UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities and Exchange
Act of 1934
AVIATION INDUSTRIES CORP.
(Exact name of registrant as specified in its charter)
Nevada 88-023361
(State of organization) (I.R.S. Employer Identification No.)
888 E. Las Olas Blvd., Suite 700, Ft. Lauderdale, FL 33301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (954) 938-2500
Securities to be registered pursuant to Section 12(b)of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common
THIS REGISTRATION STATEMENT INCLUDES FINANCIAL INFORMATION AND
ADDITIONAL DISCUSSION CONCERNING INTEGRATED MARKETING
PROFESSIONALS ("IMP"), A COMPANY WITH WHOM THE REGISTRANT HAS
AGREED TO MERGE. THE DIRECTORS OF IMP HAVE ALREADY REPLACED THE
PREVIOUS DIRECTORS OF THE REGISTRANT, PURSUANT TO THE AGREEMENT,
AND MANAGEMENT BELIEVES THE MERGER WILL BE COMPLETED AFTER THIS
REGISTRATION STATEMENT BECOMES EFFECTIVE, ALTHOUGH THE MERGER IS
STILL SUBJECT TO APPROVAL BY SHAREHOLDERS OF BOTH COMPANIES. (SEE
ITEM 1, "BUSINESS")
Item 1. Business.
(a) Development of Business
(i) General Development of AIC
Aviation Industries Corporation (referred to as "AIC") was
organized under the laws of the State of Nevada on January 26,
1988, under the name "Nevada Commercial Management, Inc." On
September 24, 1997, AIC changed its name to "Aviation Industries
Corporation." Also in September, 1997, the management team which
preceded immediately the present management team (discussed
below) purchased the majority of all shares held by a former
control group for $300,000.
(ii) Agreement of Merger
AIC entered into a definitive Agreement and Plan of Merger with
Integrated Management Professionals, Inc. ("IMP") on June 23,
1998. At some time after the effective date of this Registration
Statement, IMP is to be merged with CAL Acquisition Corp., a
Nevada corporation formed as a wholly-owned subsidiary of AIC.
IMP will be the surviving corporation of that merger. IMP and AIC
will then merge, with AIC being the surviving corporation. AIC
will then change its name to Integrated Marketing Professionals,
Inc. In accordance with the Agreement, on August 3, 1998, the
Officers and Directors of AIC resigned, with the exception of Mr.
Kaloustian, and were replaced by the Officers and Directors of
IMP, who will remain as Officers and Directors of the new
company. The business of IMP is discussed in subsection (c)
below. Throughout this Registration Statement, the post-merger
entity shall be referred to as the "Company."
The terms of the merger gives holders of the common and preferred
stock of IMP shares of AIC common stock. There are presently
15,645,590 common shares and 3,700,000 preferred shares of IMP
outstanding. Holders of those shares receive AIC common stock
valued at $11,994,018. The actual number of shares will be
determined by the average closing price of the stock during the
ten day period beginning five days prior to the effective date of
the merger. In addition, there are options or warrants for a
total of 3,046,333 shares of IMP stock. The holder of these
options or warrants shall receive options or warrants for an
equal number of shares of AIC, with the exercise price set at six
times the exercise price of the existing IMP options or warrants.
Also, Joe Logan Jr., Diran Kaloustian, and Consolidated Equities
shall convey 1.5 million shares of AIC common stock to William
Forhan and 500,000 shares of AIC common stock to James Muldowney,
will return 375,000 common shares to AIC's treasury, and will
grant to Forhan voting proxies for 2.5 million shares for a
period of 36 months or until those shares are sold to bona-fide
third party purchasers. The merger will be a reverse merger,
treated as a pooling of interests for accounting purposes.
In order for the merger to be finalized, a number of events must
occur. First, the stockholders of both companies must approve the
merger agreement. This vote has not yet occurred. However, the
Board of Directors, consisting of Mr. Diran Kaloustian and Mr.
Joe Logan, Jr., owned 63% of the stock of AIC, approved the
merger on May 20, 1998. Second, this Registration Statement must
be effective and not subject to any stop order. Third, Joe Logan,
Jr. and Diran Kaloustian, and / or their assigns, must be able to
acquire all of AIC's interest in CITA without adverse accounting
or tax consequence. This has already occurred. Finally, the
companies are preparing to file a form S-4 registration statement
with the Securities and Exchange Commission ("SEC"). If the
merger is not consummated, neither party shall have any liability
or obligation to the others, other than for a willful breach, and
the IMP directors who replaced AIC directors shall resign from
the AIC board.
(iii) General Development of IMP
IMP was incorporated under the laws of the State of Michigan on
January 14, 1994. In October, 1995, IMP reincorporated in Nevada.
In May, 1996, IMP purchased the outstanding capital stock of Dav-
Jen, Inc., d/b/a Casino Airlink, in a transaction treated as a
purchase for accounting purposes. The total purchase price was
$2,915,802 plus 1,700,000 shares of IMP's Class B Preferred Stock
valued at $850,000 ($0.50 market bid price). On October 31, 1996,
IMP's name was changed to Casino Airlink, Inc. In December, 1996,
IMP purchased the outstanding capital stock of ReSer Corp. in a
transaction treated as a purchase for accounting purposes. The
purchase price was $390,000, paid for with $195,000 in cash and
156,000 shares of common stock. IMP guaranteed that the stock
would be worth no less than $1.25 per share as of January 3,
1999. On June 15, 1998, IMP's name was changed back to Integrated
Management Professionals, Inc.
(iv) Recent Developments
Since December 1997, a number of significant transactions have
taken place:
In October, 1997, AIC acquired from General Investment Bank
(formerly Commercial Bank Help) a lien of $1,750,000 in Kiwi
International Airlines, Inc., which had just recently terminated
its Chapter 11 bankruptcy proceedings and been acquired by a new
control group.
On February 28, 1998, AIC provided $200,000 in debtor-in-
possession ("DIP") financing to Sunjet, a commercial air carrier
which had filed for reorganization pursuant to Chapter 11 of the
U.S. Bankruptcy Code. The loan was repaid on May 5, 1998.
Sunjet's certificate of operation recently expired, and AIC does
not anticipate any further investment in or dealings with Sunjet.
On February 24, 1998, AIC acquired CITA Americas, Inc. CITA
operates clinics associated with health care facilities to treat
chemical dependencies, utilizing Ultra Rapid Opiate
Detoxification and Structured Aftercare Reintegration Treatment.
CITA was acquired for 375,000 shares of restricted common stock,
valued by AIC at $1,875,000 (the stock price at the closing date
of the transaction). Because the business of CITA was not travel-
related, and AIC had decided to concentrate on travel-related
businesses, on July 28, 1998, AIC entered into a letter of intent
to sell CITA to Southwestern Environmental Corp. in exchange for
$2,200,000 worth of Southwestern's Class A preferred stock. This
sale closed on August 31, 1998. The preferred stock received by
AIC is convertible into $2,200,000 worth of common stock
(determined by the market price) at any time after July 29, 1999.
AIC recently made three major acquisitions:
1) On or about July 30, 1998, AIC acquired Magnolia Tours and
Transportation ("Magnolia"), a Biloxi, MS company that provides
motor coach transportation services, including airport transfers
for visitors traveling to and from Gulf Coast casinos and hotels,
shuttle services, and local area tours. The purchase price was
$150,000 in cash, plus the assumption of $11,000 in debt.
2) On or about August 3, 1998, AIC acquired Business Travel, a
Norcross, GA-based corporate travel agency with 1997 annual sales
of approximately $25,000,000 (1997 EBITA was $278,178), in
exchange for $300,000 in cash and $900,000 of restricted common
stock (596,027 shares valued at the 5 day average price of $1.51
per share).
3) On or about September 9, 1998, AIC completed the acquisition
of Cruising In Style, Inc. ("Cruising"), a Durham, NC travel
agency with approximately $2,000,000 in annual revenues. Cruising
specializes in the sale of upscale cruise packages to Alaska, the
Caribbean, Europe, and Trans-Canal. The total price of this
acquisition was $150,000, $25,000 of which was paid in cash,
$50,000 in a 24-month promissory note with no interest, and
87,209 shares of common stock valued at $75,000.
(b) Financial Information about Industry Segments
All of the revenue from AIC and IMP is derived from the travel
and tourism industry. The required revenue, operating profit and
loss, and identifiable assets are shown in Item 2 and in the
financial exhibits provided in Item 15 below.
(c) Narrative Description of Business
After the merger is completed, the Company will operate through
five subsidiaries - Casino Airlink and ReSer, from the current
IMP, and Magnolia, Cruising, and Business Travel, from AIC.
IMP
IMP is a holding company acquiring travel-related companies. IMP
operates through two wholly-owned subsidiaries, ReSer
Corporation, and Casino Airlink (CAI). CAI is a wholesale travel
company that is currently the exclusive provider of packaged
casino vacations from Atlanta, GA, St. Petersburg, FL, Orlando,
FL, Ft. Lauderdale, FL, and Palm Beach, FL to Biloxi on the
Mississippi Gulf Coast. CAI provides non-stop, roundtrip jet
service, destination airport transfers, ground handling, two-
three night deluxe hotel accommodations, nightly buffet meals,
and access to twenty-four hour Las Vegas style gaming and
entertainment. A 3-night package sells from $169 to $269 per
passenger from Ft. Lauderdale. CAI delivered more than 85,000
passengers to the Mississippi Gulf Coast area via their chartered
and scheduled air service in 1997 and intends to specialize in
offering casino vacations to other gaming destinations, including
Tunica, MS and Las Vegas, NV in 1999. These new routes require
government approval, a process that requires application 30 days
in advance. The application has not been filed yet.
In 1997, CAI generated $18.3 million in revenue, with pre-tax
income from operations of $350,000. CAI has 42 employees. There
are 3,000 new hotel rooms coming on-line in Biloxi by June 30,
1999. This expansion requires CAI to add a second airplane in
order to serve new departure cities. This plane will become
available by January 10, 1999. This plane is being leased on an
annual contract. New departures include Daytona Beach to Biloxi
(12 times per month), Ft. Lauderdale to Memphis (9 times per
month), and St. Petersburg, Orlando, and Atlanta to Memphis (13
times per month each).
ReSer Corp., located in Atlanta, GA, is a travel agency that
specializes in planning, organizing, and presenting educational
seminars to travel agents across the United States. In 1997,
ReSer held 40 seminars which over 2,000 agents attended to learn
about Latin America, Florida, Mexico, and Colorado. ReSer also
processes reservations for tour operators. ReSer owns expansive
hardware and software that works well for small tour operators
who do not wish to absorb the overhead expenses associated with a
reservation center. In the fourth quarter of 1997, ReSer began
accepting Casino Airlink reservations from clients in Georgia,
North Carolina, and South Carolina. ReSer's 1997 pre-tax loss was
$60,000 on sales of $600,000.
Aviation Industries
Aviation Industries has not had significant operations during the
last few years, other than the recent transactions discussed
above. AIC has three newly acquired subsidiaries, Magnolia,
Business Travel, and Cruising.
Magnolia offers airport/hotel transfers and day and night tours
of New Orleans from Biloxi, and provides charter service for
corporations, meetings, and incentives. Magnolia has 15
employees, and provides service on a year-round basis. Its
business is not seasonal. In 1997, revenues were approximately
$800,000. For the first 7 months of 1998, pre-tax income was
$16,000. On August 31, 1998, AIC replaced Magnolia's fleet of
five motor coaches with four brand new 54 passenger coaches
offering state-of-the-art audio/visual equipment, first class
passenger amenities, and will offer vacationers optional trips to
places such as New Orleans, allowing AIC to capitalize further on
the continued growth of the Gulf Coast market. The cost of the
new coaches, $1,480,000, is provided by Cargill Leasing on a 5-
year lease.
Business Travel, a corporate travel agency with over 400
corporate accounts and annual sales of approximately $25,000,000,
fits perfectly with the overall marketing mix of the Company,
especially with the ReSer subsidiary. This provides the Company
with opportunities to market packaged casino vacations offered by
it to more than 20,000 people employed by Business Travel's
corporate clients. Business Travel has 35 employees. In 1997, 80%
of its business came from airline tickets, with the remainder
coming from car rentals, hotels, and tour commissions. Business
Travel generated $175,000 of pre-tax income on $25 million in
sales in 1997.
The acquisition of Cruising fits well with AIC's growing base of
travel and leisure operations. Cruising has 4 employees, and
produced $25,000 in pre-tax income in 1997, with revenues of $1.5
million. AIC intends to expand the operations to include active
marketing of more moderately priced cruise packages, focusing on
3, 4, and 7 night Caribbean itineraries, together with a variety
of land and sea packages for these cruises. This gives the
Company the opportunity to cross-market cruise vacation packages
to the more than 20,000 people employed by Business Travel's
corporate clients and the 80,000 passengers delivered to the
Mississippi Gulf Coast annually by Casino Airlink.
Item 2. Financial Information.
(a) Selected Financial Data.
The Registrant's financial data presented below has been derived
from the financial statements appearing in Item 15 below.
AVIATION INDUSTRIES CORP.
(A Development Stage Company)
Selected Financial Data
Years Ended December 31
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
March 31, 1998 1997 1996 1995 1994 1993
Summary of Operations $0 $0 $0 $0 $0 $
Revenues 0
General, Selling and $13,046 $8,050 $0 $0 $0 $0
Administrative Expenses
Net Profit ($13,046) ($8,050) $0 $0 $0 $0
Net Profit per Common ($0.00) ($0.00) $0.00 $0.00 $0.00 $0.00
Share
Summary Balance Sheet
Data
Total Assets $7,879,231 $6,004,231 $0 $0 $0 $0
Long Term Obligations (1) $1,000,000 $1,000,000 $0 $0 $0 $0
</TABLE>
(1) The Long Term Obligations shown are for a long term debt
that was paid off in April, 1998.
INTEGRATED MANAGEMENT PROFESSIONALS, INC.
Selected Financial Data
Years Ended December 31
<TABLE>
<S> <C> <C> <C> <C> <C>
July 31, 1998 1997 1996 1995 1994
Summary of $9,920,150 $18,378,929 $18,942,574 $20,009,040 $85,512
Operations
Revenues
Cost of Sales $6,758,926 $13,876,269 $15,746,734 $16,736,046
Total Operating $2,239,730 $4,027,435 $3,332,227 $3,272,994 $96,827
Expenses
Other Income ($4,113) ($121,030) ($145,208) $47,396
Extraordinary $691,846 ($1,288,059)
Items
Net Profit $807,384 $1,046,041 ($1,569,654) ($474,422) ($11,315)
Net Profit per
Common Share
Basic $0.19
Diluted $0.09 ($0.42) ($0.94) ($2.26)
Summary Balance
Sheet Data
Total Assets $4,434,404 $3,622,981 $4,112,161 $1,015,005 $120,710
Long Term $526,382 $1,680,893 $23,712 $0
Obligations
</TABLE>
(b) Management Discussion and Analysis
(i) AIC
A new management team has taken over the operations of AIC
effective August 3, 1998. Directors and Officers of IMP have
replaced the previous Directors and Officers of AIC, except that
Diran Kaloustian remains as AIC director. AIC was a development
stage company until its recent acquisitions.
As of March 31, 1998, AIC had $1,004,231 of cash, with long-term
debt of $1,000,000. Management decided to pay off the debt early,
leaving $4,231 of cash. Management feels that this cash position
is satisfactory. Profits from operations are expected to enhance
AIC's cash balance.
The investment in CITA increased from $1.875 million to $2.2
million with its sale to Southwest Environmental for preferred
stock convertible in 12 months.
AIC does not anticipate any capital expenditures in the remainder
of 1998. The three acquisitions will generate small profits by
year end. Management is dedicated to selecting additional
acquisitions to increase revenues and profits in 1999.
Assets will increase with the acquisition of IMP to a total of
$12.3 million based upon IMP's July 31, 1998 financials.
