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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Pursuant To Section 12 (g) of the Securities Exchange Act of 1934
Commission File Number: 33-26767
V-TWIN ACQUISITIONS, INC.
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(Exact name of Registrant as specified in its charter)
District of Columbia 52-2110338
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1707 H St. N.W. #200
Washington, DC 20006
(Mail) 11708 Bowman Green Drive
Reston, VA 20190
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 437-9886.
Securities to be registered under Section 12(g) of the Act:
Description of Securities Exchange Upon Which Registered
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808,727 N/A
Class A par value $.001 common
voting shares
191,273 N/A
Class B par value $.001 common
voting shares
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Item 1. Description of Business
V-Twin Acquisitions, Inc.
(A) Business Development
The Company, a corporation, was formed in Delaware on August 16, 1988,
and successfully completed a public offering through an S-18 registration. The
Company completed and closed the referenced offering, but never effectuated its
requisite 10-K or 10-Q filings. The Company, operating under the name Commercial
Indemnity Underwriters, Inc., (formerly known as American Solid Fuel, Inc.),
remained dormant until July, 1998, as seen below, when it entered into a
statutory merger with the District of Columbia corporation, V-Twin Acquisitions,
Inc., with the latter District of Columbia company surviving.
From its inception to the present, the Company has never been involved
in any form of bankruptcy (Chapter 13, 11 or 7, or other chapter) proceeding,
nor has it been involved in any receivership, liquidation or similar
proceedings.
The Company was involved in a material reclassification, merger or
consolidation, in that it engaged in the referenced statutory merger with V-Twin
Acquisitions, Inc., a District of Columbia corporation, more fully described
herein.
(B) Business of Issuer
(1) Principal products or services and their markets: From the
Company's inception to the present date, it has provided no principal products,
nor has it produced any. Further, it has had no market for any of its products,
since it has produced none.
(2) Distribution methods of the products or services: The Company,
from its inception to the present date, having no products, also has no
distribution method for products.
(3) Status of any publicly announced new product or service: The
Company has not publicly announced any new product or service. Its planned new
product and business concept is reflected below under the heading of "Plan of
Operation", infra.
(4) Competitive Business Conditions: From its inception, to the
present, the Company has been dormant, and has had no active function. The
Company's forthcoming anticipated competitive position in its contemplated new
industry is reflected below under the heading of "Plan of Operation", infra.
(5) Sources of available raw materials and principal suppliers: Since
its inception, having entered dormant status, the Company, not actively engaged
in operation, had no sources of available raw materials, nor did it have
principal suppliers. The Company's new planned source of products and suppliers
thereof is reflected under the heading of "Plan of Operation", infra.
(6) Dependence on one or few major customers: Since its inception, and
up to the present date, the Company, remaining in non-operational status, has no
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dependence upon any one or few major customers. Anticipated equivalent
dependence is reflected below under the heading of "Plan of Operation", infra.
(7) Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements and/or Labor Contracts: Since its inception, due to the dormant
nature of its business activities, the Company holds no patents, trademarks,
licenses, franchises, concessions, royalty agreements and/or labor contracts.
The Company does intend to do so, in the future, however, and has provided in
detail for such business operation requirements in the portion hereof
designation "Plan of Operation", infra.
(8) Government approval of products or services: Since its inception
to the present date, as a result of the Company's dormant status, it has not
been subject to any requirement of government approval for its operations. The
Company anticipates that this will be the case for future operations. The
forthcoming impact of government regulation is addressed in "Plan of Operation",
infra.
(9) Effect of existing of probable governmental regulations on the
business: From its inception, to the present, the Company has been dormant, and
has had no active function. The Company's forthcoming anticipated effect of
existing probable government regulations on business in its contemplated new
industry is reflected below under the heading of "Plan of Operation", infra.
(10) Estimate of the amount spent during each of the last two fiscal
years on research and development activities, and if applicable the extent to
which the cost of such activities are borne directly by customers: From its
inception, to the present, the Company has been dormant, and has had no active
function. The Company, therefore, has not had any costs borne directly by
customers and only has experienced minimal research and development costs which
were borne by management, as is reflected further below under the heading of
"Plan of Operation", infra.
(11) Costs and effects of compliance with environmental laws (federal,
state and local): From its inception, to the present, the Company has been
dormant, and has had no active function. The Company anticipates complying, to
the extent required, with all applicable environmental laws (federal, state and
local).
(12) Number of total employees and number of full time employees: From
its inception, to the present, the Company has been dormant, and has had no
active function or employees. The Company's forthcoming anticipated effect on
the number of statutory employees it will have is reflected below under the
heading of "Plan of Operation", infra.
American Solid Fuel, Inc. sold its minimum offering in 1990, and subsequently
expended its offering proceeds through operations, never incurring any
liabilities. Its only asset was its loss carried forward for income tax
purposes. It never filed a 10-K after the its offering was closed, and
subsequently never became a fully reporting company. Its name was changed in
1995 to Commercial Indemnity Underwriters, Inc.
The District of Columbia company, V-Twin Acquisitions, Inc. was formed initially
to potentially acquire a motorcycle dealership with locations in Herndon and
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Springfield, Virginia. The Company is the survivor of the merger with Commercial
Indemnity Underwriters, Inc., and therefore survives as a publicly registered
company pursuant to the Securities Act of 1933, as amended. This Form 10-SB
registration statement is intended to establish the Company as fully reporting,
since its reporting status lapsed during its dormant period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following information should be read in conjunction with the audited
beginning financial statements and notes thereto appearing elsewhere in this
Form 10-SB. The Company has had no revenue from operations in each of the last
two fiscal years, and has developed the below listed Plan of Operation on a
go-forward basis.
Plan of Operation
V-Twin Acquisitions, Inc. ("V-Twin Acquisitions" or the "Company") is a holding
company whose intended subsidiaries will function in retail sales of several
well known brands of motorcycles, personal watercraft, and related parts and
accessories. The Company's intended subsidiaries will also provide service for
new and used motorcycles, all terrain vehicles ("ATVs") and Jet Ski type
watercraft. In its present development stage, the Company intends to focus its
principal attention on the retail motorcycle market and to acquire and
consolidate additional motorcycle retail subsidiaries. As of the date of this
filing, no other publicly traded company conducts business in this market, to
the Issuer's knowledge.
The Issuer, as a development stage company, has sufficient funds to satisfy its
cash requirements for the next 12 months, including its intended purchase of the
assets and liabilities of Cycle Sport, Inc., its first intended subsidiary.
Management has reached an agreement with the Seller to purchase those assets and
liabilities, on a bulk sale basis, for $300,000. Management has also projected
potential short term operating losses of a maximum of an additional $200,000, an
amount which management has on hand. The Issuer projects that its first intended
acquisition will re-attain profitability prior to any necessity to raise
additional operating funds.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Prior to the date hereof, the Company has been deemed a development stage
company primarily engaged in the research required in connection with the
acquisition of franchised motorcycle dealerships. The Company has no sales
revenues and has had no income from any operations. Its only actions have been
to complete its initial capitalization, and to enter into an agreement to
purchase with the owners of its first proposed acquisition - the assets and
liabilities of Cycle Sport, Inc.
Management's goal is to purchase Cycle Sport's assets, liabilities and major
motorcycle, Jet Ski and ATV franchises as a going business in its two locations
in Herndon and Springfield, VA, and to recapitalize and advertise the
dealership's products in order to bring the dealership back to the profitability
it enjoyed for its first 24 years of operations.
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The Company has sufficient cash and marketable securities on hand to accomplish
this proposed objective in the near two year term, as the Cycle Sport dealership
never had an annual loss which would create a "going concern" problem. In 1997
the Springfield location maintained a break even status from operations, and the
Herndon location's loss from operations included its owner's salary, without any
investment in advertising. Its small operating loss was consolidated with the
present owner's profitable retail fitness business.
The Company functions as a development stage public holding company, and
proposes to acquire certain operating subsidiaries, without any operations of
its own, other than its research and its related acquisition, legal, accounting,
stock transfer agent, and shareholder related record keeping responsibilities
and concomitant management costs on behalf of its subsidiaries, which will be
defrayed through management fees charged to its subsidiaries. The operations of
the proposed subsidiaries will be consolidated with the Company as a public
parent, if the acquisitions contemplated are consummated.
The fact that the Cycle Sport dealership is in the metropolitan Washington, DC
area, enjoys major product brands such as Kawasaki, Suzuki, Yamaha and Triumph,
is in a protected franchise territory, and is in a rising industry growing by
20% annually, gives it possible growth potential for the future.
The "in place" management of the first proposed acquisition, Cycle Sport, Inc.,
reduced its advertising investment to approximately 2% of the 1997 total sales
of approximately $4,000,000, at the time when the industry average is 8% of
sales. The Company believes that an additional 6% (or approximately $240,000)
spent on advertising would increase sales by approximately $2,000,000, and
create net income of $400,000 on those additional sales, which would offset the
1997 loss of $150,000 the Cycle Sport dealership suffered on $4,000,000 of
sales. In addition, the Company believes that Cycle Sport has more employees
than necessary as the present owner is a quasi-absentee owner, and that existing
salaries are also somewhat excessive based on industry standards.
