SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
L.O.M. MEDICAL INTERNATIONAL INC.,
A Delaware corporation
(Exact name of registrant as specified in its charter)
DELAWARE 98-0178784
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
#580-885 Dunsmuir Street, Vancouver, British Columbia, Canada V6C 1N8
(Address of registrant's principal executive offices) (Zip Code)
604.602.9400
(Registrant's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of Each Exchange on which
to be so registered: each class is to be registered:
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par value $.001
(Title of Class)
Preferred Stock, Par value $.001
(Title of Class)
Copies to:
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
Page 1 of 58
Exhibit Index is specified on Page 17
<PAGE>
L.O.M. Medical International Inc.,
A Delaware corporation
Index to Form 10-SB Registration Statement
<TABLE>
<CAPTION>
Item Number and Caption Page
<S> <C>
1. Description of Business 3
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
3. Description of Property 10
4. Security Ownership of Certain Beneficial Owners and Management 10
5. Directors, Executive Officers, Promoters and Control Persons 11
6. Executive Compensation - Remuneration of Directors and Officers 12
7. Certain Relationships and Related Transactions 13
8. Legal Proceedings 14
9. Market for Common Equity and Related Shareholder Matters 14
10. Recent Sales of Unregistered Securities 14
11. Description of Securities 15
12. Indemnification of Officers and Directors 15
13. Financial Statements 16
14. Changes in and Disagreements with Accountants 16
15. Financial Statements and Exhibits 16
15(a) Index to Financial Statements 16
Financial Statements F-1 through F-9
15(b) Index to Exhibits 17
Exhibits E-1 through E-31
Signatures 18
</TABLE>
2
<PAGE>
Item 1. Description of Business.
Development of the Company. L.O.M. Medical International Inc., a Delaware
corporation ("Company"), was incorporated in the State of Delaware on March 17,
1997. The executive offices of the Company are located at #580-885 Dunsmuir
Street, Vancouver, British Columbia, Canada V6C 1N8. The Company's telephone
number is 604.602.9400.
The Company was originally incorporated for the purpose of researching and
developing health care products. The goal of the Company is to become an
innovator and provider of a retractable syringe and related products and
technologies to the health care market. The Company has successfully patented
and licensed products in twenty-four other countries, including the United
States and Canada. The Company envisions that it will be able to develop new and
improved products and provide the health care industry with better, safer
products throughout the world.
The Syringe. The Company anticipates that its products improve standard
disposal methods for used syringes. In this regard, the Company has developed a
unique product designed to function as a standard hypodermic syringe (similar to
those presently used by most hospitals and medical clinics) with one significant
difference, it is safer and less perilous to the caregiver or health care
worker. Providing a significantly reduced danger of contamination, the Company's
retractable syringe product ("Syringe") will allow health care providers to
avoid direct contact with used needles. This should prevent and reduce the
recognized risk to health care workers of "needle stick" contamination and
infection. This concept should introduce an ideal method of disposing and
handling used and contaminated syringes.
Once the needle is injected, the user simply has to press the plunger top
gently with his or her thumb to automatically retract the needle into its own
sealed chamber. The needle is now hidden where it remains locked in place and
cannot be used again - leaving the Syringe virtually contaminate-proof. The
Syringe does not require a health care worker to use both hands to retract the
needle after it has been used and withdrawn from the patient. The Syringe will
be produced in standard industry sizes from 3 CC to 100 CC, inclusive. The
Company intends to promote the Syringe as a safer and less risk-oriented
instrument for hospital staff and health care workers. The Company is optimistic
that doctors, nurses, and health care workers will recognize and appreciate the
safety features of the Syringe, because of its ease of "use-and-disposal" and
its unique "contaminate-prevention" characteristics.
The Company anticipates that the products and technologies developed by the
Company will be offered to distributors on a worldwide basis, with an initial
emphasis in Canada and the United States. The Company hopes that product and
technology ideas will be generated through active dialogues among the Company,
its customers, and its network of scientific advisors, participation in national
and international conferences, and reviews of selected scientific literature.
The Company interacts with a network of scientific advisors within the
industry, including members of academic institutions with which the Company
collaborates, as well as potential customers. The Company anticipates that these
interactions should enable the Company to identify the specialized needs of
those potential customers and to provide innovative and commercially acceptable
products and technologies.
3
<PAGE>
The Company anticipates that it will be testing the Syringe in conjunction
with teaching universities in Canada, Britain, and other constituents of the
United Kingdom. The Company has also developed ancillary components to be used
in a medical emergency situations and which can also be used by hospital medical
staff and paramedics.
The Lens-O-Matic. The Company has invented and developed an insertion and
storage device for contact lenses (the "Lens-O-Matic") which is an ideal medical
method of handling and inserting contact lenses. The Company has developed the
following components and solutions that will be used together with the
Lens-O-Matic insertion and storage system: (1) a medical inserter that will
remove contact lenses in a medical emergency situation for use by hospital
medical staff and paramedics; (2) disposable and replacement inserter ends; (3)
additional storage cups and caps; and (4) all soaking and disinfecting solutions
that are to be used with the Lens-O-Matic inserter.
The Lens-O-Matic should be especially beneficial to the professional eye
care practitioner. The Lens-O-Matic is designed so that the practitioner will no
longer have direct hand or finger contact with the contact lens when fitting the
patient. This should reduce the risk of contamination and infection to the
patient. The Company has developed a liquid cleaner for its contact lens
inserter unit that quickly cleans contact lenses. The Company anticipates that
its eye care products will be sold in retail outlets, as well as distributed as
a kit by the medical profession to patients.
Business of the Company's Subsidiary. On or about June 1, 1997, the Company
agreed to purchase 4,800 of the 5,000 total issued and outstanding shares of
Class "A" common stock issued by L.O.M. Laboratories Inc., a British Columbia
corporation; as a result of which L.O.M. Laboratories, Inc. became a subsidiary
of the Company. The Company agreed to pay $1.00 per share. This represents a 96%
interest in the subsidiary. On or about January 13, 1998, the Company's purchase
of the 4800 shares of L.O.M. Laboratories Inc. was approved by the directors and
shareholders of L.O.M. Laboratories Inc. L.O.M. Laboratories Inc. owned the
rights to the Lens-O-Matic system until January 1, 1998, when the Company
purchased those rights for CDN$542,000. The primary business purpose of the
subsidiary is to develop and market new products through the Company.
Employees. The Company currently has six employees, all of which are
full-time employees. Management of the Company anticipates using consultants for
business, accounting, engineering, and legal services on an as-needed basis.
Management of the Company has experience and background in manufacturing medical
products and obtaining patents internationally, as well as obtaining medical
approvals worldwide.
Competition. Competition in the medical products industry is intense and
the Company expects the competition to increase. The Company will compete
directly with other companies and businesses that have developed and are in the
process of developing technologies and products which will be competitive with
the products developed and offered by the Company. There can be no assurance
that other technologies or products which are functionally equivalent or similar
to the technologies and products of the Company have not been developed or are
not in development. The Company expects that there are companies or businesses
which may have developed or are developing such technologies and products, as
well as other companies and businesses which have the expertise which would
enable them to develop and market products directly competitive with those
developed and marketed by the Company. Many of these competitors have greater
financial and other resources, and more experience in research and development,
than the Company. To the
4
<PAGE>
extent that customers exhibit loyalty to the supplier that first supplies them
with a particular product or technology, the competitors of the Company may have
an advantage over the Company with respect to products and technologies first
developed by such competitors. As a result of their size and breadth of their
product offerings, certain of these competitors have been and will be able to
establish managed accounts by which, through a combination of direct computer
links and volume discounts, they seek to gain a disproportionate share of orders
for health care products and technologies from prospective customers. Such
managed accounts present significant competitive barriers to the Company. It is
anticipated that the Company will benefit from its participation in niche
research markets which, as they expand, may attract the attention of the
competitors of the Company.
There can be no assurance that competitors have not or will not succeed in
developing technologies and products that are more effective than any which have
been or are being developed by the Company or which would render the products of
the Company obsolete and noncompetitive. Many of the competitors of the Company
have substantially greater experience, financial and technical resources and
production, marketing and development capabilities than the Company. If the
Company commences commercial sales of its products, it will also be competing
with respect to manufacturing efficiency and sales and marketing capabilities.
Compliance with Environmental Laws. Because of the nature of the operations
of the Company and possible use of hazardous substances in its ongoing research
and development and manufacturing activities, the Company may be subject to
stringent laws, rules, regulations and policies governing the use, generation,
manufacturing, storage, air emission, effluent discharge, handling and disposal
of certain materials and waste. The risk of accidental contamination or injury
from hazardous materials cannot be completely eliminated. In the event of such
an accident, the Company could be held liable for any damages that result and
any such liability could exceed the financial resources of the Company.
Regulation by governmental authorities in the United States and other countries
will be a significant factor in the production and marketing of any products
which may be developed by the Company. The nature and extent to which such
regulation may apply to the Company will vary depending on the nature of the
specific product. Although it is believed that the Company is currently in
compliance with all applicable governmental and environmental laws, rules,
regulations and policies, there can be no assurance that the business, financial
condition, and results of operations of the Company will not be materially
adversely affected by current or future environmental laws, rules, regulations
and policies, or by liability occurring because of any past or future releases
or discharges of materials that could be hazardous.
Compliance with Governmental Regulations. Virtually all of the Company's
products will require regulatory approval by governmental agencies prior to
commercialization. The Company expects to research and develop products and
technologies requiring rigorous pre-clinical and clinical testing and other
approval procedures by the United States Food and Drug Administration ("FDA")
and similar health authorities in foreign countries. Various federal statutes
and regulations also govern or influence the manufacturing, safety, labeling,
storage, record keeping and marketing of such products. The process of obtaining
these approvals and the subsequent compliance with appropriate federal and
foreign statutes and regulations requires the expenditure of substantial
resources. The effect of government regulations may be to delay for a
considerable period of time or even prevent the marketing of any product that
the Company may develop and/or to impose costly procedures on the Company's
activities. Non-compliance with applicable requirements can result in, among
other things, fines, injunctions, seizures of products, total or partial
suspension of product marketing, failure of government to grant pre-market
approval, withdrawal of marketing approvals, product recall and criminal
prosecution.
5
<PAGE>
Reports to Security Holders. The Company will become a reporting company
with the Securities and Exchange Commission ("SEC") when this form 10-SB is
effective. As a reporting company, the Company will be obligated to provide and
annual report to its security holders, which will include audited financial
statements. The public may read and copy any materials filed with the SEC at the
SEC's Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549.
The public may also obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The address of that
site is http://www.sec.gov.The Company currently maintains its own Internet
address at www.lomm.com.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company is not currently producing commercial quantities of its
products nor is it currently supplying any services to any third parties. No
assurance can be given that the Company, on a timely basis, will be able to make
the transition from manufacturing testing quantities to commercial production
quantities successfully or be able to arrange for contract manufacturing. The
Company does anticipate that it will be able to manufacture its products for
initial commercialization, but it has not yet demonstrated the capability to
manufacture its products in commercial quantities. There can be no assurance
that the Company will be able to establish sales, marketing and distribution
capabilities or make arrangements with collaborators, licensees or others to
perform such activities or that such efforts will be successful.
The Company anticipates that it will maintain a manufacturing facility in
Spokane, Washington. It is also anticipated that the Company's products and
technologies will be distributed from Washington. The Company believes that the
Company will produce products and technologies by its internal manufacturing
processes and by selective sources of additional products and technologies that
can be more cost effectively purchased from outside suppliers. It is anticipated
that the amount of manufacturing content in individual products produced
internally by the Company will vary, depending on the nature of raw materials
purchased. In some cases, the entire manufacturing process may be controlled by
the Company. In other cases, it may be more cost effective for the Company to
purchase materials in various states of completion and provide "value added"
manufacturing processes prior to delivery to customers. The Company may also
decide to enter into arrangements with contract manufacturing companies to
expand its production capacities, in order to satisfy requirements for its
products, or to attempt to improve manufacturing efficiency. If the Company
chooses to contract for manufacturing services and encounters delays or
difficulties in establishing relationships with manufacturers to produce,
package and distribute its finished products, clinical trials, market
introduction and subsequent sales of such products would be adversely affected.
Further, contract manufacturers must operate in compliance with various
regulators' requirements; failure to do so could result in, among other things,
the disruption of product supplies.
The manufacture of the products of the Company involves a number of
procedures and requires compliance with stringent quality control specifications
imposed by the Company and various regulators. The Company may not be able to
replace its manufacturing capacity quickly if it were unable to use its
manufacturing facilities as a result of a fire, natural disaster (including
earthquake), equipment failure or other difficulty, or if such facilities are
deemed not in compliance with the various regulators' requirements and the
non-compliance could not be rapidly rectified. The inability or reduced capacity
of the Company to manufacture its products would have a material adverse effect
on the Company's business and results of operations.
6
<PAGE>
The products of the Company will be subject to numerous foreign government
standards and regulations that are continually being amended. Although the
Company will endeavor to satisfy foreign technical and regulatory standards,
there can be no assurance that the products of the Company will comply with
foreign government standards and regulations, or changes thereto, or that it
will be cost effective for the Company to redesign its products to comply with
such standards or regulations. The inability of the Company to design or
redesign products to comply with foreign standards could have a material adverse
effect on the Company's business, financial condition and results of operations.