(ii) IMP
The management team took over IMP on December 6, 1996. IMP, which
suffered a loss in 1996, has been profitable since. The
improvement in 1997 was the result of increasing the air-load
factor to 88% while increasing the selling price by 5%. The first
six months of 1998 saw a decline in revenues from $10.4 million
to $8.6 million. This is based on an accounting change that
reduces revenues and cost of sales equally. During the same
period, income from operations increased from $360,672 to
$709,130, the result of a 5% price increase, a slight reduction
in the cost of sales, and management maintaining operations
costs.
Margins are highest in the first half of the year because of an
increase in winter population in Florida, and the fact that hotel
room costs are lower from September through May and load factors
are high without discounting the packages. In the third quarter
of 1998, IMP sustained a loss of $93,706, due to the effects of
Hurricane Georges. The hurricane closed business from September
25 to October 5, reducing profits by approximately $278,000 in
September.
IMP's cash position is strong, as IMP had over $1.1 million at
the end of July, 1998. Management expects future profits to
enhance this balance further. Management is negotiating with an
underwriter who has offered a firm commitment for a $5 million
equity raise, pursuant to Rule 506, during the first quarter of
1999, if market conditions are favorable. An agreement is
expected to be finalized by the end of November, 1998. The long-
term need for cash is for additional travel-related acquisitions.
The cash flow improved during the first quarter of 1998, due to a
seasonal increase in business. There are no trends that indicate
a change in IMP's liquidity. IMP anticipates capital expenditures
of $75,000 to $100,000 in 1999 to upgrade its reservations
systems and to expand staffing. While management does not
announce projections for future earnings, its business plan is
aggressive, and is designed with an eye towards improving
profits. In 1999, management plans to offer Tunica, MS as a
destination for a 90-day period. If the program is successful, it
may be expanded for 12 months.
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
This statement includes projections of future results and
"forward-looking statements" as that term is defined in Section
27A of the Securities Act of 1933 as amended (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934 as
amended (the "Exchange Act"). All statements that are included in
this Registration Statement, other than statements of historical
fact, are forward-looking statements. Although the management of
AIC and IMP believe that the expectations reflected in these
forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ
materially from the expectations are disclosed in this Statement,
including, without limitation, in conjunction with those forward-
looking statements contained in this Statement.
Item 3. Properties.
Both companies currently lease offices at 888 E. Las Olas Blvd.,
Suite 700, Ft. Lauderdale, FL 33301. This is the home office of
AIC, IMP. Casino Airlink leases a single-user facility with 6,000
square feet. It currently houses 30 employees, and has room to
house 50 employees.
ReSer leases a 2,000 square foot facility that houses 11
employees, and could be expanded for 24 employees. Business
Travel leases an 8,000 square foot facility for 35 employees (can
be expanded for 45 employees) and subleases 2,000 square feet of
that space (containing space for an additional 20 reservationists
in the future). Magnolia and Cruising both lease small facilities
for their operations.
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
Security Ownership of Certain Beneficial Owners - Aviation
Industries Corp.
As of June 1, 1998
<TABLE>
<S> <C> <C> <C>
Title of Name/Address of Owner Shares Percent of Class
Class Beneficially
Owned
Common Diran M. Kaloustian 3,000,000 32.00%
4605 S. Ocean Blvd.
Boca Raton, FL 334872
Common Professional Athlete 1,480,000 15.79%
Services, Inc.
1004 Coral Isle Way
Las Vegas, NV 89108
Common Chateau Vegas, Inc. 1,230,000 13.12%
1700 E. Desert Inn Rd.
#100 A
Las Vegas, NV 89109
Common General Investment Bank 900,000 9.60%
Christoprudny Blvd. 12A
Moscow, Russia
Common Officers and Directors 3,000,000 32.00%
(1 person)
</TABLE>
Note: 1,620,569 shares, equal to 17.29% of the outstanding common
stock, are held in "street name" by Cede & Co., a clearinghouse
for the shares.
Security Ownership of Certain Beneficial Owners - Integrated
Management Professionals, Inc. - As of May 1, 1998
<TABLE>
<S> <C> <C> <C> <C>
Title of Name/Address of Owner Shares Percent of Class Percent of Class
Class Beneficially -- Diluted
Owned
Preferred Dudley Bailey 1,000,000 50.00% 10.50
A 5456 E. Links Circle %
Littleton, CO 80122
Preferred Joseph and Sharon Noel 174,935 8.75% 1.84%
A 211 Stone Valley Ct.
Martinez, CA 94553
Preferred Bruce and Carol Fabric 174,935 8.75% 1.84%
A 1860 Mowry Ave., Ste.
200
Fremont, CA 94538
Preferred Christopher and 174,935 8.75% 1.84%
A Suzanne Bosio
C/O Bosio Sports
Central
4031 Wild Chaparral
Dr.
Shingle Springs, CA
95682
Preferred Michael P. Gamboa, 174,935 8.75% 1.84%
A trustee for
Schlumberger 1994
Charitable Remainder
Unitrust
One Embarcadero Center
Suite 4080
San Francisco, CA
94111
Preferred Steve Schoen 1,600,000 94.12% 8.40%
B 300 S. Florida Ave.
N. Penthouse
Tarpon Springs, FL
34689
Common Officers and Directors 1,156,000 8.66% 6.07%
(2 individuals)
</TABLE>
Note: These figures do not give effect to the dilutive impact
that the issuance of shares pursuant to the Agreement and Plan of
Merger with IMP will have on the "Percent Of Class" column. The
"Percent of Class - Diluted" column for IMP takes into account
2,000,000 shares of Series A Convertible Preferred Stock which is
convertible into 4,000,000 shares of common stock, and 1,700,000
shares of Series B Preferred Stock which is convertible into a
like number of shares of common stock.
Security Ownership of Management - Aviation Industries Corp.
As of June 1, 1998
<TABLE>
<S> <C> <C> <C>
Title of Name/Address of Owner Shares Percent of Class
Class Beneficially
Owned
Common Diran M. Kaloustian 3,000,000 32.00%
4605 S. Ocean Blvd.
Boca Raton, FL 334872
</TABLE>
Note: William Forhan and James Muldowney will receive a total of
2,000,000 shares of common stock, and Mr. Forhan will receive
proxies to vote 2,500,000 shares of common stock as a result of
the merger with IMP.
Security Ownership of Management - Integrated Management
Professionals, Inc. - As of May 1, 1998
<TABLE>
<S> <C> <C> <C> <C>
Title of Name/Address of Shares Percent of Class Percent of Class --
Class Owner Beneficially Diluted
Owned
Common Ellen Forhan 500,000 3.74% 2.62%
1800 S. Ocean Blvd.,
#510
Pompano Beach, FL
33062
Common Jim Muldowney 156,000 1.17% 0.82%
16456 Reddington Dr.
Reddington Beach, FL
33708
</TABLE>
Changes in Control
Three items result in a change of the control of the post-merger
Company. First, William Forhan, the Chairman of the Company,
receives a proxy to vote 2.5 million common shares for 18 months.
Second, Mr. Forhan and Mr. Muldowney, the Secretary and Treasurer
of IMP and the President of Casino Airlink, receive a total of 2
million shares of common stock from existing shareholders of AIC.
Finally, IMP shareholders will own 12 million of the 22 million
shares in the Company (assuming the value of AIC common stock is
$1.00 at the time shareholders vote to approve the merger). As a
result of these transactions, Mr. Forhan will own or control by
proxy 20% of the outstanding common stock. Mr. Muldowney will own
approximately 5%.
Item 5. Directors and Executive Officers.
On August 3, 1998, all members of the Board of Directors of AIC,
except for Mr. Diran Kaloustian, resigned, as agreed upon in the
merger agreement, and the board was reconstituted to consist of
Mr. Kaloustian and the members of the Board of Directors of IMP.
All officers and directors serve for a term of one year.
<TABLE>
<S> <C> <C> <C>
Name / Title / Age Start of Term Start of Term
Address on AIC Board on IMP Board
William Forhan 53 August 3, 1998 January 4,
President/Chief 1994
Executive
Officer/Director
1800 S. Ocean Blvd.,
#510
Pompano Beach, FL
33062
James Muldowney 55 August 3, 1998 January 15,
Secretary/Treasurer/D 1998
irector
16456 Reddington Dr.
Reddington Beach, FL
33708
Diran M. Kaloustian 63 September 30, N/A
Director 1997
4605 S. Ocean Blvd.
Highland, FL 33487
Tim Schad 48 September 15, September 15,
5151 W. River Drive 1998 1998
Comstock Park, MI
49321
Derek Lewin 59 August 3, 1998 May 15, 1998
Director
1800 S. Ocean Blvd.,
#312
Pompano Beach, FL
33062
Steven York 48 August 3, 1998 May 15, 1998
Director
4141 W. Walton Blvd.
Waterford, MI 48329
</TABLE>
William G. Forhan
Mr. Forhan has built businesses and developed management teams
during his twenty years in the sales incentive industry. He has
developed an in-depth understanding of the marketing structure of
many different industries, which has led to marketing plans
designed to increase and motivate sales participation for clients
in diverse fields.
Mr. Forhan left his position as District Sales Manager for Avis
Rent-A-Car, and founded three companies in the mid 1970s;
Motivation Travel, Inc., Motivation Advertising, Inc., and
Motivation Planners, Inc., a sales incentive company. Mr. Forhan
was the President of Meeting Planners from 1975 to 1983. In 1984,
he sold the companies to American Express, and was named
President of American Express Group & Incentive Services. He
retired from that position in 1986. From 1989 to 1993 he served
as President of Motivation Travel. Since 1994 he has served as
the CEO of Integrated Marketing Professionals, Inc.
Mr. Forhan graduated from Michigan State University in 1967 with
a BA in Business.
James M. Muldowney
Mr. Muldowney is a general manager with P&L experience gained
during his career of more than 25 years in the international and
domestic travel industry. He possesses hands-on knowledge of
operations and finance, and was instrumental in the acquisitions
of several corporate travel businesses, totaling $850,000,000 in
sales with 1,500 employees.
Mr. Muldowney spent 23 years with American Express Travel Related
Services, starting in 1970 as an auditor and moving up to Senior
Vice President in charge of Wholesale Travel and Airline
Relations, where he managed a staff of 600 and an annual
passenger volume in excess of 500,000.
Most recently, Mr. Muldowney was President of Club America, Inc.
(1993-1994), a travel wholesaler, and the owner and President of
the ReSer Corporation, a full service reservations and
telemarketing company (1994-1996). Since 1996, Mr. Muldowney has
served as Vice President of IMP and President of Casino Airlink.
Mr. Muldowney graduated from Seton Hall University in 1967 with a
BS in Economics and Accounting.
Diran M. Kaloustian
Education: Graduate of Duke University and New York University
Graduate School Of Business and New York University Law School.
Employment: Mr. Kaloustian was formerly the President and
Director of Depository Trust Company in New York, one of the
world's largest financial institutions. Mr. Kaloustian assumed
full executive and financial control of Depository Trust Company
in 1970 when it had reported losses and deposited assets of $25
billion and expanded it into a profitable company with deposited
assets exceeding $10 trillion.
Timothy Schad
Mr. Schad is currently chairman of the Nucraft Furniture Company
in Comstock Park, Michigan. He has been with Nucraft, a
manufacturer or wood office furniture, since 1980, serving as its
president from 1985 to 1997, and its Vice-President prior to
1985. Prior to his work with Nucraft, Mr. Schad worked at General
Motors from 1973 to 1980. From 1973 to 1975, he was on the
Environmental Activities Staff at GM, and from 1977 to 1980 he
worked at the Treasurer's Office in New York. From 1975 to 1977,
Mr. Schad attended Harvard Business School on a GM Fellowship. At
Harvard, Mr. Schad received an MBA in Finance and Marketing, with
Honors, and was elected class president.
Derek Lewin
Mr. Lewin is a founding member of the Florida Venture Capital
Group, and a member of the Association of Management Accountants.
He spent his early career as owner and developer of retail and
manufacturing groups in the United Kingdom, with an emphasis in
design and finance. He later gained experience in shipping
financing, and mortgage and investment banking.
Steven York
Mr. York is the founder and Chief Executive Officer of Contract
Professionals, Inc., an engineering services company. His time is
devoted fully to the business of that company and its affiliates.
He was formerly Vice President of Operations for Aero-Detroit,
Inc., a subsidiary of TAD Technical Services, Inc., and a
Regional Manager for Butler Service Group.
Mr. York has been a member of the Board of Directors of the
National Technical Services Association since 1987, during which
time he has served as Secretary and Treasurer, and has chaired
several committees. He is also a member of the Young Presidents
Organization and the Stanford University Human Resources
Executive Round Table.
Mr. York majored in engineering at Michigan State University, and
served eight and one-half years with the United States Air Force.
Item 6. Executive Compensation.
IMP entered into employment agreements with its key employees -
Mr. William Forhan and Mr. James Muldowney. Additionally, as part
of the agreement to purchase Casino Airlink, IMP entered into a 5-
year consulting agreement with Mr. Steven Schoen, the previous
principal shareholder of Casino Airlink. In late 1996, IMP
created a Stock Option Plan for employees and directors of IMP.
During the year 1997, Mr. Forhan and Mr. Muldowney were granted
incentive stock options. The description of the employment
agreements, the stock option plan, and the incentive stock
options are presented in the notes to the consolidated financial
statements presented in response to Item 15 below. The documents
are attached as exhibits to this Form 10.
Summary Compensation Table
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Long
compen- term
sation compens
a-tion
Awards Payouts
Name and Year Salary ($) Bonus(1 Other Restric Securit LTIP All
Position ) ($) Annua ted ies Payouts other
l Stock underly ($) Comp.
Comp. Awards ing ($)
($) ($) options
/ SARs
(#)
1998 $149,000 $17,750
William 1997 $149,000
Forhan,
CEO
1996 $149,000
Jim 1998 $150,000 $8,875
Muldowney
President 1997 $100,000
Casino 1996 $100,000
Airlink
</TABLE>
(1) The bonuses listed for 1998 are based upon the 1997
financial results. Bonuses have not yet been paid for 1998,
although the financial statements show a liability of $53,000 for
officers' bonuses as of September 30, 1998.
Option /SAR Grant in Last Fiscal Year
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Individual Potential
Grants realizable value
at assumed
annual rates of
stock price
appreciation for
option term
Name Number of Percent of total Exercise or base Expiration Date 5% 10%
securities options / SARs price ($/sh)
underlying granted to
options / SARs employees in
Granted (#) last fiscal year
William 2,000,000 83.33% $0.30 1/18/2007 $377,337 $956,245
Forhan,
CEO
Jim 400,000 16.66% $0.20 12/29/2008 $56,827 $148,249
Muldowne
y,
Presiden
t Casino
Airlink
</TABLE>
Note: the exercise price of the options will be adjusted post-
merger. Mr. Forhan's options will have an exercise price of
$1.80, while Mr. Muldowney's options will have an exercise price
of $1.20. At the post-merger price, the proper figures in the 5%
column of the above table would be $2,264,020 for Mr. Forhan and
$340,962 for Mr. Muldowney. The proper figures in the 10% column
are $5,727,473 for Mr. Forhan and $889,496 for Mr. Muldowney.
Members of the Board of Directors, including those members who
are employees and/or officers, are given stock options and
reimbursed for all travel expenses incurred on behalf of the
company. The options granted entitle each director to 150,000
shares of stock, vest in 6 months, and have a term of 10 years.
The exercise price is $0.32, which shall be adjusted to $1.92
post-merger. No options were granted to directors in 1996 or
1997.
Mr. Forhan and Mr. Muldowney both entered into employment
agreements with IMP on January 1, 1998 as President/CEO and
EVP/President of Casino Airlink, respectively. The contracts
provide each with a base salary as shown above, plus an incentive
bonus plan (5% of pre-tax net income for Mr. Forhan, 2.5% for Mr.