Other than the above acquisition target plan, the Company existed in a dormant
status only and has conducted no real business operations other than
identifying, researching and negotiating the acquisition of Cycle Sport's assets
and liabilities on a bulk sale basis.
Liquidity and Capital Resources
The Company anticipates meeting its working capital needs during the current
fiscal year from capital raised through the common stock already sold to its
control shareholders. The Company is also investigating the possibility of other
financing to provide additional acquisition capital and to further its
acquisition program. Although management has not made any arrangements or
definitive agreements, the Company is contemplating both the private placement
of securities and/or a public offering. The Company does not anticipate any
working capital shortage in 1998, in view of its current assets and assuming
neither of these offerings take place.
As of July 31, 1998, the Company had total assets of $50,148 in cash, and
$612,500 of marketable securities. The Company has no liabilities. If the
proposed acquisition is completed, the Company will add, in consolidation with
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its new subsidiary, assets of approximately $1,000,000, liabilities of $600,000
and additional total stockholders equity of $100,000.
Since January, 1998, the Company's control shareholders have expended
approximately $25,000 on research and development, organization and
administration, including legal and accounting expenses. The Company has raised
its capital funds through private common stock sales to its control parties. And
advances from control parties. Management has determined that the Company will
spend approximately $350,000 to acquire the assets and liabilities of Cycle
Sport, and anticipates expending an additional $200,000 to recapitalize the new
subsidiary, for advertising and potential shorter term operating losses (two
years maximum).
In the opinion of Management, inflation has not had a material effect on the
operations of the Company.
A detailed description of the business of the first proposed acquisition is as
follows:
Cycle Sport, Inc.
The Company has targeted its first intended acquisition, known as Cycle Sport, a
27 year old two store motorcycle, ATV and Jet Ski dealership in Herndon and
Springfield, Virginia. The Herndon location the Yamaha, Kawasaki, Suzuki, and
Triumph motorcycle and Jet Ski factory franchises. The Springfield store sells
only Yamaha and Triumph brand motorcycles, ATVs and Jet Skis.
The current new motorcycle, ATV and Jet Ski inventory exceeds approximately
$600,000 for both stores. Parts and accessories inventories exceed $300,000.
Used motorcycle inventory exceeds $100,000. These figures are based upon Cycle
Sport's books and records.
Cycle Sport sales in 1997 of motorcycles, Jet Ski's, parts, accessories and
service exceeded $4,000,000. 1998 Cycle Sport sales are projected to increase to
$4,600,000, which would equate to a 15% increase over 1997. These figures are
based upon Cycle Sport's books and records.
Four years ago, Cycle Sport's present owner used this motorcycle dealership as a
base for the establishment of 12 "physical fitness" stores with revenues now
exceeding $15,000,000, and was therefore unable to devote the time he used to
devote to the dealership. As a result, net income suffered somewhat for three
years, as gross profit margins suffered. For the prior 24 years the dealership
was profitable, based upon Cycle Sport's books and records. In addition, the
present owner offset the fitness operating profits with the motorcycle
division's small loss.
The Company expects to pay $350,000 cash for the dealership's assets and
liabilities and Kawasaki, Yamaha, Suzuki and Triumph franchises, and must set
aside an additional $200,000 to recapitalize the dealership to bring it back to
profitability. The assets and liabilities will be purchased by the Company's
District of Columbia subsidiary formed for this purpose, to be named V-Twin
Cycle Centers, Inc. These funds have been provided by the control shareholders
of the Issuer, and the funds will be invested by the Issuer in exchange for 100%
of the new subsidiary's common voting stock. The purchase will include, on a
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bulk sale basis, Cycle Sport's motorcycle, Jet Ski and ATV related assets and
liabilities, which will also include the assumption of the secured floor plan
debt related to motorcycle, ATV and Jet Ski inventory, and the franchises. The
Company will lease the Herndon premises from the present owner, and assume a
lease on the Springfield location.
PRODUCTS AND MARKETS
The Company's first proposed subsidiary is primarily engaged in retail sales of
several well known brands: Yamaha, Kawasaki, Suzuki and Triumph motorcycles,
ATVs and Jet Skis (personal watercraft), related parts and accessories, and the
service of these products.
Once the proposed acquisition of the Cycle Sport assets and liabilities are
completed, the Company's general market will be the retail motorcycle, ATV and
Jet Ski market, and related parts, accessories and service.
As recreational products, Cycle Sports Kawasaki, Yamaha, Suzuki and Triumph
motorcycles, and Yamaha and Kawasaki ATVs and Jet Skis and related parts and
accessories are products enjoying a rising consumer market. According to U.S.
Government reports, from 1992 through 1995 spending on recreational products
grew at over five percent per year and from 1994 through 1997 grew at three
times the rate of overall consumer spending.
Based on industry information, the Company believes that the typical customer
for heavyweight American touring and cruiser motorcycles is a male between the
ages of 35 and 65, with a household income of approximately $65,000. These
customers are generally experienced motorcycle riders who purchase motorcycles
for recreational purposes rather than for transportation. According to U.S.
Department of Commerce demographic surveys, the number of Americans that will
fall into the targeted age bracket is projected to increase by approximately 11%
over the next five years and by 19% over the next ten years. The 35 to 65 year
old age group also leads all age groups in annual spending per consumer on
recreational products and generally has greater disposable income than other age
groups.
The Company believes that an opportunity exists for dealership groups with
significant equity capital and experience in identifying, acquiring and
professionally managing dealerships, to acquire additional dealerships and
capitalize on changes in the motorcycle retailing industry. Motorcycle retailing
is a rapidly growing consumer retail market in the United States. The industry
ownership today is highly fragmented, with the majority of dealerships being
privately owned and operated. The Company believes that these factors, together
with increasing capital costs of opening new motorcycle dealerships, franchising
costs which require substantial inventories, the lack of alternative exit
strategies (especially for larger dealerships) and the aging of many dealership
owners provide attractive consolidation opportunities.
In 1992, the Motorcycle Industry Council recorded that 31 million people rode a
motorcycle, scooter or ATV that year. With the variety of vehicles growing at a
significant rate, popularity is increasing. In comparison to other leisure
activities, motorcycling is surprisingly popular. In 1992, motorcycling was
enjoyed by 31 million people; golf had 23 million aficionados; fishing 41
million, and camping 47 million.
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According to the Motorcycle Industry Council, motorcycle sales are up 20% across
the board, including a surprise in the playbike and competition/off road
segments, which increased 26%.
COMPETITION
As of the date of this filing, no other publicly traded company proposes to
conduct or conducts business in the retail motorcycle market, other than Polaris
Industries, which is now manufacturing the new American made Polaris motorcycle
which will be distributed through their own Polaris jet ski dealer network;
therefore, the Company will have no direct competition in the stock acquisition
arena at this time, although some competition will continue from investors
purchasing privately held and operated franchised dealerships.
The Company's competitive position within the industry will be largely
determined by its ability to offer major franchised brands which control over
60% of the present motorcycle market in America, and value and service to its
customers, both in the factory replacement parts retail sector and in the
service sector. The Company, as a holding company for retail dealerships and a
proposed consolidator of additional motorcycle dealerships, has no direct
competition insofar as it is a public company which proposes to purchase
motorcycle dealerships that are traditionally held by private owners. The vast
majority of motorcycle dealerships of all brands are single store operations
which are family owned style dealerships. There are very few buyers for these
dealerships as the average business buyer does not have any motorcycle
experience, or if they do, they can't afford the investment as the majority of
the dealerships are profitable and too expensive for individual small business
buyers. Motorcycle dealerships are also typically too small in revenues,
earnings and assets to interest most large business buyers.
DISTRIBUTION
During 1997, the majority of merchandise purchased by the Company's proposed
subsidiaries was shipped directly to the stores from their franchise
manufacturers: Kawasaki, Yamaha, Suzuki and Triumph Motorcycles. The balance of
the merchandise was after market parts and accessories, such as: side cars,
wearing apparel, helmets, saddlebags, custom exhausts, seats, handle bars, light
bars, sissy bars, and touring luggage.
The Company's first proposed dealership and any subsequently acquired
dealerships will operate pursuant to franchise agreements between each
motorcycle manufacturer (or authorized distributor thereof) (the "Manufacturer")
and the proposed subsidiary of the Company that operates such dealership. The
Company is dependent to a significant extent on its relationship with such
Manufacturers for distribution (and subsequent sales) of motorcycles and related
products. The manufacturers protect the dealer's geographical sales area through
the franchise agreements, which provides for the dealer having an exclusive for
each brand in its area with written protection from more franchises being issued
in those areas.
