a three-year exclusive retail distribution Agreement with
Navarre. Navarre, one of the leading independent distributors of
music and interactive software, distributes to retail accounts
throughout the nation, including, Tower Records, The Musicland
Group (which includes Media Play, Sam Goody, Musicland and On-
Cue), Blockbuster, Best Buy, Wherehouse, Camelot, HMV, Borders
and Circuit City as well as all the leading One Stops. Under the
Agreement, Navarre will distribute J-Bird products nationally
through its retail distribution relationships.
The Company has six employees.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
Subsequent Reports
Reference is made to the quarterly report on Form 10-QSB of J-
Bird Music Ltd., for the quarter ended September 30, 1998, filed
with the Securities and Exchange Commission (the "Quarterly
Report"), which is incorporated herein by this reference. The
Quarterly Report contains the most recent interim financial
information on the Company beginning on page 3, and Management's
Discussion and Analysis of Financial Condition and Results of
Operations for the applicable period beginning on page 10, which
should be read in conjunction with the historical information
presented herein.
Overview
The following discussion and analysis provides information
that management believes is relevant to an assessment and
understanding of J-Bird Music Group LTD's, consolidated results
of operations and financial condition for the year ended December
31, 1997. The discussion should be read in conjunction with the
Company's consolidated financial statements and accompanying
notes.
J-Bird derives its revenues from three principle sources: (i)
sales of compact disks ("CDs") directly to the artists for resale
to consumers, (ii) CD sales on the J-Bird Website; and (iii)
retail CD sales.
J-Bird's strategy to develop products and services for the
music entertainment business was primarily responsible for its
net loss for the years ended December 31, 1997 and 1996. The
Company has only a limited operating history in its operations
upon which an evaluation of J-Bird and its prospects can be
based. Accordingly, J-Bird believes that the results of its
operations in the past during which time the Company had minimal
revenues, are not meaningful indications of future performance. J-
Bird incurred losses from continuing operations of, $1,929,865
for the year ended December 31, 1997 and $351,977 for the year
ended December 31, 1996.
In 1998 the Company signed a distribution agreement with
Navarre Corporation which provides the Company with a national
presence in approximately 52,000 traditional retail
establishments. This agreement also provides the Company with a
national sales force that has existing relationships with the
major retail outlets in the country. As a start-up entity in 1997
the Company sold directly to retail markets with minimal results.
In the second half of 1997 the Company was able to obtain two
distribution agreements with regional distributors. This enabled
the Company to establish a regional presence and provided
credentials that assisted in signing the distribution agreement
with Navarre Corporation.
The Company currently intends to increase substantially its
operating expenses to fund increased sales and marketing, enhance
its existing website and to complete strategic relationships
important to the success of the Company. To the extent that such
expenses precede or are not subsequently followed by increased
revenues, the Company's business, results of operations and
financial condition will be materially adversely affected. There
can be no assurance that the Company will be able to generate
sufficient revenues from the sale of music recordings, related
merchandise, advertising and sponsorship programs to achieve or
maintain profitability on a quarterly or annual basis in the
future. The Company expects negative cash flow from operations to
continue for the foreseeable future as it continues to develop
and market its business.
CERTAIN FINANCIAL DATA
The consolidated financial data set forth below was derived
from the unaudited consolidated finacial statements of the
Company for the nine months ended September 30, 1998, and from
the audited consolidated financial statements of the Company for
the years ended December 31,1997 and 1996. The data should be
read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the
Consolidated Financial Statements and related Notes appearing
elsewhere in the registration statement and incorporated herein
by reference to the Quarterly Report.
Statement of Operations Data
Nine Months
Ended September 30 Years Ended December 31
1998 1997 1996
(Unaudited)
Net sales $ 561,436 $ 145,248 $ 6,376
Gross profit $ 284,485 $ 23,290 $ 4,669
Loss before other expense $ 522,959 $ 884,813 $ 351,977
Net loss $ 2,273,459 $1,929,865 $ 351,977
Net loss per share $ 0.18 $ 0.35 $ 0.09
Balance Sheet Data
As of September 30 As of December 31
1998 1997
(Unaudited)
Total assets $1,117,041 $1,132,290
Working capital $ 668,584 $ 151,710
Due to Shareholders $ 7,330 $ 30,880
Shareholders deficit $4,553,301 $2,281,842
Liquidity and Capital Resources
The Company has financed its operations and capital
expenditures primarily from equity financing and loans from
shareholders. At December, 1997, the Company had a cash balance
of $-0-. The Company also received $553,820 in cash from the
sale of stock through subscription agreements. The amount due
under stock subscriptions at December 31, 1997 was $369,750. The
Company expects negative cash flow from operations to continue
for the foreseeable future, as it continues to develop and market
its operations. Inflation has not had any material impact on the
Company's operations.
While the Company has positive working capital at December 31,
1997, the $500,000 note receivable responsible for the positive
working capital is in the process of being exchanged for the
purchase of treasury stock. See Note 10 to the financial
statements.
The Company is currently pursuing long term financing for its
operating activities and a potential acquisition. No source of
financing has occurred to date and there can be no assurance that
financing will be available, or if available, that it will be on
acceptable terms. The ability to finance existing and future
operations will be dependent upon external sources, which have
yet to be identified. Accordingly, the Company is unable to
predict the amount or terms of any financing arrangements it may
make in the future.
Results of Operations- year ended December 31, 1997 compared to
year ended December 31, 1996
A comparison of the 1997 results to the 1996 results is not
indicative of the operations as the Company did not begin
operations until October 1996.
1997 1996
Net Sales $145,248 $6,376
Cost of Sales $121,958 $1,707
Sales increased due to the number of artists and bands signed
by the Company in 1997. The Company had 164 of artists under
agreements at December 31, 1997 compared to 26 at December 31,
1996.
As a start-up entity in 1997 the Company sold directly to
retail markets with minimal results. In the second half of 1997
the Company was able to obtain two distribution agreements with
regional distributors. This enabled the Company to establish a
regional presence and provided credential that assisted in
signing the distribution agreement with Navarre Corporation.
Cost of sales includes $31,000 of costs that relate to the
start up of the Company when no sales took place.
Approximately $177,000 of inventory became obsolete when the
Company changed its distribution network to Navarre. This was
recorded as a separate category in the financial statements.
1997 1996
Advertising and Promotion Expenses $162,377 $46,424
The increase in advertising and promotion is due to the higher
level of operations of the Company. The primary increase from
1996 to 1997 is due to increased services with advertising
agencies as a result of the growth in the number of artists.
Professional Fees $212,255 $105,863
The increase in professional fees is due to the higher level
of legal and accounting fees by approximately $90,000.
Consulting fees were approximately $16,000 greater than the 1996
levels.
Salaries $173,225 $126,358
The increase in salaries is due to the increased number of
employees, three in 1997 compared to two in 1996 of the Company.
Financing Fee-Sale of Discounted Stock$868,000 $ -0-
Financing fees related to the non cash charge for the purchase
of restricted common stock at a discount to the market value of
the stock.
Administrative Expenses $264,329 $71,412
The increase in administrative expenses is due to the
increased of operations of the Company. Selling expense
increased in 1997 by approximately $43,000 compared to 1996.
Printing and stationary, equipment rental, insurance, postage and
general office supplies increased by approximately $86,000.
Travel and entertainment increased by approximately $64,000.
Interest Expenses $68,825 $ -0-
Interest includes $65,000 relating to the value of warrants
issued below fair market value of the stock, in connection with a
$30,000 working capital loan. The balance of the interest,
$3,825 of interest relates to the $30,000 and $20,000 working
capital loans provided to the Company.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No.130,
"Reporting Comprehensive Income" and SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information." SFAS
No.130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses,
gains and losses) in a full set of general-purpose financial
statements and requires that all items that are required to be
recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements.
SFAS No.130 is required to be adopted for the Company's fiscal
year ending December 31, 1998. The adoption of this pronouncement
is expected to have no impact on the Company's financial position
or results of operations. SFAS No.131 establishes standards for
the way that public business enterprises report information about
operating segments in annual financial statements and requires
that those enterprises report selected information about
operating segments in interim financial reports issued to
stockholders. It also establishes standards for related
disclosures about products and services, geographic areas, and
major customers. SFAS No.131 is required to be adopted for the
Company's 1998 year-end financial statements. The Company is
evaluating the impact, if any, of the adoption of this
pronouncement on the Company's existing disclosures.
RISKS ASSOCIATED WITH THE YEAR 2000
The Year 2000 issue is the result of computer programs being
written using two digits rather than four to define the
applicable year. In other words, date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year
2000. This could result in system failures or miscalculations
causing disruptions of operations, including, among others, a
temporary inability to process transactions, send invoices or
engage in similar normal business activities.
The Company intends to conduct an analysis in 1998 to determine
the extent to which its major suppliers' systems (insofar as they
relate to the Company's business) are subject to the Year 2000
issue. The Company is currently unable to predict the extent to
which the Year 2000 issue will affect the Company and its
suppliers, or the extent to which it would be vulnerable to its
suppliers' failure to remediate any Year 2000 issues on a timely
basis.
The failure of a major supplier subject to the Year 2000 issue to
convert its systems on a timely basis or a conversion that is
incompatible with the Company's systems could have a material
adverse effect on the Company. In addition, most of the
purchases from the Company's website are made with credit cards,
and the Company's operations may be materially adversely affected
to the extent its customers are unable to use their credit cards
due to Year 2000 issues that are not rectified by their credit
card providers.
ITEM 3 - PROPERTIES
The Company's principal place of business is an office located at
396 Danbury Road, Wilton, Connecticut 06897. The office facility
consists of approximately 1800 square feet and is being leased
pursuant to a thirty-six month lease expiring in July, 2000 for a
monthly lease payment of $2638. This does not include overhead
charges or salaries.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of November 19, 1997, the
number and percentage of the outstanding shares of common stock
which, according to the information supplied to the Company, were
beneficially owned by (i) each person who is currently a director
of the Company, (ii) each executive officer, (iii) all current
directors and executive officers of the Company as a group and
(iv) each person who, to the knowledge of the Company, is the
beneficial owner of more than 5% of the outstanding common stock.
Except as otherwise indicated, the persons named in the table
have sole voting and dispositive power with respect to all shares
beneficially owned, subject to community property laws where
applicable.
Common Percent of
Shares Class(2)
Name and Address
John J. Barbieri (1) 2,960,000 20.7
396 Danbury Road
Wilton, CT 06897
IMM International, Inc. (2) 1,300,000 9.1
#2 Springhill Road, Suite 17
Norwalk, CT 06851
Douglas G. McCaskey(1)(3) 681,000 4.8
26 Gay Bowers Road
Fairfield, CT 06430
Hope D. Trowbridge (1)(2) 255,000 1.8
#2 Springhill Road, Suite 17
Norwalk, CT 06851
Asa L. Fish (1) 135,000 0.9
396 Danbury Road
Wilton, CT 06897
All Executive officers and 5,331,000 37.2
Directors as a Group (4)
(1) These persons are all of the executive officers and
directors of the Company.
(2) Hope D. Trowbridge is the sole officer, director, and
shareholder of IMM International, Inc. Accordingly, Ms.
Trowbridge has voting and investment control over these shares.
(3) Includes 430,000 shares held by Mr. McCaskey through a
general partnership in which he is the general partner and
principal owner. Accordingly, Mr. McCaskey has voting and
investment control over these shares.
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PARTNERS AND CONTROL
PERSONS
All directors of the Company serve a term of one (1) year until
the next Annual Shareholders Meeting or until their death,
resignation, retirement, removal, disqualification, or until
their successors have been elected and qualified. Vacancies in
the existing board are to be filled by a majority vote of the
remaining directors. Officers of the Company serve at the will of
the Board of Directors.
The directors and executive officers of J-Bird Music Group LTD
as of September 30, 1998 are as follows:
Name Age Positions (1) Director
Since
John J. Barbieri 34 President, CEO and Director October 1997
Douglas G. McCaskey 43 Chairman and Director April 1997
Hope D. Trowbridge 37 Secretary, Treasurer and June 1991
Director
Asa L. Fish 32 Director April 1997
The following is a brief account of the business experience,
during the past five years, of each Director. Each of the
Directors is a citizen of the United States who has a business
address at the Company.
JOHN J. BARBIERI, CEO, President and Director of the Company,
earned a B.F.A. Degree from Paier College of Art in 1986. After
graduating, Mr. Barbieri joined Polygram Records as a Senior
Graphics Manager responsible for the print production and graphic
production budgets as well as implementing domestic production on
product. In May 1993, Mr. Barbieri joined Angel Records, a
division of EMI Records Group, as Vice President of Creative and
Production Services. Until June 1996, he was responsible for
creative services production, operations and new technologies
departments. Involved in creative direction, marketing and label
management, Mr. Barbieri has help pioneer the new multi-media
technology for CD PLUS and Enhanced CDs. He founded J-Bird
Records, Inc. in July 1996, and serves as its CEO, President and
Director as well as serving the same positions for J-Bird Music
Group LTD as of October 7, 1997.
DOUGLAS G. McCASKEY, Chairman and Director of the Company.
Mr. McCaskey is a graduate and MBA candidate of Babson College,
where he earned a B.S./B.A. degree in Accounting/Finance in 1975.
In November, 1975 he joined Readers Digest Association as a Field
Manager. In January, 1982 he joined Shearson American Express as
a Vice President of Investments. He went on to work as Vice
President of Investments for Oppenheimer & Company and Drexel
Burnham Lambert. Mr. McCaskey has over fifteen years of
experience in the field of investments, as a retail and
institutional broker as well as a Registered Investment Advisor.
Mr. McCaskey left the securities industry in 1992, and since
leaving has been a principal owner of several real estate
projects and provided independent consulting services to
businesses in the areas of business development and financing.
From December 1996, to the present Mr McCaskey has served as the
President and a Director of Marcorp, Inc., an inactive publicly-
held corporation with no assets.
HOPE D. TROWBRIDGE: Secretary, Treasurer and Director of J-
Bird Music Group LTD since June 7, 1991, earned a B.S. Degree in
Business, concentration marketing, from Skidmore College in 1983.
Ms. Trowbridge was employed as an account executive from March,
1986 to November, 1992 at Drexel Burnham Lambert, Access
Securities, Minotaur Securities and Harbor Financial, Inc.
Registered Agent (Series 7 and 63) August, 1983. She left the
securities industry in November 1992. From December 1992, to the
present Ms Trowbridge has served as the Corporate Secretary and a
Director of Marcorp, Inc., an inactive publicly-held corporation
with no assets. She served as President of the Company from
December 1996 to April, 1997, and is currently the
Secretary/Treasurer.
ASA L. FISH, has been a director of the Company since April
1997. He served as the Secretary from April 1997 until October
1997, and is presently Vice President and head of Investor
Relations for the Company. For five years prior to his joining
the Company, he was a Nutrition Expert and Fitness Consultant for
Gold's Gym.
During the past five years, none of the officers and/or directors
of the Company, nor any of the affiliates or promoters of the
Company filed any bankruptcy petition, have been convicted in or
been the subject of any pending criminal proceedings, or the
subject of any order, judgment or decree involving the violation
of any state or federal securities laws.
All directors serve a term of one year until the next Annual
Shareholders Meeting or until their death, resignation,
retirement, removal, disqualification, or until their successors
have been elected and qualified.
Vacancies in the existing board are to be filled by a majority
vote of the remaining directors. Officers of the Company serve
at the will of the Board of Directors.
ITEM 6 - EXECUTIVE COMPENSATION
In the year ended December 31,1997 the chief executive
officer, John J. Barbieri received a salary of $31,250 prior to
the date of the acquisition transaction between Caltron, Inc.,
and J-Bird Records, Inc., in October 1997. For the remainder of
1997 he did not receive a salary. In 1996 the Company did not
pay a salary to its chief executive officer.
For the year ending December 31, 1998, Mr. Barbieri is being
compensated at the rate of $120,000 per year for his services as
President. There is no employment agreement with Mr. Barbieri or
any other executive officer of the Company.
There were no stock options granted or exercised to the
executive officers in 1996, 1997 or 1998.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain shareholders perform legal and accounting services for
the Company. The Company issued 55,000 shares of stock valued at
$55,000 for services performed for J-Bird Records Inc. as of the
date of acquisition.
ITEM 8 - DESCRIPTION OF SECURITIES
The Company is authorized to issue 25,000,000 shares of common
stock, par value $0.001 per share, of which 13,837,795 shares are
issued and outstanding. Holders of common stock are entitled to
one vote per share on each matter submitted to a vote at any
meeting of stockholders. Shares of common stock do not carry
cumulative voting rights and, therefore, holders of a majority of
the outstanding shares of common stock will be able to elect the
entire board of directors, and, if they do so, minority
stockholders would not be able to elect any members to the board
of directors. The Company's board of directors has authority,
without action by the Company's stockholders, to issue all or any
portion of the authorized but unissued shares of common stock,
which would reduce the percentage ownership in the Company of its
stockholders and which may dilute the book value of the common
stock. Stockholders of the Company have no pre-emptive rights to
acquire additional shares of common stock. The common stock is
not subject to redemption and carries no subscription or
conversion rights. In the event of liquidation of the Company,
the shares of common stock are entitled to share equally in
corporate assets after satisfaction of all liabilities. Holders
of common stock are entitled to receive such dividends as the
board of directors may from time to time declare out of funds
legally available for the payment of dividends. The Company has
not paid dividends on its common stock and does not anticipate
that it will pay dividends in the foreseeable future.
PART II
ITEM 1 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS
MATTERS
The principal market on which the Company's common shares have
traded is the NASDAQ - Over the Counter Bulletin Board under the
symbol of "JBRD".
The Company is presently authorized to issue 25,000,000 shares
of common stock, par value $.001 per share, of which, as of
September 30, 1998, there were 13,837,795 issued and outstanding.
All shares of the common stock are of one class with equal rights
and privileges with respect to voting, liquidation and dividend
rights.
There are approximately 153 shareholders of record, which figure
does not take into consideration those shareholders whose
certificates are held in the name of broker-dealers.
As of the date hereof, the Company has not paid or declared any
cash dividends. The Company can give no assurance that it will
generate future earnings from which cash dividends can be paid.
Future payment of dividends by the Company, if any, is at the
discretion of the Board of Directors and will depend, among other
criteria, upon the Company's earnings, capital requirements, and
its financial condition as well as other relative factors.
Management has followed the policy of retaining any and all
earnings to finance the development of the business. Such a
policy is likely to be maintained as long as necessary to provide
working capital for the Company's operations.
The following table represents the average range of high and low
bid quotations for the calendar quarters during the past two
years.
Calendar Quarters High Bid Low Bid
December 1996 15.25 1.25
March 1997 7.75 1.25
June 1997 3.25 0.5313
September 1997 2.00 0.5313
December 1997 1.875 0.4063
March 1998 0.75 0.3125
June 1998 1.75 0.28125
September 1998 1.59375 0.5625
The foregoing quotations were obtained from broker-dealers and
market makers who provide daily reports of the NASD Electronic
Bulletin Board. The above quotes reflect inter-dealer prices
without retail mark-up, mark-down, or commissions and may not
necessarily represent actual transactions.
ITEM 2 - LEGAL PROCEEDINGS
There are no legal proceedings pending to which J-Bird is a
party.
In December, 1997, J-Bird entered into a Settlement Agreement
with David Rager, a former employee of J-Bird Records, Inc. Mr.
Rager initiated a lawsuit pending in the Superior Court for the
Judicial District of Fairfield at Bridgeport entitled Rager V. J-
Bird Records, Inc., et al., whereby Rager did not want to enter
into the Stock Exchange Agreement with J-Bird Music Group due to
differences between Rager and J-Bird Records. Under the
Agreement, Rager agreed to exchange his shares in J-Bird Records
for shares in J-Bird Music Group. Rager received a total of
$48,000 and 50,000 additional shares of J-Bird Music Group LTD.
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
Described below is information regarding all unregistered
sales of securities by the Company during the past three years.
All transactions described below were private transactions not
involving a public offering and were exempt from the registration
requirements of the Securities Act pursuant to Section 4(2)
thereof. No underwriter was engaged in connection with the
foregoing sales of securities. All shares sold were common
stock.
(1) The following sales in April, May, and June 1996,
involved the Company's acquisition in privately negotiated
transactions of patent rights and technology or an interest in a
business with technology under development. The purchasers were
each given an opportunity to review all business and financial
information on the Company in connection with the negotiations.
On April 10, 1996, the Company, pursuant to the Agreement with
Laminar Fluid Control, acquired all of Laminar Fluid Control's
rights, title and interests in seven (7) US and Foreign Valve
Patents in exchange for 100,000 shares of stock.
On May 5, 1996, the Company, pursuant to its Agreement with Rhode
Island Renal Institute and Brooks Porter, acquired all of their
rights, title and interest in a certain Renal Ozone
Sterilization equipment in exchange, Rhode Island Renal received
125,000 shares of stock and Porter received 75,000 shares of
stock.
On June 14, 1996, the Company, pursuant to its Agreement with
Applied Advanced Technologies and Tovi Avnery, acquired an equity
interest in AAT. Under the Agreement, the Company invested
$350,000 for a 45% ownership in AAT. Tovi Avnery was issued
130,000 shares of stock pursuant to this Agreement. Pursuant to a
Memorandum of Understanding signed in July, 1997, these shares
are to be returned to the Company and put into treasury and are
not included in the issued and outstanding figure throughout this
document.
(2) The Company is of the opinion that each of the
following purchasers was either an accredited investor within the
meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933 or sophisticated by virtue of business
background and knowledge of the Company through existing business
relationships giving them access to business and financial
information on the Company.
On April 11, 1996, Cooke Family Trust accepted 10,000 shares of
common stock as full payment of the Company's indebtedness of
$10,000 for consulting services.
On April 23, 1996, the Company sold 250,000 shares of stock to
Cooke Family Trust pursuant to a Subscription Agreement. The
Company received $0.40 a share for a total of $100,000.
On April 25, 1996, the Company sold 150,000 shares of stock to
Nostradamus, a partnership, pursuant to a Subscription Agreement.
The Company received $0.735 a share for a total of $110,000.
On May 1, 1996, the Company sold 20,000 shares of stock to
Lawrence D. Moses pursuant to his Subscription Agreement. The
Company received $2.00 a share for a total of $40,000.
On May 15, 1996, the Company sold 10,000 shares of stock to the
Bailey Realty Trust pursuant to a Subscription Agreement. The
Company received $5.00 a share for a total of $50,000.
On July 26, 1996, the Company issued McCaskey Group 250,000
shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $250,000.
On August 6, 1996, the Company issued Sandra K. Fitzpatrick
35,000 shares of stock pursuant to her Agreement with the Company
as serving as a Director.
On August 8, 1996, the Company issued Donald K. Whitcher 12,000
shares of stock as full payment for his outstanding invoice of
$10,000 for consulting and investor relations.
On August 14, 1996, the Company issued Cooke Capital Management
300,000 shares pursuant to the terms of his Consulting Agreement
with the Company.
On December 15, 1996, the Company issued McCaskey Group 75,000
shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $75,000.
(3) To the Company's knowledge each of the following
purchasers was an accredited investor within the meaning of Rule
501(a) of Regulation D promulgated under the Securities Act of
1933. Before investing, each purchaser was provided information
on the business and financial condition of the Company and given
an opportunity to ask questions of and receive information from
the executive officers of the Company.
On December 19, 1996, the Company issued Roseann E. Miller 16,500
shares pursuant to a Subscription Agreement. The Company received
$1.00 a share for a total of $16,500.
On December 19, 1996, the Company issued Judith Stevenson as
custodian 500 shares pursuant to a Subscription Agreement. The
Company received $1.00 a share for a total of $500.
On December 19, 1996, the Company issued Judith Stevenson 1,000
shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $1,000.
On January 9, 1997, the Company issued Jerold Ehrlich 7,000
shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $7,000.
On January 13, 1997, the Company issued Michael and Cheryl
Donahue 1,000 shares pursuant to a Subscription Agreement. The
Company received $1.00 a share for a total of $1,000.
On January 14, 1997, the Company issued Jerry and Joanee Cohen
5,000 shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $5,000.
On January 17, 1997, the Company issued to James England 2,000
shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $2,000.
On January 22, 1997, the Company issued Arnold and Marian Bowles
20,000 shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $20,000.
On January 25, 1997, the Company issued Cooke Family Trust 40,000
shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $40,000.
On January 28, 1997, the Company issued Tamara and Daniel Miller
1,000 shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $1,000.
On February 8, 1997, the Company issued to Cooke Family Trust
50,000 shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $50,000.
On February 15, 1997, the Company issued to Robert Fisk 5,000
shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $5,000.
On February 25, 1997, the Company issued Chennekatu and Anney
Peter 2,000 shares pursuant to a Subscription Agreement. The
Company received $1.00 a share for a total of $2,000.