Muldowney) paid quarterly. Each contract provides for life
insurance coverage, and permits the individual to be terminated
for cause. If the individual is terminated (which includes
changing his job title or removing him from the Board of
Directors) other than for cause, the company must pay a penalty
of as much as $2 million for Mr. Forhan, $1.5 million for Mr.
Muldowney.
As part of the agreement to purchase Casino Airlink, Mr. Steve
Schoen was granted a five-year consulting agreement at $125,000
per year, plus 5% of the pre-tax income of Casino Airlink (the
subsidiary).
Item 7. Certain Relationships and Related Transactions.
Pursuant to the Agreement and Plan of Merger with IMP, the
outstanding common and preferred stock of IMP shall be exchanged
for shares of the Company's common stock valued at $11,994,018,
as of the valuation date provided for in the Agreement. In
addition, options held by William Forhan, James Muldowney, and
members of the Board of Directors of IMP to acquire shares of IMP
common stock shall be converted to options to acquire shares of
the Company's common stock. Also warrants granted to Joseph
Charles & Associates, Inc. to acquire shares of IMP shall be
exchanged for warrants to acquire the Company's stock.
Sections 2.14 and 3.14 of the Agreement and Plan of Merger
require management of AIC and IMP to disclose, on attached
schedules 2.14 and 3.14, any and all conflicts of interest they
may have. No such conflicts were reported.
The Agreement and Plan of Merger also provide that at closing,
existing shareholders Chateau Vegas, Inc., Diran Kaloustian, and
Professional Athletic Service, Inc. (the "Granting Entities")
shall convey 1,500,000 shares of restricted common stock of AIC
to William Forhan; 500,000 shares of restricted common stock
shall be conveyed to James Muldowney. William Forhan will receive
proxies to vote 2,500,000 shares of common stock from the
Granting Entities for a period not to exceed thirty-six (36)
months after the consummation of the merger. The Granting
Entities listed here differ from those named in the Agreement and
Plan of Merger. The Granting Entities listed here are the
beneficial holders, or are controlled by the same individual
owners, of the shares listed in the Agreement and Plan of Merger.
Item 8. Legal Proceedings.
There is no litigation involving AIC or IMP, or any of their
subsidiaries, as a party.
Item 9. Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters.
Registrant's common stock is traded in the over-the-counter
market in the United States under the symbol AVIA. The following
are available high and low bids since AIC started trading on
January 30, 1998.
Aviation Industries High Low
January 30, 1998 to March 31, 1998 $8.62 $4.37
April 1, 1998 to June 30, 1998 $6.25 $1.37
Management is not aware of the reason for the decline in market
price that has occurred during 1998. Current management was not
involved in AIC until the Merger Agreement in June, 1998, and did
not participate in management of AIC until August, 1998. AIC
marketed itself over the internet, and trading volume from
February 19, 1998 through March 25, 1998 grew to 100,000 trades
per day. Since April 27, AIC stock has averaged 10,000 trades per
day. The merger agreement inexplicably resulted in a further
decrease in both volume and value. Management is not aware of any
factors that would account for this reaction.
IMP's common stock is traded on the over-the-counter market in
the United States under the symbol POKR. The following are the
available high and low bids since July 1, 1996.
<TABLE>
<S> <C> <C>
Integrated Management High Low
Professionals, Inc.
July 1, 1996 to September 30, $6.25 $1.06
1996
October 1, 1996 to December 31, $1.25 $0.31
1996
January 1, 1997 to March 30, $0.60 $0.22
1997
April 1, 1997 to June 30, 1997 $0.44 $0.24
July 1, 1997 to September 30, $0.46 $0.15
1997
October 1, 1997 to December 31, $0.43 $0.18
1997
January 1, 1998 to March 30, $0.43 $0.17
1998
April 1, 1998 to June 30, 1998 $0.48 $0.20
</TABLE>
NOTE: Over the counter market quotations reflect inter-dealer
prices, without retail mark-up, mark-down, or commission, and may
not, therefore, represent actual transactions.
As of June 1, 1998, there were 9,375,000 shares of AIC's common
stock outstanding, held by 47 record owners.
As of June 22, 1998, IMP had 13,353,923 shares of common stock
outstanding held by 616 shareholders, together with 2,000,000 of
Series A, Convertible Preferred Stock held by 11 shareholders,
and 1,700,000 shares of Series B Preferred Stock held by 2
shareholder.
The Registrant has never paid a cash dividend and has no present
intention of so doing.
Item 10. Recent Sales of Unregistered Securities.
On April 23, 1998, IMP completed an offering under Rule 504 of
Regulation D. A total of 7,244,583 shares of common stock were
sold in this offering at an average price of $0.138.
In addition, during September, 1997, the previous management team
of AIC (Mr. Kaloustian and Mr. Logan) gained control of that
company by purchasing 6,000,000 shares (66.67%) of AIC's common
stock from their predecessors for the price of $300,000.
On December 7, 1996, IMP issued a total of two-million shares of
its Series A Preferred Stock for a total of $366,400. A total of
125,324 was given to four firms who served as advisors to IMP
with respect to this capital raise. One-million shares were
purchased by Mr. Bailey, with the remaining 874,676 shares
purchased by a total of 6 investors.
In May, 1996, IMP issued 1,700,000 shares of its Series B
Preferred Stock to Mr. Steve Schoen and Mr. L. Pemberton, as part
of the purchase price for Casino Airlink. That stock was valued
at $850,000 by IMP's board of directors.
Item 11. Description of Registrant's Securities to be
Registered.
The common stock of AIC has a par value of $0.001 per share. The
common stock of IMP has par value of $0.10 per share. All of the
common shares are non-assessable, without non-cumulative voting,
but with pre-emptive rights. Management anticipates that shares
of the post-merger company will retain the characteristics of AIC
common stock.
IMP's Series A Preferred Stock is given one vote for each common
share equivalent as of the record date for such vote. The common
share equivalent is the number of common shares issued upon
conversion of the Series A Preferred. Holders are entitled to
noncumulative dividends as the board may from time-to-time
declare. Holders also receive, in the event IMP is liquidated, a
payment of $0.63 plus all declared by unpaid dividends, less all
dividends paid to date, prior to holders of common shares
receiving any distribution. The merger with AIC shall be treated
as a liquidation, entitling holders of the Series A Preferred
Stock to receive the liquidation preference as part of the
merger. Holders also have the right to convert into a number of
common shares calculated by dividing the Conversion Price into
the Conversion Value. The initial Conversion Price is $0.315 per
share, with the initial Conversion Value being $0.630, yielding
an initial conversion rate of 2 common shares for each share of
Series A Preferred. These values are adjusted, from time-to-time,
to prevent dilution of the conversion. Holders also have
registration rights, meaning they can force IMP to register any
or all of the Series A Preferred Stock or the Common Stock under
the Securities Act of 1933.
The Series B Preferred Stock of IMP does not give the holder any
voting rights. Holders receive a distribution of $1.25 per share
upon liquidation of IMP, prior to common shareholders receiving
any distribution. However, this distribution will not occur until
such time as holders of Series A Preferred Stock have received
their entire liquidation preference. Each share of Series B
Preferred Stock is convertible into one share of common stock.
Item 12. Indemnification of Directors and Officers.
The bylaws of AIC do not provide for the indemnification of any
director, officer, employee or agent of the issuer, or any person
serving in such capacity for any other entity or enterprise at
the request of the issuer against any and all legal expenses
(including attorneys fees), claims and liabilities arising out of
any action, suit or proceeding, except an action by or in the
right of the issuer. The bylaws of IMP do provide for such
indemnification, and management intends that the bylaws of the
surviving post-merger entity shall provide for indemnification of
officers and directors to the extent permitted by Nevada law.
Nevada law provides liberal indemnification of officers and
directors of Nevada corporations. Section 78.7502 of the Nevada
Revised Statutes permits a corporation to indemnify any officer,
director, employee, or agent, who is, was, or is threatened to be
made a party to any action, whether civil, criminal,
administrative, or investigative, except an action by or in the
right of the corporation, by reason of the fact that he is or was
an officer, director, employee, or agent, if he acted in good
faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and, in the
case of a criminal action, he had no reasonable cause to believe
that his conduct was unlawful. In the case in which a director,
officer, employee, or agent of a corporation has been successful
on the merits or otherwise in defense of such action, the
corporation must indemnify him for expenses, including attorneys'
fees, actually and reasonably incurred by him.
Insofar as indemnification for liabilities arising under the
federal securities laws may be permitted to directors and
controlling persons of the issuer, the issuer has been advised
that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the
law and is, therefor, unenforceable. In the event a demand for
indemnification is made, the issuer will, unless in the opinion
of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the law and will be governed by the final
adjudication of such issue.
Item 13. Financial Statements and Supplementary Data.
The financial statements and supplemental data required by this
Item 13 follow the index of financial statements appearing at
Item 15 of this Form 10.
Item 14. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
AIC recently changed its auditors. This is not due to a dispute
or disagreement with the previous auditor. Instead, the change
was made because Mr. Friedman, the previous auditor, specializes
in auditing "blank check" companies. As a result of the
acquisition of IMP, AIC is no longer a blank-check company, and,
therefore, retained a new auditor, Kurt Saliger, who was more
willing to undertake such an audit.
Item 15. Financial Statements and Exhibits.
PRO-FORMA FINANCIAL STATEMENTS - AIC
Unaudited Pro-Forma Consolidated Balance Sheet as
of September 30, 1998.
Unaudited Pro-Forma Consolidated Income Statement
for the quarter and nine months ended September
30, 1998.
AVIATION INDUSTRIES CORP. / INTEGRATED MARKETING PROFESSIONALS,
INC.
UNAUDITED, PRO-FORMA, CONSOLIDATED BALANCE SHEET
<TABLE>
<S> <C>
September 30,
1998
ASSETS
CURRENT ASSETS:
Cash $839,432.84
Accounts Receivable - Trade 18,377.27
Other Receivables 52,004.36
Commissions Receivable 79,273.70
Accounts Receivable - ARC 20,561.58
Accounts Receivable - Non ARC 7,266.23
Prepaid Expenses 259,770.39
Due From AVIA 304,591.75
Due From ESC 41,356.68
TOTAL CURRENT ASSETS $1,622,634.80
PROPERTY & EQUIPMENT
Furniture and Fixtures 239,487.15
Office Equipment 609,234.20
Computer Equipment 118,700.74
Motor Vehicles 1,505,112.85
Leasehold Improvements 5,300.00
Accumulated Depreciation (735,513.70)
TOTAL PROPERTY & EQUIPMENT 1,742,321.24
OTHER ASSETS;
Goodwill 2,873,365.15
Organization Costs 409.48
Security Deposits 19,450.00
Non-Compete Agreements 637,414.00
Client Lists 825,000.00
Accumulated Amortization (975,509.19)
Bond, Commercial Bank 2,610,000.00
Investment in Kiwi Holdings 2,500,000.00
Investment in CITA Americas, Inc. 2,200,000.00
Trademark 100,000.00
Deposits 17,461.81
TOTAL ASSETS $14,172,547.20
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES;
Accounts Payable - Trade $597,172.79
Capitalized Leases - Current 2,068.89
Payroll Taxes Payable 3,657.99
Unearned Revenue 886,594.97
Due to IMPI 304,591.75
Interest Payable 5,450.00
Current Portion of Notes Payable 608,052.36
Other Liabilities 57,001.02
Officer Bonus Payable 53,000.00
FET Payable - 1998 39,713.84
Commissions Payable 30,000.00
Refunds Payable 55,000.00
Due to Shareholder 54,982.15
TOTAL CURRENT LIABILITIES $2,697,285.76
LONG TERM DEBT
Notes Payable 1,642,425.62
Capitalized Leases - Long Term 1,978.21
TOTAL LONG TERM LIABILITIES 1,644,403.83
STOCKHOLDERS' EQUITY;
Common stock 1,574,184.00
Preferred Stock A 100,000.00
Preferred Stock B 170,000.00
Paid In Capital 8,135,200.64
Retained Earnings -1,116,996.37
Current Year Net Income/Loss 968,469.43
TOTAL STOCKHOLDERS' EQUITY $9,830,857.70
TOTAL LIABILITIES AND $14,172,547.20
STOCKHOLDERS' EQUITY
</TABLE>
AVIATION INDUSTRIES CORP. / INTEGRATED MARKETING PROFESSIONALS,
INC.
UNAUDITED, PRO-FORMA, CONSOLIDATED BALANCE SHEET
<TABLE>
<S> <C> <C>
Three Months Nine Months
Ended September Ended September
30, 1998 30, 1998
INCOME:
Revenue $4,731,937 $14,185,730
Cost of Sales 3,200,844 9,022,059
Gross Profit 1,531,093 5,163,671
OPERATING EXPENSES
Payroll 789,418 2,167,619
Commission 35,629 107,706
Benefits 29,076 81,492
Other Operating Expenses 688,352 1,795,828
Earnings Before Interest, Taxes, (11,382) 1,011,025
and Depreciation
Depreciation 142,286 367,069
Gain on Sale of Assets (24,339) (24,339)
Gain - Southwest Environmental (325,000) (325,000)
Interest Income (2,860) (6,220)
Interest Expense 8,102 31,050
NET INCOME 190,429 968,465
</TABLE>
FINANCIAL STATEMENTS - AIC
Report of Independent Auditor Barry L. Friedman,
CPA, dated July 1, 1997.
Reports of Independent Auditor, Kurt D. Saliger,
CPA dated February 19, 1999.
Balance Sheets as of December 31, 1996, December
31, 1997, and September 30, 1998.
Statement of Operation for the years ended
December 31, 1997, December 31, 1996, and for the
period ended September 30, 1998.
Statement of Stockholders' Equity for the years
ended December 31, 1997, December 31, 1996, and
for the period ended September 30, 1998.
Statement of Cash Flows for the years ended
December 31, 1997, December 31, 1996, and for the
period ended September 30, 1998.
Notes to Financial Statements for AIC.
FINANCIAL STATEMENTS - IMP
Report of Independent Auditor Harvey Judkowitz,
CPA, dated February 5, 1999.
Balance Sheets as of December 31, 1996, December
31, 1997, and July 31, 1998.
Statement of Operation for the years ended
December 31, 1995, December 31, 1996 and December
31, 1997, and the period ended July 31, 1998.
Statement of Stockholders' Equity for the years,
December 31, 1995, December 31, 1996 and December
31, 1997, and the period ended July 31, 1998.
Statement of Cash Flows for the years ended
December 31, 1995, December 31, 1996 and December
31, 1997, and the period ended July 31, 1998.
Notes to Financial Statements.
AVIATION INDUSTRIES INDEPENDENT AUDITOR'S REPORT
Board of Directors July 1, 1997
Nevada Commercial Management, Inc.
Las Vegas, NV
I have audited the Balance Sheets of Nevada Commercial
Management, Inc. (A Development Stage Company), as of June 30,
1997, December 31, 1996 and December 31, 1995, and the related
Statements of Operations, Stockholders' Equity and Cash Flows for
the period January 1, 1997, to June 30, 1997, and for the two
years ended December 31, 1996, and December 31, 1995. These
financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Nevada Commercial Management, Inc., at June 30, 1997, December
31, 1996 and December 31, 1995, and the results of its operations
and cash flows for the period January 1, 1997, to June 30, 1997
and for the two years ended December 31, 1996 and December 31,
1995, in conformity with generally accepted accounting
principles.
/S/ Barry L. Friedman, C.P.A.
Barry L. Friedman, C.P.A.
Las Vegas, NV
AVIATION INDUSTRIES INDEPENDENT AUDITOR'S REPORT
Board of Directors February 19, 1999
Aviation Industries Corp.
Clifton, NJ
I have audited the accompanying balance sheet of Aviation
Industries Corp. (a development stage company), as of September
30, 1998 and December 31, 1997, and the related statements of
operations, stockholders' equity and cash flows for the nine
month period ended September 30, 1998 and the year ended December
31, 1997. These financial statements are the responsibility of
the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Aviation Industries Corp. as of September 30, 1998 and December
31, 1997, and the results of their operations and their cash
flows for the nine month period ended September 30, 1998 and the
year ended December 31, in conformity with generally accepted
accounting principles.