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OPERATIONS
All phases of the Company's operations are subject to influences outside its
control. Any one, or a combination, of these factors could materially affect the
results of the Company's operations. These factors include: the cost of goods,
competitive pressures, inflation, consumer debt levels, currency exchange
fluctuations, trade restrictions, changes in tariff and freight rates, interest
rate fluctuations and other capital market conditions. Forward-looking
statements made by or on behalf of the Company are based on a knowledge of its
business and the environment in which it operates, but because of the factors
listed above, actual results may differ from those in the forward-looking
statements. Consequently, all of the forward-looking statements made are
qualified by these and other cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be
realized or, even if substantially realized, that they will have the expected
consequences to or effects on the Company or its business or operations.
SEASONALITY
The Company will experience significant seasonal fluctuations in motorcycle
sales, as summer sales are generally twice as great as winter sales, and weather
conditions, specifically a harsh and long winter season, always affect sales.
GOVERNMENT REGULATION
The success of sales of the motorcycles which the Company's subsidiary will be
franchised to sell depends upon compliance with certain government regulations.
The motorcycles which the Company will be franchised to sell are subject to the
emissions and noise standards of the U.S. Environmental Protection Agency and
the more stringent emissions standards of various State agencies. The
motorcycles are also subject to the National Traffic and Motor Vehicle Safety
Act and the rules promulgated thereunder by the National Highway Traffic Safety
Administration. Finally, federal, state and local authorities have adopted
various standards relating to air, water, helmet rules and noise pollution that
may affect the Company's distributors' manufacturing operations and its own
retail markets. The Company expects that its future facilities will comply with
all such regulations and standards, and that current production levels of
motorcycles will continue in line with the increasing interest in motorcycles,
ATVs and personal watercraft. To the degree that franchises are involved in
dealerships, the Federal Trade Commission has certain regulatory authority
thereover.
EMPLOYEES
As of July 31, 1998, the Company had no full-time employees. If the acquisition
of the assets and liabilities of Cycle Sport is successful, the Company will not
be subject to any collective bargaining agreements. The proposed subsidiary will
employ approximately 25 employees in sales, service and administration, and the
Company will provide those employees with health insurance. The Company
anticipates adding home office supervisory, marketing and administrative staff
as the Company acquires more franchised motorcycle dealerships.
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CUSTOMER BASE
The Company will not be dependent on any one major or any few select customers;
all sales will be the result of a comprehensive advertising campaigns, referrals
and re-sales to old customers. V-Twin Acquisition's first proposed subsidiary
and any subsequent subsidiaries will be, however, dependent on its manufacturers
to provide it with quality motorcycles (and associated parts and accessories) to
be sold to the public. The first subsidiary will enjoy the benefit of its
customers who have purchased various items from Cycle Sport for the past 27
years.
RESEARCH AND DEVELOPMENT
The Company has conducted specific research required in connection with the
acquisition of franchised motorcycle dealerships. Research and development is
limited to a study of the retail motorcycle industry, and finding, evaluating
and negotiating the purchase of financially sound motorcycle dealerships to be
acquired. Research and development is a critical factor to the Company only to
the extent that sound business decisions in finding and closing the purchase of
acquisitions in the unconsolidated motorcycle franchise market will lead to
success for the Company and its shareholders.
GROWTH STRATEGY
The Company plans to implement an acquisition program primarily by pursuing (i)
its first dealership in the District of Columbia/Northern Virginia metropolitan
and its growing suburban geographic markets, (ii) dealerships in other
geographic locations that will allow the Company to capitalize on regional
economies of scale, offer a greater breadth of products and services in any of
its markets or increase brand diversity, and (iii) dealerships in warm weather
geographical locations which will allow for year round sales, thereby enhancing
gross sales of motorcycles.
The Company will look to acquire dealerships in geographic markets it does not
currently serve, principally in the Eastern half of the United States. The
Company will target dealers having superior operational and financial
management, the cost of which can provide future earnings. Generally, the
Company will seek to retain the acquired dealerships' existing operational and
financial management, and thereby benefit from their market knowledge, customer
base and local reputation.
The Company will seek growth in its operations within existing markets by
acquiring dealerships that will increase the consolidated sales, and profits to
be made in those markets. These acquisitions should produce opportunities for
additional operating efficiencies, promote increased name recognition and
provide the Company with better opportunities for repeat and referral business.
The Company intends to grow significantly through the acquisition of additional
franchised motorcycle dealers. This strategy will entail reviewing and
potentially reorganizing acquired business operations, corporate infrastructure
and systems, and financial controls. Unforeseen expenses, difficulties, and
delays frequently encountered in connection with rapid expansion through
acquisitions could inhibit the Company's growth and negatively impact
profitability. There can be no assurance that suitable acquisition candidates
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will be identified, that acquisitions of such candidates will be consummated, or
that the operations of any acquired businesses will be successfully integrated
into the Company's operations and managed profitably without substantial costs,
delays, or other operational or financial difficulties. In addition, increased
competition for acquisition candidates may increase purchase prices for
acquisitions to levels beyond the Company's financial capability or to levels
that would not result in the returns required by the Company's acquisition
criteria. As of the date of this filing, the Company has no binding agreements
to effect any acquisitions and is not engaged in any active negotiations to
acquire any other dealers except Cycle Sport. The Company may issue Common
Stock, preferred stock, debt instruments, or incur substantial bank indebtedness
in making future acquisitions.
ANTI-TAKEOVER EFFECT OF ARTICLES AND BYLAW PROVISIONS
The Company's Articles of Incorporation provide that up to 25,000,000 shares of
Class A common stock and 25,000,000 Class B common stock, and 2,000,000 shares
of preferred stock may be issued by the Company from time to time in one or more
series. The Board of Directors is authorized to determine the rights,
preferences, privileges and restrictions granted to and imposed upon any
unissued series of preferred stock and to fix the number of shares of any series
of preferred stock and the designation of any such series, without any vote or
action by the Company's stockholders. The Board of Directors may authorize and
issue preferred stock with voting or conversion rights that could adversely
affect the voting power or other rights of the holders of Common Stock. In
addition, the issuance of preferred stock could have the effect of delaying,
deferring or preventing a change in control of the Company. The Company's
Articles of Incorporation also allow the Board of Directors to fix the number of
directors in the Bylaws with no minimum or maximum number of directors required.
The effect of these provisions may be to delay or prevent a tender offer or
takeover attempt that a stockholder might consider to be in his best interest,
including attempts that might result in a premium over the market price for the
shares held by the stockholders.
CHANGES IN TAX LAWS
The Company's operations depend upon a number of factors relating to or
affecting consumer spending for luxury goods, such as motorcycles. The Company's
operations may be adversely affected by unfavorable local, regional, or national
economic developments or by uncertainties regarding future economic prospects
that reduce consumer spending in the markets served by the Company. Consumer
spending on luxury goods can also be adversely affected as a result of declines
in consumer confidence levels, even if prevailing economic conditions are
favorable. In an economic downturn, consumer discretionary spending levels
generally decline, often resulting in disproportionately large reductions in the
sale of luxury goods. Similarly, rising interest rates could have a negative
impact on consumers' ability or willingness to finance motorcycle purchases,
which could also adversely affect the ability of the Company to sell its
products.
Local influences, such as corporate downsizing and military base closings, also
could adversely affect the Company's operations in certain markets. There can be
no assurance that the Company could maintain its profitability during any such
period of adverse economic conditions or low consumer confidence. Changes in
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federal and state tax laws, such as an imposition of luxury taxes on leisure
time products, also could influence consumers' decisions to purchase products
offered by the Company and could have a negative effect on the Company's sales.
DILUTION THROUGH ISSUANCE OF STOCK
The size, timing, and integration of any future acquisitions may cause
substantial fluctuations in operating results from quarter to quarter.
Consequently, operating results for any quarter may not be indicative of the
results that may be achieved for any subsequent quarter or for a full fiscal
year. These fluctuations could adversely affect the market price of the Common
Stock. The Company's ability to continue to grow through the acquisition of
additional dealers will depend upon (i) the availability of suitable acquisition
candidates at attractive purchase prices, (ii) the Company's ability to compete
effectively for available acquisition opportunities, and (iii) the availability
of funds or the market price of the Company's Common Stock with a sufficient
market price to complete the acquisitions. The Company's future growth through
acquisitions also will depend upon its ability to obtain the requisite
manufacturer approvals of franchise transfers. Alternatively, one or more
manufacturers may attempt to impose further restrictions on the Company in
connection with their approval of acquisitions.
MANUFACTURERS' CONSENT TO ACQUISITIONS AND MARKET EXPANSION
Dealer agreements with each proposed acquisition by its terms will require the
dealer to obtain consent from the Manufacturers of the franchised dealers'
motorcycles to any change in the ownership of the dealer. In determining whether
to approve acquisitions, manufacturers may consider many factors, including the
financial condition and ownership structure of the Company. Further,
manufacturers may impose conditions on granting their approvals for
acquisitions, including a limitation on the number of such manufacturers'
dealers that may be acquired by the Company. The Company's ability to meet
manufacturers' requirements for approving future acquisitions will have a direct
bearing on the Company's ability to complete acquisitions and effect its growth
strategy. There can be no assurance that a manufacturer will not terminate its
dealer agreement, refuse to renew its dealer agreement, refuse to approve future
acquisitions, or take other action that could have a material adverse effect on
the Company's acquisition program.