On February 25, 1997, the Company issued William T. Rogers 2,000
shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $2,000.
(4) The Company is of the opinion that each of the
following purchasers was either an accredited investor within the
meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933 or sophisticated by virtue of business
background and knowledge of the Company through existing business
relationships giving them access to business and financial
information on the Company.
On March 18, 1997, the Company issued McCaskey Group 400,000
shares pursuant to a Subscription Agreement. The Company
received $0.50 a share for a total of $200,000.
On April 9, 1997, the Company issued Bailey Realty Trust 15,000
shares pursuant to a Subscription Agreement. The Company
received $1.00 a share for a total of $15,000.
On April 9, 1997, the Company issued Cooke Capital Management
60,000 shares pursuant to the terms of his Consulting Agreement
with the Company.
On April 14, 1997, the Company issued Shiela R. Miller IRA 1,333
shares pursuant to a Subscription Agreement. The Company
received $1.50 a share for a total of $2,000.
On April 14, 1997, the Company issued The Volunteer Realty Trust
13,333 shares pursuant to a Subscription Agreement. The Company
received $1.50 a share for a total of $20,000.
On April 28, 1997, the Company issued Asa L. Fish 35,000
shares pursuant to an Agreement with the Company as compensation
for services.
On July 28, 1997, the Company issued Asa L. Fish 100,000
shares pursuant to an Agreement with the Company as compensation
for services.
On July 28, 1997, the Company issued to Douglas McCaskey
250,000 shares pursuant to an Agreement with the Company. The
Company received $0.10 a share for a total of $25,000.
(5) Between October 7, 1997 and December 10, 1997, the
Company issued 4,475,000 shares to J-Bird Records, Inc.
shareholders pursuant to their Agreement with J-Bird Music Group.
Pursuant to this Agreement J-Bird Records shareholders exchanged
their shares one for one with J-Bird Music Group. The purchasers
were each given an opportunity to review all business and
financial information on the Company in connection with the
exchange.
These shares were issued to the following people:
Name Number of Shares
John J. Barbieri 2,960,000
Joseph Kriz 200,000
Maurizio Lancia 200,000
Walter Ancker 90,000
IMM International Inc. 270,000
Justin Cuccia 210,000
David Minus 70,000
James Burns 80,000
Hope Trowbridge 5,000
Samuel Anderson 5,000
Mary McCaskey 10,000
Robert Morrison 25,000
Richard Wingate 10,000
John C. Buchanan 500
Donald Morrison 1,000
Anna Bailey 1,000
Bill Kousmanidis 5,000
Joel Dunkel 500
Mario Clericuzio 2,000
David B. McCaskey 5,000
Morrison Family Trust 1,000
Donna Lancia 7,500
Eric Friedberg 2,500
Eric Sands 4,000
Noteworthy Management Group 1,000
John Sullivan 80,000
Nancy Piccirillo 2,500
Thomas Payne 2,000
Paul Sitar 500
Michael DeZaio 5,000
Dana Barron 5,000
Paul Freundlich 5,000
Stephen Habetz 2,000
Michael Russo 2,000
Fredericka Sands 5,000
David Rager 200,000
Anthony Palmesi 5,000
(6) The Company is of the opinion that each of the
following purchasers was either an accredited investor within the
meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933 or sophisticated by virtue of business
background and knowledge of the Company through existing business
relationships giving them access to business and financial
information on the Company.
On October 24, 1997, the Company issued Adam Frick 10,000 shares
as full payment for an invoice for $10,000.
On October 24, 1997, the Company issued Mark Galbraith 10,000
shares as full payment for an invoice for $10,000.
On October 24, 1997, the Company issued Todd Connelly 18,000
shares pursuant to his Agreement with J-Bird Records. These
shares are currently held in escrow.
On October 30, 1997, the Company issued Maurizio Lancia 11,000
shares as full payment for an invoice for $11,000 for legal work
done for the company.
On October 30, 1997, the Company issued Joseph A. Kriz 24,000
shares as full payment for an invoice for $24,000 for legal and
accounting work done for the company.
On December 8, 1997, the Company issued IMM International Inc.
500,000 shares pursuant to a Subscription Agreement. The Company
received $0.25 a share for a total of $125,000.
On December 8, 1997, the Company issued IMM International, Inc.
500,000 shares pursuant to a Subscription Agreement. The Company
received $0.25 a share for a total of $125,000.
On December 8, 1997, the Company issued IMM International, Inc.
1,000,000 shares pursuant to a Subscription Agreement. The
Company received $0.25 for a total of $250,000.
On March 18, 1998, the Company issued Christy & Viener 27,000
shares of common stock in payment for legal services.
On April 6, 1998, the Company issued IMM International, Inc.
1,000,000 shares pursuant to a Subscription Agreement. The
Company received $0.25 per share for a total of $250,000.
On April 22, 1998, the Company issued 5,000 shares to Christina
Salito, an employee, as compensation.
On April 22, 1998, the Company issued 10,000 shares of common
stock to Darrin Nowickj, an employee, as compensation.
On April 22, 1998, the Company issued to the Cook Family Trust
500,000 shares under a Subscription Agreement. The Company
received $0.30 per share for a total of $150,000.
On May 13, 1998, the Company issued 500,000 shares of common
stock to Security Capital in payment for consulting services.
On May 20, 1998, the Company issued IMM International, Inc.
500,000 shares pursuant to a Subscription Agreement. The Company
received $0.30 per share for a total of $150,000.
In July 1998, the Company issued to Billy Squier 40,000 shares of
common stock as consideration for entering into a recording
contract with the Company.
On September 10, 1998, the Company issued 250,000 shares to
Lawrence Forrest under a Subscription Agreement. The Company
received $0.40 per share for a total of $100,000.
On September 21, 1998, the Company issued 10,000 shares to
Maurizio Lancia in payment for legal services.
On September 21, 1998, the Company issued 10,000 shares to
Charlene Wright in payment for legal services.
In November 1998, the Company issued 500,000 to the McCaskey
Group under a Subscription Agreement. The Company received $0.25
per share for a total of $125,000.
On November 20, 1998, the Company issued 100,000 shares to Jorel
Management in payment for consulting services.
On December 14, 1998, the Company issued Christy & Viener 7,500
shares of common stock in payment for legal services.
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
The By-laws of the Company provide that a director of officer of
the Company will not be personally liable to the Company or its
shareholders for monetary damages for acts or conduct of said
officer or director performed for or on behalf of the Company,
except for liability arising out of his own negligence or willful
misconduct.
The Company is entitled under its By-laws to purchase and
maintain insurance on behalf of any director or officer against
any liability asserted against him and incurred by him in any
capacity.
PART F/S
FINANCIAL STATEMENTS
The 1997 and 1996 financial statements of the Company appear
at the end of this registration statement beginning with the
Index to Financial Statements on page F-1. Reference is made to
the quarterly report on Form 10-QSB of J-Bird Music Ltd., for the
quarter ended September 30, 1998, filed with the Securities and
Exchange Commission (the "Quarterly Report"), which is
incorporated herein by this reference. The Quarterly Report
contains the most recent interim financial information on the
Company beginning on page 3, and Management's Discussion and
Analysis of Financial Condition and Results of Operations for the
applicable period beginning on page 10, which should be read in
conjunction with the historical information presented herein.
PART III
ITEM 1. INDEX TO EXHIBITS
Copies of the following documents are included as exhibits to
this report pursuant to Item 601 of Regulation S-B.
Exhibits
Exhibit SEC Ref. Title of Document Page
No. No.
1 (3)(i) Articles ofIncorporation,as amended E-1
2 (3)(ii) By-Laws E-8
3 (2) Letter of Intent between the Company E-33
And J-Bird Records, Inc.
4 (10) Navarre Corporation Distribution E-35
Agreement
5 (10) Feild Technologies Option Agreement E-46
Dated April 15, 1997
6 (10) Feild Technologies Investment Agreement E-47
Dated May 20, 1997
7 (10) Assignment Agreement with Rhode Island E-52
Renal Institute and Brooks Porter
8 (10) Letter Agreement with Applied Advanced E-58
Technologies, Inc.
9 (21) Subsidiaries of the Registrant E-66
10 (99) Form 10-QSB of the Company for the E-67
quarter ended September 30, 1998
11 (27) Financial Data Schedule (1) Not
Applicable
(1) The Financial Data Schedule is included only in the
electronic filing of this registration statement with the
Securities and Exchange Commission.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this registration statement to be
signed on its behalf by the undersigned thereunto duly
authorized.
J-BIRD MUSIC GROUP LTD.
Date: December 16, 1998 By: /s/John J. Barbieri, President
In accordance with the Exchange Act, this registration statement
has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Dated: December 16, 1998 /s/ John J. Barbieri, Director
Dated: December 18, 1998 /s/ Douglas G. McCaskey, Director
Dated: December 18, 1998 /s/ Hope D. Trowbridge, Director
Dated: December 16, 1998 /s/ Asa L. Fish, Director
<PAGE>
J-BIRD MUSIC GROUP LTD.
Financial Statements
December 31, 1997 and 1996
CONTENTS
Independent Auditors' Report F-2
Balance Sheet F-3
Statements of Operations F-4
Statements of Cash Flows F-5
Statements of Stockholders' Equity F-6
Notes to the Financial Statements F-7
<PAGE>
Schnitzer & Kondub P.C.
Certified Public Accountants
550 Mamaroneck Avenue
Harrison, New York 10528
INDEPENDENT AUDITORS' REPORT
Board of Directors
J-Bird Music Group LTD.
We have audited the accompanying balance sheet of J-Bird Music
Group LTD. as of December 31, 1997 and the related statements of
operations , changes in stockholders' equity and cash flows for
each of the years in the two year period ended 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 audits.
We conducted our audits 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 the Company's management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide 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 J-Bird Music Group LTD. as of December 31, 1997 and the
results of its operations and cash flows for each of the years in
the two year period ended December 31, 1997 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 1. to the financial statements the Company has suffered
recurring losses from operations that raise substantial doubt
about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1.
The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
In the previously issued financial statements the Company had
accounted for the acquisition of J-Bird Records, Inc. using the
purchase method of accounting with Caltron Inc. being the
acquiring company. The accompany financial statements reflect J-
Bird Records, Inc. acquiring Caltron. In addition certain sales
of stock to shareholders at a price below the market value have
been adjusted to reflect the difference between the subscription
price and fair market value of the stock as financing expense.
The financial statements have also been adjusted to reflect the
estimated fair value of services performed by the chief executive
office at no cost to the Company. The effect of these adjustments
is to decrease net loss by $1,217,836 in 1997 and $121,333 in
1996.
Schnitzer & Kondub P.C.
Harrison, New York
February 18, 1998
(Except for Notes 1. and 2. for which the date is October 1, 1998
and Note 10. for which the date is November 18, 1998)
<PAGE>
J-BIRD MUSIC GROUP LTD.
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
Inventory $ 53,766
Accounts receivable 10,095
Loans receivable, shareholder 35,000
Recording advances 21,665
Note receivable 500,000
Total Current Assets 620,526
Fixed assets, net 131,485
Note receivable 350,000
Other assets 30,279
Total Assets $ 1,132,290
LIABILITIES AND STOCKHOLDERS' EQUITY
Account payable and accrued expenses $ 361,416
Accrued royalties 17,400
Notes payable 90,000
Total current liabilities 468,816
Due to shareholders and officers 30,880
Total Liabilities 499,696
Stockholders' Equity
Common stock $.001 par value 25,000,000 shares
authorized, 10,985,795 issued and outstanding 10,985
Stock subscriptions receivable (369,750)
Paid in capital 3,273,201
Deficit (2,281,842)
632,594
Total Liabilities and Equity $ 1,132,290
<PAGE>
J-BIRD MUSIC GROUP LTD.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
------------- --------------
Net sales $ 145,248 $ 6,376
Cost of sales 121,958 1,707
23,290 4,669
Operating expenses:
Advertising and promotion 162,377 46,424
Professional fees 212,255 105,863
Amortization and depreciation 27,092 6,589
Salaries 173,225 126,358
Interest 68,825 -
Selling, general and administrative
expenses 264,329 71,412
908,103 356,646
Net (loss) before other income
(expenses) (884,813) (351,977)
Other income (expense):
Write down of inventory (177,052)
Financing fee- sale of discounted
common stock (868,000) -
(1,045,052) -
Net loss $ (1,929,865) $ (351,977)
Net loss per common share
(basic and diluted) $ (0.35) $ (0.09)
Weighted average common shares
outstanding 5,497,341 4,000,000
<PAGE>
J-BIRD MUSIC GROUP LTD.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
-------------- --------------
Cash flows from (used in) operating
activities
Adjustments to reconcile net (loss)
to net cash from (used in)
operating activities:
Net (loss) $ (1,929,865) $ (351,977)
Amortization and depreciation 27,092 6,589
Financing fee- sale of common stock
at discount 868,000 -
(Increase) in accounts receivable (8,143) (1,952)
(Increase) in inventory (5,501) (48,265)
Stock issued for services 78,300 145,600
(Increase) in recording advances (21,665) -
(Increase) other assets - (27,249)
Compensation expense (non cash) 88,750 120,000
Interest expense (non cash) 65,000 -
Notes payable 40,000 -
Increase in accounts payable 216,926 85,475
Net cash (used in) operating activities (581,106) (71,779)
Cash flows from (used in) investing activities
Cash acquired in merger 2,448 -
Purchase of fixed assets (60,936) (90,827)
Net cash (used in) investing activities (58,488) (90,827)
Cash flows from (used in) financing activities
Stock issued for cash 553,820 167,500
Due from officers 13,719 (13,719)
Due to shareholder 380 30,500
Proceeds from notes payable 50,000 -
Net cash from financing activities 617,919 184,281
Net increase (decrease) in cash (21,675) 21,675
Cash, beginning of year 21,675 -
Cash, end of year $ - $ 21,675
<PAGE)
J-BIRD MUSIC GROUP LTD.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Common Retained
Common Stock Paid-in Earnings Subscript
Shares Amount Capital (Deficit) Receivable Total
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT
JANUARY 1, 1996 - $ - $ - $ - $ - $ -
Net loss - - - (351,977) - (351,977)
Fair value of employment
services-non compensated - - 120,000 - - 120,000
Stock issued for cash 2,120,000 2,120 165,380 - - 167,500
Stock issued for services 1,880,000 1,880 143,720 - - 145,600
BALANCE AT
DECEMBER 31, 1996 4,000,000 $ 4,000 $ 429,100 $ (351,977) $ - $ 81,123
Net loss - - - (1,929,865) - (1,929,865)
Stock subscription receivable 1,629,000 1,629 368,121 (369,750) -
Financing fee-sale of discounted
common stock 868,000 868,000
Issuance of stock warrant for
note payable - - 65,000 - - 65,000
Fair value ofemployment
services-non compensated - - 88,750 - - 88,750
Merger of J Bird Music Group LTD 4,202,325 4,202 823,264 - - 827,466
Stock issued for cash 1,074,570 1,074 552,746 - - 553,820
Stock issued for services 80,000 80 78,220 - - 78,300
BALANCE AT 10,985,895 $ 10,985 $ 3,273,201 $(2,281,842) $(369,750) $ 632,594
DECEMBER 31, 1997
</TABLE>
<PAGE>
J- Bird Music Group LTD.
Notes to Consolidated Financial Statements
Years Ended December 31, 1997 and 1996
Note 1. Organization and Significant Accounting Policies
On October 7, 1997, Caltron, Inc. ("Caltron")entered into a
stock purchase agreement with the shareholders of J-Bird Records,
Inc. to purchase their shares of J-Bird Records Inc. for the
equivalent number of shares of Caltron Inc. The total number of
shares exchanged in this transaction was 4,475,000. On October 8
1997, Caltron, Inc. changed its name to J-Bird Music Group
LTD(the "Company"). J-Bird Records, Inc., is a wholly owned
subsidiary of J-Bird Music Group LTD.
As a result of this transaction, the former shareholders of J-
Bird Records , Inc. will be the controlling shareholders of the
Company. This transaction has been accounted for as purchase of
Caltron, Inc. by J-Bird Records, Inc.
J-Bird Records, Inc. is the first World Wide Web Recording Label
(TM). The Company was officially launched on November 1, 1996 to
market, distribute and sell music via a new medium - the
Internet. At its Website, located at http://www.j-
birdrecords.com, the Company attracts and signs recording artists
through its on-line office and promotes, markets and sells their
recordings through its on-line record store.
The Company has experienced operating losses since its inception
and has experienced significant cash flow problems. The Company
is in the processing of raising capital through various sources
to fund its operations and has implemented certain operating
strategies to obtain profitably.
Amounts shown in the consolidated financial statements differ
from those previously reported to shareholders due to : a change
in the accounting for the merger between Caltron and J-Bird
Records Inc. with J-Bird Records Inc. being the acquiring
company, recording the estimated fair value of officer
compensation at no cost to the Company and accounting for the
issuance of stock in certain subscription agreements at less than
the fair market value of the stock . A reconciliation of sales
and net income is as follows:
1997 1996
Sales:
Sales as previously reported $13,226 $-0-
Adjustments 132,022 6,376
Restated $145,248 $ 6,376
Net loss:
Net loss as previously reported $(3,147,701) $(473,310)
Adjustments 1,217,836 121,333
Restated $(1,929,865) $(351,977)
Investments in affiliates
The Company accounts for its investments in affiliates by using
the equity method of accounting, under which the Company's share
of earnings of these affiliates is reflected in the statement of
operations. Investments acquired through the issuance of the
Company's stock are recorded at an average of the most recent
sales price of the stock at the date of acquisition.
Fixed Assets
Fixed assets are recorded at cost and are being depreciated over
their estimated useful lives ( 5 to 15 years).
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, J-Bird Records Inc.
Material intercompany balances and transactions have been
eliminated in consolidation.
Cash
For purposes of the statement of cash flows, the Company
considers cash as cash held in operating accounts and all highly
liquid investments with a maturity of three months or less to be
cash equivalents.
Inventory
Inventory of $ 53,766, stated at the lower of cost or market
(first in, first out), consists of musical CDs.
Revenue Recognition
Revenue is recorded when CDs are shipped from its fulfillment
center. The Company maintains its inventory at a fulfillment
center, which provides the shipping to customers.
Recording Advances
Recording advances represent advances against future royalties of
certain recording artists. Royalties are accrued at 12% of an
artist's sales.
Officers' Compensation
In 1997 and 1996 the chief executive officer received $31,250 and
$ -0- of cash compensation. The financial statements have been
adjusted to include annual compensation of $120,000, to reflect
the fair value of the services provided, as a charge to
operations. Paid in capital has been increased, accordingly.
Income Taxes
The Company accounts for income taxes under Statement of
Financial Accounting Standard No. 109, "Accounting for Income
Taxes." The Company has a net loss carry forward of
approximately $3,000,000 which expires through 2012.
Earnings Per Share
In 1997 the Company adopted Statement of Financial Accounting
Standards No. 128, "Earnings per Share". Earnings per share are
based on the weighted average number of shares outstanding.
Common stock equivalents have not been considered as their effect
would be anti-dilutive.
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 the disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Reclassifications and Restatements
In the previously issued financial statements the Company had
accounted for the acquisition of J-Bird Records, Inc. using the
purchase method of accounting with Caltron Inc. being the
acquiring company. The accompany financial statements have been
restated to reflect J-Bird Records, Inc. acquiring Caltron. In
addition certain sales of stock to shareholders at a price below
the market have been adjusted to reflect the difference between
the subscription price and fair market value of the stock as a
financing fee. The financial statements have also been adjusted
to reflect the estimated fair value of services performed by the
chief executive office at no cost to the Company.
Note 2. J-Bird Records Inc.
On October 7, 1997, Caltron, Inc. entered into a stock purchase
agreement with the shareholders of J-Bird Records, Inc. to
purchase their shares of J-Bird Records, Inc. for the equivalent
number of shares of the Company. The total number of common
shares exchanged in this transaction was 4,475,000 and was valued
at $827,466, the net assets of Caltron at date of acquisition.
The 4,000,000 shares received by the founding shareholders of J-
Bird Records, Inc. in connection with the acquisition have been
shown as outstanding since the inception of J-Bird Records, Inc.
This transaction has been accounted for as a purchase. The
financial statements include the operations of Caltron, Inc.
since October 7, 1997, date of acquisition. No goodwill was
recorded in this transaction.
The following table summarizes the unaudited pro forma results of
operations of the Company for the years ended December 31, 1997
and 1996, assuming the acquisition of Caltron, Inc. had occurred
on January 1, 1996. The unaudited pro forma financial information
presented is not necessarily indicative of the results of
operations that would have occurred had the acquisitions taken
place on January 1, 1996 or of future results of operations.
1997 1996
Net Sales $ 145,248 $ 6,376
Net (Loss) $ (4,390,758) $ (825,287)
Net (loss) per share $ (.50) $ (.10)
Weighted average shares 8,784,010 8,382,225
Note 3. Disposition of Long Term Assets and Investments
Laminar Fluid Controls
On November 15, 1995, Caltron entered into an agreement with
Laminar Fluid Controls to purchase seven patents relating to
fluid control technologies and equipment. Laminar Fluid Controls
assigned all of its rights, title and interest in said patents to
and in return received 100,000 shares of the Caltron's common
stock.
On April 22, 1997, the Caltron entered into an option agreement
with Field Technologies, LLC ("FTL"), a company based in Bangor,
Maine. Under this Agreement, the Caltron merged its patents into
FTL for a five percent (5%) equity position in FTL. FTL is an
operating company run by the original inventor of the patented
valve technology.
In accordance with Statement of Financial Accounting Standard 121
"Accounting for the Impairment of Long Lived Assets and for Long
Lived Assets to be Disposed Of" no value was assigned to the
patents at the date of acquisition.
Rhode Island Renal Institute
On May 3, 1996, the Caltron entered into an agreement with Rhode
Island Renal Institute ("RIRI") and Brooks Porter ("Porter").
RIRI and Porter entered into a development and investment
agreement and pursuant to this agreement, RIRI agreed to provide
financial support, clinical testing facilities and supplies to
Porter to assist his development of the Renal Ozone Sterilization
System ("ROSS:"). Under the agreement with Caltron RIRI and
Porter assigned to Caltron the right to manufacture and
distribute ROSS and any interests created by the development and
investment agreement among Porter and RIRI. In accordance with
the agreement, RIRI received 125,000 shares of restricted common
stock of Caltron.
In December 1997, the ROSS Corporation signed an agreement with
the Caltron where the ROSS Corporation is going to buy the
Caltron's interest in the ROSS Project for $500, 000. In
connection with this transaction Caltron wrote down the value of
its investment to $500,000 as of the date of acquisition. See
Note 10. to the financial statements.
Applied Advanced Technology
On June 14, 1996, Caltron entered into an Agreement with Applied
Advanced Technologies, Inc. ("AAT") and Tovi Avnery ("Avnery") to
acquire an interest in AAT and for AAT to acquire an equity
interest in Caltron Under the terms of this agreement, Caltron
received an interest in the rights, title and interest in and to
an electron beam technology. Under this Agreement, Caltron was
to advance a total of $300,000 dollars to AAT. AAT received a
total of $350,000. In return, the Company received 114,546
shares of common stock of AAT, representing 45% ownership in the
company. Avnery also received 130,000 shares of restricted
common stock of the Company.
On July 15, 1997, Caltron and AAT entered into a memorandum of
understanding to terminate its relationship whereby AAT will pay
Caltron $350,000 plus interest, not to exceed $500,000, by July
31, 1999. In September, 1997, Caltron executed a release and
assignment of interest in AAT, to be held in escrow until said
monies owed to Caltron have been paid in full. Caltron and AAT
entered into a pledge agreement in favor of the Company, wherein
AAT permitted the pledge of all issued and outstanding shares of
capital stock of AAT, as well as its patent/patent pending in a
certain electron beam accelerator, to secure AAT's obligation to
make certain deferred payments to the Company under the $350,000
promissory note. AAT also executed a release and assignment of
interest in Caltron. All shares of common stock of Caltron owned
by AAT or Avnery are to be returned to Caltron and are not
included in the outstanding shares of the Company at December 31,
1997. See Note 10. to the financial statements.
Note 4. Note Receivable
Notes receivable consists of:
Note from AAT bearing interest at the prime rate due July 31,1999
AAT has pledged its outstanding stock and patent/pending to
secure this note $ 350,000
See Note 10.
Note from Ross Corporation bearing interest at 5% due December
10, 1998
The note is collateralized by the patent/pending associated with
the ROSS Project. See Note 10. $ 500,000
Note 5. Related Party Transactions
Certain shareholders perform legal and accounting services for
the Company.The Company issued 55,000 shares of stock valued at
$55,000 for services performed for the Company.
In April and July of 1997 an officer of Caltron entered into
stock subscription agreements with Caltron, Inc. to purchase
135,000 shares of stock at $.10 per share. The agreements were
amended to account for the shares being issued for services. The
fair market value of the stock, $228, 800, was recorded as
consulting fees prior to the merger with J Bird Records Inc.