/S/ Kurt D. Saliger C.P.A.
Kurt D. Saliger, C.P.A.
Las Vegas, NV
AVIATION INDUSTRIES CORP.
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<S> <C> <C> <C>
September 30, December 31, December 31,
1998 1997 1996
ASSETS
CURRENT ASSETS:
Cash $24,087 $1,004,231 $0
Accounts Receivable $134,732 $0
TOTAL CURRENT ASSETS $158,819 $1,004,231 $0
PROPERTY AND EQUIPMENT, NET $1,484,361 $0
OTHER ASSETS;
Bond, Commercial Bank (Note 6) $2,500,000 $2,500,000 $0
Investment in Kiwi Holdings (Note 3) $2,500,000 $2,500,000 $0
Investment in CITA Americas, Inc. $2,200,000 $0 $0
(Note 4)
Intangibles, net $1,055,289 $0
Loan Receivable $200,000 $0 $0
TOTAL OTHER ASSETS $8,255,289 $5,000,000
TOTAL ASSETS $9,898,469 $6,004,231 $0
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES;
Accounts Payable $68,783 $12,281 $0
Accrued Liabilities $470,848 $0
Current Portion, Long Term Deb $168,898 $0
TOTAL CURRENT LIABILITIES $708,529 $12,281 $0
LONG TERM DEBT (Note 7) $1,362,067 $1,000,000 $0
STOCKHOLDERS' EQUITY;
Common stock, $0.001 par value,
authorized 50,000,000 shares
issued and outstanding: 9,000,000
and 10,058,236 shares, respectively
December 31, 1996 - 2,000,000 shares $2,000
December 31, 1997 - 9,000,000 shares $9,000
September, 1998 - 10,058,236 shares $10,058
Additional paid-in Capital $7,603,845 $5,003,500 $10,500
Retained Earnings (Deficit) $213,970 ($20,550)
Deficit accumulated during ($33,596) ($20,550) ($12,500)
development stage
TOTAL STOCKHOLDERS' EQUITY $7,827,873 $4,991,950 $0
TOTAL LIABILITIES AND STOCKHOLDERS' $9,898,469 $6,004,231 $0
EQUITY
</TABLE>
AVIATION INDUSTRIES CORP.
(A Development Stage Company)
STATEMENT OF OPERATION
<TABLE>
<S> <C> <C> <C> <C>
Nine month Year Ended Year Ended Dec. January 26, 1988
period ended Dec. 31, 1997 31, 1996 (inception) to
September 30, March 31, 1998
1998
INCOME:
Revenue 1,455,200 $0 $0 $0
Cost of Revenues ($976,295) $0
GROSS PROFIT $478,905 $0
EXPENSES
General & Administrative Expenses $414,045 $8,050 $0 $33,596
Depreciation $49,744 $0
TOTAL OPERATING EXPENSES $463,789 $8,050
Net Profit/(Loss) $15,116 ($8,050) $0 ($33,596)
OTHER INCOME (EXPENSES)
Gain on sale of assets $349,339 $0
Interst expense ($12,602) $0
INCOME (LOSS) BEFORE INCOME $351,853 ($8,050)
TAXES
Income Taxes $117,333 $0
NET PROFIT (LOSS) $234,520 ($8,050)
Net Profit/Loss 0.0233 ($0.0014) $0.00 ($0.00)
(-) Per weighted Share (Note 1)
Weighted average Number of 10,058,236 9,000,000 2,000,000 9,375,000
common Shares outstanding
</TABLE>
See accompanying notes to financial statements & audit report
AVIATION INDUSTRIES CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Year Ended December 31, 1997 And The Period
From January 1, 1998 To September 30, 1998
<TABLE>
<S> <C> <C> <C> <C>
Common Shares Stock Amount Additional paid- Retained
in Capital Earnings
(Deficit)
Balance January 1, 1997 2,000,000 $2,000 $10,500 ($12,500)
September 30, 1997 5,000,000 $5,000
issued for service
September 14, 1997 1,000,000 $1,000 $4,993,000
issued for KIWI Holdings
and Commerical Bank
Bond
October 30, 1997 1,000,000 $1,000
issued for services
Net (Loss) Year ($8,050)
Ended Decmeber 31, 1997
Balance Dec. 31, 1997 9,000,000 $9,000 $5,003,500 ($20,550)
February 24, 1998 375,000 $375 $1,874,625
issued for CITA Americas,
Inc. Stock
August 3, 1998 issued 596,027 $596 $575,807
for Business Travel, Inc.
Stock
September 8, 1998 issued 87,209 $87 $149,913
for Cruising In Style
Stock
Net Incom January 1, 1998 $234,520
to September 30, 1998
Balance September 30, 1998 10,058,236 $10,058 $7,603,845 $213,970
</TABLE>
See accompanying notes to financial statements & audit report.
AVIATION INDUSTRIES CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<S> <C> <C> <C> <C>
Nine month Year Ended Year Ended Dec. January 26, 1988
period ended Dec. 31, 1997 31, 1996 (inception) to
September 30, March 31, 1998
1998
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss (Loss) $234,520 ($8,050) $0 ($33,596)
Adjustment to reconcile net income
(loss) to cash provided by operating
activities:
Depreciation $49,774 $0
Increas in accounts receivable ($134,732) $0
Increase in accounts payable $56,502 $12,281 $0 $25,327
Increase in accrued liabilities $470,848 $0
Increase in current portion of debt $168,898 $0
Increase in long term debt 1,000,000 $0 $1,000,000
Net cash provided by operating $845,780 $4,231
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment ($807,702) $0
Purchase of intangibles ($905,289) $0
Purchase of Maagnolia Tours and ($150,000) $0
Transportation, Inc.
Purchase of Business Travel, Inc. ($300,000) $0
Purchase of Cruising In Style ($25,000) $0
Net cash (used in) investing ($2,187,991) $0
activities
CASH FLOWS FROM FINANCING ACTIVITES
Increase in long term debt $362,067 $1,000,000
Net increase (decrease) in cash ($980,144) $1,004,231
Cash, Beginning of Period $1,004,231 $0
Cash, Ending of Period $24,087 $1,004,231
</TABLE>
See accompanying notes to financial statements & audit report
AVIATION INDUSTRIES CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and March 31, 1998
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized January 26, 1988, under the laws of the
State of Delaware under the name Nevada Commercial Management,
Inc. The Company operates in the travel and leisure industries.
On January 2, 1994, at a meeting of the Board of Directors, the
Board approved amending its Articles of Incorporation. These
amendments were approved by a majority vote of the stockholders.
The Company authorized changing its common stock authorized,
2,500 shares, $0.001 par value, to 50,000,000 shares, common
stock par value $0.001.
On September 24, 1997, at a meeting of the Board of Directors,
the name of the Company was changed to Aviation Industries Corp.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses on the accrual method of
accounting.
Basis of Consolidation
The accompanying consolidated financial statements include the
accounts of Business Travel, Inc., Cruising in Style, Magnolia
Tours and Transportation, and Aviation Industries Corp. All
material intercompany account balances have been eliminated.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and
liabilities, and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from
those estimates.
Cash and Equivalents
For the consolidated statements of cash flows, all highly liquid
investments with a maturity of three months or less are
considered to be cash equivalents. There were no cash equivalents
as of September 30, 1998 and December 31, 1997.
Property and Equipment
Property and equipment is stated at cost. Depreciation is
recorded using the straight-line method over the estimated useful
life of the asset of three to seven years.
NOTE 3- INVESTMENT IN KIWI HOLDINGS
The investment in Kiwi Holdings represents a minority interest
position in Kiwi International Holdings. On October 15, 1997 the
Company acquired a convertible debt position of $1,750,000 from
Commercial Bank Help in Kiwi International Holdings. This
position represents a 10% to 15% interest in Kiwi International
Holdings depending upon the dilution of the company through its
issued and outstanding stock. Kiwi International Holdings leases
eight 727 commercial aircraft which operate in seven major
airline markets. Markets served include New York City, Atlanta,
Chicago, Boston, Orlando, West Palm Beach in the United States,
and San Juan, Puerto Rico. Monthly passengers served average
100,000 per month.
NOTE 4 - INVESTMENT IN CITA AMERICAS, INC.
The investment in CITA Americas, Inc. represents a 100% interest
in a drug rehabilitation company. On February 24, 1998, the
Company issued 375,000 shares of common stock valued at $5 per
share plus an assumption of $80,000 in existing accounts payable
to acquire CITA Americas, Inc. The 375,000 shares of common stock
issued was Section 144 restricted common stock.
NOTE 5 - WARRANTS AND OPTIONS
There are no warrants or options to issue any additional shares
of common stock of the Company.
NOTE 6 - BOND
With Commercial Bank Help, the bond is repayable on September 29,
2002, and bears interest at the rate of 3% per annum.
NOTE 7 - LONG TERM DEBT
Payable $19,492 per month to Firstar Equipment Finance
Corporation, interest rate 9.02%, term of 84 months, secured by
bus transportation equipment.
<TABLE>
<S> <C>
Term of 84 months, due $1,429,086
August, 2005
Other miscellaneous debt $101,879
Less: current portion long ($168,898)
term debt
Total long term debt $1,362,067
</TABLE>
Independent Auditor's Report
The Board of Directors
Casino Airlink, Inc.
I have audited the accompanying consolidated balance sheets of
Casino Airlink, Inc. and subsidiaries as of December 31, 1997 and
1996 and the related consolidated statements of operations,
changes in stockholders' equity and cash flows for the two years
then ended. These financial statements are the responsibility of
the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes, examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statements presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Casino Airlink, Inc. and subsidiaries as of December 31, 1997 and
1996 and the results of its operations and its cash flows for the
two years then ended in conformity with generally accepted
accounting principles.
/S/ Harvey Judkowitz
Harvey Judkowitz
Certified Public Accountant
Miami, Florida
February 5, 1997
INTEGRATED MARKETING PROFESSIONALS, INC.
CONSOLIDATED BALANCE SHEET
For the Seven Months ended July 31, 1998 (unaudited)
and the Years Ended December 31, 1997 and 1996 (audited)
<TABLE>
<S> <C> <C> <C>
July 31, 1998 December 31, December 31,
1997 1996
ASSETS
Current Assets
Cash $1,114,474 $268,830 $101,522
Accounts Receivable 177432 7,669 100,841
Prepaid Expenses 343928 101,148 245,251
Other Receivables
Total Current Assets 1,635,834 $377,647 $447,614
Fixed Assets, at Cost
Automobile $10,292 $10,292
Furniture and Fixtures $53,610 53,610 53,610
Office Equipment 368,463 568,080 564,097
Computer Software 26,259 23,958
Leasehold Improvements 5,300 5,300 5,300
Accumulated Depreciation (294,430) (317,978) (180,244)
Total Fixed Assets 132,943 $345,803 $477,013
Other Assets
Goodwill $1,856,100 $1,856,100 $1,856,100
Non Compete Agreement 500,000 500,000 500,000
Customer Lists 700,000 775,000 775,000
Trademark 100,000 100,000 100,000
Accumulated Depreciation (606,814) (450,941) (163,373)
Organization Expense 436 872
Surety Bond 110,000 110,000 110,000
Security Deposit 6,342 8,936 8,935
Total Assets $4,434,404 $3,622,981 $4,112,161
July 31, 1998 December 31, December 31,
1997 1996
LIABILITIES AND EQUITY
Current Liabilities
10% Notes payable on $512,800 $915,912 $884,000
purchase - current
Accounts payable 430,190 382,908 631,640
Aircraft Expense Advance 45,644
Unearned revenue 1,064,635 949,826 746,085
Federal Excise Tax 30,168 81,505 397,718
payable
Amt. Due under cap. 2,069 2,069 21,752
Leases - current
Interest Payable 5,000
Notes payable to former 257,404
owner of Dav-Jen
Notes payable to former 41,584
owner of ReSer
Legal Settlement payable 30,000
Officers bonus payable 54,000 72,240
Due to shareholder 413 68,569
Total Current 2,094,275 2,518,572 3,015,183
Liabilities
Long Term Debt
10% notes payable $329,371 $524,404 $1,676,846
Capitalized leases 1,978 1,978 4,047
Total Long Term Debt 526,382 1,680,893
Stockholders' Equity
Class A Common Stock 1,564,559 $610,934 $529,886
$0.10 par value,
25,000,000 shares
authorized, 6,109340
issued and outstanding
in 1997, 5,298,857 in
1996
Series A Convertible 100,000 200,000 200,000
Preferred Stock, $0.10
par value, 5,000,000
shares authorized,
2,000,000 issued and
outstanding
Series B Preferred 170,000 170,000 170,000
Stock, $0.10 par value,
1,700,000 shares
authorized, issued, and
outstanding
Additional Paid In 1,110,173 1,176,653 1,141,800
Capital
Equity Investment ReSer (252,720)
Inc.
Deficit (1,490,616) (1,579,560) (2,525,601)
Profit for Period 807,384
Total Stockholders' $2,008,781 $578,027 ($583,915)
Equity
Total Liabilities and $4,434,404 $3,622,981 $4,112,161
Equity
</TABLE>
INTEGRATED MARKETING PROFESSIONALS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Seven Months ended July 31, 1998 (unaudited)
and the Years Ended December 31, 1997 and 1996 (audited)
<TABLE>
<S> <C> <C> <C>
July 31, 1998 December 31, December 31,
1997 1996
Revenues Earned $9,801,927 $18,378,929 $18,942,574
Cost of Revenues Earned 6,758,926 13,501,269 15,746,734
Gross Profit 3,043,001 4,877,660 3,195,840
Operating Expenses 2,239,730 4,027,435 3,332,227
Earnings (loss) from $803,271 $850,225 ($136,387)
Operations
Other Income (Expenses)
Gain on sale of assets
Interest Income $4,355 $1,822
Interest Expense (4,113) (125,385) (15,228)
Officer's Bonus (131,802)
Compensation
Loss From Continuing 729,195 ($281,595)
Operations
Gain on modification of $316,846
terms of carrying value
of debt (Note 14)
Loss From Discontinued ($1,288,059)
Operations (Note 2)
Net Income (Loss) $807,384 $1,046,041 ($1,569,654)
Per Common Share
Basic
Income from continuing $0.131 ($0.075)
operations:
Income from $0.057
extraordinary gain
Loss from discontinued ($0.348)
operations
Net income per share $0.188 ($0.423)
Supplemental EPS BASIC DILUTED
Information for 1997
Number of shares 5,571,559 11,271,559
Income before $0.131 $0.064
extraordinary gain
Income (loss) from $0.057 0.028
extraordinary gain
Net Income Per Share $0.188 $0.092
</TABLE>
INTEGRATED MARKETING PROFESSIONALS, INC.
CONSOLIDATED STATEMENT OF CHANGE IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1997 and 1996 (audited)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Common Shares Stock $(000's) Series A & B Series A & B Additional Paid- Deficit
(000's) Preferred Shares Preferred In Capital
(000's) $(000's)
Balance 3000 300 $86,349 ($485,737)
12/31/95
Purchase 253,651 (359,175)
Casino
Airlink, Inc.
Purchase of 5,925 (140,079)
Dav-Jen
Purchase of 136,250 (70,956)
ReSer
Sales of 2,143 214 426,135
Common Stock
Issuance of 2,000 200 50,000
Preferred A
Issuance of 1,700 170 141,100
Preferred B
Purchase of 156 15 42,120
ReSer
Loss for 1996 (1,569,654)
Balance 5,299 $529 3,700 $370 $1,141,800 ($2,625,601)
12/31/96
Issuance 810 82 34,853
Net Income 1,046,041
1997
Balance 6,109 $611 3,700 $370 $1,176,653 ($1,579,560)
12/31/97
</TABLE>
The accompanying notes are an integral part of these financial
statements.