The Company's growth strategy also entails expanding its product line and
geographic scope by obtaining additional distribution rights from its existing
and new manufacturers. While the Company believes it will be successful in
obtaining such distribution rights, there can be no assurance that such
distribution rights will be granted to the Company or that it can obtain
suitable alternative sources of supply if the Company is unable to obtain such
distribution rights.
MOTORCYCLE MANUFACTURERS' CONTROL OVER DEALERS
Historically, motorcycle manufacturers have exercised significant control over
their dealers, restricted them to specified geographic areas, and retained
approval rights over changes in ownership. The continuation of the Company's
dealer franchise agreements with certain manufacturers is contingent upon
several factors. Failure to meet the customer satisfaction and market share
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goals set forth in any dealer agreement could result in the imposition of
additional conditions in subsequent dealer agreements, termination of such
dealer agreement by the manufacturer, limitations on inventory allocations,
reductions in reimbursement rates for warranty work performed by the dealer, or
denial of approval of future acquisitions. The Company's dealer agreements with
manufacturers give the Company the exclusive right to sell those manufacturers'
products within a given protected geographical area. Accordingly, a competing
manufacturer selling a different brand could authorize another dealer to start a
new dealership in proximity to one or more of the Company's locations, or an
existing competing dealer selling competing brands could move a dealership to a
location that would be directly competitive with the Company. Such an event
could have a material adverse effect on the Company and its operations; however,
Kawasaki, Yamaha, Suzuki and Honda Motorcycles currently own 62% of the retail
motorcycle sales market in the USA, and they protect their dealers' territories.
FUTURE CAPITAL NEEDS; DEBT SERVICE REQUIREMENTS; POSSIBLE DILUTION THROUGH
ISSUANCE OF STOCK
The Company's future capital requirements will depend upon the size, timing, and
structure of future acquisitions and its working capital and general corporate
needs. To the extent that the Company finances future acquisitions in whole or
in part through the issuance of Common Stock or securities convertible into or
exercisable for Common Stock, existing stockholders will experience a dilution
in the voting power of their Common Stock and earnings per share could be
negatively impacted. The extent to which the Company will be able or willing to
use the Common Stock for acquisitions will depend on the market value of its
Common Stock from time to time and the willingness of potential sellers to
accept Common Stock as full or partial consideration. The inability of the
Company to use its Common Stock as consideration, to generate cash from
operations, or to obtain additional funding through debt or equity financings in
order to pursue its acquisition program could materially limit the Company's
growth.
Any borrowings made to finance future acquisitions or for operations could make
the Company more vulnerable to a downturn in its operating results, a downturn
in economic conditions, or increases in interest rates on borrowings that are
subject to interest rate fluctuations. If the Company's cash flow from
operations is insufficient to meet its debt service requirements, the Company
could be required to sell additional equity securities, refinance its
obligations, or dispose of assets in order to meet its debt service
requirements. In addition, it is likely any credit arrangements will contain
financial and operational covenants and other restrictions with which the
Company must comply, including limitations on capital expenditures and the
incurrence of additional indebtedness. There can be no assurance that such
financing will be available if and when needed or will be available on terms
acceptable to the Company. The failure to obtain sufficient financing on
favorable terms and conditions could have a material adverse effect on the
Company's growth prospects and its business, financial condition, and results of
operations.
IMPACT OF GENERAL ECONOMIC CONDITIONS AND DISCRETIONARY CONSUMER SPENDING
The Company's operations are dependent upon a number of factors relating to or
affecting consumer spending. The Company's operations may be adversely affected
13
<PAGE> 14
by unfavorable local, regional or national economic developments or
uncertainties regarding future economic prospects that reduce consumer spending
in the markets served by the Company's stores. Consumer spending on
non-essential goods such as motorcycles can also be adversely affected due to
declines in consumer confidence levels, even if prevailing economic conditions
are positive. In an economic downturn, consumer discretionary spending levels
are also reduced, often resulting in disproportionately large declines in the
sale of high-dollar items such as motorcycles. During 1988 through 1990, the US
economy was severely depressed due to declines in the financial, oil and gas and
real estate markets. There can be no assurance that a similar economic downturn
might not recur in the United States or any other market or that the Company
could remain profitable during any such period. Similarly, rising interest rates
could have a negative impact on consumers' ability or willingness to obtain
financing from third-party lenders, which could also adversely affect the
ability of the Company to sell its products. Changes in federal and state tax
laws including, without limitation, the imposition or proposed adoption of
luxury or similar taxes on certain consumer products, could also influence
consumers' decisions to purchase products offered by the Company and could have
a negative effect on the Company's sales. Local influences such as corporate
downsizing and military base closings may adversely affect and may influence the
Company's operations in certain markets.
PROJECTED OPERATIONS
- -- Assuming the projected acquisition of the Cycle Sport assets and
liabilities is successful, the following chart shows the last 3 years
revenues and losses for Cycle Sport, and the projections for 1998 and 1999:
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $ 3,692,716 3,420,724 4,008,309 4,621,826 6,000,000
Cost of Goods 2,455,336 2,301,854 2,779,386 3,228,907 3,600,000
--------- --------- --------- --------- ---------
Gross Profit 1,237,580 1,118,869 1,229,851 1,393,819 2,400,000
Expenses 1,285,677 1,330,491 1,396,593 1,466,063 2,000,000
--------- --------- --------- --------- ---------
Net Income (Loss) ( 48,097) ( 211,621) ( 166,742) ( 72,245) 400,000
</TABLE>
The consolidated balance sheet of V-Twin Acquisitions, Inc., projected to
include the assets and liabilities of Cycle Sport being purchased by the Company
if the acquisition is completed, appears as follows:
<TABLE>
<CAPTION>
Projected Balance Sheet Upon Completion of the Proposed acquisition
-------------------------------------------------------------------
<S> <C>
Assets $ 1,300,000
Liabilities 600,000
-----------
Capital 750,000
</TABLE>
ITEM 3. DESCRIPTION OF PROPERTY OF THE PROPOSED SUBSIDIARY
Facility
The Company occupies leased office space at 1707 H Street, NW, #200 in
Washington, DC, and such offices are suitable and adequate for administrative
use. The proposed subsidiary facilities located at 632 Grant Street, Herndon,
14
<PAGE> 15
Virginia 20170 and 6603 Backlick Road, Springfield, Virginia 22150 will be
leased from the Seller and are suitable and adequate for their intended use as a
motorcycle dealership.
Investment Policies
The Company proposes to invest its capital and subsequent earnings, if any, in
the acquisition of additional major franchised motorcycle dealerships. Such an
acquisition program is a policy of acquiring assets primarily for income. Such
investments made are centered in motorcycles, parts, accessories and service
equipment related inventory, major franchise sales agreements, and real estate
if the motorcycle dealership's retail commercial real estate locations will be
purchased. If any real estate is purchased, the Company will limit itself to 2
mortgages when arranging financing, and the purchase of a dealership location
will only be considered when it facilitates the sale of the dealership's
motorcycles and related items.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables are intended as a visual description:
All 5% persons:
<TABLE>
<CAPTION>
Name of Amount of
Beneficial Beneficial
Title of Class Owner Owner Percent of Class__A__
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Common Voting
Ted Schwartzbeck 109,515 13.54%
A. Jay Pignatello 109,515 13.54%
Villa Beau Holdings 219,030 27.08%
</TABLE>
Management 5% persons:
<TABLE>
<CAPTION>
Name of Amount of
Beneficial Beneficial
Title of Class Owner Owner Percent of Class
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Common Voting
Ted Schwartzbeck 109,515 13.54%
A. Jay Pignatello 109,515 13.54%
</TABLE>
15
<PAGE> 16
The following Class A management warrants have been reserved for the following
persons, which may only be exercised based upon the performance of those
individuals as part of the proposed management team:
Management 5% persons:
<TABLE>
<CAPTION>
Name of Amount of
Beneficial Beneficial
Title of Class Owner Owner Percent of Class
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Common Voting
David Settle 109,515 9.62% *
Eric Arlt 109,515 9.62% *
Jose Tamarez 109,515 9.62% *
</TABLE>
* The percentages owned by each management person if the above warrants are
issued will reduce all 5% persons to 9.26% each of Class A shares, and will
reduce Villa Beau Holdings, Ltd. to 19.26% of the Class A shares on a fully
diluted basis.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The Company's Directors, Executive Officers, and their ages are:
Name Position Age
---- -------- ---
Ted Schwartzbeck Chairman 35
Mr. Schwartzbeck has been an Executive Officer of Century Steel Products, Inc.
since 1985, a specialty steel fabricator in Sterling, VA, and a Director of its
parent company, Century Industries, Inc. (PHLX) since 1993.