In July of 1997 a shareholder of Caltron entered into a stock
subscription agreement with Caltron, Inc. to purchase 250,000
shares of stock at $.10 per share. The difference between the
subscription price and the fair market value of the stock,
$347,500, was recorded as financing fees prior to the merger with
J-Bird Records Inc.
In December of 1997 certain shareholders of the Company entered
into stock subscription agreements with the Company, to purchase
2,000,000 shares of stock at $.25 per share. The difference
between the he subscription price and the fair market value of
the stock, $868,000 was recorded as a non-cash charge to
operations, "financing fee-sale of discounted stock".
At December 31, 1997 $369,750 in stock subscriptions receivable
were outstanding from shareholders who had purchased stock at a
discount to market in 1997.
Note 6. Property and Equipment
Property and equipment consist of:
Computer equipment and software $ 153,829
Leasehold improvement 8,571
Furniture and fixtures 2,766
165,166
Accumulated depreciation (33,681)
$ 131,485
======
Note 7. Notes Payable
Amounts due at December 31, 1997 consist of the following:
Note payable - stockholder $ 40,000
In connection with a judgment of $48,000
against the Company for past services.
The Company entered into a settlement
agreement to pay the claimant $48,000
and issue 50,000 shares of common stock.
Payments of $8,000 per month for 5 months
commence in February, 1998
Note payable to an individual, 30,000
bearing interest at the prime rate to provide
the Company working capital.
Note payable to a former shareholder for 20,000
$20,000 bearing interest at the prime rate to
provide the Company working capital
$ 90,000
======
In connection with the $48,000 settlement described above, a
liability of $48,125 was recorded for the fair value of the 50,000
common shares to be issued. In addition the stockholder was granted
an option to purchase shares, under the same terms of future
subscription agreements for stock to be issued under fair market
value, to maintain a 2.3 % ownership percentage of the Company. No
options have been exercised under this agreement. Approximately
30,000 shares may be issued upon exercise of the option .
In connection with the $30,000 loan described above, warrants to
purchase 2% of the J Bird Records Inc. outstanding common stock
prior to a merger or acquisition were issued. The warrants are
exercisable through March 2002 at $.25 per share. The number of
warrants to be issued is 87,140 based upon the merger with
Caltron Inc. The difference between the exercise price of the
warrants and the fair market value of the stock at the date of
the loan, $65,000, was recorded as interest expense in 1997.
Note 8. Common Stock
At December 31, 1997 $369,750 in stock subscriptions receivable
were outstanding from shareholders who had purchased stock at a
discount to market in 1997.
At December 31, 1997 warrants to purchase 87,140 shares of
common stock exercisable through March 2002 at $.25 per share
were outstanding.
At December 31, 1997 options to purchase $60,000 shares of stock
at $1 per share were outstanding.
Note 9. Commitments and Contingencies
(a) Leases
The Company has an operating lease agreements for an office
condominium. Aggregate annual minimum future rental payments
under the leases are $31,650, in 1998: $ 31,650, in 1999: and $
18,466 in 2000.
The Company has an option to purchase the office condominium for
$379,800 at the end of the lease. Fifty percent of the aggregate
lease payments would be applied to the purchase price.
(b) Operating Agreements
The Company has a one year agreement with a public relations firm
that requires monthly monthly payment of $4,500 in 1998.
(c) Royalty Agreements
The Company typically has agreements with recording artists that
require royalty payments at 12% of the artists' sales.
(d) Common Stock
During the years ended December 31, 1997 and 1996, the Company
issued shares of its common stock. These shares were not
registered under the Securities Act of 1933 based on the
exemption from registration thereunder provided by section 4 (2),
thereof for offerings not involving a public offering.
Note 10. Subsequent Event
In November 1998 the Company and the ROSS Corporation agreed to
exchange 125,000 shares of the Company's stock owned by ROSS for
the $500,000 note receivable in the accompanying financial
statements. If the agreement is finalized the Company's assets
and stockholders' equity would be decreased by $500,000 to
$632,290 and $132,594 respectively.
In May of 1998 $205,000 was received for full settlement of the
$350,000 note due from AAT. The difference of $145,000 was
recorded as a loss on disposal of assets in the first six months
of 1998.
Exhibit 1
J-Bird Music Group Ltd.
Form 10-SB, Amendment No. 1
File No. 0-24449
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 91)
In compliance with the requirements of 15 Pa.C.S. 1915
(relating to articles of amendment), the undersigned business
corporation desiring to amend its Articles, hereby states that:
1.The name of the corporation is: Caltron, Inc
2.The (a) address of this corporation's current registered office
in this Commonwealth or (b) name of its commercial registered
office provider and the county of venue is (the Department is
hereby authorized to correct the following information to conform
to the records of the Department):
(a) 407 North Front Street Harrisburg, PA 17101
(b)
c/o:_____________________________________________________________
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which
the corporation is located for venue and official publication
purposes.
3.The statute by or under which it was incorporated is: 15Pa.
C.S. 1306
4.The date of its incorporation is:
____________________________________
5.(Check, and if appropriate, complete one of the following):
X The amendment shall be effective upon filing these Articles
of Amendment in the Department of State.
___The amendment shall be effective
on:_____________________at_____________
Date Hour
6.(Check one of the following):
___The amendment was adopted by the shareholders (or members)
pursuant to 15 Pa.C.S. 1914(a) and (b).
X The amendment was adopted by the board of directors pursuant
to 15 PaCS. 1914(c).
7. (Check, and if appropriate, complete one of the following):
X The amendment adopted by the corporation, set forth in
full, is as follows:
To change the name of the corporation from Caltron, Inc. to J-
Bird Music Group LTD.
____The amendment adopted by the corporation as set forth in
full in Exhibit A attached hereto and made a part hereof.
8.(Check If the amendment relates to the Articles):
X The restated Articles of Incorporation supersede the
original Articles and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused
these Articles of Amendment to be signed by a duly authorized
officer thereof this 8th day of October, 1997.
CALTRON, INC.
(Name Of Corporation)
BY: Hope D. Trowbridge
(Signature)
TITLE: President
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 90)
In compliance with the requirements of 15 Pa. C.S. 1915
(relating to articles of amendment), the undersigned business
corporation, desiring to amend its Articles, hereby states that:
1. The name of the corporation is: CLARKS VALLEY, INC.
2. The (a) address of this corporation's current registered
office in this Commonwealth or (b) name of its commercial
registered office provider and the county of venue is (the
Department is hereby authorized to correct the following
information to conform to the records of the Department):
(a) 407 North Front Street Harrisburg, PA 17101
(b) c/o:__________________________________________________
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which
the corporation is located for venue and official publication
purposes.
3. The statute by or under which it was incorporated is:
15Pa. C.S. 1306
4. The date of its incorporation is: June 7, 1991
5. (Check, and if appropriate, complete one of the following):
X The amendment shall be effective upon filing these Articles
of Amendment in the Department of State.
___ The amendment shall be effective on: __________________
at_________________ Date Hour
6. (Check one of the following):
___ The amendment was adopted by the shareholders (or members)
pursuant to
15 Pa.C.S. 1914(a) and (b).
X The amendment was adopted by the board of directors pursuant
to 15 Pa.C.S. 1914(c).
7. (Check, and if appropriate, complete one of the following):
X The amendment adopted by the Corporation, set forth in full,
is as follows:
To change the name of the corporation from Clarks Valley,
Inc. to Caltron, Inc.
___ The amendment adopted by the corporation is set forth in
full in Exhibit A attached hereto and made a part hereof.
8. (Check if the amendment restates the Articles):
X The restated Articles of Incorporation supersede the
original Articles and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused
these Articles of Amendment to be signed by a duly authorized
officer thereof this 16th day of March, 1995.
CLARKS VALLEY, INC.
(Name of Corporation)
By: Neal E. Fitzpatrick, Jr.
(Signature)
TITLE: President
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 91)
In compliance with the requirements of 15 Pa.C.S. 1915
(relating to articles of amendment), the undersigned business
corporation, desiring to amend its Articles, hereby states that:
1. The name of the corporation is: CLARKS VALLEY, INC.
2. The (a) address of this corporation's current registered
office in this Commonwealth or (b) name of its commercial
registered office provider and the county of venue is (the
Department is hereby authorized to correct the following
information to conform to the records of the Department):
(a) 407 North Front Street, 1st Floor, Harrisburg, PA 17101
(b)
c/o:____________________________________________________________
Name of Commercial Registered Office Provider
County
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which
the corporation is located for venue and official publication
purposes.
3. The statute by or under which it was incorporated is 15 Pa.
C.S. 1306
4. The date of its incorporation is: June 7, 1991
5. (Check, and if appropriate, complete one of the following):
X The amendment shall be effective upon filing these Articles
of Amendment in the Department of State.
___ The amendment shall be effective on:___________________
at________________ Date Hour
6. (Check one of the following):
___ The amendment was adopted by the shareholders (or members)
pursuant to 15 Pa.C.S. 1914(a) and (b).
X The amendment was adopted by the board of directors
pursuant to 15 Pa.C.S. 1914(c).
7. (Check, and if appropriate, complete one of the following):
X The amendment adopted by the Corporation, set forth in full,
is as follows:
To change the aggregate number of shares authorized from 1,000
shares to 25,000,000.
___ The amendment adopted by the corporation as set forth in
full in Exhibit A attached hereto and made a part hereof.
8. (Check if the amendment restates the Articles):
X The restated Articles of Incorporation supersede the
original Articles and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused
these Articles of Amendment to be signed by a duly authorized
officer thereof this 3rd day of January, 1995
CLARKS VALLEY, INC.
(Name of Corporation)
By: Neal E. Fitzpatrick, Jr.
(Signature)
Title: President
ARTICLES OF INCORPORATION
DSCB:15-1306(Rev 89)
Indicate type of domestic corporation (check one):
x Business-stock (15 Pa. C.S. 1306) ___Professional (15 Pa.
C.S. 2903)
___ Business-nonstock (15 Pa. C.S. 2102) ___Management (15
Pa. C.S. 2701)
___ Business-statutory close (15 Pa. C.S. ___Cooperative (15
Pa. C.S. 2304a is applicable) 7701)
1. The name of the corporation is: CLARKS VALLEY, INC.
This corporation is incorporated under the provisions of the
Business Corporation Law of 1988.
2. The (a) address of this corporation's initial registered
office in this Commonwealth or (b) commercial registered office
provider and the county of venue is:
(a) 814 Monroe Street Stroudsburg, PA 18360
(b)______________________________________________________________
____________
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which
the corporation is located for venue and official publication
purposes.
3. The aggregate number of shares authorized is: 1000 shares
4. The name and address, including street and number, if any, of
each incorporator is:
Name Address Signature Date
R.W. Worthington 105 N. Watts Street R.W. Worthington
6-7
Philadelphia, PA 19107
5. The specified effective date, if any, is: June 06, 1991
3:32 PM
month day year
hour, if any
6. Any additional provisions of the articles, if any, attach an 8
1/2 x 11 sheet.
7. Statutory close corporation only: Neither the corporation nor
any shareholder shall make an offering of any of its shares of
any class that would constitute a "Public Offering" within the
meaninq of the Securities Act of 1933 (15U.S.C. 77A et seq.).
8. Business cooperative corporations only: (Complete and strike
out inapplicable term) The common bond of membership among its
members/shareholders
is:______________________________________________________________
__________
Exhibit 2
J-Bird Music Group Ltd.
Form 10-SB, Amendment No. 1
File No. 0-24449
BY-LAWS OF
J-BIRD MUSIC GROUP LTD.
(a Pennsylvania corporation)
(Formerly Caltron, Inc. and Clarks Valley, Inc.)
BY-LAWS OF
CLARKS VALLEY, INC.
(a Pennsylvania corporation)
ARTICLE I
_________
OFFICES AND FISCAL YEAR
Section 1.01. REGISTERED OFFICE.
The registered office of the corporation in Pennsylvania shall be
at 814 Monroe Street, Stroudsburg, PA 18360 until otherwise
established by an amendment of the articles or by the Board of
Directors and a record of such change is filed with the
Department of State in the manner provided by law.
Section 1.02. OTHER OFFICE.
The corporation may also have offices at such other places within
or without Pennsylvania as the Board of Directors may from time
to time appoint or the business of the corporation may require.
Section 1.03 FISCAL YEAR.
The fiscal year of the corporation shall begin on the first day
of January in each year.
ARTICLE II
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NOTICE - WAIVERS - MEETINGS GENERALLY
Section 2.01. MANNER OF GIVING NOTICE.
(a) General rule.
Whenever written notice is required to be given to any person
under the provisions of the Business Corporation Law or by the
articles or these bylaws, it may be given to the person either
personally or by sending a copy thereof by first class or express
mail, postage prepaid, or by telegram (with messenger service
specified), telex or TWX (with answerback received) or courier
service, charges prepaid, or by telecopier, to the address (or to
the telex, TWX, telecopier or telephone number) of the person
appearing on the books of the corporation or, in the case of
directors, supplied by the directors to the corporation for the
purpose of notice. If the notice is sent by mail; telegraph or
courier service, it shall be deemed to have been given to the
person entitled thereto when deposited in the United States mail
or with a telegraph office or courier service for delivery to
that person or, in the case of telex or TWX, when dispatched or,
in the case of telecopier, when received. A notice of meeting
shall specify the place, day and hour of the meeting, and any
other information required by any other provision of the Business
Corporation Law, the articles or these bylaws.
(b) Adjourned shareholder meetings.
When a meeting of shareholders is adjourned, it shall not be
necessary to give
any notice of the adjourned meeting or of the business to be
transacted at an adjourned meeting, other than by announcement at
the meeting at which the adjournment is taken, unless the board
fixes a new record date for the adjourned meeting.
Section 2.02. NOTICE OF MEETINGS OF BOARD OF DIRECTORS.
Notice of a regular meeting of the board of directors need not be
given. Notice of every special meeting of the board of directors
shall be given to each director by telephone or in writing at
least 24 hours (in the case of notice by telephone, telex, TWX or
telecopier) or 48 hours (in the case of notice by telegraph,
courier service or express mail) or five days (in the case of
notice by first class mail) before the time at which the meeting
is to be held. Every such notice shall state the time and place
of the meeting. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the board need
be specified in a notice of a meeting.
Section 2.03. NOTICE OF MEETINGS OF SHAREHOLDERS.
(a) General rule.
Written notice of every meeting of the shareholders shall be
given by, or at the direction of, the secretary to each
shareholder of record entitled to vote at the meeting at least:
(1) ten days prior to the day named for a meeting called to
consider a fundamental transaction under 15 Pa.C.S. Chapter 19
regarding amendments of articles of incorporation, mergers,
consolidations, share exchanges, sale of assets, divisions,
conversions, liquidations and dissolution; or
(2) five days prior to the day named for the meeting in any
other case.
If the secretary neglects or refuses to give notice of a meeting,
the person or persons calling the meeting may do so. In the case
of a special meeting of shareholders, the notice shall specify
the general nature of the business to be transacted.
(b) Notice of action by shareholders on By-laws.
In the case of a meeting of shareholders that has as one its
purposes action on the By-laws, written notice shall be given to
each shareholder that the purpose, or one of the purposes, of the
meeting is to consider the adoption, amendment or repeal of the
bylaws. There shall be included in, or enclosed with, the notice
a copy of the proposed amendment or a summary of the changes to
be effected thereby.
Section 2.04. WAIVER OF NOTICE
(a) Written waiver.
Whenever any written notice is required to be given under the
provisions of the Business Corporation Law, the articles or these
bylaws, a waiver thereof in writing, signed by the person or
persons entitled to the notice, whether before or after the time
stated therein, shall be denied equivalent to the giving of the
notice. Except as otherwise required by this subsection, neither
the business to be transacted at, nor the purpose of, a meeting
need be specified in the waiver of notice of the meeting. In the
case of a special meeting of shareholders, the waiver of notice
shall specify the general nature of the business to be
transacted.
(b) Waiver by attendance.
Attendance of a person at any meeting shall constitute a waiver
of notice of the meeting except where a person attends a meeting
for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any
business because the meeting was not lawfully called or convened.
Section 2.05. MODIFICATION OF PROPOSAL CONTAINED IN NOTICE.
Whenever the language of a proposed resolution is included in a
written notice of a meeting required to be given under the
provisions of the Business Corporation Law or the articles or
these bylaws, the meeting considering the resolution may without
further notice adopt it with such clarifying or other
amendments as do not enlarge its original purpose.
Section 2.06. EXCEPTION TO REQUIREMENT OF NOTICE.
(a) General rule.
Whenever any notice or communication is required to be given to
any person under the provisions of the Business Corporation Law
or by the articles or these bylaws or by the terms of any
agreement or other instrument or as a condition precedent to
taking any corporate action and communication with that person is
then unlawful, the giving of the notice or communication to that
person shall not be required.
(b) Shareholders without forwarding addresses.
Notice or other communications shall not be sent to any
shareholder with whom the corporation has been unable to
communicate for more than 24 consecutive months because
communications to the shareholder are returned unclaimed or the
shareholder has otherwise failed to provide the corporation with
a current address. Whenever the shareholder provides the
corporation with a current address, the corporation shall
commence sending notices and other communications to the
shareholder in the same manner as to other shareholders.
Section 2.07. USE OF CONFERENCE TELEPHONE AND SIMILAR EQUIPMENT.
One or more persons may participate in a meeting of the Board of
Directors or the shareholders of the corporation by means of
conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this section shall
constitute presence in person at the meeting.
ARTICLE III
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SHAREHOLDERS
Section 3.01. PLACE OF MEETING.
All meetings of the shareholders of the corporation shall be held
at the registered office of the corporation unless another place
is designated by the Board of Directors in the notice of a
meeting.
Section 3.02. ANNUAL MEETING.
The Board of Directors may fix the date and time of the annual
meeting of the
shareholders, but if no such date and time is fixed by the board,
the meeting for any calendar year shall be held on the second
Tuesday of February in such year, if not a legal holiday under
the laws of Pennsylvania, and, if a legal holiday, then on the
next succeeding business day, not a Saturday, at 1:00 o'clock
P.M., and at said meeting the shareholders then entitled to vote
shall elect directors and shall transact such other business as
may properly be brought before the meeting. If the annual
meeting shall not have been called and held within six months
after the designated time, any shareholder may call the meeting
at any time thereafter.
Section 3.03. SPECIAL MEETINGS.
(a) Call of special meetings.
Special meetings of the shareholders may be called at any time:
(1) by the Board of Directors; or
(2) unless otherwise provided in the articles, by shareholders
entitled to cast at least 20% of the vote that all shareholders
are entitled to cast at the particular meeting.
(b) Fixing of time for meeting.
At any time, upon written request of any person who has called a
special meeting, it shall be the duty of the secretary to fix the
time of the meeting which shall be held not more than 60 days
after the receipt of the request. If the secretary neglects or
refuses to fix a time of the meeting, the person or persons
calling the meeting may do so.
Section 3.04. QUORUM AND ADJOURNMENT.
(a) General rule.
A meeting of shareholders of the corporation duly called shall
not be organized for the transaction of business unless a quorum
is present. The presence of shareholders entitled to cast at
least a majority of the votes that all shareholders are entitled
to cast on a particular matter to be acted upon at the meeting
shall constitute a quorum for the purposes of consideration and
action on the matter. Shares of the corporation owned, directly
or indirectly, by it and controlled, directly or indirectly, by
the board of directors of this corporation, as such, shall not be
counted in determining the total number of outstanding shares for
quorum purposes at any given time.
(b) Withdrawal of a quorum.
The shareholders present at a duly organized meeting can continue
to do business until adjournment notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
(c) Adjournment for lack of quorum.
If a meeting cannot be organized because a quorum has not
attended, those
present may, except as provided in the Business Corporation Law,
adjourn the meeting to such time and place as they may determine.
(d) Adjournments generally.
Any meeting at which directors are to be elected shall be
adjourned only from day to day, or for such longer periods not
exceeding 15 days each as the shareholders present and entitled
to vote shall direct, until the directors have been elected. Any
other regular or special meeting may be adjourned for such period
as the shareholders present and entitled to vote shall direct.
(e) Electing directors at adjourned meeting.
Those shareholders entitled to vote who attend a meeting called
for the
election of directors that has been previously adjourned for lack
of a quorum, although less than a quorum as fixed in this
section, shall nevertheless constitute a quorum for the purpose
of electing directors.
(f) Other action in absence of quorum.
Those shareholders entitled to vote who attend a meeting of
shareholders that
has been previously adjourned for one or more periods aggregating
at least 15 days because of an absence of a quorum, although less
than a quorum as fixed in this section, shall nevertheless
constitute a quorum for the purpose of acting upon any matter set
forth in the notice of the meeting if the notice states that
those shareholders who attend the adjourned meeting shall
nevertheless constitute a quorum for the purpose of acting upon
the matter.
Section 3.05. ACTION BY SHAREHOLDERS
(a) General rule.
Except as otherwise provided in the Business Corporation Law or
the articles or these bylaws, whenever any corporate action is to
be taken by vote of the shareholders of the corporation, it shall
be authorized by a majority of the votes cast at a duly organized
meeting of shareholders by the holders of shares entitled to vote
thereon.
(b) Interested shareholders.
Any merger or other transaction authorized under l5Pa.C.S.
Subchapter 19C between the corporation or subsidiary thereof and
a shareholder of this corporation, or any voluntary liquidation
authorized under 15 Pa.C.S. Subchapter 19F in which a shareholder
is treated differently from other shareholders of the same class
(other than any dissenting shareholders), shall require the
affirmative vote of the shareholders entitled to cast at least a
majority of the votes that all shareholders other than the
interested shareholder are entitled to cast with respect to the
transaction, without counting the vote of the interested
shareholder. For the purposes of the preceding sentence,
interested shareholder shall include the shareholder who is a
party to the transaction or who is treated differently from other
shareholders and any person, or group of persons, that is acting
jointly or in concert with the interested shareholder and any
person who, directly or indirectly, controls, is controlled by or
is under common control with the interested shareholder. An
interested
shareholder shall not include any person who, in good faith and
not for the purpose of circumventing this subsection, is an
agent, bank, broker, nominee or trustee for one or more other
persons, to the extent that the other person or persons are not
interested shareholders.
(c) Exceptions.
Subsection (b) shall not apply to a transaction:
(1) that has been approved by a majority vote of the board of
directors without counting the vote of directors who:
(i) are directors or officers of, or have a material equity
interest in, the interested shareholder; or
(ii) were nominated for election as a director by the interested
shareholder, and first elected as a director, within 24 months of
the date of the vote on the proposed transaction: or
(2) in which the consideration to be received by the
shareholders for shares of any class of which shares are owned by
the interested shareholder is not less than the highest amount
paid by the interested shareholder in acquiring shares of the
same class.
(d) Additional approvals.
The approvals required by subsection (b) shall be in addition to,
and not in lieu of, any other approval required by the Business
Corporation Law, the articles or these bylaws, or otherwise.
Section 3.06. ORGANIZATION.
At every meeting of the shareholders, the chairman of the board,
if there be one, or, in the case of vacancy in office or absence
of the chairman of the board, one of the following officers
present in the order stated: the vice
chairman of the board, if there be one, the president, the vice
presidents in their order of rank and seniority, or a person
chosen by vote of the shareholders present, shall act as chairman
of the meeting. The secretary or, in the absence of the
secretary, an assistant secretary, or in the absence of both the
secretary and assistant secretaries, a person appointed by the
chairman of the meeting, shall act as secretary.
Section 3.07. VOTING RIGHTS OF SHAREHOLDERS.
Unless otherwise provided in the articles, every shareholder of
the corporation shall be entitled to one vote for every share
standing in the name of the shareholder on the books of the
corporation.
Section 3.08. VOTING AND OTHER ACTION BY PROXY.
(a) General rule.
(1) Every shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent to corporate action
in writing without a meeting may authorize another person to act
for the shareholder by proxy.
(2) The presence of, or vote or other action at a meeting of
shareholders, or the expression of consent or dissent to
corporate action in writing, by a proxy of a shareholder shall
constitute the presence of, or vote or action by, or written
consent or dissent of the shareholder.
(3) Where two or more proxies of a shareholder are present, the
corporation shall, unless otherwise expressly provided in the
proxy, accept as the vote of all shares represented thereby the
vote cast by a majority of them and, if a majority of the proxies
cannot agree whether the shares represented shall be voted or
upon the manner of voting the shares, the voting of the
shares shall be divided equally among those persons.
(b) Minimum requirements.