INTEGRATED MARKETING PROFESSIONALS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For Years Ended December 31, 1997 and 1996
<TABLE>
<S>
<C> <C>
December 31, December 31,
1997 1996
For Operating
Activities
Net Income (loss) $1,046,041 ($1,569,654)
Adjustment to reconcile
net income to net cash
used for operating
activities
Depreciation and 425,738 $292,237
Amortization
Change in Accounts 93,162 434,778
Receivable
Change in Prepaid 144,103 (84,444)
Expenses
Change in Unearned 203,741 351,749
Revenues
Change in Other Assets (316,314) (103,465)
Change in Accounts (165,848) 396,791
Payable and Accrued
Expenses
Cash Provided from $1,430,623 ($282,008)
Operations
Cash from Investing
Activities
Purchase of Furniture & (6,524) (7,291)
Fixtures
Cash Flows from
Financing Activities
Effect on Paid in (226,584)
Capital from
Acquisitions
Receipt for Sales of 115,910 890,435
Stock
Loans from Stockholders 22,456
Change in Stockholder (188,835)
Loans
Change in Amounts Due (41,584)
ReSer Corp.
Payment of 10% note (1,120,530) (396,552)
payable
Change in Capitalized (21,752) (26,691)
Leases
Net Cash Used from (1,256,791) 263,064
Financing Activities
Net Increase (Decrease) 167,308 (26,235)
Cash at Beginning of 101,522 127,757
Year
Cash at End of Year $268,830 $101,522
Supplemental
Disclosures
Cash paid during the $125,385 $10,602
period for interest and
taxes
In 1996, intangible
assets and furniture
and equipment were
acquired in exchange
for the following
10% Notes Payable $3,347,486
Preferred Stock, Series 250,00
B
Common Stock 57,720
Total $3,655,206
</TABLE>
The accompanying notes are an integral part of these financial
statements.
CASINO AIRLINK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Organization
The Company was formed, in the state of Michigan on January 14,
1994, under the name of Integrated marketing Professionals, Inc.
to serve as a full service travel agency, specializing in cruises
and tour packages.
In October, 1995 the Company reincorporated in the state of
Nevada and increased its authorized shares to 25,000,000, $.10
par value shares. Accordingly, the shares already issued were
split 100 to 1.
Also, in October, 1995 an officer of the Company formed a new
company, Casino Wings, Inc. In February, 1996 the company
purchases Wings for $100. The operations of Casino Wings was
discontinued during the period and the results of its operations
are included under discontinued operations.
In May, 1996 the Company purchased the outstanding capital stock
of Dav-Jen, Inc., doing business under the name of Casino
Airlink. casino Airlink is a wholesale tour and travel company
which operates tours between Florida cities and Biloxi
Mississippi. The transaction has been treated as a purchase
transaction in accordance with generally accepted accounting
principles.
On October 31, 1996, the Company name was changed to Casino
Airlink, Inc. In November, 1996, the Company authorized the
issuance of 5,000,000 shares of Series A Preferred stock and
1,700,000 shares of Series B Preferred stock. Each share of
Preferred A stock carries a $.10 par value, has voting rights and
is convertible into two shares of common stock. Each share of
Preferred B is convertible into one share of common stock. There
are no voting rights associated with the Series B Preferred.
In December 1996, the company purchased the outstanding capital
stock of Reser Corporation, a Georgia Corporation, engaged in the
Travel Service and Seminar Business. This Transaction has also
been treated as a purchase transaction in accordance with
generally accepted accounting principles.
Principles of Consolidation
The consolidated financial statements include the accounts of
Casino Airlink, Inc. (parent) and Reser Corporation, its wholly
owned subsidiary. All significant intercompany transactions have
been eliminated.
Fixed assets
Fixed assets are carried at cost. The company provides
depreciation over the estimated useful lives of fixed assets
using the straight line method. Upon retirement or sale of fixed
assets, their net book value is removed from the accounts and the
difference between such net book value and proceeds received is
income or loss. Expenditures for maintenance and repairs are
charge to income while renewals and betterment's are capitalized.
Estimated useful lives are as follows:
Furniture 7 years
Office equipment 5 years
Income taxes
The Company has adopted SFAS 109. The Company has not made a
provision for income tax purposes due to incurring losses since
inception. The net losses of approximately $1,580,000 can be
carried forward to offset future taxable income. The net
operating loss carry forward expires in 2009.
Revenue recognition
The Company receives reservations for tours for future dates.
The amount received is booked as unearned revenue and is not
recognized as income until the tour actually occurs. The
duration of the individual tours are either 2-day or 3-day
excursions. At the date that the tour commences, the unearned
revenues are taken into income and the estimated cost to complete
the tour are accrued. Since all tours are paid in advance, no
reserve for uncollectible accounts has been established.
Intangible assets
In connection with the purchase of Casino Airlink, the Company
paid cost in excess of the net tangible assets acquired. (See
Note 7) The cost paid in excess of the net tangible assets is
attributed to long-lived intangible assets having continuing
value.
These intangible assets will be amortized using the straight line
method over their estimated useful lives, as follows:
Non compete agreement 5 years
Customer list 7 years
Trademark 10 years
Goodwill 40 years
Net income per share
For 1997, the company has elected early adoption of SFAS 128,
Earnings per Share issued by the Financial Accounting Standards
Board. It replaces the presentation of primary and fully diluted
EPS with basic and diluted EPS. Basic EPS excludes all dilution.
It is based on the weighted average number of common shares
outstanding during the period. Diluted EPS reflects the
potential dilution that would occur if securities or other
contracts to issue common stock were exercised or converted into
common stock.
For 1996, primary net income per share is computed by dividing
net income by the average number of common shares outstanding
throughout the year.
The Series A and Series B preferred shares were issued on
December 7, 1996 and December 12, 1996, respectively.
Goodwill and other long-lived assets
The Company assesses long-lived assets for impairment under FASB
Statement No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of. Under those
rules, goodwill and other long-lived assets associated with
assets acquired in a purchase business combination is included in
impairment evaluations when events or circumstances exist that
indicate the carrying amount of those assets may not be
recoverable.
Note 2: DISCONTINUED OPERATIONS
The Company had previously operated in the travel reservation
business earning income from commissions from reservations
booked. On April 30, 1996, the Company decided to wind down
these operations and to seek a different venue in the Travel and
Leisure field. It was that decision that was responsible for
the company's decision to purchase Casino Airlink. Accordingly,
the reservation booking operations have been shown separately in
these financial statements. The discontinuance of the
reservation segment had no effect on the assets of the Company.
During early 1996, Casino Airlink tried to enter a new market
with their operation, called Midwest Casino Tours. After several
months and losses in excess of $940,000 the company abandoned
this market and returned to serving its original base of
customers. Operating results of the Midwest Casino Tours for the
ten months ended October 31, 1996 are shown separately in the
accompanying financial statements.
Net revenue and expenses of the aforementioned segments for the
ten months ended are as follows:
<TABLE>
<S> <C> <C>
Reservation Midwest Casino
Operation Tours
Revenues $1,818,296
Cost and expenses $344,833 $2,761,522
Net Loss $344,833 $943,226
</TABLE>
These amounts are included in the accompanying financial
statements under the caption discontinued operations.
NOTE 3: LEASES
Operating leases
The Company lease office space in Ft. Lauderdale, Florida on a
month to month basis. The Company also Leases office facilities
and certain equipment, in Clearwater, Florida, under non
cancelable operating leases which expire at various dates through
the year 2000, as follow:
1998 $105,000
1999 110,000
2000 57,500
$272,500
Rent expense for the year ended December 31, 1997 and 1996 were
$101,400 and $113,374 respectively for all operating leases.
Capitalized leases
The company acquired office equipment under provisions of a long-
term lease. Cost and accumulated amortization of such assets
totaled $84,453.
At December 31, 1997 future annual payments are as follows:
1998 $2,069
1999 1,978
4,047
Less current portion 2,069
Amount due long-term $1,978
NOTE 4: FAIR VALUES OF FINANCIAL INSTRUMENTS
The following summarizes disclosure regarding the fair value of
the Company's financial instruments at December 31, 1997, and
1996.
<TABLE>
<S> <C> <C> <C> <C>
Carrying Amount Fair Value 1997 Carrying Amount Fair Value 1996
1997 1996
Cash and $268,830 $268,830 $101,522 $101,522
Cash
Equivalents
Accounts $7,669 $7,669 $100,841 $100,841
Receivable
Accounts $382,908 $382,908 $631,640 $631,640
Payable
Notes $1,440,316 $1,440,316 $2,859,834 $2,859,834
Payable
</TABLE>
(a) Cash and cash equivalents, accounts receivable, accounts
payable
The carrying amount approximates fair value because of the
short term maturity of these instruments.
(b) Note payable
The carrying amount approximates fair value because the
amounts represents a per passenger bonding charge owed in
consideration of the purchase of the company, as well as, balance
of amount owed for the purchase of Dav-Jen.
NOTE 5: LONG TERM DEBT
Long term debt consist of the following:
<TABLE>
<S>
<C> <C>
1997 1996
10% note payable $355,912 $745,000
on purchase of
Dav-Jen
Note payable on 160,000 195,000
purchase of Reser
Corp.
Debt payable for 924,404 1,620,846
surety guarantee
arising from the
purchase of Dav-
Jen
Long-term debt 1,440,316 2,560,846
Less current 915,912 884,000
maturities
Long-term debt, $524,404 $1,676,846
less current
maturities
Scheduled long-
term debt
maturities as of
December 31, 1997
and 1996 are as
follows:
1997 884,000
1998 915,912 816,000
1999 400,000 360,000
2000 124,404 360,000
Thereafter 140,846
$1,440,316 $2,560,846
</TABLE>
NOTE 6: RECAPITALIZATION
The Company became a Nevada Corporation in late 1995 and
restructured its capital stock to authorize 25,000,000 shares of
common stock, $.10 par value. The outstanding 5,000 shares of
$1.00 par value thereby became 500,000 shares of the new Common
stock. Accordingly, and additional 495,000 shares of common
stock were issued to the Company's shareholder and the par value
on the balance sheet was adjusted to reflect the shares issued.
This non monetary transaction necessitated an increase in par
value and a decrease in additional paid-in capital of $45,000.
In December, 1995 an additional 2,500,000 shares of Common stock
were sold.
NOTE 7: PURCHASE OF DAV-JEN
The purchase price of Dav-Jen was originally $3,500,000, subject
to adjustment, if necessary upon completion of an audit of the
Casino Airlink financial statements at May 31, 1996. In
addition, the company was to pay $4.00 for each passenger flying
via Casino Airlink for a period of five years, in consideration
for Mr.. Schoen's guarantee of a Surety Bond owned by the
Company, and the guarantee of the Company's credit card merchant
account. Based on the expected number of passengers, this cost
was $1,800,000 making the total purchase price $5,300,000. The
note for $3,500,000 was payable in seven successive equal
quarterly payments of $500,000 beginning June 3, 1996.
Additional payments were due on the first day of September and
December 1996 and March, June, September and December 1997. The
outstanding balance was to bear interest at the rate of 8% per
year commencing September 1, 1996. On June 3, the Company paid
$500,000 to the former principal stockholder of Casino Airlink as
the initial payment. Payments in consideration of the surety
bond are payable weekly based on the number of passengers for the
week.
The audit of casino Airlink for the five months ended May 31,
1996 required an adjustment (reduction) to the purchase price in
the amount of $684,198. Accordingly, the scheduled quarterly
payment for September 3, 1996 of $500,000 was canceled and the
amount due at December 3, 1996 was reduced to $315,802.
On December 6, 1996, the sales agreement was amended, retroactive
to May 31, 1996. The outstanding debt was reduced to $745,000
payable over a 24 month period commencing on January 15, 1997
bearing interest at 10% resulting in a total debt reduction of
$1,570,802. In addition the sellers received 1,700,000 shares of
Series B Convertible preferred stock with a share price of $.183
resulting in a value of $311,100.
The adjusted purchase price is calculated as follows:
<TABLE>
<S> <C>
Original $3,500,000
purchase price
Capitalized 1,800,00
bond charges 0
Adjustment for (684,198)
05/31/96 audit
Reduction due (1,570,802)
to debt
renegotiation
Value of 311,100
preferred stock
Total purchase $3,356,100
price
</TABLE>
The allocation of the $3,356,100 purchase price is as follows:
<TABLE>
<S> <C>
Non compete 500,000
agreement
Office 200,000
furniture
and
equipoment
customer 700,000
list
Trademark 100,000
Goodwill 1,856,100
</TABLE>
NOTE 8: PURCHASE OF RESER CORP.
On December 31, 1996, the company acquired all of the common
stock of Reser Corporation ("RC"). RC provides airline
reservation services. The purchase price was $252,720, of which
a note payable was issued for $195,000, as well as, 156,000
shares of common stock valued at .37 per share or $57,720. The
transaction was accounted for as a purchase, and the results of
operations from the respective date of acquisition are included
in the consolidated financial statements. The $210,318 excess of
cost over net assets acquired is allocated in the following
manner; $135,318 to equipment, and $75,000 to customer list,
which is amortized using the straight line method over 7 years
and 10 years year respectively.
In the event that the trading price of the Company's common stock
is less than $1.25 a share on December 31, 1997, the Company is
liable to pay the seller an amount of 156,000 shares multiplied
by the difference of $1.25 and the actual selling price on that
date. Therefore the company is contingently liable for this
difference. In the event of the above occurrence, any cost will
be charged to income in the year of realization.
NOTE 9: PREFERRED STOCK
The company has authorized and issued the following preferred
stock:
Series A, Convertible preferred stock - $.10 par value; 5,000,000
shares authorized, 2,000,000 issued and outstanding. The stock
is voting, bears no cumulative annual dividend rate, and can be
converted for 2 shares of common stock for each share of
preferred. There is no limitation on the time for conversion.
Series B, Convertible preferred stock - $.10 par value; 1,700,000
shares authorized, issued and outstanding. The stock is non-
voting, bears no cumulative annual dividend rate, and can be
converted for 1 share of common stock for each share of
preferred. There is no limitation on the time for conversion.
NOTE 10: OFFICER'S BONUS COMPENSATION
As of December 31, 1996, the principle shareholder of Dav-Jen had
taken advances of $131,802 for the year then ended. Pursuant to
the Casino Airlink Purchase and Sales agreement this amount was
forgiven. Accordingly, the company has written off this
receivable and has charges the officer with additional
compensation.
NOTE 11: LEGAL SETTLEMENT
Casino Airlink has agreed to pay $100,000 for cancellation of
hotel rooms. A down payment of $25,000 was made and there will
be payments of $7,500 beginning June 15, 1996 and will continue
through March 15, 1997. The payments due through December 31,
1996 have been made.
NOTE 12: EMPLOYMENT CONTRACTS
On June 17, 1996, the Company has entered into employment
contracts with certain key employees, as follows:
Mr. William Forhan; President, $149,000 per annum. As an
incentive bonus, Mr. Forhan is eligible to receive, 30 days after
the Board of Directors approves interim financial statements for
the last-ended fiscal quarter, a payment equal to 5 % of the
Company's pre-tax net income for the last-ended fiscal quarter
for each fiscal quarter after December 31, 1996. Mr. Forman's
right to receive this incentive bonus will be offset buy an equal
percentage of pre-tax losses, if any, realized from time to time.
Mr. James Muldowney; Vice President of Operations, $150,000 per
annum. Mr. Muldowney is also eligible to receive the same bonus
as Mr. Forhan, above. However, Mr. Muldowney's rate of bonus is
2.5%.
As part of the amended to the Purchase agreement, Mr. Steven
Schoen's contract, was amended and he will receive $125,000 a
year for a five year consulting agreement.
In addition to the above, all key employees receive automobile
allowances and may receive performance bonuses.