David L. Settle Executive Counselor, 37
Director
Mr. Settle raced motocross motorcycles in Maryland and won several prestigious
races from 1974 through 1994, from age 13 through age 33. He completed his
racing days with the #5 plate in the Seniors class in the State of Maryland. He
subsequently served with the U.S. State Department for several years as
Supervisor of Foreign Embassy Elevator Maintenance, coordinating and supervising
a substantial field service force. Mr. Settle, as Executive Counselor, will
assume the responsibilities of president of V-Twin after the Cycle Sport
franchises have officially been transferred to V-Twin. As of the date of this
filing, V-Twin has made a $50,000 earnest deposit to the Seller(s) of Cycle
Sport and the only condition precedent to the completion of the purchase of the
assets of Cycle Sport if the approval of the transfer of the franchises.
16
<PAGE> 17
Jay Pignatello Exec. Vice-President, 28
Director, Secretary
Mr. Pignatello graduated from the University of Pennsylvania in 1992. He has
worked in the mergers and acquisitions field since 1996. He will also manage
the shareholders relations department.
Carolyn Mongold Director 42
Prior to joining the Company, Ms. Mongold was a commercial banker with Bank
Hapoalim located in Beverly Hills, California. Prior to joining Bank Hapoalim,
Ms. Mongold spent six years with Crocker Bank.
The above Directors are all elected annually, and all the Directors have served
since the Company's inception. All of the Directors were appointed to serve for
the calendar year of 1998 at the annual meeting.
ITEM 6. EXECUTIVE COMPENSATION
No Officer or Director receives any compensation from the Company. David Settle
will receive as salary as General Manager of the acquired dealership if it is
completed. The Officers contemplate receiving a moderate compensation package
for their efforts upon the completion of the purchase of a sufficient number of
dealerships to justify such compensation.
In the following table names have been abbreviated.
SUMMARY COMPENSATION TABLE
V-Twin Acquisitions, Inc.
Name and Restricted All
Position Year Salary ($) Bonus Other($) stock awards Other
Jay Pignatello 1998 -0- -0- -0- -0- -0-
Ted Beck 1998 -0- -0- -0- -0- -0-
David L. Settle 1998 -0- -0- -0- -0- -0-
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
NONE
ITEM 8. LEGAL PROCEEDINGS
There are, at present, no legal proceedings in which the Company is involved,
either as plaintiff or defendant.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Class A and Class B shares are anticipated to trade on the NASDAQ
Bulletin Board by the Company placing a Sec. 240.15c2-11 on file with its
sponsoring broker dealer, and the Company becoming fully reporting upon this
Form 10-SB
17
<PAGE> 18
being declared effective. There exists no range of bid/asked information for the
Company's common voting Class A or Class B shares for each quarter of the last
two years.
There are approximately 158 stockholders which own the Class A shares, and there
are approximately 167 stockholders which own the Class B shares.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Within the past three years, the only sales of unregistered securities the
Company has undertaken have been the securities issued in its recent statutory
merger which are the subject matter of this registration statement. No other
securities have been sold by the Company.
ITEM 11. DESCRIPTION OF SECURITIES
When the Company completed its statutory merger with Commercial Indemnity
Underwriters, Inc., on July 10, 1998, it was authorized to issue 25,000,000
Class A common voting shares (par value $.001) and 25,000,000 Class B common
voting shares (par value $.001), and, upon completion of the statutory merger,
had 1,000,000 shares issued and outstanding, comprised of 808,727 Class A
shares, and 191,273 Class B shares. It also issued Class A warrants for 328,545
exercisable at $.01 based upon performance, which would cause the Company to
have 1,137,272 Class A shares outstanding on a fully diluted basis, and a total
outstanding of 1,328,545 of both classes.
The Company is also authorized to issue 2,000,000 shares of Preferred Stock (par
value $.001), to be designated in one or more series at the discretion of the
Board of Directors. There are no shares of the Preferred Stock issued or
outstanding.
The Company seeks to register 808,727 shares of its Class A (par value $.001)
common voting shares and 191,273 of its Class B (par value $.001) common voting
shares by the filing of this Form 10, thus seeking to register such shares
within the purview of Section 12(g).
The Company intends to commence trading on the NASDAQ OTC:BB through the
preparation of a Sec. 240.15c2-11 being on file with a sponsoring NASD broker
dealer, and to be a fully reporting 12(g) Issuer when this registration by the
filing of this Form 10 in reference to its Class A (par value $.001) common
voting shares and its Class B (par value $.001) becomes effective.
But for the 1/100th voting power of the Class B (par $.001) common voting shares
of the Company vis a vis the Company's Class A (par $.001) common voting shares,
the shareholders of each class are entitled to: a) in either 1:1 or 1:100
(depending of whether Class A or Class B common voting shares) ratio a
non-cumulative vote for each shareholder of record on all matters submitted to a
vote of the shareholders, b) full and equal rights, regardless of whether Class
A or Class B common voting shares, to participate equally in and to receive
common stock dividends (if any) as may be declared by the Board of Directors out
of legally available funds, and c) to participate equally and pro-rata,
regardless of whether Class A or Class B common voting shares, in the
distribution of any and all assets available for distribution upon liquidation
of the Company.
18
<PAGE> 19
All shareholders, regardless of whether Class A or Class B common voting shares
have no pre-emptive rights to acquire additional shares of the Company's common
stock or any other of its securities, and all outstanding shares of common stock
are non-assessable.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
There exists no statute, provision in the charter, by-laws, contract or other
arrangements that insures or indemnifies a controlling person, director or
officer of the Company which effects his or her liability in his or her capacity
as a controlling person, director or officer of the Company.
19
<PAGE> 20
ITEM 13. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
V-TWIN ACQUISITIONS, INC.
REPORT OF INDEPENDENT AUDITOR F-1
BALANCE SHEET F-2
NOTES TO FINANCIAL STATEMENTS F-3 through F-4
20
<PAGE> 21
[KLIPFEL & ASSOCIATES LOGO] KLIPFEL & ASSOCIATES, L.L.C.
ACCOUNTANTS AND FINANCIAL CONSULTANTS
Report of Independent Accountant
Board of Directors
V-Twin Acquisitions, Inc.
Washington, D.C. 20036
We have audited the accompanying balance sheet of V-Twin Acquisitions, Inc.
as of July 31, 1998. This balance sheet is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. We believe our audit provides a reasonable basis for our opinion.
In our opinion, the above-referenced financial statement presents fairly,
in all material respects, the financial position of V-Twin Acquisitions, Inc. as
of July 31, 1998, conforming with generally accepted accounting principles.
/s/ Klipfel & Associates
_____________________________
Klipfel & Associates, L.L.C.
Certified Public Accountants
Alexandria, VA.
August 10, 1998.
F-1
901 NORTH PITT STREET * SUITE 230 * ALEXANDRIA, VA 22314
PHONE: (703) 683-1100 * (888) 698-0901 * FAX: (703) 683-0990
E-MAIL: [email protected]
<PAGE> 22
V-TWIN ACQUISITIONS, INC.
BALANCE SHEET
JULY 30, 1998
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C>
Cash and Cash Equivalents $ 50,148.00
Marketable Securities 612,500.00
-----------
TOTAL ASSETS 662,648.00
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Advances from Shareholders $ 50,148.00
STOCKHOLDERS' EQUITY
Common Stock, Class A, 25,000,000 shares
authorized, 808,727 issued and outstanding 809.00
Common Stock, Class B, 25,000,000 shares
authorized, 191,273 issued and outstanding 191.00
Additional Paid in Capital 611,500.00
-----------
TOTAL STOCKHOLDERS' EQUITY 612,500.00
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 662,648.00
===========
</TABLE>
See Accompanying Notes to Financial Statements
F-2
<PAGE> 23
V-Twin Acquisitions, Inc.
(A Development Stage Company)
Notes to Financial Statement
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization - The Company was organized under the laws of the District of
Columbia on July 10, 1998. During July 1998 the Company completed a merger with
Commercial Indemnity Underwriters, Inc., with the Company becoming the surviving
entity from the merger. The Company is considered a development stage company
and during July 1998 did not engage in any business activities. As such there is
no statement of operations and no statement of cash flows contained in this
audit.
Commercial Indemnity Underwriters, Inc. was formerly known as American Solid
Fuel, Inc. and had remained dormant until its merger with the Company. American
Solid Fuel, Inc. was formed in August 1988 and successfully completed a public
offering through an S-18 registration.
NOTE 2--PROPOSED ACQUISITIONS:
The Company's future business operations are contingent upon completing a
proposed acquisition of a retail motorcycle dealership known as Cycle Sports,
Inc., based in Herndon, Virginia. Management's business strategy is to use a
successful completion of Cycle Sports, Inc. as a springboard to future
acquisitions of similar motorcycle dealerships. As of the date of this
financial statement the proposed acquisition of Cycle Sports, Inc. had not been
finalized. Management has not identified any other cycle dealership that it is
considering for a proposed future acquisition.
NOTE 3--RELATED PARTY TRANSACTIONS.
During the period ended July 31, 1998, the Company received cash loans from
shareholders. The loans were deposited in the Company's checking account:
<TABLE>
<CAPTION>
SHAREHOLDER LOAN AMOUNT
----------- -----------
<S> <C>
A. Jay Pignatello 22,148.00
Villa Beau Holdings, Ltd. 20,000.00
Ted L. Schwartzbeck 8,000.00
---------
Total Shareholder Loans 50,148.00
---------
---------
</TABLE>
F-3
<PAGE> 24
V-Twin Acquisitions, Inc.