Every proxy shall be executed in writing by the shareholder or by
the duly authorized attorney-in-fact of the shareholder and filed
with the secretary of the corporation. A proxy, unless coupled
with an interest, shall be revocable at will, notwithstanding any
other agreement or any provision in the proxy to the contrary,
but the revocation of a proxy shall not be effective until
written notice thereof has been given to the secretary of the
corporation. An unrevoked proxy shall not be valid after three
years from the date of its execution unless a longer time is
expressly provided therein. A proxy shall not be revoked by the
death or incapacity of the maker unless, before the vote is
counted or the authority is exercised, written notice of the
death or incapacity is given to the secretary of the corporation.
(c) Expenses.
Unless otherwise restricted in the articles, the corporation
shall pay the reasonable expenses of solicitation of votes,
proxies or consents of shareholders by or on behalf of the board
of directors or its nominees for election to the board, including
solicitation by professional proxy solicitors and otherwise.
Section 3.09. VOTING BY FIDUCIARIES AND PLEDGEES.
Shares of the corporation standing in the name of a trustee or
other fiduciary and shares held by an assignee for the benefit of
creditors or by a receiver may be voted by the trustee,
fiduciary, assignee or receiver. A shareholder whose shares are
pledged shall be entitled to vote the shares until the shares
have been transferred into the name of the pledgee, or a nominee
of the pledgee, but nothing in this section shall affect the
validity of a proxy given to a pledgee or nominee.
Section 3.10. VOTING BY JOINT HOLDERS OF SHARES.
(a) General rule.
Where shares of the corporation are held jointly or as tenants in
common by two or more persons, as fiduciaries or otherwise:
(1) if only one or more of such persons is present in person or
by proxy, all of the shares standing in the names of such persons
shall be deemed to be represented for the purpose of determining
a quorum and the corporation shall accept as the vote of all the
shares the vote cast by a joint owner or a majority of them; and
(2) if the persons are equally divided upon whether the shares
held by them shall be voted or upon the manner of voting the
shares, the voting of the shares shall be divided equally among
the persons without prejudice to the rights of the joint owners
or the beneficial owners thereof among themselves.
(b) Exception.
If there has been filed with the secretary of the corporation a
copy, certified by an attorney at law to be correct, of the
relevant portions of the agreement under which the shares are
held or the instrument by which the trust or estate was created
or the order of court appointing them or of an order of court
directing the voting of the shares, the persons specified as
having such voting power in the document latest in date of
operative effect so filed, and only those persons, shall be
entitled to vote the shares but only in accordance therewith.
Section 3.01. VOTING BY CORPORATIONS
(a) Voting by corporate shareholders.
Any corporation that is a shareholder of this corporation may
vote by any of its officers or agents, or by proxy appointed by
any officer or agent, unless some other person, by resolution of
the board of directors of the other corporation or provision of
its articles or bylaws, a copy of which resolution or provision
certified to be correct by one of its officers has been filed
with the secretary of this corporation, is appointed its general
or special proxy in which case that person shall be entitled to
vote the shares.
(b) Controlled shares.
Shares of this corporation owned, directly or indirectly, by it
and controlled, directly or indirectly, by the board of directors
of this corporation, as such, shall not be voted at any meeting
and shall not be counted in determining the total number of
outstanding shares for voting purposes at any given time.
Section 3.12. DETERMINATION OF SHAREHOLDERS OF RECORD.
(a) Fixing record date.
The board of directors may fix a time prior to the date of any
meeting of shareholders as a record date for the determination of
the shareholders entitled to notice of, or to vote at, the
meeting, which time, except in the case of an adjourned meeting,
shall be not more than 90 days prior to the date of the meeting
of shareholders. Only shareholders of record on the date fixed
shall be so entitled notwithstanding any transfer of shares on
the books of the corporation after any record date fixed as
provided in this subsection. The board of directors may
similarly fix a record date for the determination of shareholders
of record for any other purpose. When a determination of
shareholders of record has been made as provided in this section
for purposes of a meeting, the determination shall apply to any
adjournment thereof unless the board fixes a new record date for
the adjourned meeting.
(b) Determination when a record date is not fixed.
If a record date is not fixed:
(1) The record date for determining shareholders entitled
to notice of or to vote at a meeting of shareholders shall be at
the close of business on the date next preceding the day on which
notice is given or, if notice is waived, at the close of business
on the day immediately preceding the day on which the meeting is
held.
(2) The record date for determining shareholders entitled
to express consent or dissent to corporate action in writing
without a meeting, when prior action by the board of directors is
not necessary, shall be the close of business on the day on which
the first written consent or dissent is filed with the secretary
of the corporation.
(3) The record date for determining shareholders for any
other purpose shall be at the close of business on the day on
which the board of directors adopts the resolution relating
thereto.
Section 3.13. VOTING LISTS.
(a) General rule.
The officer or agent having charge of the transfer books for
shares of the corporation shall make a complete list of the
shareholders entitled to vote at any meeting of shareholders,
arranged in alphabetical order, with the address of and of the
number of shares held by each. The list shall be produced and
kept open at the time and place of the meeting and shall be
subject to the
inspection of any shareholder during the whole time of the
meeting for the purposes thereof.
(b) Effect of list.
Failure to comply with the requirements of this section shall not
effect the validity of any action taken at a meeting prior to a
demand at the meeting by any shareholder entitled to vote thereat
to examine the list. The original share register or transfer
book, or a duplicate thereof kept in this Commonwealth, shall be
prima facie evidence as to who are the shareholders entitled to
examine the list or share register or transfer book or to vote at
any meeting of shareholders.
Section 3.14. JUDGES OF ELECTION.
(a) Appointment.
In advance of any meeting of shareholders of the corporation, the
board of directors may appoint judges of election, who need not
be shareholders, to act at the meeting or any adjournment
thereof. If judges of election are not so
appointed, the presiding officer of the meeting may, and on the
request of any shareholder shall, appoint judges of election at
the meeting. The number of judges shall be one or three. A
person who is a candidate for office to be filled at the meeting
shall not act as a judge.
(b) Vacancies.
In case any person appointed as a judge fails to appear or fails
or refuses to act, the vacancy may be filled by appointment made
by the board of directors in advance of the convening of the
meeting or at the meeting by the presiding officer thereof.
(c) Duties.
The judges of election shall determine the number of shares
outstanding and the voting power of each, the shares represented
at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes or ballots, hear
and determine all challenges and questions in any way arising in
connection with the right to vote, count and tabulate all votes,
determine the result and do such acts as may be proper to conduct
the election or vote with fairness to all shareholders. The
judges of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as
is practical. If there are three judges of election, the
decision, act or certificate of a majority shall be effective in
all respects as the decision, act or certificate of all.
(d) Report.
On request of the presiding officer of the meeting, or of any
shareholder, the judge shall make a report in writing of any
challenge or question or matter determined by them, and execute a
certificate of any fact found by them. Any report or certificate
made by them shall be prima facie evidence of the facts stated
therein.
Section 3.15. CONSENT OF SUAREHOLDERS IN LIEU OF MEETING.
(a) Unanimous written consent.
Ally action required or permitted to be taken at a meeting of the
shareholders or of a class of shareholders may be taken without a
meeting if, prior or subsequent to the action, a consent or
consents thereto by all of the shareholders who would be entitled
to vote at a meeting for such purpose shall be filed with the
secretary of the corporation.
(b) Partial written consent.
Any action required or permitted to be taken at a meeting of the
shareholders or of a class of shareholders may be taken without a
meeting upon the written consent of shareholders who would have
been entitled to cast the minimum number of votes that would be
necessary to authorize the action at a meeting at which all
shareholders entitled to vote thereon were present and voting.
The consents shall be filed with the secretary of the
corporation. The action shall not become effective until after
at least ten days' written notice of the action has been given to
each shareholder entitled to vote thereon who has not consented
thereto.
Section 3.16. MINORS AS SECURITY HOLDERS.
The corporation may treat a minor who holds shares or obligations
of the corporation as having capacity to receive and to empower
others to receive dividends, interest, principal and other
payments or distributions, to vote or express consent or dissent
and to make elections and exercise rights relating to such shares
or obligations unless, in the case of payments or distributions
on shares, the corporate officer responsible for maintaining the
list of shareholders or the transfer agent of the corporation or,
in the case of payments or distributions on obligations, the
treasurer or paying officer or agent has received written notice
that the holder is a minor.
ARTICLE IV
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BOARD OF DIRECTORS
Section 4.01. POWERS; PERSONAL LIABILITY.
(a) General rule.
Unless otherwise provided by statute all powers vested by law in
the corporation shall be exercised by or under the authority of,
and the business and affairs of the corporation shall be managed
under the direction of, the board of directors.
(b) Standard of care; justifiable reliance.
A director shall stand in a fiduciary relation to the corporation
and shall perform his or her duties as a director, including
duties as a member of any committee of the board upon which the
director may serve, in good faith, in a manner the director
reasonably believes to be in the best interests of the
corporation and with such care, including reasonable inquiry,
skill and diligence, as a person of ordinary prudence would use
under similar circumstances. In performing his or her duties, a
director shall be entitled to rely in good faith on information,
opinions, reports or statements, including financial statements
and other financial data, in each case prepared or presented by
any of the following:
(1) One or more officers or employees of the corporation
whom the director reasonably believes to be reliable and
competent in the matters presented.
(2) Counsel, public accountants or other persons as to
matters which the director reasonably believes to be within the
professional or expert competence of such person.
(3) A committee of the board upon which the director does
not serve, duly designated in accordance with law, as to matters
within its designated authority, which committee the director
reasonably believes to merit confidence.
A director shall not be considered to be acting in good faith if
the director has knowledge concerning the matter in question that
would cause his or her reliance to be unwarranted.
(c) Consideration of factors.
In discharging the duties of their respective positions, the
board of directors, committees of the board and individual
directors may, in considering the best interests of the
corporation, consider the effects of any action upon employees,
upon suppliers and customers of the corporation and upon
communities in which offices or other establishments of the
corporation are located, and all other pertinent factors. The
consideration of those factors shall not constitute a violation
of subsection (b).
(d) Presumption.
Absent breach of fiduciary duty, lack of good faith or self-
dealing, actions taken as a director or any failure to take any
action shall be presumed to be in the best interests of the
corporation.
(e) Personal liability of directors.
(1) A director shall not be personally liable, as such, for
monetary damages for any action taken, or any failure to take any
action, unless:
(i) the director has breached or failed to perform the
duties of his or her office under this section; and
(ii) the breach or failure to perform constitutes self-
dealing, willful misconduct or recklessness.
(2) The provisions of paragraph (1) shall not apply to the
responsibility or liability of a director pursuant to any
criminal statute, or the liability of a director for the payment
of taxes pursuant to local, State or Federal law.
(f) Notation of dissent.
A director who is present at a meeting of the board of directors,
or of a committee of the board, at which action on any corporate
matter is taken shall be presumed to have assented to the action
taken unless his or her dissent is entered in the minutes of the
meeting or unless the director files a written dissent to the
action with the secretary of the meeting before the adjournment
thereof or transmits the dissent in writing to the secretary of
the corporation immediately after the adjournment of the meeting.
The right to dissent shall not apply to a director who voted in
favor of the action. Nothing in this section shall bar a
director from asserting that minutes of the meeting incorrectly
omitted his or her dissent if, promptly upon receipt of a copy of
such minutes, the director notifies the secretary in writing, of
the asserted omission or inaccuracy.
Section 4.02. QUALIFICATION AND SELECTION OF DIRECTORS.
(a) Qualifications.
Each director of the corporation shall be a natural person of
full age who need not be a resident of Pennsylvania or a
shareholder of the corporation.
(b) Election of directors.
Except as otherwise provided in these bylaws, directors of the
corporation shall be elected by the shareholders. In elections
for directors, voting need not be by ballot, except upon demand
made by a shareholder entitled to vote at the election and before
the voting begins. The candidates receiving the highest number of
votes from each class or group of classes, if any, entitled to
elect directors separately up to the number of directors to be
elected by the class or group of classes shall be elected. If at
any meeting of shareholders, directors
of more than one class are to be elected, each class of directors
shall be elected in a separate election.
(c) Cumulative voting.
Unless the articles provide for straight voting, in each election
of directors every shareholder entitled to vote shall have the
right to multiply the number of votes to which the shareholder
may be entitled by the total number of
directors to be elected in the same election by the holders of
the class or classes of shares of which his or her shares are a
part and the shareholders may cast the whole number of his or her
votes for one candidate or may distribute them among two or more
candidates.
Section 4.03. NUMBER AND TERM OF OFFICE.
(a) Number.
The Board of Directors shall consist of such number of directors,
not less than one (1) nor more than five (5), as may be
determined from time to time by resolution of the Board of
Directors.
(b) Term of office.
Each director shall hold office until the expiration of the term
for which he or she was elected and until a successor has been
selected and qualified or until his or her earlier death,
resignation or removal. A decrease in the number of directors
shall not have the effect of shortening the term of any incumbent
director.
(c) Resignation.
Any director may resign at any time upon written notice to the
corporation. The resignation shall be effective upon receipt
thereof by the corporation or at such subsequent time as shall be
specified in the notice of resignation.
Section 4.04. VACANCIES.
(a) General rule.
Vacancies in the Board of Directors, including vacancies
resulting from an increase in the number of directors, may be
filled by a majority vote of the remaining members of the board
though less than a quorum, or by a sole remaining director, and
each person so selected shall be a director to serve for the
balance of the unexpired term, and until a successor has been
selected and qualified or until his or her earlier death,
resignation or removal.
(b) Action by resigned directors.
When one or more directors resign from the board effective at a
future date, the directors then in office, including those who
have so resigned, shall have power by the applicable vote to fill
the vacancies, the vote thereon to take effect when the
resignations become effective.
Section 4.05. REMOVAL OF DIRECTORS.
(a) Removal by the shareholders.
The entire Board of Directors, or any class of the board, or any
individual director may be removed from office without assigning
any cause by the vote
of shareholders, or of the holders of a class or series of
shares, entitled to elect directors, or the class of directors.
In case the board or a class of the board or any one or more
directors are so removed, new directors may be elected at the
same meeting. The board of directors may be removed at any time
with or without cause by the unanimous vote or consent of
shareholders entitled to. vote thereon.
(b) Removal by the board.
The board of directors may declare vacant the office of a
director who has been judicially declared of unsound mind or who
has been convicted of an offense punishable by imprisonment for a
term of more than one year or if, within 60 days after notice of
his or her selection, the director does not accept the office
either in writing or by attending a meeting of the board of
directors.
(c) Removal of directors elected by cumulative voting.
An individual director shall not be removed (unless the entire
board or class of the board is removed) if sufficient votes are
cast against the resolution for his removal which, if
cumulatively voted at an annual or other regular election of
directors, would be sufficient to elect one or more directors to
the board or to the class.
Section 4.06. PLACE OF MEETINGS.
Meetings of the board of directors may be held at such place
within or without
Pennsylvania as the board of directors may from time to time
appoint or as may be designated in the notice of the meeting.
Section 4.07. ORGANIZATION OF MEETINGS.
At every meeting of the board of directors, the chairman of the
board, if there be one, or, in the case of a vacancy in the
office or absence of the chairman of the board, one of the
following officers present in the order stated: the vice chairman
of the board, if there be one, the president, the vice presidents
in their order of rank and seniority, or a person chosen by a
majority of the directors present, shall act as chairman of the
meeting. The secretary or, in the absence of the secretary, an
assistant secretary, or, in the absence of the secretary and the
assistant secretaries, any person appointed by the chairman of
the meeting, shall act as secretary.
Section 4.08. REGULAR MEETINGS.
Regular meetings of the board of directors shall be held at such
time and place as shall be designated from time to time by
resolution of the board of directors.
Section 4.09. SPECIAL MEETINGS.
Special meetings of the board of directors shall be held whenever
called by the chairman or by two or more of the directors.
Section 4.10. QUORUM OF AND ACTION BY DIRECTORS
(a) General rule.
A majority of the directors in office of the corporation shall be
necessary to constitute a quorum for the transaction of business
and the acts of a majority of the directors present and voting at
a meeting at which a quorum is present shall be the acts of the
board of directors.
(b) Action by written consent.
Any action required or permitted to be taken at a meeting of the
directors may be taken without a meeting if, prior or subsequent
to the action, a consent or consents thereto by all of the
directors in office is filed with the secretary of the
corporation.
Section 4.11. EXECUTIVE AND OTHER COMMITTEES.
(a) Establishment and powers.
The board of directors may, by resolution adopted by a majority
of the directors in office, establish one or more committees to
consist of one or more directors of the corporation. Any
committee, to the extent provided in the resolution of the board
of directors, shall have and may exercise all of the powers and
authority of the board of directors except that a committee shall
not have any power or authority as to the following:
(1) The submission to shareholders of any action requiring
approval of shareholders under the Business Corporation Law.
(2) The creation or filling of vacancies in the board of
directors.
(3) The adoption, amendment or repeal of these bylaws.
(4) The amendment or repeal of any resolution of the board
that by its terms is amendable or repealable only by the board.
(5) Action on matters committed by a resolution of the
board of directors to another committee of the board.
(b) Alternate committee members.
The board may designate one or more directors as alternate
members of any committee who may replace any absent or
disqualified member at any meeting of the committee or for the
purposes of any written action by the committee. In the absence
or disqualification of a member and alternate member or members
of a committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another director
to act at the meeting in the place of the absent or disqualified
member.
(c) Term.
Each committee of the board shall serve at the pleasure of the
board.
(d) Committee procedures.
The term "board of directors" or "board," when used in any
provision of these bylaws relating to the organization or
procedures of or the manner of taking action by the board of
directors, shall be construed to include and refer to any
executive or other committee of the board.
Section 4.12. COMPENSATION.
The board of directors shall have the authority to fix
compensation of directors for their services as directors and a
director may be a salaried officer of the corporation.
ARTICLE V
_________
OFFICERS
Section 5.01. OFFICERS GENERALLY.
(a) Number, qualifications and designation.
The officers of the corporation shall be a president, a
secretary, a treasurer, and such other officers as may be elected
in accordance with the provisions of Section 5.03. Officers may
but need not be directors or shareholders of the corporation.
The president and secretary shall be natural persons of full age.
The treasurer may be a corporation, but if a natural person shall
be of full age. The board of directors may elect from among the
members of the board a chairman of the board and a vice-chairman
of the board who shall be officers of the corporation. Any
number of offices may be held by the same person.
(b) Resignations.
Any officer may resign at any time upon written notice to the
corporation. The resignation shall be effective upon receipt
thereof by the corporation or at such subsequent time as may be
specified in the notice of resignation.
(c) Bonding.
The corporation may secure the fidelity of any or all of its
officers by bond or otherwise.
(d) Standard of care.
Except as otherwise provided in the articles, an officer shall
perform his or her duties as an officer in good faith, in a
manner he or she reasonably believes to be in the best interests
of the corporation and with such care, including reasonable
inquiry, skill and diligence, as a person of ordinary prudence
would use under similar circumstances. A person who so performs
his or her duties shall not be liable by reason of having been an
officer of the corporation.
Section 5.02. ELECTION AND TERM OF OFFICE.
The officers of the corporation, except those elected by
delegated authority pursuant to Section 5.03, shall be elected
annually by the board of directors, and each such officer shall
hold office for a term of one year and until a successor has been
selected and qualified or until his or her earlier death,
resignation or removal.
Section 5.03. SUBORDINATE OFFICERS, COMMITTEES AND AGENTS.
The board of directors may from time to time elect such other
officers and appoint such committees, employees or other agents
as the business of the corporation may require, including one or
more assistant secretaries, and one or more assistant treasurers,
each of whom shall hold office for such period, have such
authority, and perform such duties as are provided in these
bylaws or as the board of directors may from time to time
determine. The board of directors may delegate to any officer or
committee the power to elect subordinate officers and to retain
or appoint employees or other agents, or committees thereof and
to prescribe the authority and duties of such subordinate
officers, committees, employees or other agents.
Section 5.04. REMOVAL OF OFFICERS AND AGENTS.
Any officer or agent of the corporation may be removed by the
board of directors with or without cause. The removal shall be
without prejudice to the contract righhts, if any, of any person
so removed. Election or appointment of an officer or agent shall
not of itself create contract rights.
Section 5.05. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification, or any other cause, shall be filled by the
board of directors or by the officer or committee to which the
power to fill such office has been delegated pursuant to Section
5.03, as the case may be, and if the office is one for which
these bylaws prescribe a term, shall be filled for the unexpired
portion of the term.
Section 5.06. AUTHORITY.
All officers of the corporation, as between themselves and the
corporation, shall have such authority and perform such duties in
the management of the corporation as may be provided by or
pursuant to resolution or orders of the
board of directors or in the absence of controlling provisions in
the resolutions or orders of the board of directors, as may be
determined by
or pursuant to these bylaws.
Section 5.07. THE CHAIRMAN OF THE BOARD.
The chairman of the board if there be one, or in the absence of
the chairman, the vice chairman of the board, shall preside at
all meetings of the shareholders and of the board of directors
and shall perform such other duties as may from time to time be
requested by the board of directors.
Section 5.08. THE PRESIDENT.
The president shall be the chief executive officer of the
corporation and shall have general supervision over the business
and operations of the corporation, subject however, to the
control of the board of directors. The president shall sign,
execute, and acknowledge, in the name of the corporation, deeds,
mortgages, contracts or other instruments authorized by the board
of directors, except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors,
or by these bylaws, to some other officer or agent of the
corporation; and, in general, shall perform all duties incident
to the office of president and such other duties as from time to
time may be assigned by the board of directors.
Section 5.09. THE SECRETARY.
The secretary or an assistant secretary shall attend all meetings
of the shareholders and of the board of directors and shall
record all votes of the shareholders and of the directors and the
minutes of the meetings of the
shareholders and of the board of directors and of committees of
the board in a book or books to be kept for that purpose; shall
see that notices are given and records and reports properly kept
and filed by the corporation as required by law; shall be the
custodian of the seal of the corporation and see that It is
affixed to all documents to be executed on behalf of the
corporation under its seal; and, in general, shall perform all
duties incident to the office of secretary, and such other duties
as may from time to time be assigned by the board of directors or
the president.
Section 5.10. THE TREASURER.
The treasurer or an assistant treasurer shall have or provide for
the custody of the funds or other property of the corporation;
shall collect and receive or provide for the collection and
receipt of moneys earned by or in any manner due to or received
by the corporation; shall deposit all funds in his or her custody
as treasurer in such banks or other places of deposit as the
board of directors may from time to time designate; shall,
whenever so required by the board of directors, render an account
showing all transactions as treasurer and the financial condition
of the corporation; and, in general, shall discharge such other
duties as may from time to time be assigned by the board of
directors or the president.
Section 5.11. SALARIES.
The salaries of the officers elected by the board of directors
shall be fixed from time to time by the board of directors or by
such officer as may be designated by resolution of the board.
The salaries or other compensation of any other officers,
employees and other agents shall be fixed from time to time by
the officer or committee to which the power to elect such
officers or to retain or appoint such employees or other agents
has been delegated pursuant to Section 5.03. No officer shall be
prevented from receiving such salary or other compensation by
reason of the fact that the officer is also a director of the
corporation.
Section 5.12. DISALLOWED COMPENSATION.
Any payments made to an officer or employee of the corporation
such as a salary, commission, bonus, interest, rent, travel or
entertainment expense incurred by him, which shall be disallowed
in whole or in part as a deductible expense by the Internal
Revenue Service, shall be reimbursed by such officer or employee
to the corporation to the full extent of such disallowance. It
shall be the duty of the directors, as a Board, to enforce
payment of each such amount disallowed. In lieu of payment by
the officer or employee, subject to the determination of the
directors, proportionate amounts may be withheld from future
compensation payments until the amount owed to the corporation
has been recovered.
ARTICLE VI
__________
CERTIFICATES OF STOCK, TRANSFER, ETC.
Section 6.01. SHARE CERTIFICATES.
Certificates for shares of the corporation shall be in such form
as approved by the board of directors, and shall state that the
corporation is incorporated under the laws of Pennsylvania, the
name of the person to whom issued, and the number and class of
shares and the designation of the series (if any) that the
certificate represents. The share register or transfer books and
blank share certificates shal1 be kept by the secretary or by any
transfer agent or registrar designated by the board of directors
for that purpose.
Section 6.02. ISSUANCE.
The share certificates of the corporation shall be numbered and
registered in the share register or transfer books of the
corporation as they are issued. They shall be signed by the
president or a vice president and by the secretary or an
assistant secretary or the treasurer or an assistant treasurer,
and shall bear the corporate seal, which may be a facsimile,
engraved or printed; but where such certificate is signed by a
transfer agent or a registrar the signature of any corporate
officer upon such certificate may be a facsimile, engraved or
printed. In case any officer who has signed, or whose facsimile
signature has been placed upon, any share certificate shall have
ceased to be such officer because of death, resignation or
otherwise, before the certificate is issued, it may be issued
with the same effect as if the officer had not ceased to be such
at the date of its issue. The provisions of this Section 6.02
shall be subject to any inconsistent or contrary agreement at the
time between the corporation and any transfer agent or registrar.