The business of the Company and its subsidiaries will expose it to
potential product liability risks that are inherent in the testing,
manufacturing and marketing of medical products. The Company does not currently
have product liability insurance, and there can be no assurance that the Company
will be able to obtain or maintain such insurance on acceptable terms or, if
obtained, that such insurance will provide adequate coverage against potential
liabilities. The Company faces an inherent business risk of exposure to product
liability and other claims in the event that the development or use of its
technology or products is alleged to have resulted in adverse effects. Such risk
exists even with respect to those products that are manufactured in licensed and
regulated facilities or that otherwise possess regulatory approval for
commercial sale. There can be no assurance that the Company will avoid
significant product liability exposure. There can be no assurance that insurance
coverage will be available in the future on commercially reasonable terms, or at
all, that such insurance will be adequate to pay potential product liability
claims or that a loss of insurance coverage or the assertion of a product
liability claim or claims would not materially adversely affect the Company's
business, financial condition and results of operations. While the Company has
taken, and will continue to take, what it believes are appropriate precautions,
there can be no assurance that it will avoid significant liability exposure. An
inability to obtain product liability insurance at acceptable cost or to
otherwise protect against potential product liability claims could prevent or
inhibit the commercialization of products developed by the Company. A product
liability claim could have a material adverse effect on the Company's business,
financial condition and results of operations.
The strategy of the Company for growth is substantially dependent upon its
ability to market and distribute products successfully. Other companies,
including those with substantially greater financial, marketing and sales
resources, compete with the Company, and have the advantage of marketing
existing products with existing production and distribution facilities. There
can be no assurance that the Company will be able to market and distribute
products on acceptable terms, or at all. Failure of the Company to market its
products successfully could have a material adverse effect on the Company's
business, financial condition or results of operations.
The health care industry is subject to changing political, economic and
regulatory influences that will affect the procurement practices and operation
of health care organizations. Changes in current health care financing and
reimbursements systems could result in the need for unplanned product
enhancements, in delays or cancellations of product orders or shipments, or in
the revocation of endorsement of the products of the Company. Any of such
occurrences could have a material adverse effect on the Company's business,
financial condition and results of operations. During the past several years,
various health care industries have been subject to an increase in governmental
regulation of, among other things, reimbursement rates. Certain proposals to
reform the health care systems are periodically under consideration by the
appropriate regulators. These programs may contain proposals to increase
government involvement in health care and otherwise change the operating
environment for the customers of the Company. Health care organizations have
responded to these proposals and the uncertainty surrounding these proposals by
curtailing or deferring
7
<PAGE>
investments in cost containment tools and related technology, such as the
products of the Company. The Company cannot predict what impact, if any, such
factors might have on its business, financial condition and results of
operations. In addition, many health care providers are consolidating to create
integrated health care delivery systems with greater regional market power. As a
result, these emerging systems could have greater bargaining power, which may
lead to price erosion of the products of the Company. The failure of the Company
to maintain adequate prices would have a material adverse effect on the
Company's business, financial condition and results of operations. Other
legislative or market-driven reforms could have unpredictable effects on the
Company's business, financial condition and results of operations.
Impact of the Year 2000. The Company anticipates that the Year 2000 ("Y2K")
could impact the business of the Company. Many business software programs use
only the last two digits to indicate the applicable year. Unless these programs
are modified, computers running time-sensitive software may be unable to
distinguish between 1900 and 2000, resulting in system failures or
miscalculations and disruptions of operations, including, among other things, a
temporary inability to process transactions or engage in other normal business
activities. Many Y2K problems might not be readily apparent when they first
occur, but instead could imperceptibly degrade technology systems and corrupt
information stored in computerized databases, in some cases before January 1,
2000.
In order to improve operating performance and meet Y2K compliance, the
Company anticipates it will undertake a number of significant computer systems
initiatives. The Company has determined that the incremental cost of ensuring
that its computer systems are Y2K compliant is not expected to have a material
adverse impact on the Company. The Company has completed a preliminary
assessment of each of its computer operations and their Y2K readiness and has
concluded that the appropriate actions are being taken, and expects to complete
its overall Y2K readiness program prior to any anticipated impact on its
computer operations. The Company has determined that, with modifications to
existing software and conversions to new computer systems, the Y2K issue will
not pose significant operational problems for its computer systems. The Company
recognizes, however, that if such modifications are not completed, the Y2K issue
could have a material impact on the operations of the Company. The Company has
initiated formal communications with a number of its significant suppliers to
determine the extent to which the Company's computer systems are vulnerable to
those third parties' failure to remedy their own Y2K issues, and anticipates it
will initiate similar communications with major customers as well as the balance
of its major suppliers in 1999. There is no guarantee that the computer systems
of other companies on which the Company's computer systems rely will be timely
converted and will not have an adverse effect on the Company's computer systems.
Liquidity and Capital Resources. As of February 28, 1999, the Company had
cash resources of $39,415; term deposits of $329,495; and accounts receivable of
$17,569. The cash and equivalents constitute the Company's current internal
sources of liquidity. Because the Company is not generating any revenues from
the sale or licensing of its products, the Company's only external source of
liquidity is the sale of its capital stock. As of March 17, 1999, the Company
had sold a total of 917,718 shares of its common stock in reliance on an
exemption from the registration and prospectus requirements of the Securities
Act of 1933 ("Act") specified by the provisions of Section 3(b) of the Act and
Rule 504 of Regulation D promulgated by the Securities and Exchange Commission
pursuant to Section 3(b). As of March 17, 1999, the Company had sold a total of
4,814,678 shares of its common stock in reliance on an exemption from the
registration delivery requirements of the Act specified by the provisions of
Regulation S promulgated by the Securities and Exchange Commission.
8
<PAGE>
The business strategy of the Company may enable the Company to realize
revenue to support, in part, its operations and, therefore, may reduce offerings
of the Company's common stock needed to raise capital.
Results of Operations. The Company has not yet realized any revenue from
operations.
Manufacturing and Marketing the Company's Products. The Company anticipates
that it will obtain the necessary plastic for the injection molds used to
manufacture the Syringe from various domestic and international suppliers. The
Company also contemplates that it will be able to readily obtain the necessary
packaging for the Syringe. The Company's operations are not effected by any
seasonal factors.
The Company anticipates that it will eventually establish a production
facility in Spokane, Washington. It is anticipated that the facility will
initially produce approximately 2,500,000 units of the Syringe per month with
the capacity to meet increased market demands. The Company believes that it will
deliver its products to the North American markets by courier.
Once testing of the Syringe is completed, and assuming FDA approval is
received, the Company hopes to manufacture, or cause to be manufactured, a
specified number of the Syringe, which will be provided, at no charge, to a
target group of physicians for testing. The Company plans to provide Syringes to
various individuals who are to form part of the testing group. These individuals
will be asked to try the Syringe and report their findings. The Company will
then utilize professionals, such as doctors and related health care
professionals, who approve, recommend and endorse the Company's products,
including the Syringe. Thereafter, the Company anticipates that the Syringe will
be supplied to large national distributors within specific regions all over the
world. The Company anticipates that the distributors will thereafter market the
Syringe to pharmacy and medical supply companies. The Company's overall
operating plan is to act as a manufacturer, selling directly and only to
distributors and retail chains. The Company hopes that the Syringe will gain
acceptance in the medical community, and that the Company's skill in positioning
and merchandising the products and technology of the Company will enable the
Company to acquire a commercially reasonable portion of the market.
The Company anticipates that its eye care products will be sold retail, as
well as distributed as a kit by the medical profession. The Company expects that
the eye care products will be sold through pharmacies, wholesale drug
distributors and chain stores and that such products will be sold to
Optometrists and Ophthalmologists directly by the Company's sales
representatives. The Company has recently secured FDA approval for the
manufacturing and distribution of a first product run of its eye-care products.
The Company is currently negotiating with Shippert Medical Technologies of
Englewood, Colorado ("Shippert") pursuant to which the Company anticipates that
Shippert will distribute the Company's product line in the United States. The
Company anticipates the marketing of its eye-care products will begin in mid to
late 1999.
The Company plans to focus its initial marketing efforts in Canada and the
United States of America. The Company hopes to eventually expand its product
marketing and sales into Europe, South America, Central America, Mexico and
Asia. The Company plans to market its products by advertising in catalogs and
medical journals, by distributing brochures (both written and video), by direct
mail and by posters. Follow-up calls will be made to promising prospects. This
approach will be the Company's primary marketing method. It is expected that the
Company's personnel will attend various trade shows and medical conventions in
order to introduce the Syringe with the hope of gaining endorsements and
approvals. There can be no assurance that the Company would be able to establish
other methods of marketing and sales of its products successfully should it
become necessary or desirable in the future. A significant portion of the
Company's sales may be made through independent distributors over which the
Company has no control and who also will represent products of other companies.
The Company recognizes that in order to increase market awareness and the
9
<PAGE>
marketing potential of its products, it must hire adequate personnel and
institute effective advertising in the most cost effective way.
Item 3. Description of Property
Property held by the Company. As of the dates specified in the following
table, the Company held the following property valued at the following amounts:
================================================================================
Property May 31, 1998 February 28, 1999
- --------------------------------------------------------------------------------
Cash $137,691 $ 39,415
- --------------------------------------------------------------------------------
Term Deposits $410,506 $329,495
- --------------------------------------------------------------------------------
Investment in Lens-O-Matic $380,885 $380,885
================================================================================
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Management. The directors and principal executive
officers of the Company beneficially own, in the aggregate, 3,766,059 shares of
the Company's common stock, or approximately 65.7 % of the Company's issued and
outstanding shares, as set forth in the following table:
<TABLE>
<CAPTION>
Title of Class Name and Address Number of Shares Percent of
-------------- of Beneficial Owner and Nature of Class
------------------- Beneficial Owner -----
----------------
<S> <C> <C> <C>
Common Stock David E. Gramlich 69,300 1.2%
21274-87 Place
Langley, B.C. V1M 1Z8 Director
Common Stock Colin Lee 55,000 1.0%
2749 McColl Place
Victoria, B.C. V8N 5Y8 Director
Common Stock Peter McFadden 10,980 .1%
418 Oakview Road
Kelowna, B.C. V1W 4K2 Vice President, Chief Financial
Officer and Director
Common Stock John Klippenstein 1,814,895 31.7%
494 Casa Rio Drive
Kelowna, B.C. V1Z 3L6 President, Chief Executive
Officer and Director
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Title of Class Name and Address Number of Shares Percent of
-------------- of Beneficial Owner and Nature of Class
------------------- Beneficial Owner -----
----------------
<S> <C> <C> <C>
Common Stock Maria Klippenstein 1,814,884 31.7%
494 Casa Rio Drive
Kelowna, B.C. V1Z 3L6 Secretary and Treasurer
Common Stock John Gergely 1,000 .02%
21327-86A Cresent
Langley, B.C. V1M 2A1 Director
</TABLE>
Changes in Control. Management of the Company is not aware of any
arrangements which may result in "changes in control" as that term is defined by
the provisions of Item 403(c) of Regulation S-B. On or about June 1, 1997, the
Company agreed to acquire a 96% interest (4800 Class A common voting shares) of
L.O.M. Laboratories Inc., a British Columbia corporation. On or about January
13, 1998, the shareholders and directors of L.O.M. Laboratories Inc. approved
the sale of the 4800 shares to the Company. L.O.M. Laboratories Inc. is now a
wholly-owned subsidiary of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The directors and principal executive officers of the Company are as
specified on the following table:
<TABLE>
<CAPTION>
=================================================================================================
Name Age Position
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
John Klippenstein 60 President, Chief Executive Officer and Director
- -------------------------------------------------------------------------------------------------
Peter McFadden 43 Vice President, Chief Financial Officer and Director
- -------------------------------------------------------------------------------------------------
Maria Klippenstein 59 Secretary and Treasurer
- -------------------------------------------------------------------------------------------------
David A. Gramlich 58 Director
- -------------------------------------------------------------------------------------------------
Colin Lee 62 Director
- -------------------------------------------------------------------------------------------------
John Gergely 35 Director
=================================================================================================
</TABLE>
John Klippenstein received his education in Winnipeg and received a Certified
Engineering Technician degree in 1964 from Red River College in Winnipeg,
Manitoba. Mr. Klippenstein worked for several land development companies until
1969 when he started his personal land development and construction management
company, which still has holdings in Kelowna, British Columbia. As owner of
TechNacan Consultants Inc., Mr. Klippenstein has developed and built many large
commercial and industrial projects including health care facilities, clinics,
schools, institutional buildings, senior citizen housing, high rise apartment
complexes, recreational complexes, and food processing facilities in Manitoba,
Saskatchewan and Alberta.
Peter McFadden began his university education in 1979. He received his Bachelor
of Science degree at McMaster University, and a Masters Degree in Business
Administration from the University of Windsor in 1982. Currently Mr. McFadden
operates a Chartered Accountant practice in Kelowna, British Columbia.
11
<PAGE>
Maria Klippenstein has completed university level studies in industrial
accounting including bookkeeping, accounts receivable and accounts payable, and
banking. Mrs. Klippenstein is also an accomplished artist and photographer.