Notes to Financial Statement
(page 2 of 2.)
The loans were made by the shareholders to the Company for working capital
purposes with no specific repayment terms. The advances are non-interest
bearing.
The Company's largest holder of its Class A Common Stock is Villa Beau
Holdings, Ltd., a company incorporated in The Bahamas. As consideration for
acquiring its 219,030 shares in the Company, Villa Beau Holdings, Ltd.
transferred to the Company 350,000 shares of Class A common stock of Century
Industries, Inc., which is a U.S. based company whose stock is traded on the
Philadelphia Stock Exchange. At the time of this exchange between the Company
and Villa Beau Holdings, Ltd. the 350,000 shares in Century Industries, Inc. had
a market value of $612,500.
The vice-president, treasurer, and secretary of the Company, Mr. A. Jay
Pignatello, is also a director of the Company. He sits on the board of directors
of Century Industries, Inc. The chairman of the board of the Company, Mr. Ted L.
Schwartzbeck, is president of Century Steel Products, Inc., a wholly-owned
subsidiary of Century Industries, Inc.
Management Compensation -- Each officer and director will not be paid any
compensation for services rendered nor reimbursed for expenses incurred on
behalf of the Company until such time the Company receives revenues from future
operations.
NOTE 4 -- INCOME TAXES.
There are no provisions for income taxes.
F-4
<PAGE> 25
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There are not now, nor have there been, disagreements with the Company's
presently engaged accountants, Klipfel & Associates, PLLC.
ITEM 15. FINANCIAL STATEMENTS
On July 10, 1998, the Company completed the statutory merger with
Commercial Indemnity Underwriters, Inc., a dormant company registered pursuant
to section S-18, now projected to be listed on the NASDAQ Bulletin Board. This
transaction has been accounted for as a statutory merger, with the Company
designated as the survivor. The most current Financial Statement available for
the Company can be found under Item 13 hereinabove.
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has caused this registration statements to be signed on its behalf by
the undersigned, thereunto duly authorized.
August 7, 1998
V-Twin Acquisitions, Inc.
/s/ Ted L. Schwartzbeck
- -------------------------------------
Ted L. Schwartzbeck, Chairman and CEO
21
<PAGE> 26
The following Exhibits are attached as required by Small Business Issuers:
(l) Underwriting agreement. Not applicable.
(2) Plan of acquisition, reorganization, arrangement, liquidation or succession.
Attached hereto.
(3) Articles of Incorporation and by-laws. Attached hereto.
(4) Instruments defining rights of holders. Not applicable.
(5) Opinion re legality. Not applicable.
(6) No Exhibit required.
(7) Opinion re liquidation preference. Not applicable.
(8) Opinion re tax matters. Not applicable.
(9) Voting trust agreement. Not applicable.
(10) Material contracts. Not applicable.
(11) Statement re computation of per share earnings. See profit & loss income
statement audited financials Item 13 herein.
(12) No Exhibit required.
(13) Annual or quarterly reports, Form 10-Q or quarterly report to security
holders. Not applicable.
(14) Material foreign patents. Not applicable.
(15) Letter on unaudited interim financial information. Not applicable.
(16) Letter on change in certifying accountant. Not applicable.
(17) Letter on director resignation. Not applicable.
(18) Letter re change in accounting principles. Not applicable.
(19) Report furnished to security holders. Not applicable.
(20) Other documents or statements to security holders. Not applicable.
(21) Subsidiaries of the registrant. Not applicable.
(22) Published report regarding matters submitted to vote of security holders.
Not applicable.
(23) Consents of experts and counsel. Not applicable.
(24) Power of attorney. Not applicable.
22
<PAGE> 27
(25) Statement of eligibility of trustee. Not applicable.
(26) Invitations for competitive bids. Not applicable.
(27) Financial data schedule. Not applicable.
(28) Information from reports furnished to state insurance authorities. Not
applicable.
(29) Additional Exhibits. Not applicable.
23
<PAGE> 1
GOVERNMENT OF THE DISTRICT OF COLUMBIA
DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS
BUSINESS REGULATION ADMINISTRATION
[DISTRICT OF COLUMBIA SEAL]
CERTIFICATE
THIS IS TO CERTIFY that all applicable provisions of the DISTRICT
OF COLUMBIA BUSINESS CORPORATION ACT have been complied with and accordingly,
this CERTIFICATE of MERGER is hereby issued to
COMMERCIAL INDEMNITY UNDERWRITERS, INC. (UNQUALIFIED DE CORP.)
MERGED INTO
V-TWIN ACQUISITIONS, INC.
(DC CORP.)
as of JULY 10TH, 1998.
Dwight H. Reeves
Interim Director
Patricia A. Montgomery
Administrator
Business Regulation Administration
/s/ William L. Ables, Jr.
----------------------------------------
William L. Ables, Jr.
Act. Asst. Corporate Program Manager
Corporations Division
Marion Barry, Jr.
Mayor
<PAGE> 2
ARTICLES OF MERGER OF DOMESTIC AND FOREIGN CORPORATIONS
TO: DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS
BUSINESS REGULATION ADMINISTRATION
CORPORATIONS DIVISION
614 H STREET, N.W. ROOM 407
WASHINGTON, D.C. 20001
Pursuant to the provisions of Title 29, Chapter 9 of the Code of Laws of
the District of Columbia, the undersigned domestic and foreign corporations
adopt the following Articles of Merger for the purpose of merging them into one
of such corporations:
FIRST: The names of the undersigned corporations and the States, including the
District of Columbia, under the laws of which they are respectively
organized are:
Name of Corporations State
- -------------------- -----
Commercial Indemnity Underwriters, Inc. DE
V-Twin Acquisitions, Inc. DC
SECOND: The laws of the State under which such foreign corporation is organized
permit such merger are the laws of the State of Delaware.
THIRD: The name of the surviving corporation is V-Twin Acquisitions, Inc. and
it is governed by the laws of the District of Columbia.
FOURTH: The following Plan of Merger was approved by the shareholders of the
undersigned Domestic Corporation in the manner prescribed by the Code of
Laws of the District of Columbia, and was approved by the undersigned
foreign corporation in the manner prescribed by the laws of the State
under which it is organized. Plan of Merger is attached hereto as
Exhibit "A".
FIFTH: The merger received an affirmative vote as a class of the holders of at
least 2/3rds of the outstanding shares of each class of shares entitled
to vote as a class.
SIXTH: The surviving corporation be governed by the laws of the District of
Columbia, and it agrees (a) that it may be served with process in the
District of Columbia in any proceeding for the enforcement of any
obligation of the undersigned domestic corporation and in any proceeding
for the enforcement of
<PAGE> 3
the rights of a dissenting shareholder of such domestic corporation
against the surviving corporation; (b) irrevocably appoints the
Corporations Division for the District of Columbia as its agent to
accept service of process in any such proceeding; and (c) agrees that it
will promptly pay to the dissenting shareholders of such domestic
corporation the amount, if any, to which they shall be entitled under
the provision of the Code of Laws of the District of Columbia, with
respect to the rights of dissenting shareholders.
DATE: July 9, 1998 Commercial Indemnity Underwriters, Inc.
A Delaware Corporation
BY: /s/ Clara Cespedes
-------------------------------------
Clara Cespedes, President
(Corporate Seal)
DATE: July 9, 1998 V-Twin Acquisitions, Inc.
A District of Columbia Corporation
BY: /s/ Sebastian Davila
-------------------------------------
Sebastian Davila, President
(Corporate Seal)
<PAGE> 4
Exhibit A
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER is entered into and is effective this 9th
day of July, 1998, by and between V-Twin Acquisitions, Inc., a District of
Columbia corporation (hereinafter called "V-Twin") and Commercial Indemnity
Underwriters, Inc., a Delaware corporation, (hereinafter called "CIU").
W I T N E S S E T H:
WHEREAS, V-Twin has an authorized capital stock consisting of 25,000,000
shares of Class A common stock, $.001 par value per share, 25,000,000 shares of
Class B common stock, $.001 par value per share, of which 1,000,000 shares
(808,727 Class A and 191,273 Class B) have been duly issued and are outstanding
(the "Common Stock"), and 2,000,000 shares of Preferred Stock, $.001 par value
per share, of which no shares are issued and outstanding, and
WHEREAS, CIU has an authorized capital stock consisting of 1,666,667 shares
of common stock, par value $.001 per share, of which 1,000,000 shares have been
duly issued and are now outstanding (the "Common Stock"), and
WHEREAS, V-Twin and CIU desire to adopt a plan and agreement of merger
pursuant to the provisions of Section 386(a)(1)(f) of the Internal Revenue Code
of 1954, as amended (the "Code"), upon the terms and conditions as contained in
this Agreement.