Section 6.03. TRANSFER.
Transfers of shares shall be made on the share register or
transfer books of the corporation upon surrender of the
certificate therefor, endorsed by the person named in the
certificate or by an attorney lawfully constituted in writing. No
transfer shall be made inconsistent with the provisions of the
Uniform Commercial Code, 13 Pa.C.S. 8101 et seq., and its
amendments and supplements.
Section 6.04. RECORD HOLDER OF SHARES.
The corporation shall be entitled to treat the person in whose
name any share or shares of the corporation stand on the books of
the corporation as the absolute owner thereof, and shall not be
bound to recognize any equitable or other claim to, or interest
in, such share or shares on the part of any other person.
Section 6.05. LOST, DESTROYED OR MUTILATED CERTIFICATES.
The holder of any shares of the corporation shall immediately
notify the corporation of any loss, destruction or mutilation of
the certificate therefor, and the board of directors may, in its
discretion, cause a new certificate or certificates to be issued
to such holder, in case of mutilation of the certificate, upon
the surrender of the mutilated certificate or, in case of loss or
destruction of the certificate, upon satisfactory proof of such
loss or destruction and, if the board of directors shall so
determine, the deposit of a bond in such form and in such sum,
and with such surety or sureties, as it may direct.
ARTICLE VII
___________
INDEMNIFICATION OF DIRECTORS, OFFICERS AND
OTHER AUTHORIZED REPRESENTATIVES
Section 7.01. SCOPE OF INDEMNIFICATION.
(a) General rule.
The corporation shall indemnify an indemnified representative
against any liability incurred in connection with any proceeding
in which the indemnified representative may be involved as a
party or otherwise by reason of the fact that such person is or
was serving in an indemnified capacity, including, without
limitation, liabilities resulting from any actual or alleged
breach or neglect of duty, error, misstatement or misleading
statement, negligence, gross negligence or act giving rise to
strict or products liability, except:
(1) where such indemnification is expressly prohibited by
applicable law;
(2) where the conduct of the indemnified representative has
been finally determined pursuant to Section 7.06
or otherwise:
(i) to constitute willful misconduct or recklessness
within the meaning of 15 Pa.C.S. 513(b) and 1746(b) and 42
Pa.C.S. 8365(b) or any superseding provision of law sufficient in
the circumstances to bar
indemnification against liabilities arising from the conduct; or
(ii) to be based upon or attributable to the receipt by
the indemnified representative from the corporation of a personal
benefit to which the indemnified representative is not legally
entitled; or
(3) to the extent such indemnification has been finally
determined in a final adjudication pursuant to Section 7.06 to be
otherwise unlawful.
(b) Partial payment.
If an indemnified representative is entitled to indemnification
in respect of a portion, but not all, of any liabilities to which
such person may be subject, the corporation shall indemnify such
indemnified representative to the maximum extent for such portion
of the liabilities.
(c)Presumption.
The termination of a proceeding by judgment, order, settlement or
conviction or upon a plea of nolo contendere or its equivalent
shall not of itself create a presumption that the indemnified
representative is not entitled to indemnification.
(d) Definitions.
For purposes of this Article:
(1) "indemnified capacity" means any and all past, present
and future service by an indemnified representative in one or
more capacities as a director, officer, employee or agent of the
corporation, or, at the request of the corporation, as a
director, officer, employee, agent, fiduciary or trustee of
another corporation, partnership, joint venture, trust, employee
benefit
plan or other entity or enterprise ;
(2) "indemnified representative" means any and all
directors and officers of the corporation and any other person
designated as an indemnified representative by the board of
directors of the corporation (which may, but need not, include
any person serving at the request of the corporation, as a
director, officer, employee, agent, fiduciary or trustee of
another
corporation, partnership, joint venture, trust, employee benefit
plan or other entity or enterprise):
(3) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed
with respect to an employee benefit plan, or cost or expense, of
any nature (including, without limitation, attorneys' fees and
disbursements); and
(4) "proceeding" means any threatened, pending or completed
action, suit, appeal or other proceeding of any nature, whether
civil, criminal, administrative or investigative, whether formal
or informal, and whether brought by or in the right of the
corporation, a class of its security holders or otherwise.
Section 7.02. PROCEEDINGS INITIATED BY INDEMNIFIED
REPRESENTATIVES.
Notwithstanding any other provision of this Article, the
corporation shall not indemnify under this Article an indemnified
representative for any liability incurred in a proceeding
initiated (which shall not be deemed to include counter-claims or
affirmative defenses) or participated in as an intervenor or
amicus curiae by the person seeking indemnification unless such
initiation of or participation in the proceeding is authorized,
either before or after its commencement, by the affirmative vote
of a majority of the directors in office. This section does not
apply to a reimbursement of expenses incurred in successfully
prosecuting or defending an arbitration under Section 7.06 or
otherwise successfully prosecuting or defending the rights of an
indemnified representative granted by or pursuant to this
Article.
Section 7.03. ADVANCING EXPENSES.
The corporation shall pay the expenses (including attorneys' fees
and
disbursements) incurred in good faith by an indemnified
representative in advance of the final disposition of a
proceeding described in Section 7.01 or the initiation of or
participation in which is authorized pursuant to Section 7.02
upon receipt of an undertaking by or on behalf of the indemnified
representative to repay the amount if it is ultimately determined
pursuant to Section 7.06 that such person is not entitled to be
indemnified by the corporation pursuant to this Article. The
financial ability of an indemnified representative to repay an
advance shall not be a prerequisite to the making of such
advance.
Section 7.04. SECURING OF INDEMNIFICATION OBLIGATIONS.
To further effect, satisfy or secure the indemnification
obligations provided herein or otherwise, the corporation may
maintain insurance, obtain a letter of credit, act as self-
insurer, create a reserve, trust, escrow, cash collateral or
other fund or account, enter into indemnification agreements,
pledge or grant a security interest in any assets or properties
of the corporation, or use any other mechanism or arrangement
whatsoever in such amounts, at such costs, and upon such other
terms and conditions as the board of directors shall deem
appropriate. Absent fraud, the determination of the board of
directors with respect to such amounts, costs, terms and
conditions shall be conclusive against all security holders,
officers and directors and shall not be subject to voidability.
Section 7.05. PAYMENT OF INDEMNIFICATION.
An indemnified representative shall be entitled to
indemnification within 30 days after a written request for
indemnification has been delivered to the secretary of the
corporation.
Section 7.06. ARBITRATION.
(a) General rule.
Any dispute related to the right to indemnification, contribution
or advancement of expenses as provided under this Article, except
with respect to indemnification for liabilities arising under the
Securities Act of 1933 that the corporation has undertaken to
submit to a court for adjudication, shall be decided only by
arbitration in the metropolitan area in which the principal
executive offices of the corporation are located at the time, in
accordance with the commercial arbitration rules then in effect
of the American Arbitration Association, before a panel of three
arbitrators, one of whom shall be selected by the corporation,
the second of whom shall be selected by the indemnified
representative and third of whom shall be selected by the other
two arbitrators. In the absence of the American Arbitration
Association, or if for any reason arbitration under the
arbitration rules of the American Arbitration Association cannot
be initiated, or if one of the parties fails or refuses to select
an arbitrator or if the arbitrators selected by the corporation
and the indemnified representative cannot agree on the selection
of the third arbitrator within 30 days after such time as the
corporation and the indemnified representative have each been
notified of the selection of the other's arbitrator, the
necessary arbitrator or arbitrators shall be selected by the
presiding judge of the court of general jurisdiction in such
metropolitan area.
(b) Burden of proof.
The party or parties challenging the right of an indemnified
representative to the benefits of this Article shall have the
burden of proof.
(c) Expenses.
The corporation shall reimburse an indemnified representative for
the expenses (including attorneys' fees and disbursements)
incurred in successfully prosecuting or defending such
arbitration.
(d) Effect.
Any award entered by the arbitrators shall be final, binding and
nonappealable and judgment may be entered thereon by any party in
accordance with applicable law in any court of competent
jurisdiction, except that the corporation shall be entitled to
interpose as a defense in any such judicial enforcement
proceeding any prior final judicial determination adverse to the
indemnified
representative under Section 7.01(a)(2) in a proceeding not
directly involving indemnification under this Article. This
arbitration provision shall be specifically enforceable.
Section 7.07. CONTRIBUTION.
If the indemnification provided for in this Article or otherwise
is unavailable for any reason in respect of any liability or
portion thereof, the corporation shall contribute to the
liabilities to which the indemnified representative may be
subject in such proportion as is appropriate to reflect the
intent of this Article or otherwise.
Section 7.08. MANDATORY INDEMNIFICATION OF DIRECTORS, OFFICERS,
ETC.
To the extent that an authorized representative of the
corporation has been successful on the merits or otherwise in
defense of any action or proceeding referred to in 15 Pa.C.S.
1741 or 1742 or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including
attorneys' fees and disbursements) actually and reasonably
incurred by such person in connection therewith.
Section 7.09. CONTRACT RIGHTS; AMENDMENT OR REPEAL.
All rights under this Article shall be deemed a contract between
the corporation and the indemnified representative pursuant to
which the corporation and each indemnified representative intend
to be legally bound. Any repeal, amendment or modification
hereof shall be prospective only and shall not affect any rights
or obligations then existing.
Section 7.10. SCOPE OF ARTICLE.
The rights granted by this Article shall not be deemed exclusive
of any other rights to which those seeking indemnification,
contribution or advancement of expenses may be entitled under any
statute, agreement, vote of shareholders or disinterested
directors or otherwise both as to action in an indemnified
capacity and as to action in any other capacity. The
indemnification, contribution and advancement of expenses
provided by or granted pursuant to this Article shall continue as
to a person who has ceased to be an indemnified representative in
respect of matters arising prior to such time, and shall inure to
the benefit of the heirs, executors, administrators and personal
representatives of such a person.
Section 7.11. RELIANCE OF PROVISIONS.
Each person who shall act as an indemnified representative of the
corporation shall be deemed to be doing so in reliance upon the
rights provided in this Article.
Section 7.12. INTERPRETATION.
The provisions of this Article are intended to constitute bylaws
authorized by 15 Pa.C.S. 513 and 1746 and 42 Pa.C.S. 8365.
ARTICLE VIII
____________
MISCELLANEOUS
Section 8.01. CORPORATE SEAL.
The corporation seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words
"Corporate Seal, Pennsylvania
Section 8.02. CHECKS.
All checks, notes, bills of exchange or other orders in writing
shall be signed by such person or persons as the board of
directors or any person authorized by resolution of the board of
directors may from time to time designate.
Section 8.03. CONTRACTS.
(a) General rule.
Excepts as otherwise provided in the Business Corporation Law in
the case of transactions that require action by the shareholders,
the board of directors may authorize any officer or agent to
enter into any contract or to execute or deliver any instrument
on behalf of the corporation, and such authority may be general
or confined to specific instances.
(b) Statutory form of execution of instruments.
Any note, mortgage, evidence of indebtedness, contract or other
document, or any assignment or endorsement thereof, executed or
entered into between the corporation and any other person, when
signed by one or more officers or agents having actual or
apparent authority to sign it, or by the president or vice
president and secretary or assistant secretary or treasurer or
assistant treasurer of the corporation, shall be held to have
been properly executed for and in behalf of the corporation,
without prejudice to the rights of the corporation against any
person who shall have executed the instrument in excess of his or
her actual authority.
Section 8.04. INTERESTED DIRECTORS OR OFFICERS; QUORUM.
(a) General rule.
A contract or transaction between the corporation and one or more
of its directors or officers or between the corporation and
another corporation, partnership, joint venture, trust or other
enterprise in which one or more of its directors or officers are
directors or officers or have a financial or other interest,
shall not be void or voidable solely for that reason, or solely
because the director or officer is present at or participates in
the meeting of the board of directors that authorizes the
contract or transaction, or solely because his, her or their
votes are counted for that purpose, if:
(1) the material facts as to the relationship or interest and as
to the contract or transaction are disclosed or are known to the
board of directors and the board authorizes the contract or
transaction by the affirmative votes of a majority of the
disinterested directors even though the disinterested directors
are less than a quorum;
(2) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known
to the shareholders entitled to vote thereon and the contract or
transaction is specifically approved in good faith by vote of
those shareholders; or
(3) the contract or transaction is fair as to the corporation as
of the time it is authorized, approved or ratified by the board
of directors or the shareholders.
(b) Quorum.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board which authorizes a
contract or transaction specified in subsection (a).
Section 8.05. DEPOSITS.
All funds of the corporation shall be deposited from time to time
to the credit of the corporation in such banks, trust companies
or other depositaries as the board of directors may approve or
designate, and all such funds shall be withdrawn only upon checks
signed by such one or more officers or employees as the board of
directors shall from time to time determine.
Section 8.06. CORPORATE RECORDS.
(a) Required records.
The corporation shall keep complete and accurate books and
records of account, minutes of the proceedings of the
incorporators, shareholders and directors and a share register
giving the names and addresses of all shareholders and the number
and class of shares held by each. The share register shall be
kept at either the registered office of the corporation in
Pennsylvania or at its principal place of business wherever
situated or at the office of its registrar or transfer agent.
Any books, minutes or other records may be in written form or any
other form capable of being converted into written form within a
reasonable time.
(b) Right of inspection.
Every shareholder shall, upon written verified demand stating the
purpose thereof, have a right to examine, in person or by agent
or attorney, during the usual hours for business for any proper
purpose, the share register, books and records of account, and
records of the proceedings of the incorporators, shareholders and
directors and to make copies or extracts therefrom. A
proper purpose shall mean a purpose reasonably related to the
interest of the person as a shareholder. In every instance where
an attorney or other agent is the person who seeks the right of
inspection, the demand shall be accompanied by a verified power
of attorney or other writing that authorizes the attorney or
other agent to so act on behalf of the shareholder. The demand
shall be directed to the corporation at its registered office in
Pennsylvania or at its principal place of business wherever
situated.
Section 8.07. FINANCIAL REPORTS.
Unless otherwise agreed between the corporation and a
shareholder, the
corporation shall furnish to its shareholders annual financial
statements, including at least a balance sheet as of the end of
each fiscal year and a statement of income and expenses for the
fiscal year. The financial statements shall be prepared on the
basis of generally accepted accounting principles, if the
corporation prepares financial statements for the fiscal year on
that basis for any purpose, and may be consolidated statements of
the corporation and one or more of its subsidiaries. The
financial statements shall be mailed by the corporation to each
of its shareholders entitled thereto within 120 days after the
close of each fiscal year and, after the mailing and upon written
request, shall be mailed by the corporation to any shareholder or
beneficial owner entitled thereto to whom a copy of the most
recent annual financial statements has not previously been
mailed. Statements that are audited or reviewed by a public
accountant shall be accompanied by the report of the accountant;
in other cases, each copy shall be accompanied by a statement of
the person in charge of the financial records of the corporation:
(1) Stating his reasonable belief as to whether or not the
financial statements were prepared in accordance with generally
accepted accounting principles and, if not, describing the basis
of presentation.
(2) Describing any material respects in which the financial
statements were not prepared on a basis consistent with those
prepared for the previous year.
Section 8.08. RESTRICTION ON TRANSFER OF SHARES
(a) Any shareholder desiring to sell, assign, transfer, pledge
or otherwise dispose of his shares, or the representative of any
deceased shareholder within a reasonable time after the death of
the shareholder, must offer his shares in writing, first to the
corporation for a period of 30 days, at fair market value as
determined by the corporation's accountant. Any shares not
purchased by the corporation within the 30 day period shall then
be offered to the remaining shareholders in proportion to their
holdings of such shares in the same manner and at the same price
for a further period of 30 days. Any shares not purchased by the
shareholders within the 30 day period may then be offered for
sale in the open market, at a price no lower than that at which
the shares were previously offered. If all of the shares have
not been disposed of in the open market within a period of six
months, the shares remaining unsold must again be offered for
sale to the corporation and to the remaining shareholders in the
same manner as hereinbefore set forth before they may be offered
for sale to other than the corporation and the shareholders.
Notwithstanding the provisions of ARTICLE VIII, Section 8.09 this
By-law may be amended or repealed only by unanimous vote at any
regular or special meeting of the shareholders duly convened
after notice to the shareholders of that purpose.
Section 8.09. AMENDMENT OF BY-LAWS.
These bylaws may be amended or repealed, or new bylaws may be
adopted, either (i) by vote of the shareholders at any duly
organized annual or special meeting of shareholders, or (ii) with
respect to those matters that are not by statute committed
expressly to the shareholders and regardless of whether the
shareholders have previously adopted or approved the bylaw being
amended or repealed, by vote of a majority of the board of
directors of the corporation in office at any regular or special
meeting of directors. Any change in these bylaws shall take
effect when adopted unless otherwise provided in the resolution
effecting the change. See Section 2.03(b) (relating to notice of
action by shareholders on bylaws).
Exhibit 3
J-Bird Music Group Ltd.
Form 10-SB, Amendment No. 1
File No. 0-24449
LETTER OF INTENT
LETTER OF INTENT, made this day of July, 1997 by
and between Caltron, Inc., a Pennsylvania corporation with
offices located in Connecticut (hereinafter referred to as
"Caltron") and J-Bird Records, Inc., a Connecticut
corporation located in Wilton, Connecticut (hereinafter
referred to as J-Bird").
WHEREAS, J-Bird is the owner of certain recording
labels and related rights thereto; and
WHEREAS, Caltron desires to merge with J-Bird; and
WHEREAS, J-Bird desires to merge with Caltron on the
terms and conditions set forth below:
NOW, THEREFORE, in consideration of the premises and
promises contained herein the signatory parties agree hereto
as follows:
1. Caltron agrees to execute all documents that may be
required to convey Caltron common shares to the common
shareholders of J-Bird Records, Inc.
2. J-Bird Records agrees to encourage the holders of J-
Bird common shares to merge with Caltron, Inc.
3. Caltron is a corporation in good standing with
audited Financial Statements. The company is currently
trading on the NASDAQ OTC BB under the symbol of "CTON".
There are four market makers for the stock. Caltron
utilizes the services of American Securities Transfer and
Trust in Lakewood, Colorado as their Transfer Agent.
4. Caltron to provide J-Bird with an Opinion Letter
and Audited Financial Statements satisfactory to J-Bird as
merger is consummated. Caltron to retain one board seat and
one officers position, that of Corporate Secretary.
5. This Agreement shall be governed by the laws of the
State of Connecticut.
6. This Agreement may be executed in multiple
counterparts, each of which may be deemed an original
instrument.
IN WITNESS WHEREOF, the parties have set their hands
and seal the day, month and year above written.
CLATRON, INC. J-BIRD RECORDS, INC.
____________________
____________________________
Douglas G. MeCaskey Jay Barbieri
CEO President
4
Exhibit 4
J-Bird Music Group Ltd.
Form 10-SB, Amendment No. 1
File No. 0-24449
NAVARRE CORPORATION
NATIONAL DISTRIBUTION AND WAREHOUSING
AGREEMENT
This Agreement is entered into by the parties hereof as of the
21st day of November, 1997.
NAVARRE CORPORATION ("NAVARRE") is an experienced wholesale
distributor of musical, literary, and artistic recordings on
various recording media.
The company listed below ("LABEL") has released, and will release
during the term of this Agreement, certain Recordings for sale
and distribution in the United States through NAVARRE.
J BIRD RECORDS. INC.
LABEL Name
396 Danbury Road
Street Address
Wilton. CT 06897
City/State/Zip Code
DEFINITIONS:
"Actual Price" shall mean the Base Price adjusted for Growth
Incentive Rebates and the discounts and rebates described in
Schedule A hereto.
"Base Price" shall mean the price of the Recordings to NAVARRE,
as set forth on Schedule A hereto.
"Contract Year" shall mean each January 1through December 31
during the term of this Agreement.
"Recordings" means and includes all of LABEL's musical sound
recordings on various recording media (including but not limited
to compact disks, cassettes and DVD). A partial listing of the
LABEL's catalog of Recordings is shown in Schedule B to this
Agreement.
1. APPOINTMENT AND SCOPE.
1.1 This Agreement will be effective as of November 21,1997.
The initial term will be for approximately three years ending
December 31, 2000. Therefore, this Agreement will automatically
renew for successive one-year periods unless terminated as
provided in Section 11.
1.2 Except as described in Schedule 1.2 hereof, LABEL appoints
NAVARRE as its exclusive distributor in the United States for
sales and the distribution of all of LABEL's content or
recordings, through all wholesale and retail sales channels.
Distribution rights outside the United States may be granted by
LABEL to NAVARRE upon mutual agreement of both parties. LABEL
represents that all of its current labels are listed on Schedule
A hereto. If LABEL markets its Recordings under more than one
label, the current labels as shown in Schedule A, and all
additional labels created during the term of this Agreement, are
included under this appointment. This appointment includes,
without limitation, sales to retail outlets, one stops, rack
jobbers, military, wholesale clubs, and sales to subdistributors
as provided by this Agreement, as well as electronic transfers to
a retail outlet.
2. PRICING: PAYMENT.
2.1 In consideration of the rights granted hereunder and the
obligations and covenants of the parties set forth herein,
NAVARRE shall pay LABEL a variable cost for each recording
calculated in accordance with Schedule A hereto.
2.2 The current suggested retail prices charged by LABEL for
Recordings are shown in Schedule A. LABEL may change the
suggested retail price on a prospective basis by issuing new
pricing sheets to NAVARRE to reflect price changes and new
releases.
2.3 NAVARRE will provide LABEL on a weekly basis with total
shipments, by SKU, and also carrying inventory figures through
the last business day of the week (normally Friday). This
information will be transmitted in electronic form, by title and
customer, on the following business day (normally Monday). If
electronic link is not possible, hard copies of reports will be
mailed each Monday.
2.4 During the period September I through December 25 of each
year, NAVARRE shall be entitled to retain 20% of the Base Price
of all copies of Christmas Recordings sold by NAVARRE during such
period as a reserve for returns. This reserve will be reconciled
and paid by NAVARRE to LABEL by April 30 of the following year.
2.5 Invoices will be issued weekly by LABEL to NAVARRE from the
net total on the Weekly Invoice reports which correspond to each
week ending Saturday. Payment terms to LABEL are two percent
(2%), sixty (60). Payments will be sent to the LABEL at the end
of each week, corresponding to the invoice which comes due on its
sixtieth day during that week.
2.6 Within 30 days after the end of each Contract Year, any
Growth Incentive Rebate fee payable to LABEL or Charge shall be
calculated in accordance with Schedule A hereof. If additional
money is owed to LABEL, NAVARRE shall pay it within 60 days. If
actual amount paid to LABEL for the calendar year is in excess of
the amount due LABEL hereunder, NAVARRE may, at its option,
either (i) require LABEL to remit the overage to NAVARRE within
60 days or (ii) deduct the overpayment from the next distribution
payment(s) that would otherwise be payable to LABEL.
2.7 LABEL also agrees to participate in the following discount
programs and prices for such recordings shall be correspondingly
reduced from the Base Price described on Schedule A:
(a) A minimum of two (2) of NAVARRE's three (3) scheduled
sell in programs (February/Winter, May/Spring, Fall Buy In). This
participation will be in the form of a discount passed on to
NAVARRE for all of the LABEL's product sold during the program
period. LABEL's participation in such programs shall be at a rate
of up to six (6%) percent off of the Base Price at NAVARRE's
discretion. Any such discount in excess of six (6%) percent off
of the Base Price will have to be agreed to in advance by LABEL
unless otherwise agreed in writing by LABEL.
(b) Standard discounts for NAVARRE's sales to rack jobbers,
which is currently in the amount of five (5%) percent off of the
Base Price.
(c) Standard discounts for NAVARRE's sales to military
bases and installations, which is currently in the amount of ten
(10%) percent off of the Base Price.
2.8 In the event that LABEL reduces the price of any product or
offers the product at a lower price, including raising the
discount offered, to any other party, LABEL shall promptly credit
NAVARRE for the difference between the invoice price charged to
NAVARRE and the reduced price for each unit of product held in
inventory by NAVARRE on the date the reduced price is first
offered. LABEL will also credit NAVARRE for the difference
between the invoice price charged to NAVARRE and the reduced
price for each unit of product held in inventory by NAVARRE's or
its customers on the date the reduced price is first offered by
LABEL `if NAVARRE's customers request a credit resulting from
LABEL's price reduction. Should any of NAVARRE's customers
request a price adjustment as outlined in this section, NAVARRE
shall provide for an independent third party audit of that
customer's inventory upon LABEL's reasonable request and at
LABEL's expense. NAVARRE will use commercially reasonable efforts
to provide inventory reporting of its customer's inventory. Any
such price reduction shall be taken into account in the
calculation of amounts payable hereunder.
2.9 No payment or fees shall be payable to LABEL on copies of
the Recordings furnished free of charge by LABEL or NAVARRE to
third parties for non-resale purposes such as review,
advertising, sample, publicity, promotion or like purposes, or
copies destroyed by fire or water, or on copies sold at or below
the cost of manufacture.