David A. Gramlich began his business career in 1968 in the field of real estate.
From 1968 to 1979 he worked as a manager of several real estate firms. Mr.
Gramlich has participated in industrial, commercial and institutional
transactions.
Colin Lee, M. D., came to Canada in 1968 after having received his medical
degree from Capetown University in South Africa in 1966. Since his arrival in
Canada, Dr. Lee has worked in the specialty of radiology.
John Gergely, M. D., currently works at Vancouver General Hospital, where he
interns, specializing as an anesthetist. Dr. Gergely graduated from the Royal
University Hospital in Saskatoon, Saskatchewan with an Medical Doctorate Degree.
Dr. Gergely anticipates participating in the Company's medical product research
and testing activities.
John Klippenstein and Maria Klippenstein are husband and wife. Other than
the persons specified above, there are no significant employees expected by the
Company to make a significant contribution to the business of the Company. All
directors of the Company serve until the next annual meeting of stockholders.
The Company's executive officers are appointed by the Company's Board of
Directors and serve at the discretion of the Board of Directors.
There are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining Mr. Klippenstein, Mr. McFadden, Dr. Gergley, Mr. Gramlich, Dr. Lee
or Mrs. Klippenstein from engaging in or continuing any conduct, practice or
employment in connection with the purchase or sale of securities, or convicting
such person of any felony or misdemeanor involving a security, or any aspect of
the securities business or of theft or of any felony, nor are Mr. Klippenstein,
Mr. McFadden, Dr. Gergley, Mr. Gramlich, Dr. Lee or Mrs. Klippenstein the
officers or directors of any corporation or entity so enjoined.
Item 6. Executive Compensation - Remuneration of Directors and Officers.
Specified below, in tabular form, is the aggregate annual remuneration of
the Company's Chief Executive Officer and the four (4) most highly compensated
executive officers other than the Chief Executive Officer who were serving as
executive officers at the end of the Company's last completed fiscal year.
12
<PAGE>
================================================================================
Name of individual or Capacities in which Aggregate
Identity of Group Remuneration was received Remuneration
- --------------------------------------------------------------------------------
John Klippenstein President and Chief Executive CDN$130,000
Officer
================================================================================
Specified below, in tabular form, is the aggregate annual remuneration
of the Director's of the Company who were serving as directors at the end of the
Company's last completed fiscal year.
================================================================================
Name of individual or Capacities in which Aggregate
Identity of Group Remuneration was received Remuneration
- --------------------------------------------------------------------------------
All Directors None None
================================================================================
Each director of the Company receives reimbursement for actual and
necessary expenses incurred in attending meetings of the Board.
Item 7. Certain Relationships and Related Transactions
Transactions with Promoters. J. Alexander & Company is the market maker for
the Company. J. Alexander & Company has not received any shares of common stock
of the Company for its market making services.
Related Party Transactions. On or about January 1, 1998, prior to becoming
a subsidiary of the Company, L.O.M. Laboratories Inc., purchased from John
Klippenstein all product rights to the Lens-O- Matic. L.O.M. Laboratories Inc.
paid a purchase price of CDN$542,000 allocated as follows: (i) L.O.M.
Laboratories Inc. forgave indebtedness owed to it by John Klippenstein in the
amount of CDN$101,329; and (ii) L.O.M. Laboratories Inc. issued, to John
Klippenstein, 4000 of the Company's Class "C" Preferred Shares valued at
CDN$440,671. At the time of the transaction, John Klippenstein was serving as
the President, Chief Executive Officer and director of the Company as well as
serving as President and a director of L.O.M. Laboratories Inc. John
Klippenstein signed the Purchase and Sale Agreement in his individual capacity
as seller and as the authorized officer of L.O.M. Laboratories Inc. At the time
of the transaction, Mr. Klippenstein's wife, Maria Klippenstein, was both the
Secretary and a director of L.O.M. Laboratories Inc. The value of the investment
will ultimately be determined by the acceptance of the product in the market
place which is uncertain at this time.
On or about June 1, 1999, the Company agreed to purchase 4,800 of the 5,000
total issued and outstanding shares of L.O.M. Laboratories Inc.'s Class "A"
common shares. The Company agreed to pay $1.00 per share. This represents a 96%
interest in L.O.M. Laboratories Inc., now a subsidiary of the Company. The other
200 issued and outstanding common shares are owned by John and Maria
Klippenstein. On or about January 13, 1998, the shareholders and directors of
L.O.M. Laboratories Inc. approved the sale of the 4800 shares to the Company. At
the time of the transaction, John Klippenstein was serving as the President,
Chief Executive Officer and director of the Company as well as serving as
President and a director
13
<PAGE>
of L.O.M. Laboratories Inc. At the time of the transaction, Mr. Klippenstein's
wife, Maria Klippenstein, was both the Secretary and a director of L.O.M.
Laboratories Inc.
The Company leases its office space from 494040 B.C. Ltd. (Tech-Nacan
Consultants). Tech-Nacan Consultants, a British Columbia corporation, is a real
estate development company owned by John Klippenstein, President, Chief
Executive Officer and a director of the Company, and Maria Klippenstein,
Secretary and Treasurer of the Company. The Company pays CDN$28,365 per year to
494040 B.C. Ltd. for the use of the office space.
On or about October 27, 1997, with the Board of Director's approval, the
Company and John Klippenstein executed a five-year employment contract. Pursuant
to that employment agreement, John Klippenstein is to provide management
services for the Company for which the Company agreed to pay CDN$120,000 for the
first year with a CDN$10,000 increase every year thereafter, resulting in a
final fifth year salary of CDN$160,000. John Klippenstein currently is the
President, Chief Executive Officer and a director of the Company.
On or about July 10, 1997, the Company's subsidiary, L.O.M. Laboratories
Inc., entered into a Loan Agreement with David A. Gramlich, a current director
of the Company. Pursuant to the terms of the Loan Agreement, L.O.M. Laboratories
Inc. lent Mr. Gramlich CDN$17,000, interest to accrue at the Royal Bank prime
rate; such principal and interest to be paid upon demand. The above loan is
presented in the attached audited financials as an accounts receivable balance
of US$12,713. Mr. Gramlich's current balance is presented in the attached
unaudited balance sheets as an accounts receivable balance of US$17,569,
representing the principal plus accrued interest. The Company anticipates that
Mr. Gramlich will pay this debt on or before May 22, 1999.
Item 8. Legal Proceedings
There are no legal actions pending against the Company nor are any such
legal actions contemplated.
Item 9. Market for Common Equity and Related Stockholder Matters
The Company participates in the OTC Bulletin Board Electronic Quotation
System maintained by the National Association of Securities Dealers, Inc., using
the trading symbol "LOMM". As of May 31, 1998, there were no issued or
outstanding warrants to purchase the Company's common stock.
There are approximately 286 holders of the Company's common stock. There
have been no cash dividends declared on the Company's common stock in the last
two fiscal years. Dividends are declared at the sole discretion of the Company's
Board of Directors.
Item 10. Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three
(3) years which would be required to be disclosed pursuant to Item 701 of
Regulation S-B, except for the following:
14
<PAGE>
On or about April 16, 1997, the Company commenced an offering of shares of
its $.001 par value common stock for $1.00 per share. The shares were issued in
reliance on an exemption from the registration and prospectus delivery
requirements of the Securities Act of 1933 ("Act") specified by the provisions
of Section 3(b) of the Act and Rule 504 of Regulation D promulgated by the
Securities and Exchange Commission pursuant to Section 3(b). Through January 29,
1999, the Company had sold a total of 917,718 shares of its common stock
pursuant to that offering. Gross proceeds from the offering were $917,718 in
cash. The offering price for the Company's shares of common stock was
arbitrarily established by the Company and had no relationship to assets, book
value, revenues or other established criteria of value.
Since its formation, the Company has offered and sold shares of its $.001
par value common stock in reliance upon the exemption from the registration and
prospectus delivery requirements of the Act set forth in Regulation S
promulgated by the Securities and Exchange Commission. Specifically, the offer
was made to "non U.S. persons" (as that term is defined by Regulation S),
including the shares issued to John and Maria Klippenstein. Through April 17,
1999, the Company had issued a total of 4,521,647 shares of its common stock
pursuant to Regulation S. The offering prices for the units were arbitrarily
established by the Company and had no relationship to assets, book value,
revenues or other established criteria of value. Gross proceeds from those
offerings received by the Company total $495,212.
Item 11. Description of Securities
The Company is authorized to issue 50,000,000 shares of common stock, $.001
par value, each share of common stock having equal rights and preferences,
including voting privileges. The Company is also authorized to issue 5,000,000
shares of preferred stock with a par value of $.001. As of April 17, 1999,
5,732,396 shares of the Company's common stock were issued and outstanding. As
of April 17, 1999, none of the Company's preferred stock was issued and
outstanding.
The shares of $.001 par value common stock of the Company constitute equity
interests in the Company entitling each shareholder to a pro rata share of cash
distributions made to shareholders, including dividend payments. The holders of
the Company's common stock are entitled to one vote for each share of record on
all matters to be voted on by shareholders. There is no cumulative voting with
respect to the election of directors of the Company or any other matter, with
the result that the holders of more than 50% of the shares voted for the
election of those directors can elect all of the directors. The holders of the
Company's common stock are entitled to receive dividends when, as and if
declared by the Company's Board of Directors from funds legally available
therefor; provided, however, that cash dividends are at the sole discretion of
the Company's Board of Directors. In the event of liquidation, dissolution or
winding up of the Company, the holders of common stock are entitled to share
ratably in all assets remaining available for distribution to them after payment
of liabilities of the Company and after provision has been made for each class
of stock, if any, having preference in relation to the Company's common stock.
Holders of the shares of Company's common stock have no conversion, preemptive
or other subscription rights, and there are no redemption provisions applicable
to the Company's common stock. All of the outstanding shares of Company's common
stock are duly authorized, validly issued, fully paid and non-assessable.
Item 12. Indemnification of Directors and Officers
Article Seventh of the Company's Articles of Incorporation provides that no
director shall be personally liable to the Corporation or its stockholders for
monetary damages for any breach of fiduciary duty by such
15
<PAGE>
director as a director. Article Seventh also specifies that, notwithstanding the
foregoing sentence, a director shall be liable to the extent provided by
applicable law, (i) for breach of the director's duty of loyalty to the Company
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of the law, (iii) pursuant
to Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit.
Finally, that article provides that no amendment or repeal of that article shall
apply to or have any effect on the liability or alleged liability of any
director of the Company for or with respect to any acts or omissions of such
director occurring prior to such amendment.
The Company may enter into indemnification agreements with each of its
officers and directors pursuant to which the Company agrees to indemnify each
such officer and director for all expenses and liabilities, including criminal
monetary judgments, penalties and fines, incurred by such officer or director in
connection with any criminal or civil action brought or threatened against such
officer or director by reason of such person being or having been an officer or
director of the Company. In order to be entitled to indemnification by the
Company, such officer or director must have acted in good faith and in a manner
such officer or director believed to be in the best interests of the Company
and, with respect to criminal actions, such person must have had no reasonable
cause to believe his or her conduct was unlawful.
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, INDEMNIFICATION
FOR LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933 IS CONTRARY TO
PUBLIC POLICY AND, THEREFORE, UNENFORCEABLE.
Item 13. Financial Statements
Copies of the Company's Financial Statements specified in Regulation
228.310 (Item 310) are filed with this Registration Statement, Form 10-SB (see
Item 15 below).
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with the Company's
accountants since the formation of the Company required to be disclosed pursuant
to Item 304 of Regulation S-B.
Item 15. Financial Statements and Exhibits
(a) Index to Financial Statements. Page
Unaudited Balance Sheets as of February 28, 1999 F-1
Unaudited Statement of Loss and Deficit for the period F-2
ending February 28, 1999
Auditors' Report for the period ending May 31, 1998 F-3
(Consolidated) Audited Balance Sheet as of May 31, 1998 F-4
16
<PAGE>
(Consolidated) Statement of Loss and Deficit F-5
for the year ended May 31, 1998
Statement of Changes in Financial Position F-6
for the period ending May 31, 1998
Notes to Financial Statements F-7 through F-9
(b) Index to Exhibits.
Copies of the following documents are filed with this Registration
Statement, Form 10-SB as exhibits:
Index to Exhibits Page 2
1 Certificate of Incorporation of L.O.M. E-1 through E-3
Medical International Inc.
2 Bylaws of L.O.M. Medical E-4 through E-24
International Inc.
3 Minutes of Meeting of Shareholders of E-25
L.O.M. Laboratories Inc. approving the
sale of 96% interest to the Company
4 Minutes of Meeting of Directors of E-26
L.O.M. Laboratories Inc. approving the
sale of 96% interest to the Company
5 Resolution of L.O.M. Laboratories Inc. E-27
authorizing the sale of 96% interest to
the Company
3 Lease Agreement Between L.O.M. Medical E-28 through E-29
International Inc. and 494040 B.C. Ltd.
4 Employment Agreement Between E-30
L.O.M. Medical International Inc.
and John Klippenstein
5 Demand Loan Agreement Between E-31
L.O.M. Laboratories Inc. and David Gramlich
17
<PAGE>
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange
Act of 1934, the Company has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Vancouver, British Columbia, Canada, on May ___, 1999.