NOTE 13: 1996 STOCK OPTION PLAN
Effective December 27, 1996, the company has a qualified stock
option plan authorizing the granting to key employees of options
to purchase common stock at exercise prices equal to the fair
market value of the common stock on the date of the grant. On
January 18, 1997, William Forhan was granted an incentive stock
option to purchase up to 2,000,000 share of common stock at a
price of $.30 per share, the fair market value of the Company's
stock at the date of grant. In December 1997, James Muldowney
was granted an incentive stock option to purchase up to 400,000
share of common stock at a price of $.19 per share, the fair
market value of the Company's stock at the date of grant.
Options become exercisable one-fifth annually beginning one year
after the grant and expire ten years after the grant. As
permitted under generally accepted accounting principles, grants
under the plan are accounted for following the provisions of APB
Opinion No. 25 and its related interpretations. Accordingly, no
compensation cost has been recognized for grants made to date.
Had compensation cost been determined based on the (fair)
(minimum) value method prescribed in FASB Statement No. 123,
reported net income (and earnings per share) would have been
reduced to:
<TABLE>
<S> <C> <C>
Year Ended Net Income Per Share
December 31,
1997
$1,008,541 $0.181
</TABLE>
In determining the pro forma amounts above, the value of each
grant is estimated at the grant date using the (minimum) (fair)
value method prescribed in Statement No. 123, with the following
weighted-average assumptions for grants in 1997, respectively:
dividend rate of 0%: risk free interest rates of 7%: expected
lives of 10 years, and expected price volatility of 0%.
No options have been exercised to date and all options granted
are outstanding at December 31, 1997. The following summarizes
the number of grants and their respective exercise prices and
grant date fair values per option, for each year and the number
outstanding and exercisable at the end of the year.
<TABLE>
<S> <C> <C> <C>
Shares Granted Exercise Price (Fair)
Per Share (Minimum)Value
Per Share
1997 2,400,000 $0.282 $0.140
</TABLE>
Options outstanding, exercisable options and average exercise
prices at the end of 1997 were:
<TABLE>
<S> <C> <C> <C>
Options Options Average Exercise
Outstanding Exercisable Price
1997 2,400,000 0 0
All options granted to date will expire in 2007.
NOTE 14: MODIFICATION OF TERMS - CARRYING VALUE OF DEBT
EXCEEDS FUTURE CASH PAYMENTS
On December 29, 1997, the company modified the terms of its 10%
Notes Payable to the seller. The amount of debt at December 31,
1997 was $1,676,846 and the seller has agreed to accept
$1,360,000 at the same 10% rate over the same period.
Accordingly, the amount of the note has been reduced by $316, 846
and an extraordinary gain of $316, 846 ($.05 a share) has been
included in net income in 1997.
NOTE 15: SETTLEMENT OF EQUITY CLAIMS
During the year ended December 31, 1997, certain claims against
the company were settled by the issuance of Common Stock. Under
the terms of these settlements, 670,483 shares were issued in
exchange of $160,901 in claims. The difference between the par
value of $67,048 and the $160,901 in claims or $93,852, was
charged against income during the year.
EXHIBITS
2. Agreement of Merger
3.1 Articles of Incorporation - AIC
3.2 By-Laws - AIC
3.3 Articles of Incorporation - IMP
3.4 By-Laws - IMP
4.1 Description of IMP Series A Convertible Preferred Stock
4.2 Description of IMP Series B Preferred Stock
4.3 Option Agreement - William Forhan
4.4 Option Agreement - James Muldowney
4.5 Warrant - Joseph Charles & Associates, Inc.
10.1 Employment Agreement - William Forhan
10.2 Employment Agreement - James Muldowney
13 1997 Annual Report to IMP Shareholders
16 Letter from Barry Friedman, CPA, re: change in
certifying accountant
99.1 Press Release - Business Travel
99.2 Press Release - Magnolia Tours
99.3 Press Release - IMP Merger
99.4 Press Release - Aviation Board
99.5 Press Release - Cruising In Style, Inc.
99.6 Letter from Barry Friedman, CPA
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
AVIATION INDUSTRIES CORP.
By:
William E. Forhan, President
</TABLE>
AGREEMENT AND PLAN OF MERGER
by and between
AVIATION INDUSTRIES CORP.
a Nevada Corporation
and
CAL ACQUISITION CORP.,
a Nevada Corporation to be formed
and
INTEGRATED MARKETING PROFESSIONALS, INC.
F/K/A CASINO AIRLINK, INC.
a Nevada Corporation
AGREEMENT AND PLAN OF MERGER, dated as of ____________ 1998,
between AVIATION INDUSTRIES CORP., a Nevada corporation ("AIC"),
and CAL ACQUISITION CORP., a Nevada corporation to be formed
("CAL"), and INTEGRATED MARKETING PROFESSIONALS, INC. f/k/a
CASINO AIRLINK, INC., a Nevada corporation ("CASINO")
WHEREAS, AIC and CASINO are publicly traded companies, the shares
of which are quoted on the over-the-counter bulletin board; and
WHEREAS, AIC and CASINO have executed a letter of intent for a
merger of CASINO with and into AIC, subject to entering into a
formal merger agreement, and
WHEREAS, CAL is a wholly owned subsidiary of AIC; and
WHEREAS, the respective boards of directors of AIC and CASINO
deem it advisable to merge CASINO with CAL pursuant to this
Agreement and Articles of Merger to be executed by each company
("Articles of Merger"), whereby the holders of shares of common
and preferred stock of CASINO (such shares of common stock being
sometimes hereinafter called, collectively, the "Common Stock"
and such shares of preferred stock being sometimes hereinafter
called, collectively, the "Preferred Stock") outstanding at the
effective time (as hereinafter defined) of the merger shall
receive shares of AIC common stock $.001 par value per share (the
"AIC Shares"), in the manner and in such amount as is set forth
in Article I hereof and upon the terms and conditions otherwise
set forth in this Agreement; and
WHEREAS, to effectuate the foregoing, the parties desire to adopt
a plan of reorganization in accordance with the provisions of
Section 368 (a)(1)(A) of the Internal Revenue Code of 1986, as
amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and for the purpose of
stating the terms and conditions of the merger, the mode of
carrying the same into effect, the manner of converting the
shares of CASINO issued and outstanding immediately prior to the
effective date of the merger into AIC shares, and such other
details and provisions as are deemed desirable, the parties
hereto, severally and jointly, have agreed, and do hereby agree,
subject to the terms and conditions hereinafter set forth as
follows:
ARTICLE I
THE MERGER
1.01 Execution of Certificates, and Articles of Merger. Subject
to the provisions of this Agreement, the Articles of Merger with
respect to the merger shall be executed and acknowledged by CAL
and CASINO and thereafter delivered to the Secretary of State of
the State of Nevada for filing, as provided by the Nevada
Business Corporation Law, as soon as practicable on or after the
closing date (as hereinafter defined) of such merger. The merger
shall become effective upon the filing of the Articles of Merger
with the Secretary of State of the State of Nevada. The date when
the merger becomes effective shall be called the "effective date"
of such merger. At the effective date of the merger, the separate
existence of CAL shall cease and such company shall be merged
with and into CASINO. CASINO shall be the surviving corporation
of the merger, and shall be a wholly owned subsidiary of AIC.
1.02 Consummation of the Merger. As soon as practicable after the
approval of the merger by the stockholders, AIC, CAL and CASINO
will cause such merger to be consummated in accordance with
applicable law, subject to the conditions hereinafter set forth.
1.03 Conversion of Shares of CASINO / AIC.
(a) On the effective date of the merger, each of 15,645,189
outstanding shares of CASINO common stock, each of the 1,000,000
outstanding shares of CASINO Series A preferred stock, and each
of the 1,700,000 outstanding shares-of CASINO preferred stock,
shall be exchanged for shares of AIC common stock having a value
equal to $11,994,018. The number of AIC shares for which the
outstanding common and preferred stock of CASINO is to be
exchanged shall be determined by dividing 11,994,018 by the
average closing price of AIC common stock over the ten trading
days commencing five trading days prior to the effective date of
the merger.
(b) On the effective date of the merger, each share of CAL
common stock shall be exchanged for and converted into one share
of CASINO common stock.
(c) On the effective date of the merger, (i) the 2,000,000
options granted to William Forhan to purchase 2,000,000 shares of
CASINO common stock at an exercise price of $.30 per share shall
be exchanged for options to purchase 2,000,000 shares of AIC
common stock at an exercise price of $1.80 per share, (ii) the
400,00 options granted to James Muldowney to purchase 400,000
shares of CASINO common stock at an exercise price of $.20 per
share shall be exchanged for options to purchase 400,000 shares
of AIC common stock at an exercise price of $1.20 per share, and
(iii) the 150,000 options granted to each member of CASINO's
Board of Directors to purchase an aggregate of 750,000 shares of
CASINO common stock at an exercise price of $.28 per share shall
be exchanged for options to purchase an aggregate of 750, 000
shares of AIC common stock at an exercise price of $1.68 per
share.
(d) On the effective date of the merger, the 643,333 five year
warrants granted to Joseph Charles & Associates, Inc. ("JCA") to
purchase 643,333 shares of CASINO common stock at an exercise
price of $.35 per share, shall be exchanged for five year
warrants to purchase the quantity of shares of AIC common stock
JCA would have received in the merger had the warrants been
exercised prior to the merger, at an exercise price of $2.10 per
share.
1.04 Exchange of Certificates. On or after the effective date of
the merger, each holder of a certificate theretofore evidencing
outstanding shares of common stock of CASINO (other than shares
held by dissenting stockholders and shares that are automatically
cancelled as hereinafter provided), upon surrender of the same to
the transfer agent of such other agent or agents as shall be
appointed by AIC, shall be entitled to receive in exchange
therefor a certificate or certificates evidencing the pro-rata
number of full AIC shares for which the shares of common stock of
CASINO theretofore represented by the certificate or certificates
so surrendered and exchanged. As soon as practicable after the
effective date of the merger, the Transfer Agent will send a
notice and transmittal form to each holder of an outstanding
certificate which immediately prior to the effective time of such
merger evidenced shares of common stock of CASINO and which is to
be exchanged for AIC as provided for herein, advising such
stockholder of the terms of the exchange effected by such merger
and the procedure for surrendering to the Transfer Agent (which
may appoint forwarding agents) such certificate for exchange into
one or more certificates evidencing AIC shares. Until so
surrendered, each outstanding certificate which, prior to the
effective date of such merger, represented common stock of CASINO
(other than shares previously held by dissenting stockholders)
will be deemed for all corporate purposes of AIC to evidence
ownership of the pro-rata number of full AIC shares for which the
shares of common stock of CASINO represented thereby were
exchanged; provided, however, that until such outstanding
certificates formerly evidencing common stock of CASINO are
surrendered, no dividend payable to holders of record of AIC
shares as of any date subsequent to the effective date of such
merger or any cash in lieu of any fraction of a AIC share payable
pursuant to Section 1,05 hereof shall be paid to the holder of
such outstanding certificates in respect thereof. After the
effective date of such merger there shall be no further registry
of transfers on the records of CASINO of shares of common stock
of CASINO and, if a certificate evidencing such shares is
presented to AIC, it shall be canceled and exchanged for a
certificate evidencing shares of AIC common stock as herein
provided.
1.05 No fractional shares. Neither certificates nor scrip for
fractional AIC shares will be issued, but in lieu thereof each
holder of shares of CASINO who would otherwise have been entitled
to a fraction of a AIC share, upon surrender of all the
certificates evidencing shares of common stock of such company
registered in the name of such holder, will be paid the cash
value of such fraction, which shall be equal to such fraction
multiplied by the market value of a AIC share at the close of
trading of the AIC shares on the trading day immediately
preceding the effective date of such merger.
1.06 Certificate of incorporation;-By-laws; Directors. The
Certificate of incorporation and By-laws of AIC and CASINO, as in
effect immediately prior to the effective date of the merger,
shall continue to be the Certificate of Incorporation and By-laws
of AIC and CASINO, until they shall thereafter be duly altered,
amended or repealed, except that (i) on the effective date of the
merger, the name of AIC! shall be changed to "Integrated
Marketing Professionals, Inc.", (ii) the name of CASINO shall be
changed to a name other than Integrated Marketing Professionals,
Inc., and (iii) the By-Laws of AIC shall be amended in the manner
provided on Schedule 1.06.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF AIC
AIC represents and warrants to CASINO, knowing and intending that
CASINO will rely on these representations and warranties in
entering into this Agreement, as follows:
2.01 Corporate Authority.
(a) AIC has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by
the Board of Directors of AIC, and, except for the approval of
AIC's stockholders, no other corporate proceedings on the part of
AIC are necessary to authorize this Agreement and the
transactions contemplated hereby.
(b) CAL is, or will be by the effective date of the merger, a
wholly owned subsidiary of AIC. The capitalization of CAL shall
be set forth in Schedule 2.01.
2.02 Due Organization; Power, Qualification, Subsidiaries, Etc.
(a) AIC is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Nevada and has
the corporate power to own its property and to carry on its
business as now and where now conducted. AIC is duly qualified or
licensed as a foreign corporation and is in good standing in all
jurisdictions in which the nature of its business or the property
owned, leased or operated by it makes such qualification or
licensing necessary.
(b) Other than CAL, AIC has no subsidiaries or affiliates (as
that term is used in the regulations promulgated under the
Securities Act of 1933), except as disclosed in Schedule 2.02,
(c) AIC has previously furnished to CASINO true and complete
copies of the Articles (or Certificates) of Incorporation of AIC
certified by the Secretary of State of the domicile of AIC and of
the By-Laws (or Codes of Regulations) of AIC, certified by its
corporate Secretary.
(d) AIC has heretofore furnished to CASINO or its counsel for
examination-the minute and stock record book or books of AIC and
the same are true and complete and reflect all resolutions
adopted and all actions authorized or ratified by the
shareholders and the directors of AIC. All such actions and any
other actions required by or reflected in any "contracts" (as
identified in Section 2.06 and Schedule 2.06), and all other
material actions taken by AIC, have been duly so authorized or
ratified.
2.03 Capitalization. The authorized capital stock of AIC consists
of 50,000,000 shares of common stock, $.001 par value per share,
of which 9,375,000 shares are issued and outstanding as of the
date hereof. There are no options, warrants, convertible
securities or rights which may require any Company to issue
additional shares of its capital stock. All the outstanding
shares of common stock and preferred stock of AIC have been duly
authorized, and are validly issued, fully paid and nonassessable.
AIC has no obligation of any kind to issue any additional
securities, except as disclosed in Schedule 2.03, or as provided
for herein,
2.04 Financial Information; No Material Adverse Change.
(a) AIC has heretofore delivered to CASINO its audited financial
statements ("Financial Statements") for the year ending December
31, 1997 and the quarter ending March 31, 1998. All of the
Financial Statements (i) have been prepared in accordance with
generally accepted accounting principles applied on a consistent
basis during the periods, (ii) fairly present the financial
condition, results of its operations and changes in its financial
position at and for the periods therein specified for the
entities covered thereby, (iii) are true and complete, (iv) are
consistent with the books and records of the entities covered
thereby, and (v) with respect to any unaudited Financial
Statements, include all adjustments, consisting only of normal
recurring adjustments, required for a fair presentation. As of
the respective dates, such Financial Statements did not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
(b) Since March 31, 1998 there has not been any material adverse
change in the business, or financial condition or the operations
of AIC or to the best knowledge of AIC any occurrence,
circumstance, or combination thereof which reasonably could be
expected to result in such a material adverse change in the
future.
(c) At March 31, 1998, there were no liabilities, absolute or
contingent of AIC that were not shown or reserved against on the
balance sheets included in the Financial-3 Statements, except
obligations under the contracts shown on or as otherwise
disclosed in Schedule 2.04.
(d) Since March 31, 1998, AIC has not sold or otherwise disposed
of or encumbered any of the properties or assets reflected on the
Financial Statements, or otherwise owned or leased by it except
in the ordinary course of business, except as described in
Schedule 2.04.