NOW, THEREFORE, for and in consideration of the premises and of the
respective agreements set forth below and in order to consummate this Plan and
Agreement of Merger, the parties hereto agree as follows:
1. Merger. CIU shall merge into V-Twin, with V-Twin surviving.
2. Effective Date. This Plan and Agreement of Merger shall become
effective as of the date first stated above, being hereinafter called the
Effective Date.
3. Surviving Corporation. V-Twin shall survive the merger herein
contemplated and shall continue to be governed by the laws of the District of
Columbia, and the separate corporate existence of CIU shall cease forthwith upon
the Effective Date.
<PAGE> 5
4. Certificate of Incorporation. The Certificate of Incorporation of the
District of Columbia Corporation set forth as Exhibit "A" hereto shall be the
composite Certificate of Incorporation of V-Twin.
5. Bylaws. The Articles of Incorporation of V-Twin shall be the Articles
of Incorporation of the merged V-Twin following the Effective Date unless and
until the same shall be amended or repealed in accordance with the provisions
thereof.
6. Authorized Capital. The authorized capital stock of V-Twin following
the Effective Date shall be 25,000,000 Class A shares having $.001 par value per
share, and 25,000,000 Class B shares of common stock having $.001 par value per
share, with the Class A shares having one vote for one share, and the Class B
shares having one vote for each 100 shares, unless and until the same shall be
changed in accordance with the laws of the District of Columbia, and 2,000,000
shares of Preferred stock, $.001 par value, to be designated at the discretion
of the Board of Directors of V-Twin.
7. Further Assurance of Title. If at any time V-Twin shall consider or be
advised that any acknowledgements or assurances in law or other similar actions
are necessary or desirable in order to acknowledge or confirm in and to the
District of Columbia Corporation any right, title, or interest which CIU held
immediately prior to the Effective Date, CIU and its proper officers and
directors shall and will execute and deliver all such acknowledgements or
assurances in law and do all things necessary or proper to acknowledge or
confirm such right, title, or interest in the District of Columbia Corporation
as shall be necessary to carry out the purposes of this Plan and Agreement of
Merger, and V-Twin and the proper officers and directors hereof are fully
authorized to take any and all such action in the name of CIU or otherwise.
8. Pro Rata Conversion of Outstanding Stock. Forthwith upon the Effective
Date, each of the issued and outstanding shares of CIU common stock and all
rights in respect thereof shall be converted into the following classes of
V-Twin Stock: 808,727 Class A and 191,273 Class B, equal to one fully paid and
non assessable share of V-Twin Class A or Class B Common Stock, and each
certificate nominally representing the Class A and Class B shares of V-Twin
Common Stock shall for all purposes be deemed to evidence the ownership of a
like manner of shares of CIU Common Stock.
9. Officers and Directors. The officers and directors of V-Twin shall
remain the same following the Effective Date, until the next annual meeting of
shareholders and directors of V-Twin.
2
<PAGE> 6
10. Book Entries. The merger contemplated herein shall be treated as a
pooling of interests and as of the Effective Date entries shall be made upon the
books of the District of Columbia Corporation in accordance with the following:
(a) The assets and liabilities of the CIU shall be recorded on the
books of V-Twin at the amounts at which they are carried on the books of the
Delaware corporation immediately prior to the Effective Date with appropriate
adjustment to V-Twin.
(b) There shall be credited to the Capital Account of V-Twin an amount
equal to that carried on the Capital Account of CIU immediately prior to the
Effective Date.
(c) There shall be credited to the Retained Earnings Account of V-Twin
an amount equal to that carried on the Retained Earnings Account of CIU
immediately prior to the Effective Date.
11. Notices. Any notice or other communication required or permitted
hereunder shall be properly given when deposited in the United States mail for
transmittal by certified or registered mail, postage prepaid, or when deposited
with a public telegraphic company for transmittal, charges prepaid, addressed:
(a) In the case of V-Twin to:
Sebastian Davila
1155 Connecticut Avenue, NW, Suite 300
Washington, DC 20036
or to such other person or address as V-Twin may from time to time furnish to
CIU.
(a) In the case of CIU to:
Clara Cespedes
11708 Bowman Green Drive - 1st Floor
Reston, Virginia 20190
or to such other persons or address as CIU may from time to time furnish to
V-Twin.
12. Submission to Shareholders. Both parties warrant that this Plan and
Agreement of Merger has been submitted separately for approval to the
shareholders of the constituent corporations in the
3
<PAGE> 7
manner provided by the laws of the District of Columbia and the State of
Delaware.
13. Termination. This Plan and Agreement of Merger may not be terminated
or abandoned by action of the Board of Directors of V-Twin or CIU subsequent to
the Effective Date, or after approval by the shareholders of the constituent
corporations.
IN WITNESS WHEREOF, an authorized representative of each of the constituent
corporations has executed this Plan and Agreement of Merger effective as of the
date written above.
V-Twin Acquisitions, Inc.
a District of Columbia corporation
BY: /s/ Sebastian Davila
-------------------------------------
Sebastian Davila, President
Commercial Indemnity Underwriters, Inc.
a Delaware corporation
BY: /s/ Clara Cespedes
-------------------------------------
Clara Cespedes, President
4
<PAGE> 1
GOVERNMENT OF THE DISTRICT OF COLUMBIA
DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS
BUSINESS REGULATION ADMINISTRATION
[DISTRICT OF COLUMBIA SEAL]
CERTIFICATE
THIS IS TO CERTIFY that all applicable provisions of the DISTRICT
OF COLUMBIA BUSINESS CORPORATION ACT have been complied with and
accordingly, this CERTIFICATE of INCORPORATION is hereby issued to
V-TWIN ACQUISITIONS, INC.
as of JULY 10TH, 1998.
Dwight H. Reeves
Interim Director
Patricia A. Montgomery
Administrator
Business Regulation Administration
/s/ Patricia E. Grays
----------------------------------------
Patricia E. Grays
Corporate Program Manager
Corporations Division
Marion Barry, Jr.
Mayor
<PAGE> 2
ARTICLES OF INCORPORATION
OF
V-TWIN ACQUISITIONS, INC.
TO: Department of Consumer and Regulatory Affairs
Corporation Division
614 H St., NW
Suite 407
Washington, DC 20001
I/We the undersigned natural persons of the age of eighteen year or more
acting as incorporators of a corporation under the BUSINESS CORPORATION ACT (DC
Code, 1981 ed., Title 29, Chap. 3), adopt the following Articles of
Incorporation:
First: The name of the corporation is V-TWIN ACQUISITIONS, INC.
Second: The period of its duration is perpetual.
Third: The purposes for which the corporation is organized is to acquire
motorcycle dealerships, and/or dealership assets, in the District of
Columbia, the District of Columbia metropolitan area, and elsewhere,
and to be in business for pecuniary gain.
Fourth: The aggregate number of shares which the corporation is authorized to
issue is: 25,000,000 shares of $.001 par value Class A common stock;
25,000,000 shares of $.001 par value Class B common stock; and
2,000,000 shares of $.001 par value preferred stock, for which the
Board of Directors is hereby granted designation rights.
Fifth: All the Class A common shares will have equal voting rights with
respect to one another. The Class B common shares shall have a single
vote for every 100 shares (1:100) and will enjoy all the other rights
and privileges as the Class A common shares. The preferred shares
shall have no voting privileges whatsoever.
Sixth: The corporation will not commence business until at least $1,000 has
been received as initial capitalization.
Seventh: The initial shareholders will not have any preemptive rights
whatsoever to acquire additional shares.
<PAGE> 3
Eighth: The internal affairs of the corporation will be regulated by the
By-laws of the corporation.
Ninth: The address, including street and number of the initial registered
office of the corporation is 1730 K Street, NW, Suite 304,
Washington, DC, 20006, and the name of the initial registered agent
at such address is Robert J. Flynn, Jr. The address, including street
and number where it conducts its principal business is 1155
Connecticut Ave., NW, #300, Washington, DC 20036.
Tenth: The number of directors constituting the initial Board of Directors
of the corporation is one and the name and address, including street
and number and zip code of the person who is to serve as directors
until the first annual meeting of shareholders or until their
successor(s) is/are elected and shall qualify is:
NAME ADDRESS
- ---- -------
Sebastian Davila 1155 Connecticut Ave., NW #300
Washington, DC 20036
Eleventh: The name and address, including street and number if any of each
incorporator are:
NAME ADDRESS
- ---- -------
Sebastian Davila 1155 Connecticut Ave., NW #300
Washington, DC 20036
July 9, 1998
/s/ Sebastian Davila
--------------------------------------------
Incorporator
<PAGE> 4
WRITTEN CONSENT TO ACT AS REGISTERED AGENT
TO:
The Superintendent of Corporations
Department of Consumer and Regulatory Affairs
Business Regulation Administration, Corporations Division
614 H Street, N.W. Room 407
Washington, D.C. 20001
(A) BY A DISTRICT OF COLUMBIA RESIDENT
PURSUANT TO THE DISTRICT OF COLUMBIA BUSINESS CORPORATION ACT AS AMENDED (D.C.