2.10 LABEL shall be responsible for payment directly to the
copyright proprietors of any and all mechanical copyright
royalties on any and all compositions incorporated into the
Recordings at the applicable statutory rates or as provided by
artist LABEL contracts.
2.11 NAVARRE shall provide LABEL with an accounting of all
amounts payable to LABEL hereunder within thirty (30) days of the
end of each Contract Year. All such accountings rendered by
NAVARRE will become final and binding on LABEL and LABEL will
neither have nor make any claim against NAVARRE with respect to
such statement unless prior to 90 days after the rendering of
such statement LABEL advises NAVARRE in writing of any objection
to such statement, setting forth the specific basis for
objection, in which case such statement shall be binding in all
respects except those stated in such written objection.
2.12 LABEL shall have the right, at LABEL's expense, to engage an
independent certified public accountant, not then conducting or
participating in an audit of NAVARRE's books, to audit relevant
portions of NAVARRE's books and records pertaining to monies
payable to LABEL hereunder that have not been rendered
incontestable, but not more than once in any twelve (12) month
period, during normal business hours and upon reasonable notice,
and provided that such audit will not be conducted on a
contingent fee arrangement.
3. NAVARRE OBLIGATIONS.
3.1 NAVARRE shall promote, sell and deliver the Recordings in
the ordinary course of its business.
3.2 NAVARRE shall maintain suitable offices, warehousing
facilities and adequate staffing for the performance of its
duties under this Agreement. NAVARRE shall conduct its business
in its own name and shall pay all of its own costs and expenses.
3.3 NAVARRE shall respect the musical, dramatic, artistic and
literary rights of LABEL and the property rights of the LABEL,
the artists, producers and others in the Recordings, the trade
names, trademarks, logos and other information supplied with or
that is a part of the Recordings or promotional materials for the
Recordings.
3.4 NAVARRE shall promptly pay LABEL according to the payment
provisions of this Agreement.
3.5 NAVARRE shall make available to LABEL manufacturing of all
forms of CD's, DVD and cassettes upon the pricing and terms
established from time to time by separate agreement between the
parties.
4. LABEL'S OBLIGATIONS.
4.1 LABEL shall provide NAVARRE with a minimum of 16 releases
annually during the term of this contract.
4.2 LABEL shall accept orders from NAVARRE for the consignment
of recordings, and shall promptly deliver against those orders.
Recordings will be supplied in industry acceptable packaging with
the appropriate UPC sticker or labeling.
4.3 LABEL shall provide NAVARRE with reasonable quantities of
no-charge promotional and advertising materials for the
recordings, but in no event shall LABEL be required to provide
promotional goods, at no charge, in excess of limitations on
LABEL as provided in recording Agreements with Artists signed to
LABEL.
4.4 LABEL shall consign an inventory of recordings to NAVARRE
sufficient to allow both parties to comply with the terms of this
Agreement.
4.5 If at any time, for any reason, LABEL has a debit balance
with NAVARRE, LABEL will pay NAVARRE the debit balance within
sixty (60 days). If all or any portion of the balance remains
unpaid after 60 days, NAVARRE shall be entitled, at its option,
to (i) withhold future payments due LABEL until such debit
balance is paid, and/or (ii) liquidate any inventory of LABEL in
the possession or control of NAVARRE and/or (iii) apply any
proceeds received from such liquidation towards LABEL's debit
balance and/or (iv) manufacture and sell additional Recordings at
prices determined by NAVARRE, in its discretion, in quantities
sufficient to fully repay all amounts owed by LABEL to NAVARRE
and/or (v) immediately terminate this Agreement without further
notice.
4.6 All new pressings covered under the terms of this contract
shall include the statement "Distributed by Navarre Corporation,
Minneapolis, MN 55428."
5. CONSIGNMENT OF INVENTORY.
5.1 LABEL will deliver on consignment to NAVARRE's warehousing
facilities an inventory of recordings requested by NAVARRE in
amounts determined by NAVARRE. LABEL and NAVARRE shall consult
regarding the timing and size of manufacturing orders for
purposes of coordinating availability of adequate inventory in
accordance with the terms and conditions of this Agreement, but
NAVARRE shall at all times have the sole authority to determine
the amount of inventory stored at its premises, and any excess
inventory shall be returned to LABEL or destroyed pursuant to
Section 7.2 hereof.
5.2 NAVARRE assumes the risk of loss or damage to consigned
recordings from the time of delivery to NAVARRE, until sold or
returned to LABEL. If NAVARRE provides manufacturing services to
LABEL pursuant to Section 2.7 of this Agreement, NAVARRE shall
assume the risk of loss of consigned goods from the time that
LABEL becomes liable to pay the cost of manufacturing such goods.
5.3 NAVARRE will pay all expenses incurred after delivery for
the protection, sale, warehousing and shipment of recordings.
5.4 LABEL will be responsible for payment of shipping costs for
delivery of the recordings to NAVARRE, and the LABEL shall pay
for shipping costs for any authorized returns to LABEL (returns
will be shipped freight collect).
5.5 NAVARRE will keep books and records showing the transactions
made pursuant to this Agreement. NAVARRE's books and records
supporting receipts of recordings, shipments of recordings, and
all charges applicable to LABEL will be open to inspection upon
reasonable advance notice by LABEL during NAVARRE's normal
business hours.
5.6 NAVARRE will provide LABEL with a physical inventory,
supervised by NAVARRE's CPA firm (currently Ernst & Young), every
six months (January and July unless otherwise agreed). LABEL
shall also have the right to make its own physical inspection of
inventory, upon reasonable advance notice, during NAVARRE's
normal business hours.
5.7 The consigned recordings will be safely stored at NAVARRE's
warehousing facilities, and will not be removed except upon their
sale or return. NAVARRE will keep the inventory adequately
insured at its expense against loss or damage, and will have
LABEL named as an additional insured.
5.8 Subject to Section 4.5 hereof, title to the consigned
recordings shall be and remain in LABEL until sold.
5.9 Shipment discrepancies between the invoice/bill-of-lading
provided by LABEL and any damage in transit will be promptly
reported.
6. SALES BY NAVARRE.
6.1 NAVARRE is authorized to sell the consigned inventory to its
accounts in the United States.
6.2 NAVARRE shall be free to establish, with respect to its
agents and distributors, the terms of sale, and cost prices at
NAVARRE's discretion.
6.3 LABEL will reorder recordings for delivery, to NAVARRE, as
reasonably required to maintain adequate inventory, based on the
shipping report issued each week and the order requests issued to
LABEL by NAVARRE.
7. RETURNS.
7.1 All defective recordings, either identified upon receipt
from LABEL, or determined to be defective when returned from
NAVARRE's customers or subdistributors, will be reported to LABEL
and placed at its disposition. LABEL shall advise NAVARRE
regarding the disposition of defective recordings within 14 days
after receipt of notice of defects from NAVARRE. Otherwise, the
defective product will be destroyed, at NAVARRE's option. LABEL
shall bear all expenses regarding the destruction or other
disposition of defective recordings.
7.2 Due to the nature of the consignment, NAVARRE may return for
full credit up to 100% of all conforming sound Recordings
received from LABEL. Such returns shall be limited to once per
month, and shall be made with advance notice to LABEL as to
estimate arrival date. Upon advance notice of returns, LABEL
shall provide Return Authorization within seven (7) days of
notice. NAVARRE shall bear expense and risk of loss of return
shipment. LABEL shall issue payment to NAVARRE for such returned
products if no balance is then outstanding. If at any time LABEL
refuses to accept returns from NAVARRE, NAVARRE may, at its
option, destroy the product or arrange for transportation and
storage at another location. All costs relating to destruction,
transportation and storage of such product shall be paid by
LABEL.
7.3 LABEL shall issue an immediate credit for purchase price
plus all return freight charges for defective product, and
products returned as defective by NAVARRE customers. Upon LABEL
recall of products due to defects, NAVARRE shall provide
reasonable assistance, at LABEL's expense, in such recall.
7.4 NAVARRE's right to return products shall survive the term
and termination of this Agreement. Should NAVARRE have a balance
due upon reconciliation of the account for product returns,
freight chargebacks, advertising credits, or other upon end of
term or termination, LABEL shall issue payment therefore within
forty-five (45) days of such term or termination. NAVARRE shall
use best efforts to return all unsold products within one hundred
eighty (180) days of termination of the Agreement.
7.5 NAVARRE will provide LABEL with weekly customer returns
report identifying quantities and titles. All non-defective
returns will be processed by NAVARRE, and placed in inventory for
resale or returned to LABEL.
8. ADVERTISING AND MARKETING.
8.1 LABEL agrees to conduct marketing and promotional efforts
supporting the sale of recordings at its expense. This includes.
but is not limited to, advertising in trade and consumer
publications, in-store or media promotions, all costs relating to
in-store appearances, and promotions for radio airplay.
8.2 LABEL shall provide suitable advertising allowances that can
be claimed by NAVARRE or its customers.
8.3 LABEL shall provide to NAVARRE camera ready artwork, free of
charge, to be used in advertisements, and other suitable
promotional materials for NAVARRE and its customers.
8.4 NAVARRE or its customers may produce their own
advertisements or promotional materials for LABEL's recordings,
so long as such advertisements and promotional material, or the
use thereof, have been approved in advance by LABEL. Such
approval will not be unreasonably withheld, with decisions being
made within five workings days of receipt of written request by
NAVARRE.
9. INTELLECTUAL PROPERTY.
9.1 LABEL grants to NAVARRE the transferable right to use, in
connection with sales of Recordings the trademarks and trade
names listed in Schedule 9. 1. NAVARRE shall have no right to
remove or cover such marks on the products and the marks and
names shall remain the exclusive property of LABEL.
9.2 LABEL warrants that the recordings, the sale of recordings
and the intended use of recordings does not infringe the patent,
copyright, trademark or trade name of any third party. LABEL will
indemnify and defend NAVARRE against all damages and costs
incurred by NAVARRE due to claims of infringement of any patents,
copyrights, trademarks, trade secrets, or other proprietary
rights in the manufacture or marketing of product. Upon claim of
infringement, NAVARRE may, at its option, immediately cease
manufacture, sale and distribution of the recordings. Also, LABEL
may, at its expense and option, either procure the right to
continue using any part of product, replace same with non-
infringing product, or modify product to make it non-infringing;
should LABEL be unable or unwilling to replace, modify, or
procure right to continued use of product within thirty (30) days
of claim notification, NAVARRF_ may, at its option, return
product for a full cash refund or credit provided there is a
balance due LABEL of all amounts paid by NAVARRE to LABEL for
such Recordings.
9.3 NAVARRE agrees to respect and abide by the terms and
conditions of the licensed or transferred use of applicable
patents, copyrights, trademarks and trade names for purposes of
this Agreement. NAVARRE will indemnify and hold LABEL harmless
against claims by third parties respecting breaches of this
Agreement by NAVARRE.
10. REPRESENTATIONS AND WARRANTIES.
10.1 As an inducement for NAVARRE to enter into this Agreement,
LABEL hereby warrants and represents to NAVARRE as follows:
(a) Corporate Existence, Power and Authority. LABEL is a
corporation duly organized and validly existing in the State of
Connecticut, and is fully qualified to do business and in good
standing in the State of Connecticut and in every other
jurisdiction wherein the nature of its businesses or the
character of its properties makes such qualification necessary,
and has all requisite power and authority to carry on its
businesses as now conducted and as presently proposed to be
conducted. LABEL has full power and authority to execute and
deliver this Agreement, and all other documents contemplated
herein and therein, and to incur and perform its obligations
hereunder and thereunder.
(b) Licenses: Royalties and Infringement. LABEL possesses
adequate licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct its
respective business substantially as now conducted and as
presently proposed to be conducted. There does not exist and
there is no reason to anticipate that there may exist, any
liability to LABEL with respect to any claim of infringement
regarding any patent, copyright, trademark, trade name or other
intellectual property right relating to the releases. LABEL is
current on all license and royalty payments owed, including,
without limitation, artist royalties and mechanicals.
(c) Default. LABEL is not in default of a material
provision under any material agreement, instrument, decree or
order to which it is a party or by which it or its respective
property is bound or affected.
(d) Consents. No consent, approval, order or authorization
of any governmental authority or any third party is required in
connection with the execution and delivery of this Agreement, or
any of the agreements or instruments herein mentioned or the
carrying out or performance of any of the transactions required
or contemplated hereby or thereby or, if required, such consent,
approval, order or authorization has been obtained by LABEL prior
to the date hereof.
(e) Ownership. The shareholders, officers and directors of
LABEL are listed on Schedule 10. 1 (e) hereto. Except as
described on Schedule 10. 1 (e), none of the persons listed owns,
controls, is employed by or affiliated with any recording company
or label other than LABEL.
11. TERMINATION.
11.1 The initial term of this Agreement shall be three (3) years.
Thereafter, shall automatically renew for additional one (1) year
periods.
11.2 LABEL may terminate this Agreement, without cause, if it has
been in effect for a period of at least one-year. LABEL must give
NAVARRE at least ninety (90) days advance written notice of
termination. Upon such notice, NAVARRE shall not be required to
make further payments to LABEL for a period of one hundred eighty
(180) days after the date the termination is effective.
Upon termination by LABEL without cause, it shall pay to NAVARRE
for the loss of the rights granted under this Agreement, as
liquidated damages and not as a penalty, a dollar amount derived
from the gross margins that would have been realized by NAVARRE
during the remaining term of this Agreement. For this
calculation, the "gross margin percentages" realized by NAVARRE
from the shipment and sale of recordings over the six month
period preceding the giving of notice will be used to determine
the average gross margin dollars realized per month. This dollar
amount will then be multiplied by the months remaining in the
term of the Agreement. NAVARRE's invoice for this amount shall
include documentation to support its calculation. Payment shall
be made within 30 days. LABEL shall have the right to audit
NAVARRE's books and records to confirm the accuracy of NAVARRE's
calculation of a basis for this payment, provided that LABEL
shall place the amount of such payment in an escrow account
pending verification of the amount of the audit. As used herein,
"gross margin percentage" is defined as the sell price NAVARRE
charges its customers minus the Base Price NAVARRE pays LABEL (as
defined in Schedule A) divided by the sell price NAVARRE charges
its customers.
11.3 NAVARRE may terminate this Agreement, without cause, by
giving LABEL 90 days notice of its intent to terminate. Both
parties agree to as smooth a transition as possible.
11.4 This Agreement may be terminated for cause upon the material
breach by LABEL or NAVARRE of any obligation created hereunder.
Except as otherwise provided in this Agreement, such termination
shall be effected by the giving of 30 days written notice of the
intent to terminate. The notice must give details of the claimed
breach, and the party given the notice shall have the 30-day
period to cure before the termination will be effective.
11.5 In the event either NAVARRE or LABEL files or becomes
subject to a petition in bankruptcy, or other assignment for the
benefit of creditors, such event may constitute a material breach
and may be cause for termination of this Agreement under the
standard termination clause contained herein. In such event, all
consigned goods held by NAVARRE shall be delivered to LABEL, or
held for LABEL's benefit at a location designated by LABEL.
11.6 At the end of term or termination of this Agreement for any
reason, NAVARRE may return products in lieu of payment on account
for one hundred eighty (180) days. At the end of the one-hundred
eighty (180) days, NAVARRE may keep products and pay LABEL
therefor. Prices and payment schedule for such products shall be
as mutually agreed at that time. If LABEL and NAVARRE are unable
to agree upon such prices and payment schedule within ten (10)
days following the expiration of said one hundred eighty (180)
day period, NAVARRE will return all products for credit, or if
there is a balance owed to NAVARRE, LABEL shall pay NAVARRE
within thirty (30) days.
12. RELATIONSHIP OF THE PARTIES.
12.1 Neither party to this Agreement is the employee, agent or
legal representative of the other for any purpose whatsoever.
13. GENERAL PROVISIONS.
13.1 This Agreement shall be governed by the laws of the state of
Minnesota. Any dispute arising out of this Agreement shall be
brought and prosecuted in a court within Hennepin County
Minnesota. For this purpose, LABEL, appoints the Secretary of
State of Minnesota as its agent for services of process in the
event that NAVARRE is unable to serve process on LABEL at its
last known business address.
13.2 This Agreement may be assigned by either party subject to
the written consent of both parties and said consent will not be
unreasonably withheld. Said assignment shall not unreasonably
impair the rights of the non-assigning party and shall not be on
terms less favorable than the terms set forth in this Agreement.
13.3 This Agreement supersedes all prior oral or written
proposals and communications between the parties related to this
Agreement, and shall not be modified, rescinded, waived or
otherwise changed except with the written consent of the parties.
This contract sets forth the entire Agreement between the parties
with respect to the subject matter hereof.
13.4 Each party confirms that no inducements, promises or
representations, not written herein, caused it to enter into this
Agreement.
The parties, by the actions of their authorized representatives,
have executed this Agreement, including the attached Schedules,
as of the date first mentioned above.
LABEL: NAVARRE:
NAVARRE CORPORATION
/s/ Jay Barbieri, President /s/ Guy M. Marsala, COO
Exhibit 5
J-Bird Music Group Ltd.
Form 10-SB, Amendment No. 1
File No. 0-24449
FEILD TECHNOLOGIES, LLC
321 STILLWATER AVE., SUITE 19
BANGOR, ME 04401-3950
Tel: (207) 947-2186
Fax: (207) 990-2694
Date April 15, 1997
Re: Option Agreement
This Option agreement made between Caltron, Inc. (Caltron) and
Feild Technologies, LLC. (FTL) is an option to trade all of the
USA and Foreign Valve Patents presently owned by Caltron for a
five percent (5%) ownership in FTL. (These Patents were formerly
owned by Laminar Fluid Controls, Inc.)
The payout of profits of FTL will be based on the percentage of
ownership, according to the FTL Operating Agreement signed and
dated January 16, 1997.
The above 16 page "Operating Agreement of FTL", was written by
our attorneys, Rudman and Winchell of Bangor Maine.
If the above mentioned 5% ownership does not generate and pay to
Caltron $100,000 over a period of two years, FTL will give an
additional 5% of the company to Caltron. The additional 5% will
be transferred to Caltron at no cost to Caltron. The two year
period will start with the date of the legal transfer of the
patents to FTL from Caltron.
FTL owns a number of fluid control ideas and is in the process of
obtaining additional patents. FTL does not own ideas, or related
devices, pertaining to fuel or other liquid modification.
Caltron agrees that the patents are free and clear of any and all
encumbrances. Caltron also agrees that all maintenance fees in
all countries have been paid and that the patents are up to date,
on the date of transfer to LFC.
Caltron agrees this option will be in force until FTL's patent
attorney, Allen McCollum can execute the necessary documents to
complete the patent transfer from Caltron to FTL.
/s/ Hope Trowbridge Date /s/ Eugene Feild Date
President. President
Caltron, Inc. Feild Technologies,
LLC.
5
Exhibit 6
J-Bird Music Group Ltd.
Form 10-SB, Amendment No. 1
File No. 0-24449
INVESTMENT AGREEMENT FOR INVESTMENT BY CALTRON, INC.
IN
FEILD TECHNOLOGIES, LLC
This Investment Agreement is made by and between Feild
Technologies, LLC, a Maine limited liability company (the
"Company") and Caltron, Inc., a Pennsylvania corporation which is
agreeing hereby to acquire an interest in the Company (the
"Securities").
RECITAL:
Caltron, Inc., a Pennsylvania corporation ("Caltron"), and
the Company have entered into an agreement pursuant to which
Caltron shall contribute all of the USA and foreign valve patents
presently owned by Caltron (formerly owned by Laminar Fluid
Controls, Inc.) to the Company for a 5% interest in the Company.
If the 5% interest to be acquired by Caltron does not generate
cash distributions to Caltron in the amount of at least
$100,000.00 on or before December 31, 2000, Caltron shall be
entitled to increase its interest in the Company to 10%, with a
2.5% decrease in the interests of each of Eugene P. Feild and
Thomas Christensen.
In consideration of the Company's agreement to accept
Caltron as a member of the Company upon the terms and conditions
set forth herein and in a certain Operating Agreement of the
Company, (the "Operating Agreement"), Caltron agrees and
represents as follows:
A. INVESTMENT
1. In consideration for its receipt of a 5% interest in
the Company, Caltron hereby agrees to sell, assign, and transfer
to the Company the full and exclusive right, title and interest
in and to the inventions, patent applications and patent rights
throughout the world, including foreign patent priority rights
identified in the forms of Assignment attached hereto as Exhibits
B1 through B7. On or before May 23, 1997 (the "Closing Date" or
the "Closing"), Caltron shall execute and deliver to the Company
the assignments in the forms of Exhibits B1 through B7. At the
Closing, Caltron shall also execute and deliver to the Company an
original counterpart signature page of the First Amended
Operating Agreement of the Company. A copy of the First Amended
Operating Agreement of the Company is attached hereto as Exhibit
A. The Company hereby agrees that in the event Caltron does not
receive distributions of at least $100,000.00 on or before
December 31, 2000, it shall be entitled to increase its interest
in the Company from 5% to 10%, and the other members' interests
in the Company shall be reduced on a basis proportionate to their
relative interests. At Closing, Caltron shall deliver to the
Company a Certificate of Good Standing, a certificate of
incumbency, a certificate of corporate resolutions of its Board
of Directors authorizing Caltron's entry into this transaction,
and an opinion of counsel opining as to the due incorporation,
organization, and authority of Caltron to enter into this
transaction. The opinion of counsel shall also opine that
Caltron is not a party to any pending or threatened litigation or
legal claims, and that Caltron's entry into this Agreement does
not require the consent of any third parties and does not breach,
contravene or constitute a default under any obligations of
Caltron. The opinion of counsel shall also opine that this
transaction is exempt from the registration requirements of state
and federal securities laws, and that no filings are required to
secure exemption from the registration requirements of state and
federal securities laws and regulations.
B. REPRESENTATIONS AND WARRANTIES
1. Caltron hereby represents and warrants to, and agrees
with the Company as follows:
(a) The Securities are being purchased for its own
account, for investment purposes only, and not for the account of
any other person, and not with a view to distribution, assignment
or resale to others or to fractionalization in whole or in part.
Caltron acknowledges that the purchase of the Securities is
intended to be exempt from registration under the Securities Act
of 1933 (the "Act"). In furtherance thereof, Caltron represents,
warrants, and agrees as follows: (i) no other person has or will
have a direct or indirect beneficial interest in such Securities
and Caltron will not sell, hypothecate or otherwise transfer the
Securities except in accordance with the Operating Agreement and
the Act and applicable state securities laws or unless, in the
opinion of counsel for the Company, a transfer is permitted by
the Operating Agreement and an exemption from the registration
requirements of the Act and such laws is available; and (ii) the
Company is under no obligation to register the Securities on
behalf of Caltron or to assist Caltron in complying with any
exemption from registration.
(b) The Company has made available to Caltron the
Operating Agreement and all other documents and information that
Caltron has requested relating to an investment in the Company.
(c) Caltron recognizes that investment in the Company
involves substantial risks, and has taken full cognizance of all
of the risks related to the purchase of the Securities.
(d) Caltron has carefully considered and has consulted
with its professional legal, tax and financial advisers as to the
suitability of an investment in the Company for its particular
tax and financial situation and has determined that the
Securities are a suitable investment. Caltron, including the
legal and financial advisors of Caltron, has had an opportunity
to request all information from the Company thought to be
necessary to enable Caltron to evaluate the merits of and
suitability of an investment in the Company by Caltron. Caltron
understands that the success of the Company depends upon the
successful development and exploitation of currently undeveloped
technology. The Company has not yet patented any of its
technology, nor has the Company demonstrated the ability to sell,
license or otherwise capitalize on its technology. Caltron
understands that an investment in the Company is highly
speculative and Caltron hereby warrants, represents and
acknowledges that Caltron may lose its entire investment of
intellectual property in the Company, and Caltron has the
financial means to incur such a loss.
(e) All information which Caltron has provided to the
Company is correct and complete as of the date set forth below,
and if there should be any change in such information prior to
acceptance as a security holder of the Company, it will
immediately provide such information to the Company and will
promptly send confirmation of such information to the Company.
(f) Caltron hereby represents that it is a
Pennsylvania corporation, with a principal place of business at
338 Peguot Avenue, Southport, Connecticut.
(g) Caltron hereby represents that it is a corporation
with total assets in excess of $5,000,000.00 and was not formed
for the purpose of making an investment in the Company.
2. The foregoing representations and warranties are true
and accurate as of the date hereof, shall be true and accurate as
of the date of the acceptance hereof by the Company and shall
survive thereafter. If such representations and warranties shall
not be true and accurate in any respect, Caltron will, prior to
such acceptance, give written notice of such fact to the Company
specifying which representations and warranties are not true and
accurate and the reasons therefor.