(e) AIC has no liabilities or obligations, whether accrued or
unaccrued, fixed or contingent, which have not been reflected in
the Financial Statements or described on Schedules to this
Agreement, except liabilities incurred and obligations entered
into in the ordinary course of business since March 31, 1998. AIC
is not in default with respect to any such liability or
obligation.
2.05 Tax Matters.
(a) AIC has filed or caused to be filed with the appropriate
federal, state, county, local and foreign governmental agencies
of instrumentalities all tax returns and tax reports required to
be filed, and all taxes, assessments, fees and other governmental
charges have been fully paid when due.
(b) There is no pending or, to the best knowledge of AIC, any
threatened federal, state or local tax audit of AIC; there is no
agreement with any federal, state or local taxing authority by
AIC that may affect the subsequent tax liabilities of AIC.
(c) Without limiting the foregoing: (a) the financial statements
include adequate provision for all taxes, assessments fees,
penalties and governmental charges which have been or in the
future may be assessed against AIC with respect to the period
then ended and all periods prior thereto; and (b) AIC is not, on
the date hereof, liable for taxes, assessments, fees or
governmental charges.
(d) AIC has heretofore furnished to CASINO or its counsel true
and complete copies of all federal, state and local income,
franchise or other tax returns filed by AIC.
2.06 No Conflict or Default Neither the execution and delivery of
this Agreement, nor compliance with the terms and provisions
hereof, including without limitation the consummation of the
transactions contemplated hereby, will violate any statute,
regulation or ordinance of any governmental authority, or
conflict with or result in the breach of any term condition or
provisions of the Articles of Incorporation or By-laws of AIC, or
of any agreement, deed, contract, mortgage, indenture, writ,
order decree, legal obligation or instrument to which AIC is a
party or by which it or any of its respective assets or
properties are or may be bound: or constitute a default (or an
event which, with the lapse of time or the giving of notice, or
both, would constitute a default) thereunder, or result in the
creation or imposition of any lien, charge or encumbrance, or
restriction of any nature whatsoever with respect to any
properties or assets of AIC, or give to others any interest or
rights, including rights of termination, acceleration or
cancellation in or with respect to any of the properties, assets,
contracts, or business of AIC.
2.07 Party to Agreements.
(a) AIC is not a party to any contract or other arrangements
except those made in the ordinary course of business or which are
terminable on the giving of sixty (60) days (or less) notice of
AIC's intent to terminate such contract. AIC is not in default in
any material respect under any contract or agreements to which it
is a party or by which it or any of its assets is or may be
bound.
(b) Schedule 2.07 is a true and complete list of all contracts,
understandings, commitments, arrangements and agreements (all of
which, and any other agreements set forth on any other Schedule
or list, or furnished in writing to CASINO pursuant to this
Agreement, are collectively referred to in this Agreement as
"contracts") , which are in full force and effect unperformed in
whole or in part, to which AIC is a party, including, but not
limited to, the following;
(i) bonus, incentive, pension, profit-sharing, hospitalization,
insurance, deferred compensation, retirement, stock option or
stock purchase plans or similar plans providing employee
benefits;
(ii) factoring, loan, note, financing or similar contracts with
any lenders, or guarantees of undertakings to answer for the
debts or defaults of another, or any contracts encumbering title
to any of AIC's assets;
(iii) contracts for the acquisition or disposition of the
property, assets or capital stock or other securities of a
business or company;
(iv) management or consulting contracts;
(v) partnership or joint venture contracts involving a sharing
of profits;
(vi) contracts for the employment or compensation of any
employee, officer, director or agent; and
(vii) contracts not made in the ordinary course.
2.08 Litigation. Except as disclosed in Schedule 2.08, there are
no actions, suits, investigations, or proceedings pending, or, to
the knowledge of AIC, threatened, against or affecting or which
may affect AIC, the performance of the terms and conditions
hereof, or the consummation of the transactions contemplated
hereby, in any court or by or before any governmental body or
agency, including without limitation any claim, proceeding or
litigation for the purpose of challenging, enjoining or
preventing the execution, delivery or consummation of this
Agreement; and AIC does not know of any state of facts which
would give rise to any such action, suit, investigation or
proceeding. AIC is not subject to any order, judgment, decree,
stipulation or consent or any agreement with any governmental
body or agency which affects its business or operation.
2.09 Securities Filings. AIC has previously filed all reports
required to be filled by it with the Securities and Exchange
Commission ("SEC") and will have on the closing date and
thereafter, made all filings required to be made by AIC with the
SEC and any state securities authorities, and will have done so
in a timely manner.
2.10 Governmental Approval. AIC has all permits, licenses, orders
and approvals of all federal, state, local or foreign
governmental or regulatory bodies required for AIC to conduct its
business as presently conducted. All such permits, licenses,
orders and approvals are in full force and effect and no
suspension or cancellation of any of them is threatened, and none
of such permits licenses, orders of approvals will be affected by
the consummation of the transactions contemplated by this
Agreement.
2.11 Salaries. Schedule 2.11 annexed hereto and made a part
hereof is a true and complete list, as of the date of this
agreement, of all of the persons who are employed by AIC,
together with their compensation (including bonuses) for the
calendar year ended December 31, 1997, and the three (3) month
period ended March 31, 1998, and the rate of compensation
(including bonus arrangements) currently being paid to each such
employee.
2.12 Accrued Compensation. AIC does not have outstanding
liability for payment of wages , vacation pay (whether accrued or
otherwise) , salaries, bonuses, pensions or contributions under
any labor or employment contract, whether oral or written, or by
reason of any past practices with respect to such employees based
upon or accruing with respect to services of present or former
employees of AIC, except as disclosed in Schedule 2.12.
2.13 Employee Benefit Plans. AIC does not have any pension plan,
profit-sharing plan or employees' savings plan, and AIC is not
otherwise subject to any applicable provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
2.14 Conflicts of Interest. Transactions between management of
AIC and such Corporation, Management's interest in affiliated
Corporations, agreements as to Management's remuneration, as well
as any other actual or potential conflicts of interest are
disclosed in Schedule 2.14.
2.15 Title to Assets. AIC has good, valid and, except as to
leased assets, marketable title to all of its assets (real and
personal, tangible and intangible), including, but not limited
to, all assets reflected or required to be reflected in the
Financial Statements and all assets purchased or leased by them
since March 31, 1998 (except for properties and assets so
reflected or required to be reflected, which have been sold or
otherwise disposed of in the ordinary course of business),
subject to no liens, pledges, encumbrances, mortgages, security
interests, charges or other similar restrictions of any nature
whatsoever, except as disclosed in the Financial Statements or in
Schedules to this Agreement. The personal property owned or
leased by AIC for the operation of, or used in, its business is
in its possession and is in good operating or working condition
and repair, after taking into account routine maintenance and
repair, age of equipment and ordinary wear and tear, and is
adequate for the operation of its business as presently
conducted.
2.16 Patents and Trademarks
(a) Except as disclosed in Schedule 2.16, AIC does not own or
use in its operations, any patent or any applications therefor.
All trademarks, trade names, service marks or applications owned
by AIC or used in its operations are listed on Schedule 2.16 and,
to the extent indicated thereon, have been duly registered and
filed.
(b) All copyright registrations (both U.S. and foreign), pending
copyright registration applications, all common law copyrights
and other intellectual property rights owned by AIC or used in
its operations are listed on Schedule 2.16 and, to the extent
indicated thereon, have been duly registered and, tiled.
(c) AIC has not been charged with infringement or violation of,
or otherwise been put on notice of the existence of, any
adversely held patent, trademark, trade name, service mark,
copyright or other intellectual property right.
2.17 Environmental Concerns. AIC has not engaged in any
operations which have resulted or will result in any chemicals,
hazardous, noxious or toxic wastes being deposited, spilled,
leaked, disposed of, dumped or buried at any facility, contiguous
property, or any other real property, which have, will, or may
result in property damages, personal injury or clean-up costs.
2.18 Material Misstatements or Omissions. No representations or
warranties made by AIC in this Agreement or in any certificate,
schedule or other document furnished or to be furnished to CASINO
or its counsel pursuant hereto, or in connection with the
transactions contemplated by this Agreement, contains or will
contain any untrue statement of a material fact, or omits or will
omit to state a material fact necessary to make the statements of
fact contained therein not misleading. All statements made and
data presented by AIC in this Agreement and in any certificate,
schedule, chart, list, letter, compilation or other document
provided to CASINO by AIC pursuant to this Agreement are deemed
to be representations and warranties made under this Agreement to
CASINO by AIC. References in any such document to any other
document as to which AIC on or prior to the closing has not
provided to CASINO a copy or, if oral, a written summary thereof,
shall not be deemed for any purposes of this Agreement to be a
disclosure of any term, provision or statement of fact of, or
relating to, such document. To the extent that any such
representations and warranties are stated as being to the best
knowledge of AIC, the same are being made after diligent and
reasonable investigation under the circumstances by them as to
the subject matter thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CASINO
CASINO represents and warrants to AIC, knowing and intending that
AIC will rely on these representations and warranties in entering
into this Agreement, as follows:
3.01 Corporate Authority. CASINO has the corporate power and
authority to enter into this Agreement and to carry out its
obligation hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by its Board of Directors and,
except for the approval of its stockholders, no other corporate
proceedings on the part of such Company are necessary to
authorize this Agreement and the transactions contemplated
hereby.
3.02 Due organization; Power; Qualification; Subsidiaries and
Affiliates, Etc.
(a) CASINO is a corporation duly organized, validly existing, in
good standing under the laws of the State of Nevada and is
authorized to do business in the State of Florida and has the
corporate power to own its property and to carry on its business
as now conducted. The nature of the business now conducted by
CASINO, the character of the property owned by it, or any other
state of facts does not require CASINO to be qualified to do
business as a foreign corporation in any jurisdiction.
(b) Except as disclosed in Schedule 3.02 there are no
subsidiaries or affiliates (as that term is used in the
regulations promulgated under the Securities Act of 1933) of
CASINO.
3.03 Capitalization. The authorized capital stock of CASINO
consists of 25,000,000 shares of common stock, $.10 par value per
share, of which 15,645,189 shares are issued and outstanding as
of the date hereof; 5,000,000 shares of Preferred "All (each
convertible to two shares of Common Stock), 1,000,000 shares of
which are issued and outstanding as of the date hereof; 1,700,000
shares of Preferred "B" (each convertible to one share of Common
Stock), all of which are issued and outstanding as of the date
hereof. There are no options, warrants, convertible securities or
rights which may require any Company to issue additional shares
of its capital stock, except as disclosed in Section 1.03. All
the outstanding shares of common stock and preferred stock of
CASINO have been duly authorized, and are validly issued, fully
paid and nonassesable. CASINO has no obligation of any kind to
issue any additional securities, except as disclosed in Schedule
3.03, or as provided for herein.
3.04 Financial Information, No Material Adverse Change.
(a) CASINO has heretofore delivered to AIC (i) audited financial
statements for the year ended December 31, 1996, and December 31,
1997; and (ii) unaudited financial statements for the quarter
ending March 31, 1998 (collectively "Financial Statements") and
month ending April 30, 1998. All of the Financial Statements (i)
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the
periods, (ii) fairly present the financial condition, results of
its operations and changes in its financial position at and for
the periods therein specified for the entities covered thereby,
(iii) are true and complete, (iv) are consistent with the books
and records of the entities covered thereby, and (v) with respect
to any unaudited Financial Statements, include all adjustments,
consisting only of normal recurring adjustments, required for a
fair presentation. As of the respective dates, such documents did
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein in order to
make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) At April 30, 1998, there were no liabilities, absolute or
contingent of CASINO that were not shown or reserved against on
the balance sheets included in the Financial Statements, except
obligations under the contracts shown in Schedule 3.07, or as
otherwise disclosed on Schedule 3.04.
(c) Since April 30, 1998, CASINO has not sold or otherwise
disposed of or encumbered any of the properties or assets
reflected on the Financial Statements, or otherwise owned or
leased by it, except in the ordinary course of business.
(d) Since April 30, 1998, there has been no material adverse
change in the business or financial condition or the operations
of CASINO or to the best knowledge of CASINO any occurrence,
circumstance, or combination thereof which reasonably could be
expected to result in such a material adverse change in the
future.
(e) CASINO has no liabilities or obligations, whether accrued or
unaccrued, fixed or contingent, which have not been reflected in
the Financial Statements or described on Schedules to this
Agreement, except liabilities incurred and obligations entered
into in the ordinary course of business since April 30, 1998.
CASINO is not in default with respect to any such liability or
obligation.
3.05 Tax Matters.
(a) CASINO has filed or caused to be filed with the appropriate
federal, state, county, local and foreign governmental agencies
or instrumentalities all tax returns and tax reports required to
be filed, and all taxes, assessments, fees and other governmental
charges have been fully paid when due.
(b) There is no pending or, to the best knowledge of CASINO,
threatened federal, state or local tax audit of CASINO; there is
no agreement with any federal, state or local taxing authority
that may affect the subsequent tax liabilities of CASINO.
(c) Without limiting the foregoing: (i) the Financial Statements
include adequate provision for all taxes, assessments, fees,
penalties and governmental charges which have been or in the
future may be assessed against CASINO with respect to the period
then ended and all periods prior thereto; and (b) CASINO is not,
on the date hereof, liable for taxes, assessments, fees or
governmental charges.
(d) CASINO has heretofore furnished to AIC or its counsel true
and complete copies of all federal, state and local income,
franchise or other tax returns filed by CASINO.
3.06 No Conflict or Default. Neither the execution and delivery
of this Agreement, nor compliance with the terms and provisions
hereof, including without limitation the consummation of the
transactions contemplated hereby, will violate any statute,
regulation or ordinance of any governmental authority, or
conflict with or result in the breach of any term, condition or
provisions of the Articles of Incorporation or By-laws of CASINO,
or of any agreement, deed, contract, mortgage, indenture, writ,
order decree, legal obligation or instrument to which CASINO is a
party or by which it or any of its respective assets or
properties are or may be bound, or constitute a default (or an
event which, with the lapse of time or the giving of notice, or
both, would constitute a default) thereunder or result in the
creation or imposition of any lien, charge or encumbrance, or
restriction of any nature whatsoever with respect to any
properties or assets of CASINO, or give to others any interest or
rights, including rights of termination, acceleration or
cancellation in or with respect to any of the properties, assets,
contracts or business of CASINO.
3.07 Party to Agreements.
(a) CASINO is not a party to any contract or other arrangement
except those made in the ordinary course of business or which are
terminable on the giving of sixty (60) day' s (or- less) notice
of CASINO, s intent to terminate such contract, except as set
forth on Schedule 3.08 annexed hereto. CASINO is not in default
in any material respect under any contract or agreement to which
it is a party or by which it or any of its assets is or may be
bound.
(b) CASINO has heretofore furnished to AIC or its counsel true
and complete copies of each document, and a written description
of each oral contract, set forth on Schedule 3.07. Schedule 3.07
is a true and complete list of all contracts, understandings,
commitments, arrangements and agreements (all of which, and any
other agreements Bet forth on any other Schedule or list, or
furnished to AIC pursuant to this Agreement, are collectively
referred to in this Agreement as "contracts"), which are in full
force and effect unperformed in whole or in part, to which CASINO
is a party, including, but not limited to, the following:
(i) bonus, incentive, pension, profit-sharing, hospitalization,
insurance, deferred compensation, retirement, stock option or
stock purchase plans or similar plans providing employee
benefits;
(ii) factoring, loan, note, financing or similar contracts with
any lenders, or guarantees of undertakings to answer for the
debts or defaults of another, or any contracts encumbering title
to any of CASINO's assets;
(iii) contracts for the acquisition or disposition of the
property, assets or capital stock or other securities of a
business or company;
(iv) management or consulting contracts;
(v) partnership or joint venture contracts involving a sharing
of profits,
(vi) contracts for the employment or compensation of any
employee, officer, director or agent, and
(vii) contracts not made in the ordinary course.