L.O.M. Medical International Inc.,
a Delaware corporation
By:
----------------------------
John Klippenstein
Its: President
18
<PAGE>
L.O.M. MEDICAL INTERNATIONAL INC.
BALANCE SHEET
(9 Month Interim Financials)
AS AT FEBRUARY 28, 1999
ASSETS
1999
-----------
CURRENT
Bank $ 39,415
Accounts receivable 17,569
Term deposits 329,495
Prepaid expenses 11,885
Due from shareholder 133,110
-----------
531,474
INVESTMENT IN LENS-O-MATIC 380,885
OTHER ASSETS 396,896
CAPITAL ASSETS 66,362
GOODWILL ON PURCHASE OF SUBSIDI 129,418
-----------
$ 1,505,035
===========
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 4,457
GST payable (4,900)
-----------
(443)
PREFERRED REDEEMABLE SHARES 309,677
-----------
309,234
-----------
SHAREHOLDER'S EQUITY
CAPITAL STOCK 1,590,437
(DEFICIT) RETAINED EARNINGS (394,636)
-----------
1,195,801
-----------
$ 1,505,035
===========
APPROVED ON BEHALF OF THE BOARD:
John Klippenstein Director
- -------------------------------------
Director
- -------------------------------------
F-1
<PAGE>
L.O.M. MEDICAL INTERNATIONAL INC.
STATEMENT OF LOSS AND DEFICIT
(9 Month Interim Financials)
FOR THE PERIOD ENDED FEBRUARY 28, 1999
1999
---------
REVENUE
Interest income $ 14,371
---------
GENERAL AND
ADMINISTRATIVE EXPENSES
Advertising 1,640
Automotive expense 5,261
Commission on share issue 650
Consulting fees 14,235
Director's fees 5,271
Exchange gain or loss (18,522)
Insurance 382
Interest and bank charges 691
Legal and accounting 19,479
Licenses, fes, and dues 165
Office & administrative supplies 4,988
Promotion and entertainment 1,260
Prospectus & share issue expenses 5,434
Publications and videos 6,406
Rent 26,052
Repairs & maintenance 939
Subcontract 13,733
Storage expense 1,353
Telephone 8,664
Travel 3,227
Utilities 428
Standard and Poor 2,450
---------
104,186
---------
NET (LOSS) INCOME (89,815)
(DEFICIT) RETAINED EARNINGS, beginning of year (304,821)
---------
(394,636)
---------
(DEFICIT) RETAINED EARNINGS, end of year $(394,636)
=========
F-2
<PAGE>
Joe Maciel Inc.
Chartered Accountant
- --------------------------------------------------------------------------------
3670 Hoskins Road Tel: (250) 768-0644
Westbank, BC. V4T 1P7 Fax: (250) 768-0634
AUDITORS' REPORT
To the Shareholders of:
L.O.M. Medical International Inc.
I have audited the consolidated balance sheet of L.O.M. Medical International
Inc. as at May 31, 1998 and the consolidated statements of loss and deficit and
changes in financial position for the year then ended. These financial
statements are the responsibility of the company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In my opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at May 31, 1998 and
the results of its operations and the changes in its financial position for the
year then ended in accordance with generally accepted accounting principles.
Westbank, B.C. Joe Maciel Inc.
September 24, 1998 CHARTERED ACCOUNTANT
F-3
<PAGE>
L.O.M. MEDICAL INTERNATIONAL INC.
================================================================================
BALANCE SHEET
AS AT MAY 31, 1998
ASSETS
1998
(In U.S. Dollars)
- --------------------------------------------------------------------------------
CURRENT
Cash $ 137,691
Term deposits 410,506
Accounts receivable 12,713
Prepaid expenses 11,885
- --------------------------------------------------------------------------------
572,795
- --------------------------------------------------------------------------------
INVESTMENT IN LENS-O-MATIC (Note 3) 380,885
GOODWILL QN PURCHASE OF SUBSIDIARY (Note 4) 129,418
OTHER ASSETS (Note 5) 397,957
CAPITAL ASSETS (Note 6) 10,660
- --------------------------------------------------------------------------------
$ 1,491,715
================================================================================
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 22,571
- --------------------------------------------------------------------------------
22,571
Preferred Redeemable Shares of L.O.M. Laboratories Inc. (Note 7) 309,677
Non controlling interest in L.O.M. Laboratories Inc. (5,536)
- --------------------------------------------------------------------------------
326,712
- --------------------------------------------------------------------------------
SHAREHOLDERS' DEFICIT
CAPITAL STOCK (Note 8) 1,464,163
DEFICIT (299,160)
- --------------------------------------------------------------------------------
1,165,003
- --------------------------------------------------------------------------------
$ 1,491,715
================================================================================
APPROVED 0N BEHALF OF THE BOARD:
[ILLEGIBLE] Director
- -------------------------------------
John Klippenstein Director
- -------------------------------------
F-4
<PAGE>
L.O.M. MEDICAL INTERNATIONAL INC.
================================================================================
STATEMENT OF LOSS AND DEFICIT
FOR THE YEAR ENDED MAY 31, 1998
1998
(In U.S. Dollars)
- --------------------------------------------------------------------------------
REVENUE
Interest income $ 16,335
- --------------------------------------------------------------------------------
EXPENSES
Advertising 3,496
Amortization 7,188
Automotive 10,646
Design plans 10,911
Director's fees 8,520
Exchange gain or loss (14,937)
Insurance 1,605
Interest and bank charges 937
Legal and accounting 39,404
Licences, fees and dues 290
Management fees 143,859
Office and administration 27,466
Product Development 1,582
Promotion and entertainment 5,887
Prospectus & share issue expenses 8,891
Rent 30,538
Repairs and maintenance 1,973
Telephone 9,505
Travel 10,161
Video production 7,573
- --------------------------------------------------------------------------------
315,495
- --------------------------------------------------------------------------------
NET LOSS (299,160)
- --------------------------------------------------------------------------------
DEFICIT, end of year $(299,160)
================================================================================
F-5
<PAGE>
L. 0. M. MEDICAL INTERNATIONAL INC.
================================================================================
STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE YEAR ENDED MAY 31,1998
1998
(In U.S. Dollars)
- --------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES
Net loss $ (299,160)
- --------------------------------------------------------------------------------
Items not requiring an outlay of cash:
Amortization 7,188
- --------------------------------------------------------------------------------
(291,972)
CHANGES IN NON-CASH WORKING CAPITAL BALANCES
Accounts receivable (12,713)
Prepaid expenses and deferred charges (11,885)
Accounts payable and accrued liabilities 22,571
- --------------------------------------------------------------------------------
(2,027)
- --------------------------------------------------------------------------------
(293,999)
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of capital stock 1,464,160
Preferred redeemable shares of L.O.M. Laboratories Inc. 309,677
Non controlling interest in L.O.M. Laboratories Inc. (5,536)
- --------------------------------------------------------------------------------
1,768,301
- --------------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisition of capital assets (14,527)
Acquisition of other assets (397,957)
Goodwill on purchase of subsidiary (129,418)
Purchase of investments (380,885)
- --------------------------------------------------------------------------------
(922,787)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH 551,515
- --------------------------------------------------------------------------------
CASH, end of year $ 551,515
================================================================================
REPRESENTED BY:
Cash $ 137,691
Term Deposits 410,506
- --------------------------------------------------------------------------------
$ 548,197
================================================================================
F-6
<PAGE>
L.O.M. MEDICAL INTERNATIONAL INC.
================================================================================
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MAY 31,1998
- --------------------------------------------------------------------------------
1. INCORPORATION AND DESCRIPTION OF BUSINESS
The company was incorporated on March 17, 1997 in the State of Delaware. It
conducts research and development on new products in the medical field and
has filed a patent application on a retractable syringe. The company owns a
96% interest in the common voting shares of L.O.M. Laboratories Inc. (a
British Columbia company).
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Marketable Securities
Marketable securities are valued at the lower of cost and market
value.
(b) Capital Assets
Capital assets are recorded at cost. Amortization is provided annually
at rates calculated to write-off the assets over their estimated
useful lives as follows:
Computer software - 100% straight line
Equipment - 30% diminishing balance
Office furniture & equipment - 20% diminishing balance
(c) Other assets
Other assets relate to costs associated with patent applications for a
retractable syringe developed by the company. These costs will be
amortized on a straight line basis over five years commencing in the
year when the product goes into production.
================================================================================
3. INVESTMENT IN LENS-O-MATIC
The "Lens-o-matic" system is a contact lens inserter and storage system
developed by the president of the company and purchased by L.O.M.
Laboratories Inc. during the year. The value attributed to the product
rights of the Lens-o-matic system was agreed to by the Board of Directors.
The value of the investment however will ultimately be determined by the
acceptance of the product in the market place which is uncertain at this
time; and may be more or less than the amount paid by the company. Also see
Related Party Note 9.
================================================================================
4. PURCHASE OF SUBSIDIARY
The company acquired 4800 class A common voting shares of L.O.M.
Laboratories Inc. effective June 1, 1997. This represents a 96% interest in
the subsidiary, which is being consolidated.
================================================================================
5. OTHER ASSETS
1998
- --------------------------------------------------------------------------------
Deferred financing costs $ 375,506
Deferred patent costs 22,451
- --------------------------------------------------------------------------------
F-7
<PAGE>
L. O.M. MEDICAL INTERNATIONAL INC.
================================================================================
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MAY 31, 1998
- --------------------------------------------------------------------------------
6. CAPITAL ASSETS
Accumulated Net
Cost Depreciation 1998
- --------------------------------------------------------------------------------
Computer software 534 267 267
Equipment 17,698 7,441 10,257
Furniture and fixtures 160 24 136
- --------------------------------------------------------------------------------
$18,392 $ 7,732 $10,660
================================================================================
7. PREFERRED REDEEMABLE SHARES OF L.O.M. LABORATORIES INC.
1998
- --------------------------------------------------------------------------------
Authorized
5,000 Class C Redeemable Preferred shares with a par value of
$100 Canadian each with fixed non-cumulative dividends
at the rate of 9% per share per annum payable at such
times as determined by the directors.
Issued during the year
4,000 Class C Preferred shares $ 309,677
The preferred shares are redeemable for $110.16 each Canadian at the option
of the holder upon giving notice to the company which shall not be less
than 10 days or more than 30 days from the date of the notice.
================================================================================
8. CAPITAL STOCK
Authorized
50,000,000 Class Common shares with a par value of $.00l each.
1998
- --------------------------------------------------------------------------------
Issued during the year
5,483,274 Common shares with a par value of $.001 each. $ 1,464,163
- --------------------------------------------------------------------------------
F-8
<PAGE>
L.O.M. MEDICAL INTERNATIONAL INC.
================================================================================
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MAY 31, 1998
- --------------------------------------------------------------------------------
9. RELATED PARTY TRANSACTIONS
During the year the subsidiary entered into the following transactions with
related parties:
1998
- --------------------------------------------------------------------------------
Rent paid 12,496
Management fees paid 102,140
Office management pald 15,391
Purchase of Lens-o-matic 380,885
Accounting fees paid 6,091
Loan to related party 12,713
During the year the subsidiary purchased from the president the rights to a
contact lens inserter and storage system called "Lens-o-matic".
The company agreed to pay $380,885 in exchange for the product rights to
the Lens-o-matic system as follows:
Debt taken back by vendor
Issuance of 4,000 class C Preferred shares redeemable at $116.16 Canadian
each
The agreement was subject to a joint election under subsection 85(1) of the
Canadian Income Tax Act.
================================================================================
10. COMMITMENTS
The Subsidiary Company leases its premises under operating leases. The
Company is obligated to make future lease payments as follows:
1999 23,281
2000 17,956
The Subsidiary has also entered into an automotive lease agreement
requiring payments as follows:
1999 7,821
2000 1,955
F-9
State of Delaware
PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "L.O.M. MEDICAL INTERNATIONAL INC.", FILED IN THIS OFFICE ON
THE SEVENTEENTH DAY OF MARCH, A.D. 1997 AT 9 0'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL]
/s/ EDWARD J. FREEL
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
DATE:
E-1
<PAGE>
CERTIFICATE OF INCORPORATION
OF
L.O.M. MEDICAL INTERNATIONAL INC.
FIRST. The name of this corporation shall be:
L.O.M. MEDICAL INTERNATIONAL INC.
SECOND. Its registered office in the State of Delaware is to be located at
1013 Centre Road, in the City of Wilmington, County of New Castle and its
registered agent at such address is CORPORATION SERVICE COMPANY.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is
authorized to issue is:
Fifty Five Million (55,000,000) Shares With A Par Value Of One Mill ($.001) Per
Share Amounting To Fifty Five Thousand Dollars ($55,000) Of Which Fifty Million
(50,000,000) Shares Are Common Stock And Five Million (5,000,000) Shares Are
Preferred Stock.
FIFTH. The name and address of the incorporator is as follows:
Robert Matera
Corporation Service Company
1013 Centre Road
Wilmington, DE 19805
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
E-2
<PAGE>
SEVENTH. No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article Seventh
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore
named, has executed, signed and acknowledged this certificate of incorporation
this seventeenth day of March, A.D., 1997.