3. Caltron shall indemnify and hold harmless the Company
and any of its managers, officers, employees, and representatives
who was or is a party or is threatened to be made a party to any
threatened, pending or contemplated action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of or arising from any actual or alleged misrepresentation
or misstatement of facts or omission to represent or state facts
made by Caltron to the Company concerning its financial position,
in connection with the offering or sale of the Securities,
against losses, liabilities and expenses for which the Company or
any of its members, managers, officers, employees or
representatives have not otherwise been reimbursed (including
attorneys' fees, judgments, fines and amounts paid in settlement)
as actually and reasonably incurred by such person or entity in
connection with such action, suit or proceeding.
C. UNDERSTANDINGS
1. Caltron understands, acknowledges and agrees with the
Company as follows:
(a) This investment agreement is and shall be
irrevocable.
(b) No federal or state agency has made any finding or
determination as to the
fairness of this investment, nor any recommendation or
endorsement of the Securities.
(c) There is no public market for the Securities or
any of the Company's securities and such a market may never
develop. There can be no assurance that Caltron will be able to
sell or dispose of its Securities. Moreover, no assignment,
sale, transfer, exchange or other disposition of the Securities
can be made other than in accordance with the Operating Agreement
and all applicable securities laws.
(d) There can be no assurance as to the federal or
state tax results of an investment in the Company.
(e) Caltron acknowledges that the information provided
by the Company to Caltron is confidential and non-public and
agrees that all such information shall be kept in confidence and
not disclosed to any third party for any reason; provided, that
its obligation shall not apply to any such information which (i)
is part of the public knowledge or literature and readily
accessible at the date hereof; (ii) becomes part of the public
knowledge or literature and readily accessible by the public
(except as a result of a breach of these provisions); or (iii) is
received from third parties (except third parties who disclose
such information in violation of any confidentiality agreements
including, without limitation, any Investment Agreement they may
have with the Company).
2. The representations, warranties, understandings,
acknowledgments and agreements in this Agreement are true and
accurate as of the date hereof, shall be true and accurate as of
the date of the acceptance hereof by the Company and shall
survive thereafter.
D. MISCELLANEOUS
1. Neither this Investment Agreement nor any provisions
hereof shall be waived, modified, changed, discharged,
terminated, revoked or canceled except by an instrument in
writing signed by the party against whom any change, discharge or
termination is sought.
2. Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be sufficiently given
when personally delivered or sent by certified mail, return
receipt requested, addressed to the other party at the address of
such party set forth on the signature page hereto.
3. Failure of the Company to exercise any right or remedy
under this Investment Agreement or any other agreement between
the Company and Caltron, or otherwise, or delay by the Company in
exercising such right or remedy, will not operate as a waiver
thereof. No waiver by the Company will be effective unless and
until it is in writing and signed by the Company.
4. This Investment Agreement shall be enforced, governed
and construed in all respects in accordance with the laws of the
State of Maine, as such laws are applied by Maine courts to
agreements entered into and to be performed in Maine by and
between residents of Maine, and shall be binding upon Caltron,
its successors and assigns, and shall inure to the benefit of the
Company and its successors and assigns.
5. In the event that any provision of this Investment
Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or
unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
6. This Investment Agreement, the Operating Agreement, and
other documents contemplated hereby or thereby constitute the
entire agreement among the parties hereto with respect to the
subject matter hereof and supersede any and all prior or
contemporaneous representations, warranties, agreements and
understandings in connection therewith. This Agreement may be
amended only by a writing executed by all parties hereto.
7. Caltron represents to the Company that (a) the
information contained herein is complete and accurate on the date
hereof and may be relied upon by the Company and (b) Caltron will
notify the Company immediately of any change in any of such
information occurring prior to the acceptance of the subscription
and will promptly send the Company written confirmation of such
change.
IN WITNESS WHEREOF, Caltron has executed this Investment
Agreement this 20th day of May, 1997.
CALTRON, INC.
BY: /s/
INVESTMENT AGREEMENT ACCEPTED:
FEILD TECHNOLOGIES, LLC /s/ Eugene P. Feild,
individually
/s/ Eugene P. Feild, Manager /s/ Thomas
Christensen, individually
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AS AMENDED (THE "ACT") OR PURSUANT TO THE SECURITIES LAWS
OF THE STATE OF MAINE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT
AND THE SECURITIES LAWS OF THE STATE OF MAINE OR AN EXEMPTION
THEREFROM IS AVAILABLE.
1
Exhibit 7
J-Bird Music Group Ltd.
Form 10-SB, Amendment No. 1
File No. 0-24449
ASSIGNMENT AGREEMENT
This Assignment Agreement, made this 3rd day of May, 1996
among Rhode Island Renal Institute, a Rhode Island non profit
corporation with its principle place of business at 2736 Post
Road, Warwick, Rhode Island 02886 ("RIRI"), Brooks Porter, an
individual, residing at 381 Allen Avenue, Wakefield, Rhode Island
02879 ("PORTER"), CALTRON, Inc. a Pennsylvania corporation, with
offices at 338 Pequot Avenue, Southport, Connecticut 06490
("CALTRON").
WHEREAS, PORTER and RIRI have entered into a Development and
Investment Agreement dated November 21, 1995 ("D&I Agreement");
WHEREAS, pursuant to the D&I Agreement RIRI agrees to
provide financial support, clinical testing facilities and
supplies to PORTER to assist his development of the Renal Ozone
Sterilization System ("ROSS");
WHEREAS, PORTER and RIRI desire to assign their interest in
the ROSS and any interest created by the D&I Agreement to CALTRON
and in exchange Caltron desires to transfer certain restricted
common shares of CALTRON stock ("Stock') to RIRI;
WHEREAS, CALTRON, INC. desires to accept assignment of the
ROSS and any interest created by the D&I Agreement under the
terms and conditions set forth below.
NOW THEREFORE, in consideration of the mutual premises and
promises contained herein, the signatory parties agree hereto as
follows:
1. Assignment.
PORTER and RIRI herewith and hereby assign to CALTRON which
herewith and hereby accepts said assignment from PORTER and RIRI
the right to manufacture and distribute the ROSS and any
interests created by the D&I Agreement among PORTER and RIRI
("Assigned Rights"). PORTER and RIRI agree to execute all
documents necessary to effectuate the above contemplated
assignments. PORTER and RIRI further agree that any future
developments, whether patentable or otherwise, whether
copyrighted or otherwise, developed from the pending Patents
shall be assigned to CALTRON.
2. CALTRON Use of the Ross and the Interests Created Pursuant
to the D&I Agreement.
CALTRON shall use the Assigned Rights solely to manufacture
and distribute the ROSS and for no other use.
3. CALTRON Reimbursement to PORTER and RIRI for Assigned
Rights.
CALTRON shall pay to RIRI a total of 125,00 shares of the
Stock in exchange for the Assigned Rights at the time this
Agreement is executed. The foregoing transfer of the Stock shall
be subject to the representations and warranties of CALTRON and
RIRI as indicated on Addendum A attached hereto and which is a
part of this Agreement.
4. RIRI's Unconditional Put Option.
Notwithstanding the foregoing, RIRI shall have the
unconditional right, within three (3) months of the date of this
Agreement, to put the Stock which Caltron transferred to RIRI
pursuant to this Agreement back to Caltron in exchange for either
$500,000.00 or the Assigned Rights. RIRI shall exercise the put
by sending written notice to Neal E. Fitzpatrick, Jr., President
of Caltron, stating that it is exercising the put. The written
notice shall specify whether RIRI will receive, in exchange for
the put, either $500,000.00 or the Assigned Rights that RIRI has
transferred to Caltron pursuant to this Agreement.
5. CALTRON Royalty Payments to PORTER and RIRI..
CALTRON agrees to pay to RIRI as additional consideration
for the Assigned Rights, a perpetual royalty of three (3%)
percent of all commercial sales made by CALTRON related to the
Assigned Rights. CALTRON agrees to make available, to PORTER and
RIRI, CALTRON's sales records with regard to sales related to the
Assigned Rights. CALTRON agrees to pay the 3% royalty on an
annual basis which payment shall be made within 30 days of the
close of CALTRON's fiscal year.
6. Development by RIRI and PORTER.
PORTER and RIRI shall devote its best efforts to develop the
ROSS project by January 1, 1997, including, but not limited to,
completing the testing of the effectiveness of the ROSS and to
further develop the efficiencies of the sterilization technology.
7. Patent Application.
PORTER and RIRI will file a patent application for the ROSS
by May 9, 1996. They will also provide a letter from patent
counsel, who shall be acceptable to all parties, stating that the
application complies with all legal requirements.
8. Patent Infringement.
PORTER and RIRI agree to defend any patent infringements by
third parties.
9. Testing.
PORTER and RIRI shall conduct clinical testing of the ROSS
system, testing shall include but not be limited to, standard
sterility testing of the Dialyzer and comparison to standard
chemical reuse sterilization techniques.
10. Reversion of Assignment to RIRI and PORTER Upon Certain
Conditions.
If CALTRON does not generate a total of $500,000 in
commercial sales of sales directly related to the Assigned Rights
within 5 years of the date of this Agreement, all rights granted
to CALTRON pursuant to this Agreement shall terminate and shall
revert back to RIRI and PORTER.
11. Miscellaneous.
a. Governing Law. This Agreement shall be governed by the
laws of the State of Rhode Island.
b. Counterparts. This Agreement may be executed in
multiple counterparts, each of which may be deemed an
original instrument.
c. Assignment. This Agreement shall not be transferred or
assigned by either party without the express written
consent of the other party and such consent shall not
be unreasonably withheld.
d. Modification. This Agreement may only be modified in
writing signed by the parties.
IN WITNESS WHEREOF, the parties have set their hands and
seal this day, month, and year above written.
CALTRON, INC. BROOKS PORTER
/s/ Neal E. Fitzpatrick, Jr. /s/Brooks
Porter
President
RHODE ISLAND RENAL INSTITUTE, INC.
/s/ James Cook
Executive Director
ADDENDUM A
Caltron's Representations.
Caltron represent and warrant to the RIRI as follows:
1. Ownership of the Stock. Caltron is duly
authorized to issue and by this Agreement transfers to the RIRI
the Stock, free and clear of hens, encumbrances, restrictions and
claims of every kind. Caltron has full legal right, power and
authority to enter this Agreement and to issue the Stock. There
is no legal action pending or (to the knowledge of Caltron)
threatened affecting the stock ownership, nor is there any
reasonable basis for such an action.
2. Liabilities. Caltron does not have any
obligations or liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise and whether due or to
become due) resulting from or arising out of any transaction
entered into, any action taken or omitted, or any state of facts
existing on or before the Closing Date. All others are released
or otherwise eliminated by Caltron on or before Closing. To the
best of Caltron's knowledge there is no basis for any claim
against Caltron for any material liabilities or obligations not
disclosed, including liabilities pertaining to hazardous waste
materials or toxic or waste-like substances. Caltron is not
indebted to any director, officer, employee or agent of Caltron,
and Caltron is indebted to a stockholder which has been disclosed
to RIRI.
3. Financial Statements. Caltron agrees to deliver
to the RIRI audited financial statements of Caltron. These will
accurately present Caltron's financial position at the time
issued and will be prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout
preceding periods. There has been no material adverse change in
Caltron's business, assets, properties, liabilities or financial
condition since the date of the Financial Statements and no
future changes are expected. Caltron has operated solely in the
ordinary course of business to date.
4. Assets, Property. Caltron has good and marketable
title to all of the properties and assets which the Financial
Statements state that it owns, and they are not subject to any
mortgages, pledges, hens, encumbrances or other charges of any
kind or nature whatsoever. Other than the properties owned by
Caltron on the date of this Agreement, there are no properties
tangible or intangible owned by Caltron or other third parties
which are used in the day-to-day operation of Caltron.
5. Corporate Matters. Caltron is a corporation duly
organized, validly existing and in good standing under the laws
of Pennsylvania. Caltron has all requisite corporate power and
authority to own and use its properties, to carry on its business
as now conducted and as proposed to be conducted. The copies of
Caltron's Articles of Incorporation and By-Laws, in each case as
amended through the date of this Agreement, and its stock
ledgers, stock transfer books, other stock records and records of
all of its corporate proceedings, including those of its
shareholder and directors, which have been furnished to the RIRI
are true, correct and complete.
6. Capitalization. Caltron's authorized capital
consists solely of 25,000,000 shares of common stock, of which
2,300,000 are currently outstanding. No shares of common stock
have been reserved for any purpose, or are held in its treasury,
and there are no outstanding securities that are convertible into
or exchangeable for shares of common stock. All of the issued
and outstanding shares of common stock have been duly authorized
and validly issued, are fully paid and non-assessable, and have
been offered, sold, issued and delivered in accordance with all
applicable federal and state securities laws.
7. Authorization. This Agreement has been duly
executed and delivered and constitutes Caltron's binding
obligation, enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby does not and
will not (i) conflict with or result in a breach of terms,
conditions or provisions of, (ii) constitute a default under,
(iii) result in the creation of any lien, security interest,
charge or encumbrance upon the Stock or Caltron's assets pursuant
to, (iv) give any third parties the right to accelerate any
obligation under, (v) result in a violation of, or (vi) except
for those consents, authorizations or approvals which have been
obtained or those notices, registrations or declarations which
have been filed, require the authorization, consent or approval
of, or the filing of any notice, registration or declaration
with, any court or administrative or governmental body pursuant
to: (A) Caltron's Articles of Incorporation, or By-Laws, as
amended, (B) any law, statute, rule or regulation, or (C) any
deed of trust, mortgage, agreement, instrument, order, lease,
award, judgment or decree to which Caltron, the Stock or any of
Caltron's properties are subject.
8. Compliance with Laws, Litigation. Caltron has
conducted its business in full compliance with all laws, rules
and regulations applicable to it and its business, assets and
properties, (including environmental, health or safety laws,
rules and regulations) and has not received any claim or notice
to the contrary. There are no judgments, orders, decrees or
restrictions entered against Caltron. There are no actions,
suits, proceedings or claims pending or, to the best of Caltron's
knowledge, threatened against or affecting Caltron at law, in
equity or before or by any governmental department, commission,
board, bureau, agency or instrumentality, nor is there any
reasonable basis therefor. Caltron is not subject to any
arbitration proceedings or, to the best of Caltron's knowledge,
any governmental investigation or inquiry. To the best of
Caltron's knowledge, there is no basis for any of the foregoing.
Caltron has not received any opinion, memorandum or advice from
legal counsel to the effect that it is exposed to any liability
or disadvantage which may be material to its business.
9. Tax Matters. Caltron timely filed all tax returns
and reports required to be filed by it and paid all taxes and
assessments shown therein to be due or claimed to be due,
together with all interest, penalties, assessments and
deficiencies assessed in connection therewith. All tax
obligations and liabilities to which Caltron was subject on the
date of the Financial Statements are fully reserved for in the
Financial Statements. No tax or related liabilities are proposed
to be assessed or to the best of Caltron's knowledge threatened
against Caltron nor is there any reasonable basis therefor. No
waivers of statutes of limitations have been given or requested
by Caltron.
10. All Material Information. Caltron disclosed all
material facts concerning itself and none of Caltron's
representations or warranties or any information contained in any
document furnished by Caltron contain any untrue statement of a
material fact or omits any material facts necessary to make the
statement contained therein or otherwise made not misleading.
RIRI's Representations.
The RIRI represents and warrants to Caltron as follows:
1. Authorization. RIRI has duly authorized by all
necessary corporate action relating to the execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly
executed and delivered and constitutes the legal, valid and
binding obligation of the RIRI, enforceable according to its
terms.
8
Exhibit 8
J-Bird Music Group Ltd.
Form 10-SB, Amendment No. 1
File No. 0-24449
June 14, 1996
Mr. Neal E. Fitzpatrick, Jr.
Caltron, Inc.
P.O. Box 721
Southport, CT 06430
Dear Neal:
This letter sets forth the terms and conditions on and
subject to which Applied Advanced Technologies, Inc. ("AAT"),
Tovi Avnery ("Avnery") and Caltron, Inc. ("Caltron") agree that
(i) Caltron shall acquire an interest in AAT, and (ii) AAT and
Avnery shall acquire equity in Caltron and cash.
I. Governance of AAT
Avnery shall be the sole president of AAT so long as he remains
the holder of a majority of the outstanding shares of the common
stock of AAT (the "Common Stock"). During the term of this
agreement, Avnery shall vote his shares to elect to the board of
directors of AAT one nominee of Caltron and two nominees of
Avnery.
Avnery has assigned to AAT all of Avnery's right, title and
interest in and to an electron beam technology (the "Technology"
as more completely described in Schedule A) to AAT prior to
Caltron's initial investment in AAT.
II. Purchase and Sale of Shares
A. The initial closing of the transactions contemplated by this
Agreement (the "Initial Closing") shall be accomplished by mail
and/or fax or other electronic transfer on or before June 14,
1996 (the "Initial Closing Date"), or in such other manner and at
such other date, place and time as the parties shall agree. The
Initial Closing shall be accomplished as follows:
(1) Caltron shall transfer to Avnery a total of 130,000
shares of Caltron common stock, of which said shares shall be
unregistered, rule 144 stock.
(2) Caltron shall pay to AAT $100,000 by certified check or
wire transfer, such amount to be offset by the $4 1,000 already
advanced to AAT.
(3) Upon receipt by Avnery of the Caltron shares referred
to in A.(1) and the receipt by AAT of the amount referred to in
A(2), Avnery shall transfer 60,000 shares of AAT Common Stock to
Caltron, representing 30% of the issued and outstanding AAT
shares, and AAT shall issue an additional 15,385 shares of AAT
Common Stock to Caltron, representing an additional 5% of the
issued and outstanding shares of AAT.
B. The second closing of the transactions contemplated by this
Agreement (the "Second Closing") shall be accomplished by mail
and/or fax or other electronic transfer on or before the sixtieth
day following the Initial Closing Date (or if such date is not a
business day in Boston, Massachusetts, on the next following
business day), or in such other manner and at such other date,
place and time as the parties shall agree. The Second Closing
shall be accomplished as follows:
(1) Caltron shall pay to AAT $100,000 by certified check or
wire transfer.
(2) Upon receipt by AAT of the amount referred to in B(l),
AAT shall transfer to Caltron an additional 17,948 shares of AAT
Common Stock, representing an additional 5% of the issued and
outstanding shares of AAT.
C. The third closing of the transactions contemplated by this
Agreement (the "Third Closing") shall be accomplished by mail
and/or fax or other electronic transfer on or before the one
hundred twentieth day following the Initial Closing Date (or if
such date is not a business day in Boston, Massachusetts, on the
next following business day), or in such other manner and at such
other date, place and time as the parties shall agree. The Third
Closing shall be accomplished as follows:
(1) Caltron shall pay to AAT $100,000 by certified check or
wire transfer.
(2) Upon receipt by AAT of the amount referred to in C(l),
AAT shall transfer to Caltron an additional 21,213 shares of AAT
Common Stock, representing an additional 5% of the issued and
outstanding shares of AAT.
D. Avnery and AAT (and their respective agents) shall have
complete access to the books and records of Caltron and shall
have the right to audit and copy such books and records.
E. Caltron (and their respective agents) shall have complete
access to the books and records of AAT and shall have the right
to audit and copy the financial books and records.
F. If Caltron fails to pay in full the amounts provided above
after thirty (30) days following AAT's written notice, AAT shall,
at Avnery's sole election, issue up to 2.5 million new shares of
AAT Common Stock to be registered in the name of Avnery or his
nominees. The purchase price for such shares shall equal the par
value thereof, payable in cash, debt, services or property of
equivalent value, as determined by the AAT board of directors.
III. Issuance of Subsequent Shares
Unless AAT is authorized to issue shares pursuant to II.F, AAT
shall sell to Caltron, at a time (determined by AAT) after the
third anniversary and prior to the sixth anniversary of the
Initial Closing Date and upon at least 30 days written notice to
Caltron, and Caltron shall purchase, a number of shares of Common
Stock (the "Additional Shares") required so that upon giving
effect to such issuance Caltron would own eighty percent (80%) of
the outstanding shares of Common Stock. In consideration of the
issuance and delivery of the Additional Shares, Caltron shall
issue and deliver to AAT, either a number of shares of fully
registered and immediately publicly tradable Caltron stock valued
as of the date of AAT's notice, or immediately available funds,
in amount equal to thirty-five percent (35%) of (five times AAT's
gross pre-tax profit for the then preceding four quarters). In
addition, at Avnery's option, Caltron shall take all actions
necessary or appropriate to cause Avnery to be elected to
Caltron's Board of Directors, and to continue to hold such
position (absent Avnery's resignation), such actions to include
without limitation the execution and delivery of any agreements,
and the solicitation of proxies, as may be necessary to ensure
such election. At Avnery's election, shares to be issued to
Caltron shall be purchased from Avnery, instead of being issued
directly by AAT, so as to achieve the same shift in ownership.
The percentage ownership by Avnery of Caltron shall not be
diluted by the issuance of additional Caltron shares. If Caltron
should spin off AAT, Avnery shall have the option (exercisable
beginning with the effectiveness of the spin-off and continuing
for five years thereafter) to purchase an additional ten percent
(10%) of AAT common stock at a price of $.01 per share.
IV. Future Development and Reversion of Shares
A. AAT anticipates that it will require approximately
$2,000,000 in funding in order to continue development of the
technology to the point of commercializing the product. Caltron
will use its best efforts to procure the needed funding by
sublicensing the Technology in fields to be determined by mutual
agreement of Caltron and AAT.
B. Beginning with the sixth month following the date of this
Agreement and ending on the twenty-sixth month following the date
of this Agreement (the "Minimum Payment Period"), Caltron shall
pay AAT $75,000 per month (the "Minimum Payment") payable on the
last day of the month; provided that the minimum payment due each
month shall be offset (but not below zero) by the amount by which
(i) aggregate revenues from the license of the Technology
received by AAT prior to such month, plus the dollar amount of
Minimum Payment actually paid for all prior months, exceeds (ii)
the product of $75,000 multiplied by the number of months of the
Minimum Payment Period for all prior months.
C. If AAT and Caltron do not generate a total of $1,500,000 in
license fees actually received
on commercial licenses of the Technology within two (2) years of
the date of this Agreement, then AAT and Avnery, respectively,
shall have the right to terminate this Agreement with thirty (30)
days written notice to Caltron. Should the Agreement be
terminated then all rights granted to Caltron pursuant to this
Agreement shall terminate and all rights granted to AAT and
Avnery collectively and individually pursuant to this Agreement
Shall terminate. In addition, all AAT stock transferred to
Caltron in connection with this Agreement shall revert back to
AAT and Avnery, respectively, in each case without any payment by
AAT or Avnery to Caltron, and Caltron shall promptly deliver to
AAT and Avnery all certificates representing such AAT shares,
duly endorsed for transfer. All Caltron stock transferred to AAT
and Avnery pursuant to section II.A.(I) collectively and
individually in connection with this Agreement shall revert back
to Caltron without any payment by Caltron to AAT or Avnery, and
AAT and Avnery shall deliver to Caltron all certificates
representing such Caltron shares, duly endorsed for transfer.
All cash payments made by Caltron to AAT and Avnery under this
Agreement are non refundable.
D. If Caltron (or any of its successors in interest) is
required to transfer any shares of AAT to
either AAT or Avnery, or their respective successors in
interest, and is unable to, or for any reason does not,
deliver the certificate or certificates evidencing such shares in
accordance with this Agreement, Caltron (or its successors in
interest) shall be deemed to have sold, assigned, transferred and
conveyed to AAT and/or Avnery (as applicable) all right, title
and interest in and to such shares, and Caltron (and its
successors in interest) shall have no further rights thereto and
AAT shall record the transfer in its stock transfer book.
E. If AAT and/or Avnery (or their respective successors in
interest) is required to transfer any shares of Caltron to
Caltron (or its successors in interest) and is unable to, or for
any reason does not, deliver the certificate or certificates
evidencing such shares in accordance with this Agreement, AAT
and/or Avnery (or their successors in interest) shall be deemed
to have sold, assigned, transferred and conveyed to Caltron all
right, title and interest in and to such shares, and AAT and/or
Avnery (and their respective successors in interest) shall have
no further rights thereto and Caltron shall record the transfer
in its transfer agent.
F. Except as specifically provided above, Caltron shall not
transfer any shares of AAT without the prior written consent of
AAT until two (2) year after the date of this Agreement. The
certificates representing shares to be issued by AAT shall bear a
legend prohibiting the transfer of such shares. Upon expiration
of the two (2) year period (assuming the shares have not reverted
to AAT and Avnery), Caltron may surrender the certificates
representing the shares to AAT and AAT shall issue new
certificates which do not bear such legend.