CODE, 1981 EDITION, TITLE 29, SECTION 29-310(2))
I, Robert J. Flynn, Jr., Esq.
-----------------------------------------------------------------------------
A Bona fide Resident of the District of Columbia Herein Consent to Act as a
Registered Agent For:
V-TWIN ACQUISITIONS, INC.
- --------------------------------------------------------------------------------
(Name of Corporation)
SIGNATURE OF REGISTERED AGENT:
/s/ Robert J. Flynn, Jr.
- ---------------------------------------
DATE: 7-9-98
--------
(B) BY A LEGALLY AUTHORIZED CORPORATION
THE CORPORATION HEREIN NAMED IS:
- --------------------------------------------------------------------------------
An Authorized Corporate Registered Agent in the District of Columbia, per
Signatures of its President/Vice-President and Secretary/Assistant Secretary,
Herein Consents to Act as Registered Agent For:
- --------------------------------------------------------------------------------
NAME OF CORPORATION
SIGNATURE: OF PRESIDENT OR VICE-PRESIDENT
------------------------------------
ATTEST: OF SECRETARY OR ASSISTANT SECRETARY
------------------------------------
DATE:
---------------------------
<PAGE> 5
BY-LAWS
OF
V-TWIN ACQUISITIONS, INC.
ARTICLE I -- OFFICES
The principal office of the corporation in the DISTRICT of COLUMBIA shall
be located in the DISTRICT of COLUMBIA. The corporation may have such other
offices, either within or without the State of incorporation as the board of
directors may designate or as the business of the corporation may from time to
time require.
ARTICLE II -- STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the 31st day of
August in each year, beginning with the year 1998 at the hour 12 o'clock P.M.,
for the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual meeting
shall be a legal holiday such meeting shall be held on the next succeeding
business day.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of the holders of
not less than 20 per cent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate
By-Laws 1
<PAGE> 6
any place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or
if a special meeting be otherwise called, the place of the meeting shall be the
principal office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than 10 nor more than 60 days
before the date of the meeting, either personally or by mail, by or at the
direction of the president, or the secretary, or the officer or persons calling
the meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the stockholder at his address as it appears
on the stock transfer books of the corporation, with postage thereon prepaid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a
determination of stockholders for any other proper purpose, the directors of
the corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, 10 days. If the stock transfer
books shall be closed for the purpose of determining stockholders entitled to
notice of or to vote at a meeting of stockholders, such books shall be closed
for at least 3 days immediately preceding such meeting. In lieu of closing the
stock transfer books, the directors may fix in advance a date as the record
date for any such determination of stockholders, such date in any case to be
not more than 14 days and, in case of a meeting of stockholders, not less than
14 days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders, or stockholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the directors
declaring such dividend is adopted, as the case may be, shall be the record
date for such determination of stockholders. When a determination of
stockholders entitled to vote at any meeting of stockholders
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<PAGE> 7
has been made as provided in this section, such determination shall apply to
any adjournment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for shares
of the corporation shall make, at least 5 days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of 5
days prior to such meeting, shall be kept on file at the principal office of
the corporation and shall be subject to inspection by any stockholder at any
time during usual business hours. Such list shall also be produced and kept
open at the time and place of the meeting and shall be subject to the
inspection of any stockholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to who are the
stockholders entitled to examine such list or transfer books or to vote at the
meeting of stockholders.
7. QUORUM.
At any meeting of stockholders 51 of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. The stockholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy executed
in writing by the stockholder or by his duly authorized attorney in fact. Such
proxy shall be filed with the secretary of the corporation before or at the
time of the meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by
By-Laws 3
<PAGE> 8
proxy, for each share of stock entitled to vote held by such stockholders. Upon
the demand of any stockholder, the vote for directors and upon any question
before the meeting shall be by ballot. All elections for directors shall be
decided by plurality vote; all other questions shall be decided by majority
vote except as otherwise provided by the Certificate of Incorporation or the
laws of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
By-Laws 4
<PAGE> 9
ARTICLE III - BOARD OF DIRECTORS
--------------------------------
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board
of directors. The directors shall in all cases act as a board, and they may
adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these by-laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be 4. Each director shall
hold office until the next annual meeting of stockholders and until his
successor shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice
than this by-law immediately after, and at the same place as, the annual
meeting of stockholders. The directors may provide, by resolution, the time and
place for the holding of additional regular meetings without other notice than
such resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of
the president or any two directors. The person or persons authorized to call
special meetings of the directors may fix the place for holding any special
meeting of the directors called by them.
5. NOTICE.
Notice of any special meeting shall be given at least 10 days previously
thereto by written notice delivered personally, or by telegram or mailed to
each director at his business address. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the telegraph company.
The attendance of a director at a meeting shall constitute a waiver of notice
of such meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
By-Laws 5
<PAGE> 10
6. QUORUM.
At any meeting of the directors 3 shall constitute a quorum for the
transaction of business, but if less than said number is present at a meeting,
a majority of the directors present may adjourn the meeting from time to time
without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled by
vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified
in the notice, the resignation shall take effect upon receipt thereof by the
board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance
at each regular or special meeting of the board may be authorized. Nothing
herein contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
By-Laws 6
<PAGE> 11
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the directors
at which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the secretary of
the corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an
executive committee and other committees, each consisting of three or more
directors. Each such committee shall serve at the pleasure of the board.
By-Laws 7
<PAGE> 12
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a vice-president, a
secretary and a treasurer, each of whom shall be elected by the directors. Such
other officers and assistant officers as may be deemed necessary may be elected
or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be removed
by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the stockholders and of the directors. He
may sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the directors have authorized to be executed, except in cases where the signing
and execution thereof shall be expressly delegated by the directors or by these
by-laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall
By-Laws 8
<PAGE> 13
perform all duties incident to the office of president and such other duties as
may be prescribed by the directors from time to time.
6. VICE-PRESIDENT.
In the absence of the president or in event of his death, inability or
refusal to act, the vice-president shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. The vice-president shall perform such other
duties as from time to time may be assigned to him by the President or by the
directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that
all notices are duly given in accordance with the provisions of these by-laws
or as required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform
all duties incident to the office of secretary and such other duties as from
time to time may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
By-Laws 9
<PAGE> 14
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authority may be general or confined
to specific instances.
2. LOANS.
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution
of the directors. Such authority may be general or confined to specific
instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall from time to time be determined by resolution of the
directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositaries as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such form
as shall be determined by the directors. Such certificates shall be signed by
the president and by the secretary or by such other officers authorized by law
and by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the stockholders, the
number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be canceled and no new certificate shall be issued until the
By-Laws 10
<PAGE> 15
former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered
on the transfer book of the corporation which shall be kept at its principal
office.
(b) The corporation shall be entitled to treat the holder of record of
any share as the holder in fact thereof, and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the _____ day of
_________________ in each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal".
By-Laws 11
<PAGE> 16
ARTICLE X -- WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI -- AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be
adopted by a vote of the stockholders representing a majority of all the shares
issued and outstanding, at any annual stockholders' meeting or at any special
stockholders' meeting when the proposed amendment has been set out in the notice
of such meeting.
By-Laws 12
<PAGE> 17
ARTICLE XII -- ANTI-TAKEOVER EFFECT OF ARTICLES AND BYLAW PROVISIONS
The Company's Articles of Incorporation provide that up to 25,000,000
shares of Class A common stock and 25,000,000 Class B common stock, and
2,000,000 shares of preferred stock may be issued by the Company from time to
time in one or more series. The Board of Directors is authorized to determine
the rights, preferences, privileges and restrictions granted to and imposed upon
any unissued series of preferred stock and to fix the number of shares of any
series of preferred stock and the designation of any such series, without any
vote or action by the Company's stockholders. The Board of Directors may
authorize and issue preferred stock with voting or conversion rights that could
adversely affect the voting power or other rights of the holders of Common
Stock. In addition, the issuance of preferred stock could have the effect of
delaying, deferring or preventing a change in control of the Company. The
Company's Articles of Incorporation also allow the Board of Directors to fix the
number of directors in the Bylaws with no minimum or maximum number of directors
required. The effect of these provisions may be to delay or prevent a tender
offer or takeover attempt that a stockholder might consider to be in his best
interest, including attempts that might result in a premium over the market
price for the shares held by the stockholders.
By-Laws 13
<PAGE> 18
CERTIFICATION OF ADOPTION
OF BYLAWS
We, the undersigned, the duly elected and acting Directors of this corporation
certify that that within and foregoing Bylaws were adopted as the Bylaws of
this corporation on this date and that these Bylaws now constitute the Bylaws
of this corporation.
IN WITNESS WHEREOF, we have hereunto subscribed our names and affixed the seal
of the corporation this date: August 6, 1998.
/s/ Ted L. Schwartzbeck
- ---------------------------------
Director and Shareholder
/s/ A. Jay Pignatello
- ---------------------------------
Director and Shareholder
/s/ Carolyn Mongold
- ---------------------------------
Director and Shareholder
/s/ David Settle
- ---------------------------------
Director and Shareholder