/s/ ROBERT MATERA
-----------------------------
Robert Matera
Incorporator
E-3
BYLAWS
OF
L.O.M. MEDICAL INTERNATIONAL INC.
ARTICLE I
Offices
Section 1. Registered Office. The registered office of L.O.M. Medical
International Inc. ("Corporation") shall be maintained at such locations within
the State of Delaware as the Board of Directors from time to time shall
designate. The Corporation shall maintain in charge of such registered office an
agent upon whom process against the Corporation may be served.
Section 2. Other Offices. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board of Directors from time to time may determine or the
business of the Corporation may require.
ARTICLE II
Meetings of Shareholders
Section I. Annual Meetings. Subject to the provisions of these Bylaws, the
annual meeting of the shareholders for the election of directors and for the
transaction of such other business as may properly come before such meeting
shall be held on such date and at such time as shall be designated by the Board
of Directors and stated in the notice of such meeting. If the election for
directors shall not be held on the day designated therefor or at any adjournment
thereof, the directors shall cause such election to be held at a special meeting
of the shareholders as soon thereafter as may be convenient. At such special
meeting, subject to the provisions of these Bylaws, the shareholders may elect
the directors and transact any other business with the same force and effect as
at an annual meeting duly called and held.
Section 2. Special Meetings. A special meeting of the shareholders for any
purpose or purposes, unless otherwise prescribed by statute, may be called at
any time and shall be called by the President or Secretary, upon the direction
of the Board of Directors, or upon the written request of a shareholder or
shareholders holding of record at least ten percent (10 %) of the outstanding
shares of the Corporation entitled to vote at such a meeting.
Section 3. Place of Meetings. All meetings of the shareholders shall be
held at the principal place of business of the Corporation or at such other
place, within or without
1
E-4
<PAGE>
the State of Delaware, as shall be designated by the Board of Directors and
stated in the notice of each such meeting.
Section 4. Notice of Meetings. Except as otherwise provided by law, notice
of each meeting of the shareholders, whether annual, special, or adjourned,
shall be given, not less than ten (10) days nor more than sixty (60) days before
the day on which such meeting is to be held, to each shareholder of record
entitled to vote at such meeting by delivering a written or printed notice
thereof to such shareholder personally, by facsimile machine, or by mailing such
notice in a postage prepaid envelope addressed to such shareholder at the post
office address furnished by such shareholder to the Secretary for such purpose,
or, if such shareholder shall not have furnished to the Secretary an address for
such purpose, then at the address of such shareholder last known to the
Secretary. Except when expressly required by law, no publication of any notice
of a meeting of shareholders shall be required. Notice of any meeting of
shareholders shall not be required to be given to any shareholder who shall
attend such meeting in person or by proxy. If any shareholder shall in person or
by proxy waive notice, in writing, of such meeting, whether before or after such
meeting, notice thereof need not be given to such shareholder. Notice of any
adjourned meeting of the shareholders shall not be required to be given, except
when expressly required by law.
Section 5. Quorum. At each meeting of the shareholders, the presence in
person or by proxy of shareholders holding of record a majority of the
outstanding shares entitled to vote at such meeting shall be necessary and
sufficient to constitute a quorum for the transaction of business. In the
absence of a quorum, the shareholders entitled to vote who are present in person
or by proxy at the time and place of any meeting, or, if no shareholder entitled
to vote is so present in person or by proxy, any officer entitled to preside at
or act as secretary of such meeting may adjourn such meeting from time to time,
without notice other than an announcement at such meeting, until a quorum shall
be present. At any such adjourned meeting at which a quorum may be present, any
business may be transacted which might have been transacted at the meeting as
originally called.
Section 6. Organization. At every meeting of the shareholders, the
President, or, in his or her absence, a Vice President, or, in the absence of
the President and all of the Vice Presidents, a chairman chosen by a majority in
interest of the shareholders present in person or by proxy and entitled to vote
thereat, shall act as chairman. The Secretary, or, in his or her absence, an
Assistant Secretary, shall act as secretary at all meetings of the shareholders.
In the absence from any such meeting of the Secretary or an Assistant Secretary,
the chairman may appoint any person to act as secretary of such meeting.
Section 7. Business and Order of Business. Subject to the provisions of
these
2
E-5
<PAGE>
Bylaws, at each meeting of the shareholders, such business may be transacted as
may properly be brought before such meeting.
Section 8. Voting. At each meeting of the shareholders, each shareholder
shall be entitled to one vote in person or by proxy for each share of the
Corporation having voting rights registered in his or her name on the books of
the Corporation at the close of business on the day next preceding the day on
which notice of such meeting was given, or, if no notice was given, on the day
next preceding the day on which such meeting is held, except when, pursuant to
the provisions of Section 7 of Article VII of these Bylaws, a date shall have
been fixed as a record date for the determination of the shareholders entitled
to vote. Any shareholder entitled to vote may vote in person or by proxy in
writing; provided, however, that no proxy shall be valid after eleven (11)
months after the date of its execution, unless otherwise provided therein. The
presence at any meeting of any shareholder who has given a proxy shall not
revoke such proxy, unless such shareholder shall file written notice of such
revocation with the secretary of such meeting prior to the voting of such proxy.
At each meeting of the shareholders, all matters other than those the
manner of deciding of which is expressly regulated by statute, the Certificate
of Incorporation, or these Bylaws, shall be decided by a majority of the votes
cast by the holders of shares entitled to vote thereon.
The Board of Directors, in advance of any meeting of the shareholders, or
the chairman of such meeting, at such meeting, may appoint one or more
inspectors of election to act at such meeting or any adjournment thereof, but no
inspectors need be appointed unless expressly requested at such meeting by a
shareholder entitled to vote thereat.
Section 9. Conduct of Meetings of Shareholders. Meetings of the
shareholders shall generally follow reasonable and fair procedure. Subject to
the foregoing, the conduct of any meeting and the determination of procedure and
rules shall be within the absolute discretion of the chairman, and there shall
be no appeal from any ruling of the chairman with respect to procedure or rules.
Accordingly, in any meeting of the shareholders, or part thereof, the chairman
shall have the absolute power to determine appropriate rules or to dispense with
theretofore prevailing rules. Without limiting the foregoing, the following
rules shall apply:
(a) Within his or her sole discretion, the chairman of a meeting may
adjourn such meeting by declaring such meeting adjourned. Upon his or
her doing so, such meeting shall be immediately adjourned.
3
E-6
<PAGE>
(b) The chairman may ask or require that anyone who is not a bona fide
shareholder or proxy leave a meeting.
(c) A resolution or motion shall be considered for vote only if proposed
by a shareholder or duly authorized proxy, and seconded by a person,
who is a shareholder or a duly authorized proxy, other than the person
who proposed the resolution or motion. The chairman may propose any
motion for vote.
(d) The chairman of a meeting may impose any reasonable limits with
respect to participation by shareholders in a meeting, including, but
not limited to, limits on the amount of time at the meeting taken up
by the remarks or questions or any shareholder, limits on the numbers
of questions per shareholder, and limits as to the subject matter and
timing of questions and remarks by shareholders.
Notwithstanding anything in these Bylaws to the contrary, no business shall
be conducted at any meeting of the shareholders except in accordance with the
procedures set forth in this Section 9; provided, however, that nothing in this
Section 9 shall be deemed to preclude discussion by any shareholder as to any
business properly brought before any meeting.
The chairman shall, if the facts warrant, determine, and declare at any
meeting of the shareholders that business was not properly brought before such
meeting in accordance with the provisions of this Section 9, and if he or she
should so determine, he or she shall so declare to such meeting and any such
business not properly brought before such meeting shall not be transacted.
Section 10. Advance Notice of Shareholder Proposed Business at any Meeting
of the Shareholders. To be properly brought before any annual meeting of the
shareholders, business must be either (a) specified in the notice of such
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (b) otherwise properly brought before such meeting by or at the
direction of the Board of Directors, or (c) otherwise properly brought before
such meeting by a shareholder. In addition to any other applicable requirements,
including, but not limited to, requirements imposed by federal and state
securities laws pertaining to proxies, for business to be properly brought
before any meeting by a shareholder, such shareholder must have given timely
notice thereof in writing to the Secretary. To be timely, shareholder's notice
must be delivered to or mailed and received at the principal executive offices
of the Corporation not later than the close of business on the 15th day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made, whichever first occurs. A
shareholder's notice to the Secretary shall set forth as to each
4
E-7
<PAGE>
matter such shareholder proposes to bring before any meeting of the shareholders
(i) a brief description of the business desired to be brought before the meeting
and the reasons for conducting such business at the meeting, (ii) the name and
record address of the shareholder proposing such business, (iii) the class and
number of shares of the Corporation which are beneficially owned by such
shareholder, and (iv) any material interests of such shareholder in such
business.
Notwithstanding anything in these Bylaws to the contrary, no business shall
be conducted at any annual meeting except in accordance with the procedures set
forth in this Section 10. The chairman of such annual meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before such meeting and in accordance with the provisions of
this Section 10, and if he or she should so determine, he or she shall so
declare to such meeting and any such business not properly brought before such
meeting shall not be transacted.
Section 11. Action by Shareholders Without a Meeting. Any action required
or permitted to be taken at a meeting of the shareholders under any provisions
of the Delaware General Corporation Law, the Certificate of Incorporation, or
these Bylaws may be taken without a meeting if all of the shareholders entitled
to vote thereon consent in writing to such action being taken, or, subject to
the provisions of Section 228 of the Delaware General Corporation Law, if the
shareholders who would have been entitled to cast the minimum number of votes
which would be necessary to authorize such action at a meeting at which all of
the shareholders entitled to vote thereon were present and voting shall consent
in writing to such action being taken. Whenever action of the Corporation is so
taken, the consents of the shareholders consenting thereto shall be filed with
the minutes of proceedings of the shareholders.
ARTICLE III
Board of Directors
Section 1. General Powers. The property, affairs, and business of the
Corporation shall be managed by the Board of Directors.
Section 2. Number, Qualifications, and Term of Office. There shall be five
(5) directors constituting the Board of Directors. The directors shall be
elected annually at the annual meeting of the shareholders. Each director shall
hold office until his or her successor shall have been elected and qualified,
until his or her death, until he or she shall have resigned in the manner set
forth in Section 13 of this Article III, or until he or she shall have been
removed in the manner set forth in Section 14 of this Article III, whichever
shall first occur. Any director elected to fill a vacancy in the Board of
Directors shall be deemed elected for the unexpired portion of the term of his
or her
5
E-8
<PAGE>
predecessor on the Board of Directors. Each director, at the time of his or her
election, shall be at least eighteen (18) years of age.
Section 3. Nomination of Directors. (a) Only persons who are nominated in
accordance with the procedures set forth in this section shall be eligible for
election as directors. The Board of Directors, or a duly appointed committee
thereof, shall act as a nominating committee for selecting nominees for election
as directors. Except in the case of a nominee substituted as a result of the
death or incapacity of a nominee of the nominating committee, the nominating
committee shall deliver written nominations to the Secretary at least ninety
(90) days prior to the appropriate date of the previous meeting of shareholders
called for election of directors. Provided such nominating committee makes such
nominations, no nominations for directors, except those made by the nominating
committee, shall be voted upon at the annual meeting unless other nominations by
shareholders are made in accordance with the provisions of this section. No
person shall be elected as a director of the Corporation unless nominated in
accordance with the procedures set forth in this section. Ballots specifying the
names of all persons nominated by the nominating committee and by shareholders
shall be provided for use at the annual meeting.
(b) Nominations of persons for election to the Board of Directors of the
Corporation at an annual meeting of shareholders may be made by any shareholder
entitled to vote for the election of directors at such meeting who complies with
the procedures set forth in this section. Such nominations, other than those
made by the Board of Directors or a nominating committee thereof, shall be made
pursuant to timely notice in writing to the Secretary as set forth in this
section. To be timely, a shareholder's notice shall be delivered to or received
at the principal executive offices of the Corporation not less than ninety (90)
clays prior to the appropriate anniversary date of the previous meeting of
shareholders of the Corporation called for the election of directors. Each such
shareholder's notice shall set forth (1) the name and address of the shareholder
who intends to make the nomination and of the person or persons to be nominated;
(2) a representation that the shareholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (3) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the shareholder; (4) such other information regarding each nominee proposed by
such shareholder as would be required to be disclosed in solicitations of
proxies with respect to nominees for election as directors, pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, including,
but not limited to, information required to be disclosed by Items 4, 5, 6, and 7
of Schedule 14A; (5) the consent of each nominee to serve as director of the
6
E-9
<PAGE>
Corporation if so elected; and (6) the class and number of shares of stock of
the Corporation which are beneficially owned by such shareholder on the date of
such shareholder notice and, to the extent known, by any other shareholders
known by such shareholder to be supporting such nominees on the date of such
shareholder notice. At the request of the Board of Directors, any person
nominated by the Board of Directors, or a nominating committee thereof, for
election as a director shall furnish to the Secretary that information required
to be set forth in a shareholder's notice of nomination which pertains to the
nominee together with the required written consents, each as described herein.