G. Except as specifically provided above, AAT and/or Avnery
shall not transfer any of the 130,000 shares described in section
II.A.(1) of Caltron without the prior written consent of Caltron
until two (2) year after the date of this Agreement. The
certificates representing shares to be issued by Caltron shall
bear a restrictive legend under Rule 144, prohibiting the
transfer of such shares. Upon expiration of the two (2) year
period (assuming the shares have not reverted back to Caltron),
AAT and/or Avnery may surrender the certificates representing the
shares to Caltron and Caltron shall issue new certificates which
do not bear such legend.
V. Confidential Information.
Caltron will not at any time divulge or make accessible to
any person or entity, or appropriate to the use of Caltron or any
third party, for any reason or purpose whatsoever, any knowledge
or information disclosed to Caltron of a confidential or
proprietary nature relating to the products, technology, business
or customers of AAT, including without limitation non-public
technical information related to the Technology (collectively,
the "Confidential Information"). AAT shall, in addition to any
other available rights and remedies, have the right to obtain
injunctive relief for any breach or threatened breach of the
terms of this Section.
VI. Miscellaneous.
A. This Agreement shall not be assigned by either party without
the advance written consent of the other, provided AAT may assign
to a successor to all or substantially all of its business. This
Agreement shall be binding upon and inure to the benefit of the
parties, their successors and permitted assigns.
B. This Agreement constitutes the entire agreement between the
parties with respect to its subject matter; except as provided
herein, all other prior agreements, representations, statements,
negotiations and undertakings are terminated and superseded
hereby.
C. This Agreement shall be governed by and construed in
accordance with the internal laws of the Commonwealth of
Massachusetts.
D. Avnery shall use his best effort to cause AAT to carry on
its business in accordance with the by-laws of AAT and applicable
Massachusetts law.
E. Except for the right of either party to apply to a court of
competent jurisdiction for a temporary restraining order,
preliminary injunction, or other equitable relief to preserve the
status quo or prevent irreparable harm pending the selection and
confirmation of an arbitrator, any dispute under this agreement
shall be determined by binding arbitration in accordance with the
commercial arbitration rules of the American Arbitration
Association, in Boston, Massachusetts, before a single
arbitrator.
EXECUTED AS AN INSTRUMENT UNDER SEAL.
APPLIED ADVANCED TECHNOLOGIES, INC.
By: /s/ Tovi Avnery, President
ACCEPTED AND AGREED TO:
CALTRON, INC.
By: /s/ Neal E. Fitzpatrick, Jr., President /s/ Tovi Avnery
ASSIGNMENT OF
RIGHTS TO TECHNOLOGY
The undersigned, for good and valuable consideration paid by
APPLIED ADVANCED TECHNOLOGIES, INC. ("Grantee") the receipt and
sufficiency whereof is acknowledged, does hereby grant, sell,
transfer, assign and deliver to the Grantee all of the
undersigned's right, title and interest in and to the following
intellectual property rights:
all general and specific knowledge, experience and
information, including without limitation on all inventions,
trade secrets, know-how and improvements thereof and all
patent and proprietary rights and patent applications now or
hereafter owned or possessed by the undersigned, relating to
the development, design, manufacture, assembly, operation,
or testing or methods, processes or equipment related to the
technology described in Schedule A or components thereof
(including without limitation all continuations,
continuations-in-part, divisions and reissues of patents),
engineering and manufacturing information and procedures and
components information, all apparatus, prototypes, equipment
and parts embodying any of the above and all documents and
copies thereof constituting, describing or relating to the
above, including memoranda, reports, manuals, descriptions,
specifications, drawings, schematics, software (including
without litigation source and object codes), notebooks,
printed circuit patterns, parts lists, patent applications
and patentable information, invention records and
disclosures, drawings (including lay-out and assembly
drawings), renderings, schedules, financial records, work
records, time records, flow charts, computer programs,
photographs, computer print-outs, listings, tapes, disks,
diskettes, chips, contracts, patterns, inspection procedures
and test procedures.
to have and to hold the same to the Grantee and its successors
and assigns to their own use and behoof forever.
The undersigned agrees to execute and deliver such
additional documents and instruments as the Grantee may
reasonably request in order to confirm-n the transfer of
technology contemplated hereby and the Grantees ownership
thereof.
Executed as an instrument under sea] this 17th day of November,
1995.
/s/ Tovi Avnery
Schedule A
Description of Technology
An Electron Beam Accelerator technology which uses thermionic
emission as Electron Source, and Titanium Foil for Exit Window,
with vacuum Sealed-off Chamber that requires no active vacuum
pumps for operation and uses Ceramic or Glass as High Voltage
Insulator and Vacuum Chamber combined.
ASSIGNMENT OF
RIGHTS TO TECHNOLOGY
The undersigned, for good and valuable consideration paid by
APPLIED ADVANCED TECHNOLOGIES, INC. ("Grantee") the receipt and
sufficiency whereof is acknowledged, does hereby grant, sell,
transfer, assign and deliver to the Grantee all of the
undersigned's right, title and interest in and to the following
intellectual property rights:
all general and specific knowledge, experience and
information, including without limitation on all inventions,
trade secrets, know-how and improvements thereof and all
patent and proprietary rights and patent applications now or
hereafter owned or possessed by the undersigned relating to
the development, design, manufacture, assembly, operation,
or testing or methods, processes or equipment related to the
technology described in Schedule A or components thereof
(including without limitation all continuations,
continuations-in-part, divisions and reissues of patents),
engineering and manufacturing information and procedures and
components information, all apparatus, prototypes, equipment
and parts embodying any of the above and all documents and
copies thereof constituting, describing or relating to the
above, including memoranda, reports, manuals, descriptions,
specifications, drawings, schematics, software (including
without limitation source and object codes), notebooks,
printed circuit patterns, parts lists, patent applications
and patentable information, invention records and
disclosures, drawings (including lay-out and assembly
drawings), renderings, schedules, financial records, work
records, time records, flow charts, computer programs,
photographs, computer print-outs, listings, tapes, disks,
diskettes, chips, contracts, patents, inspection procedures
and test procedures.
to have and to hold the same to the Grantee and its successors
and assigns to their own use and behoof forever.
The undersigned agrees to execute and deliver such additional
documents and instruments as the Grantee may reasonably request
in order to confirm the transfer of technology contemplated
hereby and the Grant s ownership thereof.
Executed as an instrument under seal this 17th day of November,
1995.
/s/ Tovi Avnery
Exhibit 9
J-Bird Music Group Ltd.
Form 10-SB, Amendment No. 1
File No. 0-24449
Subsidiaries of the Registrant
J-Bird Records, Inc., a Connecticut corporation
2
Exhibit 10
J-Bird Music Group Ltd.
Form 10-SB, Amendment No. 1
File No. 0-24449
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - QSB
QUARTERLY REPORT UNDER REGULATION SB OF THE
SECURITIES EXCHANGE ACTS OF 1934
For the Quarter Ended
Commission File Number:
September 30, 1998
0-24449
J-BIRD MUSIC GROUP LTD.
(Exact Name of Registrant as specified in its charter)
Pennsylvania 06-1411727
( State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
396 Danbury Road Wilton, Connecticut 06897
(Address and zip code of principal executive officers)
(203) 761-9393
------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required by Regulation SB of the Securities Exchange Act
of 1934 during the preceding 12 months ( or for such shorter
period that the Registrant was required to file such reports),
and (2) has been subject to the filing requirements for at least
the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer/s
classes of common stock, as of the last practicable date:
Number of shares Outstanding Class Date
13,842,795 Common Stock November 13, 1998
$.001 par value
<PAGE>
J-BIRD MUSIC GROUP LTD.
Index
PART I FINANCIAL INFORMATION
Balance sheet September 30 , 1998 3
Statements of Operations
Three Months Ended September 30, 1998 and 1997 4
Nine Months Ended September 30, 1998 and 1997 5
Statements of Cash Flow
Nine Months Ended September 30 , 1998 and 1997 6
Notes to Unaudited Financial Statements
September 30, 1998 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II
Other Information
Signatures 14
<PAGE>
J-BIRD MUSIC GROUP LTD.
BALANCE SHEET
SEPTEMBER 30,1998
ASSETS
Cash $ 2,677
Inventory 314,463
Accounts receivable 84,541
Loans receivable, shareholder 35,000
Recording advances 39,165
Notes receivable 500,000
Total Current assets 975,846
Fixed assets, net 138,916
Other assets 2 ,279
Total assets 1,117,041
LIABILITIES AND STOCKHOLDERS' EQUITY
Account payable and accrued expenses $ 257,476
Accrued royalties 34,786
Note payable 15,000
Total current liabilities 307,262
Due to shareholders and officers 7,330
Total Liabilities 314,592
Stockholders' Equity
Common stock $.001 par value 25,000,000 shares
Authorized, 13,837,795 issued and outstanding 13,837
Stock subscriptions receivable (290,286)
Paid in capital 5,634,199
Deficit (4,555,301)
802,449
Total Liabilities and Equity $ 1,117,041
<PAGE>
J-BIRD MUSIC GROUP LTD.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30,1998 AND 1997
1998 1997
------------------------
Net sales $ 298,010 $ 57,765
Cost of sales 120,517 41,248
177,493 16,517
Operating expenses:
Advertising and promotion 71,747 44,657
Professional fees 132,065 -
Amortization and depreciation 9,112 6,658
Salaries 88,036 82,223
Administrative expenses 94,551 33,790
395,411 167,328
Net (loss) before other income (expenses)(217,918) (150,811)
Other income (expense)
Financing fee- sale of discounted
common stock (92,500) -
(92,500) -
Net loss $ (310,418) $ (150,811)
Net loss per common share $ (0.02) $ (0.03)
Weighted average common shares outstanding13,659,462 4,403,570
<PAGE>
J-BIRD MUSIC GROUP LTD.
STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30,1998 AND 1997
1998 1997
------------- --------------
Net sales $ 561,436 $ 132,021
Cost of sales 276,951 97,885
284,485 34,136
Operating expenses:
Advertising and promotion 163,180 95,692
Professional fees 185,131 58,599
Amortization and depreciation 27,375 24,848
Salaries 225,730 161,289
Administrative expenses 206,028 138,352
807,444 478,780
Net (loss) before other income (expenses)(522,959) (444,644)
Other income (expense):
Financing fee- sale of discounted
common stock (1,052,500) -
Investment advisory fees (525,000) -
Loss from disposition of assets (173,000) -
(1,750,500) -
Net loss $(2,273,459) $ (444,644)
Net loss per common share $ (0.18) $ (0.11)
Weighted average common shares outstanding12,616,239 4,156,746
<PAGE>
J-BIRD MUSIC GROUP LTD.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30,1998 AND 1997
1998 1997
-------------- --------------
Cash flows from (used in) operating activities
Adjustments to reconcile net (loss) to net cash
from (used in) operating activities:
Net (loss) $ (2,273,459) $ (444,644)
Amortization and depreciation 27,375 21,209
Financing fee- sale of common stock at discount1,052,500 -
Loss on sale of assets 173,000 -
(Increase) in accounts receivable (74,446) (52,025)
(Increase) in inventory (260,697) (58,799)
Stock issued for services 614,350 27,000
(Increase) in recording advances (17,500) (17,105)
(Increase) other assets - (979)
Compensation expense (non cash) - 90,000
(Decrease) increase in accounts payable (40,900) 230,894
Net cash (used in) operating activities (799,777) (204,449)
Cash flows from (used in) investing activities
Purchase of fixed assets (34,806) (75,356)
Net cash (used in) investing activities (34,806) (75,356)
Cash flows from (used in) financing activities
Collection of stock subscriptions 730,810 -
Collection of note receivable 205,000 -
Stock issued for cash - 205,000
Due from officers - 5,000
Due to shareholder (23,550) 48,630
Repayment of notes payable (75,000) (500)
Net cash from financing activities 837,260 258,130
Net increase (decrease) in cash 2,677 (21,675)
Cash, beginning of year - 21,675
Cash, end of year $ 2,677 $ -
<PAGE>
J- Bird Music Group LTD.
Notes to Unaudited Financial Statements September 30, 1998
Note 1. Organization
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
provisions of Regulation SB. Accordingly, they do not include
all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair
presentation have been included. Certain reclassification and
restatements of prior year numbers have been made to conform to
the current year presentations.
On October 7, 1997, Caltron, Inc. entered into a stock purchase
agreement with the shareholders of J-Bird Records, Inc. to
purchase their shares of J-Bird Records, Inc. for the equivalent
number of shares of Caltron Inc. The total number of shares
exchanged in this transaction was 7,889,225 and was valued at
$827,466. On October 8 1997, Caltron, Inc. changed its name to J-
Bird Music Group LTD. J-Bird Records, Inc. is a wholly owned
subsidiary of J-Bird Music Group LTD.
As a result of this transaction, the former shareholders of J-
Bird Records, Inc. will be the controlling shareholders of the
Company. This transaction has been accounted for as purchase of
Caltron, Inc. by J-Bird Records, Inc.
J-Bird Records, Inc. is the first World Wide Web Recording Label
(TM). The Company was officially launched on November 1, 1996 to
market, distribute and sell music via a new medium - the
Internet. At its Website, located at http://www.j-
birdrecords.com, the Company attracts and signs recording artists
through its on-line office and promotes, markets and sells their
recordings through its on-line record store.
The Company has experienced operating losses since its inception
and has experienced significant cash flow problems. The Company
is in the processing of raising capital through various sources
to fund its operations and has implemented certain operating
strategies to obtain profitably.
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, J-Bird Records, Inc.
Material intercompany balances and transactions have been
eliminated in consolidation.
The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full
year. The accompanying financial statements should be read in
conjunction with the Company's form 10-SB filed for the year
ended December 31,1997.
Earnings (loss) per share are based on the weighted average
number of shares outstanding. Common stock equivalents have not
been considered as their effect would be anti-dilutive.
Note 2. J-Bird Records, Inc.
On October 7, 1997, Caltron, Inc. entered into a stock purchase
agreement with the shareholders of J-Bird Records, Inc. to
purchase their shares of J-Bird Records, Inc. for the equivalent
number of shares of the Company. The total number of common
shares exchanged in this transaction was 7,889,225 and was valued
at $827,466. This transaction has been accounted for as a
purchase. The financial statements include the operations of
Caltron, Inc. since October 7, 1997, date of acquisition.
The following table summarizes the unaudited pro forma results of
operations of the Company for the three months and nine months
ended September 30, 1997 assuming the acquisition of J-Bird
Records, Inc. had occurred on January 1, 1997. The unaudited pro
forma financial information presented is not necessarily
indicative of the results of operations that would have occurred
had the acquisition taken place on January 1, 1997 or of future
results of operations.
Nine months Three months
Ended September 30, 1997Ended September 30, 1997
Net sales $132,021 $57,765
Net (loss) $ (3,205,202) $ (2,806,900)
Net (loss) per share $(0.38) $(0.32)
Weighted average shares 8,538,971 8,785,795
========= =========
Note 3. Disposition of Long Term Assets and Investments
Rhode Island Renal Institute
On May 3, 1996, the Caltron entered into an agreement with Rhode
Island Renal Institute ("RIRI") and Brooks Porter ("Porter").
Under the agreement with Caltron, RIRI and Porter assigned to
Caltron the right to manufacture and distribute a Renal Ozone
Sterilization System ("ROSS") and any interests created by the
development and investment agreement among Porter and RIRI.
In December 1997, the ROSS Corporation signed an agreement with
the Company where the ROSS Corporation was going to buy the
Company's interest in the ROSS project for $500,000. In
connection with this transaction Caltron wrote down the value of
its investment to $500,000 as of the date of acquisition.
In November 1998, the Company and the ROSS Corporation agreed to
exchange 125,000 shares of the Company's stock owned by ROSS for
the $500,000 note receivable. See note 5 to the financial
statements.
Applied Advanced Technology
On June 14, 1996, Caltron entered into an Agreement with Applied
Advanced Technologies, Inc. ("AAT") and Tovi Avnery ("Avnery") to
acquire an interest in AAT and for AAT to acquire an equity
interest in Caltron. Under the terms of this agreement, Caltron
received an interest in the rights, title and interest in and to
an electron beam technology. Under this Agreement, Caltron was
to advance a total of $300,000 dollars to AAT. AAT received a
total of $350,000. In return, the Company received 114,546
shares of common stock of AAT, representing 45% ownership in the
company. Avnery also received 130,000 shares of restricted
common stock of the Company.
On July 15, 1997, Caltron and AAT entered into a memorandum of
understanding to terminate its relationship whereby AAT will pay
Caltron $350,000 plus interest, not to exceed $500,000, by July
31, 1999. All shares of common stock of Caltron owned by AAT or
Avnery were returned to the Company. In May 1998, the Company
collected $205,000 for full settlement of the $350,000 note
receivable from AAT.The difference has been recorded as a loss on
disposition of assets in the nine months ended September 30,
1998.
Note 4. Common Stock
In the nine months ended September 30, 1998 the Company issued
2,250,000 shares of restricted common stock at prices below the
fair market value of the stock. The Company has recorded a non-
cash charge of $1,052,500 as "financing fees- sale of discounted
stock" in connection with these sales. The Company has collected
$730,810 of cash in the nine months ended September 30, 1998 with
respect to the stock subscriptions. At September 30, 1998
$290,286 in subscriptions receivable were outstanding.
The Company issued 500,000 common shares valued at $525,000 to
an investment banker in connection with an agreement for
investment services. This was recorded as a non-cash charge to
operations as investment advisory fees.
At September 30, 1998 warrants to purchase 87,140 shares of
common stock exercisable through March 2002 at $.25 per share
were outstanding.
At September 30, 1998 options to purchase $60,000 shares of stock
at $1 per share were outstanding.
Note 5. Subsequent Event
In November 1998 the Company and the ROSS Corporation agreed to
exchange 125,000 shares of the Company's stock owned by ROSS for
the $500,000 note receivable in the accompanying financial
statements. If the agreement is finalized the Company's assets
and stockholders' equity would be decreased by $500,000 to
$617,041 and $302,449 respectively.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Overview
- -----------
The following discussion and analysis provides information that
management believes is relevant to an assessment and
understanding of J-Bird Music Group LTD's, consolidated results
of operations and financial condition for the nine months ended
September 30, 1998. The discussion should be read in conjunction
with the Company's consolidated financial statements and
accompanying notes.
J-Bird derives its revenues from four principle sources: (i)
sales of compact disks ("CDs") directly to the artists for resale
to consumers, (ii) fees paid by artists to sign recording
contracts, (iii) CD sales on the J-Bird Website; and (iv) retail
CD sales.
J-Bird's strategy to develop products and services for the music
entertainment business was primarily responsible for its net loss
for the nine months ended September 30,1998 and the years ended
December 31, 1996 and 1997. The Company has only a limited
operating history in its operations upon which an evaluation of J-
Bird and its prospects can be based. Accordingly, J-Bird believes
that the results of its operations in the past during which time
the Company had minimal revenues, are not meaningful indications
of future performance. J-Bird incurred losses from continuing
operations of $ 2,273,459 in the nine months ended September
30,1998 , $351,977 for the year ended December 31, 1996 and
$1,929,865 for the year ended December 31, 1997.
In 1998 the Company signed a distribution agreement with Navarre
Corporation which provides the Company with a national presence
in approximately 52,000 traditional retail establishments. This
agreement also provides the Company with a national sales force
that has existing relationships with the major retail outlets in
the country. As a start-up entity in 1997 the Company sold
directly to retail markets with minimal results. In the second
half of 1997 the Company was able to obtain two distribution
agreements with regional distributors. This enabled the Company
to establish a regional presence and provided credentials that
assisted in signing the distribution agreement with Navarre
Corporation.
The Company currently intends to increase substantially its
operating expenses to (a) fund increased sales and marketing,
enhance its existing website and to complete strategic
relationships important to the success of the Company. To the
extent that such expenses precede or are not subsequently
followed by increased revenues, the Company's business, results
of operations and financial condition will be materially
adversely affected. There can be no assurance that the Company
will be able to generate sufficient revenues from the sale of
music recordings, related merchandise, advertising and
sponsorship programs to achieve or maintain profitability on a
quarterly or annual basis in the future. The Company expects
negative cash flow from operations to continue for the
foreseeable future as it continues to develop and market its
business.
Liquidity and Capital Resources
The Company has financed its operations and capital expenditures
primarily from equity financing and loans from shareholders. At
September 30, 1998 , the Company had a cash balance of $2,677.
The Company received $205,000 in May 1998 with respect to the
$350,000 note receivable from AAT and recognized a loss of
$145,000 on this transaction. The Company also received $730,810
in cash from the sale of restricted stock through subscription
agreements. The stock has been sold at a discount to market
resulting in a non-cash charge to earnings of $1,052,500. The
amount due under stock subscriptions at September 30, 1998 was
$290,286. The Company expects negative cash flow from operations
to continue for the foreseeable future, as it continues to
develop and market its operations. Inflation has not had any
material impact on the Company's operations.
While the Company has positive working capital at September 30,
1998 the $500,000 note receivable responsible for the positive
working capital is in the process of being exchanged for the
purchase of treasury stock. See Note 5. to the financial
statements.
The Company is currently pursuing long term financing for its
operating activities and a potential acquisition. No source of
financing has occurred to date and there can be no assurance that
financing will be available, or if available, that it will be on
acceptable terms. The ability to finance existing and future
operations will be dependent upon external sources.
Results of Operations- Nine months ended September 30, 1998
compared to Nine months ended September 30,1997
1998 1997
----------- ----------
Net Sales $561,436 $132,021
- ------------
Cost of Sales $276,951 $97,885
- ---------------
In 1998 the Company signed a distribution agreement with Navarre
Corporation which provides the Company with a national presence
in approximately 52,000 traditional retail establishments. This
agreement also provides the Company with a national sales force
that has existing relationships with the major retail outlets in
the country. As a start-up entity in 1997 the Company sold
directly to retail markets with minimal results. In the second
half of 1997 the Company was able to obtain two distribution
agreements with regional distributors. This enabled the Company
to establish a regional presence and provided credential that
assisted in signing the distribution agreement with Navarre
Corporation.
In addition to obtaining the distribution agreement with
Navarre, sales increased due to the increased number of artists
and bands signed by the Company in 1998, including two nationally
recognized performers. These two artists accounted for
approximately $290,000 of sales in 1998. Thirteen performers
signed to agreements subsequent to September 30, 1997 had sales
of approximately $130,000 in the nine months ended September 30,
1998. Sales also increased due to the development of the 1997
catalog. Five artists signed to agreements prior to September 30,
1997 have increased sales by $57,000 in 1998 compared to 1997.
The Company has 214 of artists under agreements at September 30,
1998 compared to 159 at September 30, 1997.
Cost of sales in 1998 has increased in accordance with the
increase in sales. The cost of sales includes a web site fee of
approximately $31,000 for 1997 and 1998. As a result the 1997
cost of sales percentage is significantly higher than the 1998
percentage.
1998 1997
------------ -----------
Advertising and Promotion Expenses$163,180 $95,692
- --------------------------------------------
The increase in advertising and promotion is due to the higher
level of operations of the Company. The primary increase from
1997 to 1998 is due to an agreement with a advertising agency
requiring monthly payments of $4,500.
Professional Fees
- -------------------- $185,131 $58,599
The increase in professional fees is due to the higher level of
legal, accounting and consulting fees of the Company. Include in
professional fees in 1998 is a charge of approximately $51,000 to
a recording artist for consulting services. Other consulting
fees were approximately $60,000 greater than the 1997 levels.
Salaries $225,730 $161,289
- ---------
The increase in salaries expense is due to the increased number
of employees, six in 1998 compared to three in 1997 of the
Company.
Financing Fee-Sale of Discounted Stock$1,052,500 $ -0-
- ------------------------------------------------
Financing fees related to the non cash charge for the purchase of
restricted common stock at a discount to the market value of the
stock.
Loss on Sale of Assets $173,000 $ -0-
- --------------------------
Loss on sale of assets consists of $ 145,000 loss on the note
receivable from ATT and the write down of $ 28,000 of other
investments.
Administrative Expenses $206,028 $138,352
- ------------------------------
The increase in administrative expenses is due to the increased
of operations of the Company. Rent expense increased in 1998 by
approximately $21,000 compared to 1997. Printing and stationary,
registration fees, insurance, postage and general office expenses
increased by approximately $29,000. Travel and entertainment
increased by approximately $35,000. These increases were offset
by a decrease in commission expense of approximately $17,000
compared to 1997.
Investments Advisory Fees $525,000 $ -0-
- --------------------------------
Investment advisory fees increased due to an agreement with an
investment banking firm entered into in 1998. 500,000 shares of
common stock valued at $525,000 were issued in connection with
this transaction.
Results of Operations- Nine months ended September 30, 1997
compared to nine months ended September 30,1996
A comparison of the 1997 results to the 1996 results is not
meaningful as the Company did not begin operations until October
1996.
PART II
OTHER
INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULT UPON SENIOR SECUITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
J-Bird Music Group LTD.
(Registrant)
Dated: November 19, 1998
By: /s/ John J. Barbieri
President
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