(c) The Board of Directors may reject any nomination by a shareholder not
timely made in accordance with the requirements of this section. If the Board of
Directors, or a designated committee thereof, determines that the, information
provided in a shareholder's notice does not satisfy the informational
requirements of this section in any material aspect, the Secretary shall notify
such shareholder of the deficiency in the notice. The shareholder shall have an
opportunity to cure the deficiency by providing additional information to the
Secretary within such period of time, not to exceed five (5) days from the date
such deficiency notice is given to the shareholder, as the Board of Directors or
such committee shall reasonably determine. If the deficiency is not cured within
such period, or if the Board of Directors or such committee reasonably
determines that the additional information provided by the shareholder, together
with information previously provided, does not satisfy the requirements of this
section in any material respect, then the Board of Directors may reject such
shareholder's nomination. The Secretary shall notify a shareholder in writing
whether his or her nomination has been made in accordance with the time and
informational requirements of this section. Notwithstanding the procedures set
forth in this section, if neither the Board of Directors nor such committee
makes a determination as to the validity of any nominations by a shareholder,
the chairman of such annual meeting shall determine and declare at such annual
meeting whether the nomination was made in accordance with the terms of this
section. If such chairman determines a nomination was made in accordance with
the terms of this section, he or she shall so declare at such annual meeting and
ballots shall be provided for use at the annual meeting with respect to such
nominee. If such chairman determines that a nomination was not made in
accordance with this section, he or she shall so declare at the annual meeting
and defective nomination shall be disregarded.
Section 4. Election of Directors. At each meeting of the shareholders for
the election of directors, the directors shall be chosen by a plurality of the
votes cast at such election by the holders of shares entitled to vote thereon.
The vote for directors need not be by ballot, unless demanded by a shareholder
entitled to vote thereon at such election and before the voting begins. The
shareholders shall not be entitled to cumulate their votes for directors.
7
E-l0
<PAGE>
Section 5. Annual Meetings. The annual meeting of the Board of Directors
shall be held in each year immediately after the annual meeting of shareholders,
at such place as the Board of Directors from time to time may fix and, if so
held, no notice of such meeting need be given.
Section 6. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times as the Board of Directors shall determine. If any
day fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting which would otherwise be held on that
day shall be held at said place at the same hour on the next succeeding business
day that is not a legal holiday. Notice of regular meetings need not be given.
Section 7. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the President or any one (1) director. Notice
of each such meeting shall be mailed to each director, addressed to him or her
at his or her residence or usual place of business, at least five (5) days
before the day on which such meeting is to be held, or shall be sent to him or
her at such place by facsimile machine, telegraph, cable, telex, or the
equivalent, or be delivered personally or by telephone, not later than the day
preceding the day on which such meeting is to be held, except that in the event
of an emergency, the President may direct that shorter notice of a special
meeting be given personally or by facsimile machine, telephone, telegraph,
cable, telex, or the equivalent. Neither the business to be transacted nor the
purpose of any such meeting need be specified in such notice. Notice of any
meeting of the Board of Directors need not be given, however, if waived in
writing or by facsimile machine, telegraph, telex, cable, or the equivalent,
either before or after such meeting, or, at the meeting. Any meeting of the
Board of Directors shall be a legal meeting without any notice having been
given, if all the directors shall be present thereat.
Section 8. Place of Meeting. Meetings of the Board of Directors may be held
at such place or places within or without the State of Delaware as the Board of
Directors from time to time may designate.
Section 9. Quorum and Manner of Acting. A majority of the directors shall
be required to constitute a quorum for the transaction of business at any
meeting. The act of a majority of the directors present at any meeting while a
quorum is present shall be an act of the Board of Directors. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum be had. Notice of any adjourned meeting shall be given, in
the same manner as notice of special meetings is required to be given, as set
forth in these Bylaws. The directors shall act only as a board and the
individual directors shall have no power as such.
8
E-11
<PAGE>
Section 10. Action by Written Consent. Any action required or permitted to
be taken at any meeting of the Board of Directors or any committee thereof may
be taken without a meeting if, prior or subsequent to such action, all members
of the Board of Directors or of such committee, as the case may be, consent
thereto in writing and such written consents are filed with the minutes of the
proceedings of the Board of Directors or such committee. Such consent shall have
the same effect as a unanimous vote of the Board of Directors or such committee
for all purposes and may be stated as such in any certificate or other document.
Section 11. Organization. At each meeting of the Board of Directors, the
President or, in his or her absence, a chairman chosen by a majority of the
directors present, shall act as chairman. The Secretary, or, in his or her
absence, an Assistant Secretary, or, in the absence of the Secretary and the
Assistant Secretaries, any person appointed by the chairman, shall act as
secretary of such meeting.
Section 12. Order of Business. At all meetings of the Board of Directors
business may be transacted in such order as the Chairman of the Board of
Directors may determine.
Section 13. Resignations. Any director of the Corporation may resign at any
time by giving written notice to the President or to the Secretary. The
resignation of any director shall take effect at the time specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make such resignation effective.
Section 14. Removal of Directors. Any director may be removed at any time,
either with or without cause, by the shareholders at any regular or special
meeting of the shareholders and the vacancy in the Board of Directors caused
thereby may be filled by the shareholders at the same meeting.
Section 15. Vacancies. In addition to a vacancy occurring by removal by the
shareholders, as contemplated by Section 14 of these Bylaws, a vacancy in the
Board of Directors shall occur upon the happening of any of the following
events:
(a) a director dies or resigns:
(b) the shareholders fail to elect the number of directors authorized to
be elected at any meeting of shareholders at which any director is to
be elected;
(c) the Board of Directors by resolution have elected to increase the
number of
9
E-12
<PAGE>
directors;
(d) the Board of Directors declare vacant the office of any director for
such cause as the Board may determine; or
(e) a vacancy occurs for any other reason. Any vacancy occurring in the
Board of Directors shall be filled by a majority of the remaining
members of the Board of Directors, though less than a quorum, and each
person so elected shall hold office until the next annual meeting of
shareholders and until his or her successor is duly elected and has
qualified.
Section 16. Compensation. The directors shall receive no compensation for
their services as directors.
Section 17. Indemnification of Directors, Officers, Employees and Agents.
The Corporation shall indemnify each director, officer, employee and agent of
the Corporation, as amended by the provisions of Section 145 of the Delaware
General Corporation Law, as set forth in Article VI of these Bylaws.
(b) During the intervals between the meetings of the Board of Directors,
the Executive Committee may exercise all the authority of the Board of
Directors; provided, however, that the Executive Committee shall not have the
power to amend or repeal any resolution of the Board of Directors that by its
terms shall not be subject to amendment or repeal by the Executive Committee,
and the Executive Committee shall not have the authority of the Board of
Directors in reference to (1) approving or proposing to shareholders action
required to be approved by shareholders; (2) filling vacancies on the Board of
Directors or on any of its committees; (3) amending the Certificate of
Incorporation; (4) adopting, amending or repealing bylaws; or (5) approving a
plan of merger or share exchange not requiring shareholder approval.
(c) The Executive Committee shall meet from time to time on call of the
Chairman of the Board of Directors or of any two (2) or more members of the
Executive Committee. Meetings of the Executive Committee may be held at such
place or places, within or without the State of Delaware, as the Executive
Committee shall determine or as may be specified or fixed in the respective
notices or waivers of such meetings. The Executive Committee may fix its own
rules of procedures, including provision for notice of its meetings. It shall
keep a record of its proceedings and shall report these proceedings to the Board
of Directors at the meeting thereof held next after they have been taken, and
all such proceedings shall be subject to revision or alternation by the Board of
Directors except to the extent that action shall have been taken pursuant to or
in reliance upon such proceedings prior to any such revision or alternation.
10
E-13
<PAGE>
(d) The Executive Committee shall act by majority vote of its members;
provided, however, the provisions of Section 20 of these Bylaws notwithstanding,
that contracts or transactions of and by the Corporation in which officers or
directors of the Corporation are interested shall require the affirmative vote
of majority of the disinterested members of the Executive Committee, at a
meeting of the Executive Committee at which the material facts as to the
interest and as to the contract or transaction are disclosed or known to the
members of the Executive Committee prior to the vote.
(e) Members of the Executive Committee may participate in committee
proceedings by means of conference telephone or similar communications equipment
by means of which all persons participating in the proceedings can hear each
other, and such participation shall constitute presence in person at such
proceedings.
(f) The Board of Directors, by resolution adopted in accordance with
Paragraph (a) of this section, may designate one or more directors as alternate
members of the Executive Committee who may act in the place and stead of any
absent member or members at any meeting of said committee.
(g) The Board of Directors, by resolution adopted by a majority of the
entire Board of Directors, may designate one or more additional committees, each
committee to consist of two (2) or more of the directors, which shall have such
name or names and shall have and may exercise such powers of the Board of
Directors, except the powers denied to the Executive Committee, as may be
determined from time to time by the Board of Directors. Such committees shall
provide for their own rules of procedure, subject to the same restrictions
thereon as provided above for the Executive Committee.
(h) The Board of Directors shall have the power at any time to remove any
member of any committee, with or without cause, and to fill vacancies in and to
dissolve any such committee.
Section 19. Provision Concerning Interested Transactions. Any contract or
other transaction between the Corporation and (i) any director, or (ii) any
corporation, unincorporated association, business trust, estate, partnership,
trust, joint venture, individual or other legal entity ("Legal Entity") (A) in
which any director has a material financial interest or is a general partner, or
(B) of which any director is a director, officer, or trustee (collectively, a
"Conflict Transaction"), shall be valid for all purposes, if the material facts
of such Conflict Transaction and such director's interest were disclosed or
known to the Board of Directors, a committee with authority to act thereon, or
the shareholders entitled to vote thereon, and the Board of Directors, such
committee, or such shareholders authorized, approved, or ratified such Conflict
Transaction. A Conflict Transaction shall be authorized, approved or ratified:
11
E-14
<PAGE>
(a) By the Board or Directors or such committee, if it receives
affirmative vote of majority of the directors who have no interest in
the Conflict Transaction, notwithstanding the fact that such majority
may not constitute a quorum or a majority of the Board of Directors or
such committee or a majority of the directors present at such meeting,
and notwithstanding the presence or vote of any director who does have
such an interest; provided, however, that no Conflict Transaction may
be authorized, approved or ratified by a single director; or
(b) By such shareholders, if such Conflict Transaction receives the vote
of a majority of the shares entitled vote, in which vote shares owned
or voted under the control of any director who, or of any Legal Entity
that, has an interest in the Conflict Transaction may be counted. This
section shall not be construed to require authorization, ratification
or approval by the shareholders of any Conflict Transaction, or to
invalidate any Conflict Transaction that would otherwise be valid
under the common and statutory law applicable thereto.
Section 20. Telephonic Meeting. Unless restricted by the Certificate of
Incorporation, any one or more members of the Board of Directors may participate
in a meeting of the Board of Directors by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation by such means shall constitute
presence in person at a meeting.
ARTICLE IV
Officers
Section 1. Number. The officers of the Corporation shall be a President, a
Treasurer, and a Secretary, and, in the discretion of the Board of Directors,
one or more Vice Presidents.
Section 2. Election, Qualifications, and Terms of Office. The officers
shall be elected annually by the Board of Directors. Each officer shall hold
office until his or her successor shall have been elected and qualified, or
until his or her earlier death, resignation, or removal in the manner provided
in these Bylaws. Any person may hold more than one office.
Section 3. Resignations. Any officer may resign at any time by giving
written notice of such resignation to the Board of Directors, the President, or
the Secretary. Unless otherwise specified in such written notice, such
resignation shall take effect upon
12
E-15
<PAGE>
receipt of the notice thereof by the Board of Directors or any such officer.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause shall be filled for
the unexpired portion of the term by the Board of Directors.
Section 5. The President. The President shall be the chief executive
officer of the Corporation. Subject to the direction of the Board of Directors,
the President shall have general charge of the business affairs and property of
the Corporation and general supervision over its officers and, agents. If
present, the President shall preside at all meetings of shareholders and at all
meetings of the Board of Directors. The President shall see that all orders and
resolutions of the Board of Directors are carried into effect. The President may
sign, with any other officer "hereunto authorized, share certificates of the
Corporation, the issuance of which shall have been duly authorized, and may sign
and execute, in the name of the Corporation, deeds, mortgages, bonds, contracts,
agreements, and other instruments duly authorized by the Board of Directors,
except in these instances where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent.
From time to time, the President shall report to the Board of Directors all
matters within his or her knowledge which the interests of the Corporation may
require to be brought to their attention. The President shall also perform such
other duties as are given to him or her by these Bylaws or as from time to time
may be assigned to him or her by the Board of Directors.
Section 6. The Secretary. The Secretary shall (a) record all the
proceedings of the meetings of the shareholders and Board of Directors in a book
or books to be kept for that purpose; (b) cause all notices to be duly given in
accordance with the provisions of these Bylaws and as required by statute; (c)
be custodian of the records and of the seal of the Corporation and cause such
seal to be affixed to all certificates representing shares of the Corporation
prior to the issuance thereof and to all instruments the execution of which on
behalf of the Corporation under its seal shall have been duly authorized; (d)
see that the lists, books, reports, statements, certificates, and other
documents and records required by statute are properly kept and filed; (e) have
charge of the share record books of the Corporation and cause the same to be
kept in such manner as to show at any time the amount of shares of the
Corporation issued and outstanding, the names and addresses of the holders of
record thereof, the number of shares held by each, and the date when each became
such holder of record; (f) perform the duties required of him or her under
Section 9 of Article II of these Bylaws; (g) sign (unless the Treasurer shall
sign) certificates representing shares of the Corporation, the issuance of which
shall have been duly authorized; and (h) in general, perform all duties incident
to the office of Secretary and such other duties as are given to him or her by
these Bylaws or as from time to time may be assigned to him or her by the Board
of Directors or the President.
13
E-16
<PAGE>
Section 7. The Chief Financial Officer. The Chief Financial Officer shall
(a) have charge of and supervision over and by responsible for the funds,
securities, receipts, and disbursements of the Corporation; (b) cause the moneys
and other valuable effects of the Corporation to be deposited in the name and to
the credit of the Corporation in such banks or trust companies, or with such
bankers or other depositories, as shall be selected in accordance with Section 3
of Article V of these Bylaws or to be otherwise dealt with in such manner as the
Board of Directors may direct; (c) cause the funds of the Corporation to be
disbursed by checks or drafts upon the authorized depositories of the
Corporation and cause to be taken and preserved proper vouchers for all moneys
disbursed; (d) render to the Board of Directors or the President, whenever
requested, a statement of the financial condition of the Corporation and of all
his or her transactions as Chief Financial Officer; (e) cause to be kept, at the
principal office of the Corporation or at such other office (within or without
the State of Delaware) as shall be designated by the Board of Directors, correct
books of account of all its business and transactions; (f) sign (unless the
Secretary shall sign) certificates representing shares of the Corporation, the
issuance of which shall have been duly authorized; and (g) in general, perform
all duties incident to the office of Treasurer and such other duties as are
given to him or her by these Bylaws or as from time to time may be assigned to
him or her by the Board of Directors or the President.
Section 8. The Vice Presidents. At the request of the President, any Vice
President shall perform all the duties of the President and, when so acting,
shall have all the powers of and be subject to all restrictions upon the
President. Any Vice President may also sign, with any other officer thereunto
duly authorized, share certificates of the Corporation, the issuance of which
shall have been duly authorized, and may sign and execute in the name of the
Corporation, deeds, mortgages, bonds, contracts, agreements, and other
instruments duly authorized by the Board of Directors, except in those instances
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent. Each Vice President shall
perform such other duties as are given to him or her by these Bylaws or as from
time to time may be assigned to him or her by the Board of Directors or the
President.
Section 9. Salaries. The salaries of the officers of the Corporation shall
be fixed from time to time by the Board of Directors. No officer shall be
prevented from receiving such salary by reason of the fact that he or she is
also a director of the Corporation.
Section 10. Surety Bonds. In the event the Board of Directors shall so
require, any officer or agent of the Corporation shall execute a bond to the
Corporation, in such amount and with such surety or sureties as the Board of
Directors may direct, conditioned upon the faithful discharge of his or her
duties.
14
E-17
<PAGE>
ARTICLE V
Contracts and Financial Matters
Section 1. Execution of Contracts. The President or any Vice President,
subject to the approval of the Board of Directors, may enter into any contract
or execute and deliver any instrument in the name and on behalf of the
Corporation. Such authorization may be general or restricted to specific
instances.
Section 2. Checks and Drafts. All checks, drafts, or other orders for the
payment of money and all notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers or agent or
agents of the Corporation as shall be thereunto so authorized from time to time
by resolution of the Board of Directors.
Section 3. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to its credit in such banks or trust
companies or with such bankers or other depositaries as the Board of Directors
may select or as may be selected by any officer or officers or agent or agents
authorized so to do by the Board of Directors. Endorsements for deposit to the
credit of the Corporation in any of its duly authorized depositaries shall be
made in such manner as the Board of Directors from time to time may determine.
Section 4. General and Special Bank Accounts. The Board of Directors may
authorize from time to time the opening and keeping of general and special bank
accounts with such banks, trust companies, or other depositaries as the Board of
Directors may designate and may make such special rules and regulations with
respect thereto, not inconsistent with the provisions of these Bylaws, as the
Board of Directors may deem expedient.
Section 5. Loans. No loans or advances shall be contracted on behalf of the
Corporation and no negotiable paper shall be issued in its name, unless and
except as authorized by the Board of Directors. Such authorization may be
general or restricted to specific instances. Any officer or agent of the
Corporation thereunto so authorized may effect loans and advances for the
Corporation and for such loans and advances may make, execute, and deliver
promissory notes, bonds, or other evidences of indebtedness of the Corporation.
Any officer or agent of the Corporation thereunto so authorized may pledge,
hypothecate, or transfer, as security for the payment of any and all loans,
advances, indebtedness, and liabilities of the Corporation, any and all stocks,
bonds, other securities, and other personal property at any time held by the
Corporation and, to that end, may endorse, assign, and deliver the same and do
every act and shine necessary or proper in connection therewith.
15
E-18
<PAGE>
Section 6. Proxies. Proxies to vote with respect to shares of stock of
other corporations owned by or standing in the name of the Corporation may be
executed and delivered from time to time on behalf of the Corporation by such
person or persons as shall be thereunto authorized from time to time by the
Board of Directors.
ARTICLE VI
Indemnification and Insurance
Section 1. Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any pending,
threatened, or completed civil, criminal, administrative, or arbitration action,
suit, or proceeding, or any appeal therein or any inquiry or investigation which
could lead to such action, suit, or proceeding ("proceeding"), by reason of his
or her being or having been a director, officer, employee, or agent of the
Corporation or of any constituent corporation absorbed by the Corporation in a
consolidation or merger or by reason of his or her being or having been a
director, officer, trustee, employee, or agent of any other corporation
(domestic or foreign) or of any partnership, joint venture, sole proprietorship,
trust, employee benefit plan, or such enterprise (whether or not for profit),
serving as such at the request of the Corporation or of any such constituent
corporation, or the legal representative of any such director, officer, trustee,
employee, or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent permitted by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than the Delaware General Corporation Law
permitted prior to such amendment), from and against any and all reasonable
costs, disbursements, and attorney's fees, and any and all amounts paid or
incurred in satisfaction of settlements, judgments, fines, and penalties,
incurred or suffered in connection with any such proceeding, and such
indemnification shall continue as to a person who has ceased to be a director,
officer, trustee, employee, or agent and shall inure to the benefit of his or
her heirs, executors, administrators, and assigns; provided, however, that,
except as provided in Section 2 of this Article VI, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was specifically authorized by the Board of Directors of the
Corporation. The right to indemnification specified in this Article VI shall be
a contract right and shall include the right to be paid by the Corporation the
expenses incurred in connection with any proceeding in advance of the final
disposition of such proceeding as authorized by the Board of Directors;
provided, however; that, if the Delaware General Corporation Law so requires,
the payment of such expenses in advance of the final disposition of a proceeding
shall be made only upon receipt by the Corporation of an undertaking, by or on
behalf of such director, officer, employee, or agent, to repay all amounts so
advanced
16
E-19
<PAGE>
unless it shall ultimately be determined that such person is entitled to be
indemnified under this article or otherwise.
Section 2. Right of Claimant to Bring Suit. If a claim made under Section 1
of this Article VI is not paid in full by the Corporation within thirty (30)
days after a written request has been received by the Corporation, the claimant
may, at any time thereafter, apply to a court for an award of indemnification by
the Corporation for the unpaid amount of the claim and, if successful on the
merits or otherwise in connection with any proceeding or in the defense of any
claim, issue, or matter therein, the claimant shall also be entitled to be paid
by the Corporation for any and all expenses incurred or suffered in connection
with such proceeding. It shall be a defense to any such action (other than an
action brought to enforce a claim for the advancement of expenses incurred in
connection with any proceeding where the required undertaking, if any, has been
tendered to the Corporation) that the claimant has not satisfied the standard of
conduct which makes it permissible under the Delaware General Corporation Law
for the Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, its independent legal
counsel, or its shareholders) to have made a determination prior to the
commencement of such proceeding that indemnification of the claimant is proper
in the circumstances because he or she has satisfied the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, its
independent legal counsel, or its shareholders) that the claimant has not
satisfied such applicable standard of conduct, nor the termination of any
proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo
contendere or its equivalent, shall be a defense to the action or create a
presumption that the claimant has not satisfied the applicable standard of
conduct.
Section 3. Nonexclusivity of Rights. The right to indemnification and
advance of expenses provided by or granted pursuant to this Article VI shall not
exclude or be exclusive of any other rights to which any person may be entitled
under the Certificate of Incorporation of the Corporation, these Bylaws, any
agreement, vote of shareholders, or otherwise; provided, however, that no
indemnification shall be made to or on behalf of such person if a judgment or
other final adjudication adverse to such person establishes that such person has
not satisfied the applicable standard of conduct required to be satisfied under
the Delaware General Corporation Law.
Section 4. Insurance. The Corporation may purchase and maintain insurance
on behalf of any director, officer, employee, or agent of the Corporation, or of
another corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise, against any expenses incurred in any proceeding and against
any liabilities asserted
17
E-20
<PAGE>
against him or her by reason of such person's being or having been such a
director, officer, employee, or agent, whether or not the Corporation would have
the power to indemnify such person against such expenses and liabilities under
the provisions of this Article VI or otherwise.
ARTICLE VII
Shares and Their Transfer
Section 1. Share Certificates. Every holder of shares of the Corporation
shall be entitled to have a certificate, signed by the President or a Vice
president and either the Treasurer or the Secretary, certifying the number of
shares owned by him or her in the Corporation. In case any officer of the
Corporation who has signed any such certificate shall cease to be such officer,
for whatever cause, before the certificate shall have been delivered by the
Corporation, the certificate shall be deemed to have been adopted by the
Corporation, unless the Board of Directors shall otherwise determine prior to
the issuance and delivery thereof, and may be issued and delivered as though the
person who signed it had not ceased to be such officer of the Corporation.
Certificates representing shares of the Corporation shall be in such form as
shall be approved by the Board of Directors. There shall be entered upon the
share record books of the Corporation, at the time of issuance of each share,
the number of the certificate issued, the name and address of the person owning
the shares represented thereby, the number of shares, and the date of issuance
thereof. Every certificate exchanged or returned to the Corporation shall be
marked "cancelled" with the date of cancellation.
Section 2. Share Record Books. The share record books and the blank share
certificate books shall be kept by the Secretary, or by any officer or agent
designated by the Board of Directors.
Section 3. Addresses of Shareholders. Each shareholder shall designate to
the Secretary of the Corporation an address at which notices of meetings and all
other corporate notices may be served, delivered, or mailed to such shareholder
and, if any shareholder shall fail to designate such address, all corporate
notices (whether served or delivered by the Secretary, another shareholder, or
any other person) may be served upon such shareholder by mail directed to him or
her at his or her last known post office address.
Section 4. Transfers of Shares. Transfers of shares of the Corporation
shall be made on the books of the Corporation by the holder or record thereof or
by his or her attorney thereunto duly authorized by a power of attorney duly
executed in writing and filed with the Secretary and on surrender of the
certificate or certificates representing such shares. The Corporation shall be
entitled to treat the holder of record of any shares
18
E-21
<PAGE>
as the absolute owner thereof for all purposes and, accordingly, shall not be
obligated to recognize any legal, equitable, or other claim to or interest in
such shares on the part of any other person, whether or not it or they shall
have express of other notice thereof, except as otherwise expressly provided by
statute; provided, however, that whenever any transfer of shares shall be made
for collateral or security and not absolutely and written notice thereof shall
be given to the Secretary, such fact shall be expressed in the entry of the
transfer. Notwithstanding anything to the contrary contained in these Bylaws,
the Corporation shall not be required or permitted to make any transfer of
shares of the Corporation which, if made, would violate the provisions of any
agreement restricting the transfer of shares of the Corporation to which the
Corporation shall be a party; provided, however, that the restriction upon the
transfer of the shares represented by any share certificate shall be set forth
or referred to upon the certificate.
Section 5. Regulations. Subject to the provisions of this Article VII, the
Board of Directors may make such rules and regulations as it may deem expedient
concerning the issuance, transfer, and registration of certificates for shares
of the Corporation.
Section 6. Lost, Destroyed, and Mutilated Certificates. The holder of any
shares shall immediately notify the Corporation of any loss, destruction, or
mutilation of the certificate therefor and the Board of Directors, in its
discretion, may cause to be issued to him or her a new certificate or
certificates upon surrender of the mutilated certificate or, in case of loss or
destruction of the certificate, upon satisfactory proof of such loss or
destruction. The Board of Directors, in its discretion, may require the owner of
the lost or destroyed certificate or his or her legal representative to give the
Corporation a bond, in such amount (not exceeding twice the value of such
shares) and with such surety or sureties as it may direct, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss or destruction of any such certificate.
Section 7. Fixing of Record Dates. The Board of Directors shall have the
power to fix in advance a date, not more than sixty (60) nor less than ten (10)
days, preceding the date of any meeting of shareholders, the date for the
payment of any dividend or allotment of any right, the date when any change,
conversion, or exchange of shares shall go into effect, or for the purpose of
any other action, as a record date for the determination of the shareholders
entitled to notice of and to vote at any such meeting, entitled to receive
payment of any such dividend or allotment of any right, entitled to exercise the
rights in respect to any such change, conversion, or exchange of shares, or
entitled to participate in or be entitled to the benefit of any such other
action. Whenever a record date has been so fixed, only shareholders of record on
such date shall be entitled to notice of and to vote at such meeting, to receive
payment of any such dividend or allotment of any right, to exercise such rights
in respect to any such change, conversion, or exchange of shares, or to
participate in or be entitled to the benefit of any such other
19
F-22
<PAGE>
action.
Section 8. Refusal to Register Transfer. The Corporation shall not register
any transfer of securities issued by the Corporation in any transaction that
qualifies for the exemption from registration requirements specified by the
provisions of Regulation S, unless such transfer is made in accordance with the
provisions of Regulation S.
ARTICLE VIII
Dividends and Surplus
Subject to any restrictions imposed by statute, the Board of Directors from
time to time, in its discretion, may fix and vary the amount of the working
capital of the Corporation and determine what, if any, dividends shall be
declared and paid to the shareholders out of the surplus of the Corporation. The
Board of Directors, in its discretion, may use and apply any surplus in
purchasing or acquiring any of the shares of the Corporation in accordance with
law or any of its bonds, debentures, or other obligations, or from time to time
may set aside from such surplus such amount or amounts as it, in its absolute
discretion, may deem proper as a reserve fund to meet contingencies or for
equalizing dividends, for the purpose of maintaining or increasing the property
or business of the Corporation, or for any other purposes it may deem consistent
with the best interest of the Corporation. All such surplus, until actually
declared in dividends or used and applied as aforesaid, shall be deemed to be so
set aside by the Board of Directors for one or more of said purposes.
ARTICLE IX
Corporation Seal
The Corporation shall have a corporate seal which shall be in circular
form, shall bear the name of the Corporation and the words and figures denoting
its organization under the laws of the State of and the year thereof and
otherwise shall be in such form as shall be approved from time to time by the
Board of Directors.
ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE XI
Accountants
The Board of Directors of the Corporation from time to time shall designate
the
20
E-23
<PAGE>
independent accountants of the Corporation.
ARTICLE XII
Amendments
All Bylaws of the Corporation shall be subject to amendment, alteration, or
repeal, and new Bylaws not inconsistent with any provision of the Certificate of
Incorporation of the Corporation or any provision of law may be made, by the
shareholders or by the Board of Directors, except as otherwise expressly
required by statute. Any Bylaw adopted, amended, or repealed by the shareholders
may be amended or repealed by the Board of Directors, unless the resolution of
the shareholders adopting such Bylaw expressly reserves the right to amend or
repeal it only to the shareholders.
ARTICLE XIII
Force and Effect
These Bylaws are subject to the provisions of the Delaware General
Corporation Law and the Certificate of Incorporation, as the same may be amended
from time to time. If any provision in these Bylaws is inconsistent with an
express provision of either of the Delaware General Corporation Law or the
Certificate of Incorporation, the provision of the Delaware General Corporation
Law or the Certificate of Incorporation, as the case may be, shall govern,
prevail and control the extent of such inconsistency.
21
E-24
Minutes of a Meeting of the Shareholders of
L.O.M. Laboratories Inc.
held at Westbank, in the Province of British Columbia
on the 13th day of January, 1998
=====================================================
Present:
John Klippenstein Maria Klippenstein
All the Shareholders of the Company being present, and notice calling the
Meeting having been waived, the Meeting was declared to be regularly
constituted.
UPON MOTION DULY MADE AND SECONDED, IT WAS UNANIMOUSLY RESOLVED that John
Klippenstein act as Chairman of the Meeting and that Maria Klippenstein act as
Secretary of the Meeting.
The Chairman advised the meeting that L.O.M. Medical International Inc. wished
to purchase FOUR THOUSAND EIGHT HUNDRED (4800) shares in the Company for the
consideration of $0.01 per share.
UPON MOTION DULY MADE AND SECONDED, IT WAS UNANIMOUSLY RESOLVED that the
following share allotment accepted in a Meeting of the Board of Directors of the
Company, dated the 13th day of January, 1998 be approved:
"Share Certificate No. FIVE (5) issued to L.O.M. Medical International Inc.
for FOUR THOUSAND EIGHT HUNDRED (4800) Class "A" Common Shares WPV."
UPON MOTION DULY MADE AND SECONDED, IT WAS UNANIMOUSLY RESOLVED that the
Solicitor for the Company be directed to prepare and file the necessary Minutes
of this Meeting together with such other forms as might be reasonably required.
THE FOLLOWING MEMORANDUM was then read in order to be inserted in the Minutes:
"We, being all the Shareholders of the Company, do hereby consent to this
Meeting being held at the above time and place and do hereby waive notice
of this Meeting and consent to the transaction of such business as may have
come before it, as testified by our signatures hereto."
THERE BEING NO FURTHER BUSINESS, the Meeting then adjourned.
/s/ JOHN KLIPPENSTEIN /s/ MARIA KLIPPENSTEIN
- ---------------------------------- ----------------------------------
John Klippenstein Maria Klippenstein
File No.:D304\7314
E-25
Minutes of a Meeting of the Directors of
L.O.M. Laboratories Inc.
held at Westbank, in the Province of British Columbia
on the 13th day of January, 1998
=====================================================
Present:
John Klippenstein Maria Klippenstein
All the Directors being present, and notice calling the Meeting having been
waived, and the holding of a Meeting consented to by the Directors, the Meeting
was declared to be regularly constituted.
UPON MOTION DULY MADE AND SECONDED, IT WAS UNANIMOUSLY RESOLVED that John
Klippenstein act as Chairman of the Meeting and that Maria Klippenstein act as
Secretary of the Meeting.
The Chairman then advised the Meeting that L.O.M. Medical International Inc.
wished to purchase FOUR THOUSAND EIGHT HUNDRED (4800) Shares in the Company for
the consideration of $0.01 per share.
UPON MOTION DULY MADE AND SECONDED, IT WAS UNANIMOUSLY RESOLVED that the share
allotment effected in a Meeting of the Shareholders of L.O.M. Laboratories Inc.,
dated the 13th of January, 1998 be approved, and that a new Share Certificate be
issued as follows:
"Share Certificate No. FIVE (5) issued to L.O.M. Medical International Inc.
for FOUR THOUSAND EIGHT HUNDRED (4800) Class "A" Common Shares WPV."
THE FOLLOWING MEMORANDUM was then read in order to be inserted in the Minutes:
"We, the undersigned, being all the Directors of the Company, do hereby
consent to and adopt in writing the foregoing resolutions and do hereby
consent to this Meeting being held at the above time and place and do
hereby waive notice of this Meeting."
THERE BEING no further business to conduct, on motion the Meeting then
adjourned.
/s/ JOHN KLIPPENSTEIN /s/ MARIA KLIPPENSTEIN
- ---------------------------------- ----------------------------------
John Klippenstein Maria Klippenstein
File No.:D204\7314
E-26
Resolutions Consented to in Writing by
all of the Shareholders of
L.O.M. Laboratories Inc.
and adopted as of the
on the 13th day of January, 1998
WHEREAS the Company proposes to sell the FOUR THOUSAND EIGHT HUNDRED (4800)
Class "A" Common shares held by L.O.M. Laboratories Inc. to L.O.M. Medical
International Inc. for the consideration of $48.00.
THEREFORE IT IS RESOLVED that the Company shall approve the following share
allotment:
"Share Certificate No. FIVE (5) be issued to L.O.M. Medical International
Inc. for FOUR THOUSAND EIGHT HUNDRED (4800) Class "A" Common Shares."
THEREFORE IT IS RESOLVED that the Solicitor for the Company be directed to
prepare and file the necessary resolutions together with the transfer of shares,
and such other forms as might be reasonably required.
The foregoing resolution is hereby consented to:
/s/ JOHN KLIPPENSTEIN /s/ MARIA KLIPPENSTEIN
- ---------------------------------- ----------------------------------
John Klippenstein Maria Klippenstein
File No.:D170\7314
E-27
LEASE AGREEMENT
Between
494040 B.C. LTD. (The Lessor)
And
L.O.M. MEDICAL INTERNATTONAL INC. (The Lessee)
(A Delaware Company)
The conditions of this Lease shall be governed in accordance with the B.C.
Landlord and Tenants Act of 1996 and such other jurisdictions as may be
applicable., Such as City Bylaws, Municipal Acts etc.
IT IS AGREED;
Terms:
That L.O.M. Medical International will Lease Offices located at #3 - 1482
Springfield Rd. Kelowna, British Columbia for a term of five years with an
option to renew the Lease for another five years for a total of ten years in
duration.
Lease Renewal:
The base lease shall remain in force and be applicable for the second five year
terms with the following considerations for adjustments, such as interest rates,
tax increases, maintenance costs, Strata fees, or other costs not controlled by
the Lessor.
The Premises:
Legal description Strata Plan of Lot A, Plan KAP59949 Sec. 19 TP.26 O.Y.D.
Strata Plan Kas 001946 Land Titles Kamloops dated Sept 16th 1997 plan attached.
Office layout plan attached as exhibit "A". Site plan exhibit "B" Total floor
area = 1,550 square feet, Parking 6 stalls # 7 to # 13 inclusive.
Inclusions:
o Exterior walls insulated and dry-walled ready for paint
o Electrical run in all exterior walls
o Ceilings insulated and dry-walled
o Roughed in plumbing washroom & kitchenette
o Floors smooth and ready for carpets Exclusions:
o Leasehold improvements such as, Interior Decorator, Electrical, Fixtures
floor covering, painting, drywall, millwork, decorative iron work, drapes,
hardware, and or anything to do with interiors.
E-28
<PAGE>
Lease Agreement cont.
Lease Rate:
The lease rate is based on the following basis of consideration on
established costs, taxes for 1998; Commercial Mortgage rate of 9.5% int.
and the Lessor paying for 40% of the total leasehold improvements. Based on
the above the lease rate is $18.30 per square foot, plus G.S.T., triple net
five year term renewable for a second 5 years - (see terms)
Commencement Date:
This lease shall become effective and commence as of August 1st 1998 and
expire July 31st in the year 2004 at 12: O'clock midnight.
Dated this 1st Day of August 1998 in the City of Kelowna, in the Province of
B.C.
For: 494040 B.C. LTD. For: L.O.M MEDICAL INC.
/s/ MARIA KLIPPENSTEIN /s/ PETER M. FADDEN
- ----------------------------- -----------------------------
SEC/TRES V.P. & Director
MARIA KLIPPENSTEIN PETER M. FADDEN
E-29
[LOGO] L.O.M. Medical International Inc.
Lux Optimum Medicamentum
Employment Contract
Between: L.O.M. Medical International Inc.
-A United States Company registered in Delaware
U.S.A. in compliance to U.S. Law.
And: John Klippenstein
-494 Casa Rio Drive, Kelowna, British Columbia,
Canada.
Term of Contract: Five years
Salary Schedule: Year One: $120,000 USD.
Year Two: $130,000 USD.
Year Three: $140,000 USD.
Year Four: $150,000 USD.
Year Five: $160,000 USD.
Benefits: Health Care, Dental Plan, Life Insurance, Three
Weeks of paid Holidays and a Company Leased
Vehicle.
Options: In lieu of salary may use portion of funds for
stock options or other method of renumeration if
so elected.
Arbitration of Disputes: 1. By the Board of Directors
2. By Appointed Arbitration
Remedy: As directed by arbitration clauses 1 or 2.
Dated this 27th day of October, 1997 at Vancouver B.C. at the meeting of the
Board at #580-885 Dunsmuir St., Vancouver, B.C.
Approved by the Board of Directors. Signatures for this agreement as indicated
below.
[SEAL]
1. /s/ [ILLEGIBLE] 2. /s/ [ILLEGIBLE]
----------------------------- -----------------------------
3. /s/ [ILLEGIBLE] 4. /s/ [ILLEGIBLE]
----------------------------- -----------------------------
- --------------------------------------------------------------------------------
E-30
[LOGO] L.O.M Medical International Inc. Phone & Fax: (250)769-6265
494 Casa Rio Drive 769-0894
Kelowna
V1Z 3L6
VANCOUVER OFFICE Phone: 604 602 9400
DEMAND LOAN AGREEMENT
BETWEEN
DAVID A. GRAMLICH (Borrower)
AND
L.O.M. LABORATORIES INC. (Lenders)
Loan Type: Demand
Term: Open
Interest: Royal Bank Prime
AMOUNT; $ 17,000.00 CAD
SEVENTEEN THOUSAND DOLLARS CANADIAN
DATED THIS 10th DAY OF JULY,1997
[SEAL]
For the Lender For the Borrower
L.O.M. LABORATORIES INC. DAVID GRAMLICH
/s/ JOHN KLIPPENSTEIN /s/ DAVID GRAMLICH
- ----------------------------- -----------------------------
JOHN KLIPPENSTEIN, PRES DAVID A. GRAMLICH
21274-87 PLACE
LANGELY, BC
V1M 1Z8
E-31