3.08 Litigation. Other than as disclosed in its Financial
Statements or in a Schedule 3,08, there are no actions suits,
investigations, or proceedings pending, or, to the knowledge of
CASINO, threatened, against or affecting or which may affect
CASINO, the performance of the terms and conditions hereof, or
the consummation of the transactions contemplated hereby, in any
court or by or before any governmental body or agency, including
without limitation any claim, proceeding or litigation for the
purpose of challenging, enjoining or preventing the execution,
delivery or consummation of this agreement; and except as
otherwise disclosed herein does not know of any state of f acts
which would give rise to any such action, suit investigation or
proceeding. CASINO is not subject to any order, judgment, decree,
stipulation or consent or any agreement with any governmental
body or agency which affects its business or operation.
3.09 Securities Filings. CASINO will have on the closing date and
thereafter, made all filings required to be made by it with the
Securities and Exchange Commission and any state securities
authorities, and will have done so in a timely manner.
3.10 Governmental Approval. CASINO has all permits, licenses,
orders and approvals of all federal state, local or foreign
governmental or regulatory bodies required for CASINO to conduct
its business as presently conducted. All such permits, licenses,
orders and approvals are in full force and effect and no
suspension or cancellation of any of them is threatened, and none
of such permits licenses, orders of approvals will be affected by
the consummation of the transactions contemplated by this
Agreement.
3.11 Salaries. Schedule 3.11 annexed hereto and made a part
hereof is a true and complete list, as of the date of this
Agreement, of all of the persons who are employed by CASINO,
together with their compensation (including bonuses) for the year
ended December 31, 1997 and the three month period ended March
31, 1998, and the rate of compensation (including bonus
arrangements) currently being paid to each such employee. Any
amounts due and owing immediately prior to the effective date of
the merger to the officers, directors, and employees of CASINO
shall not be paid to such persons out of funds of AIC, existing
as of the closing date.
3.12 Accrued Compensation. CASINO does not have any outstanding
liability for payment of wages, vacation pay (whether accrued or
otherwise) , salaries, bonuses, pensions or contributions under
any labor or employment contract, whether oral or written or by
reason of any past practices with respect to such employees based
upon or accruing with respect to services or present or former
employees of CASINO, except as disclosed in Schedule 3.12.
3.13 Employee Benefit Plans. CASINO does not have any pension
plan, profit-sharing plan or employees, savings plan, and CASINO
is not otherwise subject to any applicable provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA").
3.14 Conflicts of Interest. Transactions between Management of
CASINO and such Corporation, Management's interest in affiliated
Corporations, agreements as to Management's remuneration, as well
as any other actual or potential conflicts of interest are
disclosed in Schedule 3.14.
3.15 Title to Assets. CASINO has good, valid and, except as to
leased assets, marketable title to all of its assets (real and
personal, tangible and intangible), including, but not limited
to, all assets reflected or required to be reflected in the
Financial Statements and all assets purchased or leased by them
since March 31, 1998 (except for properties and assets so
reflected or required to be reflected, which have been sold or
otherwise disposed of in the ordinary course of business),
subject to no liens, pledges, encumbrances, mortgages, security
interests, charges or other similar restrictions of any nature
whatsoever, except as disclosed in the Financial Statements or in
Schedules to this Agreement. The personal property owned or
leased by CASINO for the operation of, or used in, its business
is in its possession and is in good operating or working
condition and repair, after taking into account routine
maintenance and repair, age of equipment and ordinary wear and
tear, and is adequate for the operation of its business as
presently conducted.
3.16 Patents and Trademarks.
(a) CASINO does not own or use in its operations, any patent or
any applications therefor. All trademarks, trade names, service
marks or applications owned by CASINO or used in its operations
are listed on Schedule 3.16 and, to the extent indicated thereon,
have been duly registered and filed.
(b) All copyright registrations (both U.S. and foreign), pending
copyright registration applications, all common law copyrights
and other intellectual property rights owned by CASINO or used in
its operations are listed on Schedule 3.16 and, to the extent
indicated thereon, have been duly registered and, filed.
(c) CASINO has not been charged with infringement or violation
of, or otherwise been put on notice of the existence of, any
adversely held patent, trademark, trade name, service mark,
copyright or other intellectual property right.
3.17 Environmental Concerns. CASINO has not engaged in any
operations which have resulted or will result in any chemicals,
hazardous, noxious or toxic wastes being deposited, spilled,
leaked, disposed of, dumped or buried at any facility, contiguous
property, or any other real property, which have, will, or may
result in property damages, personal injury or clean-up costs.
3.18 Material Misstatements or Omissions. No representations or
warranties made by CASINO in this Agreement or in any
certificate, schedule or other document furnished or to be
furnished to AIC or its counsel pursuant hereto, or in connection
with the transactions contemplated by this Agreement, contains or
will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the
statements of fact contained therein not misleading. All
statements made and data presented by CASINO in this Agreement
and in any certificate, schedule, chart, list, letter,
compilation or other document provided to AIC by CASINO pursuant
to this Agreement are deemed to be representations and warranties
made under this Agreement to AIC by CASINO. References in any
such document to any other document as to which CASINO on or
prior to the closing has not provided to AIC a copy or, if oral,
a written summary thereof, shall not be deemed for any purposes
of this Agreement to be a disclosure of any term, provision or
statement of fact of, or relating to, such document. To the
extent that any such representations and warranties are stated as
being to the best knowledge of CASINO, the same are being made
after diligent and reasonable investigation under the
circumstances by them as to the subject matter thereof.
3.19 Title and Authority. To the best of the knowledge of CASINO,
shareholders as listed in Schedule 3.19 constitute the holders of
record as of the date set forth therein (the "Record Date") of
all of the outstanding shares of CASINO common stock and
preferred stock. CASINO has no knowledge that any such
shareholder does not have:
(a) full legal title to all of such shares free and clear of any
liens, security interests, encumbrances, pledges, charges,
claims, voting trusts, restrictions on transfer, and of any
rights or interest therein, direct or contingent, in favor of any
other parties; and
(b) full and unrestricted right, power and authority to sell,
assign, transfer and deliver the same or to cause the same to be
surrendered in accordance with this Agreement.
ARTICLE IV
COVENANTS
4.01 Covenants Of CASINO. agrees that prior to the closing date:
(a) No dividend shall be declared or paid by other distribution
(whether in cash, stock, property or any combination thereof) or
payment declared or made in respect to CASINO common stock or
preferred stock, nor shall CASINO purchase, acquire or redeem or
split, combine or reclassify any shares of its capital stock.
(b) Except as herein provided or disclosed on Schedule 4.01, no
change shall be made in the number of shares of authorized or
issued CASINO common stock; nor shall any option, warrant, call,
right, commitment or agreement of any character be granted or
made by CASINO relating to its authorized or issued CASINO common
or preferred stock; nor shall CASINO issue, grant or sell any
securities or obligations convertible into or exchangeable for
shares of CASINO common stock.
(c) Except as disclosed on Schedule 4.01, CASINO will not (i)
incur any indebtedness for borrowed money; (ii) assume,
guarantee, endorse, or otherwise become liable or responsible
(whether directly contingently or otherwise) for the obligations
of any other individual, firm or corporation; or (iii) make any
loans, advances or capital contributions to or investments in,
any other individual, firm or corporation.
(d) CASINO will not take, agree to take or knowingly permit to
be taken any action or do or knowingly permit to be done
anything, in the conduct of the business of CASINO or otherwise,
which would be contrary to or in breach of any of the terms or
provisions of this Agreement, or which would cause any of
CASINO's representations contained herein to be or become untrue
in any material respect at the closing date.
(e) CASINO will not alter or change any employment or other
contract with any of its management personnel or make, adopt,
alter, revise, or amend any pension, bonus, profit-sharing or
other employee benefit plan, or grant any salary increase or
bonus to any person without the prior written consent of AIC.
4.02 Covenants of AIC. AIC agrees that prior to the closing date:
(a) No dividend shall be declared or paid or other distribution
(whether in cash, stock, property or any combination thereof) or
payment declared or made in respect of AIC Common Stock nor shall
AIC purchase, acquire or redeem or split, combine or reclassify
any shares of AIC Common Stock.
(b) Except as herein provided, no change shall be made in the
number of shares of authorized or issued AIC common stock; nor
shall any option, warrant, call, right, commitment or agreement
(other than this Agreement) of any character be granted or made
by AIC relating to its authorized or issued AIC Common stock; nor
shall AIC issue, grant or sell any securities or obligation
convertible into or exchangeable for shares of common stock,
(c) AIC will not (i) incur any indebtedness for borrowed money;
(ii) assume, guarantee, endorse, or otherwise become liable or
responsible (whether directly contingently or otherwise) for the
obligations of any other individual, firm or corporation; or
(iii) make any loans, advances of capital contributions to or
investments in, any other individual, firm or corporation.
(d) AIC will not alter or change any employment or other
contract with any of its management personnel or make, adopt,
alter, revise, or amend any pension, bonus, profit-sharing or
other employee benefit plan, or grant any salary increase or
bonus to any person or owe any accrued salary or other
compensation under any agreement or plan without the prior
written consent of CASINO.
(e) AIC will not take, agree to take, or knowingly permit to be
taken any action, or do, or knowingly permit to be done anything
in the conduct of the business of AIC, or otherwise, which would
be contrary to or in breach of any of the terms or provisions of
this Agreement, or which would cause any of the representations
of AIC contained herein to be or become untrue in any material
respect at the Closing Date.
4.03 Mutual Covenants. AIC and CASINO further agree and covenant
as follows:
(a) Stockholders' Meetings. CASINO and AIC will take all actions
necessary in accordance with applicable law, including proxy
solicitation requirements, and the Articles of Incorporation and
By-Laws to convene meetings of stockholders as promptly as
practicable, upon the effectiveness of the required Registration
Statement, to consider and vote upon the approval of this merger.
(b) Conduct of Business Pending the Merger. Prior to the
effective date of the merger, unless AIC and CASINO shall
otherwise agree in writing, each Company shall not (i) operate
its business otherwise than in the ordinary course, (ii) grant
any compensation increase to any director, officer or employee,
(iii) issue, authorize or propose the issuance of additional
shares of capital stock of any class or securities convertible
into any such shares or rights, warrants or options to acquire
any such shares or convertible securities, (iv) amend its
Articles of Incorporation or By-laws, (v) split, combine or
reclassify its outstanding shares of common or preferred stock,
or (vi) authorize, recommend or propose any merger,
consolidation, acquisition of assets, disposition of assets,
material change in its capitalization or any comparable event,
not in the ordinary course of business (other than the
transactions contemplated hereby and transactions as to which
written notice has been given to AIC prior to the date hereof).
(c) Takeover Proposals. CASINO and AIC will not, and will not
authorize or permit any officer, director or employee of, or any
investment banker, attorney, accountant or other representative
retained by, or agent of such company or any affiliate of such
company, to directly or indirectly solicit or encourage any
proposal for a merger or other business combination involving
such company for the acquisition of a substantial equity interest
in such company or a substantial portion of such company's
assets, other than as contemplated by this Agreement. Each
company will promptly advise the other company of the terms of
any such proposal that it may receive.
(d) Registration / Proxy Statements. The parties hereto shall
forthwith agree upon a time table for the filing of a
registration statement and any required amendments thereto, Blue
Sky filings, proxies and all other steps necessary to register
the shares proposed to be distributed to the shareholders of
CASINO pursuant to this Agreement. The registration statement
shall be prepared by AIC, at AIC's expense, with the cooperation
of CASINO and filed with the United States Securities and
Exchange commission ("SEC"). The parties shall select counsel and
such other professionals as are required to prepare and file the
necessary registration statements. In connection with the
preparation of a Registration Statement, Proxy Statement and/or
any other filings, CASINO and AIC will cooperate with each other
and will furnish the information relating to CASINO and AIC, as
the case may be, required by the Securities Act of 1933 and/or
the Securities Exchange Act of 1934 to be set forth in such,
Registration Statement, Proxy Statement and/or any other filings,
The information to be provided shall continue to be true and
correct in all material respects and shall not contain any untrue
statement of a material fact, or omit to state a material fact
required to be stated therein to make the statements made, in the
light of the circumstances under which they were made, not
misleading.
(e) Press Releases. CASINO and AIC agree to cooperate with each
other in releasing information concerning this Agreement and the
transaction contemplated herein. where possible, each of the
parties shall furnish to the other drafts of all releases prior
to publication. Nothing contained herein shall prevent either
party at any time from furnishing any information to any
governmental agency, provided that each party shall give at least
48 hours prior written notice to the other of the intent to make
any such disclosure.
(f) Recommendation of Approval. The Board of Directors of AIC
and CASINO shall continue to recommend to their respective
stockholders approval of this Agreement and the merger to which
such company is a party, except as the fiduciary obligations of
each such Board of Directors may otherwise require.
(g) Access. Prior to the closing, CASINO shall afford to the
officers, attorneys, accountants, and other authorized
representatives of AIC free and full access to the premises,
books and records of CASINO in order that AIC may make such
investigation as it may desire of the affairs of CASINO. Prior to
the closing, AIC shall afford to the officers, attorneys,
accountants, and other authorized representatives of CASINO free
and full access to the premises, books and records of AIC so that
purchasers may make such investigations as it may desire of the
affairs of AIC.
ARTICLE V
CONDITIONS
5.01 Conditions to the Obligations of AIC. The obligations of AIC
to consummate the merger contemplated by this Agreement are
subject to the satisfaction, at or before the consummation of
such merger, of each of the following conditions:
(a) No action shall have been threatened, taken by or be pending
before, and no statute, rule, regulation or order shall have been
promulgated, enacted, entered, enforced or deemed applicable to
the merger by any federal, state or foreign government or
governmental authority or by any court, domestic or foreign,
including the entry, of a preliminary or permanent injunction,
which would (i) make the merger illegal, (ii) require the
divestiture by AIC of the shares of AIC or of a material portion
of the business of AIC, (iii) impose material limits on the
ability of AIC to effectively control the business of AIC, (iv)
otherwise materially adversely affect AIC or (v) if the merger is
consummated, subject any officer, director, or employee of AIC to
criminal penalties or to civil liabilities not adequately covered
by insurance or enforceable indemnification maintained by AIC.
(b) CASINO shall have complied in all material respects with its
agreements and covenants herein, and all representations and
warranties of CASINO herein shall be true and correct in all
material respects at the time of consummation of the merger and
it made at that time, except to the extent they expressly relate
to an earlier date, and AIC shall have received a certificate to
that effect to the best of the knowledge of CASINO, signed by the
President of CASINO.
(c) The holders of not more than ten percent (10%) of the issued
and outstanding shares of common and preferred stock of CASINO
with respect to which such merger is proposed shall have
exercised their right to dissent as dissenting stockholders.
(d) AIC shall have received from the accountants for CASINO, an
opinion, in form and substance satisfactory to AIC, that there
has been no material or adverse change 'in the financial
condition of CASINO as of the date of consummation of the merger,
or reflected in the Financial Statements.
5.02 Conditions to the Obligations of CASINO. The obligations of
CASINO to consummate the merger contemplated by this Agreement
are subject to the satisfaction, at or before the consummation of
such merger, of each of the following conditions:
(a) No action shall have been threatened, taken by or be pending
before, and no statute, rule, regulation or order shall have been
promulgated, enacted, entered, enforced or deemed applicable to
the merger by any federal, state of foreign government or
governmental authority or by any court, domestic or foreign,
including the entry of a preliminary or permanent injunction,
which would (i) make the merger illegal, (ii) require the
divestiture by CASINO of the shares of CASINO or of a material
portion of the business of CASINO, (iii) impose material limits
on the ability of CASINO to effectively control the business of
CASINO, (iv) otherwise materially adversely affect CASINO or (v)
if the merger is consummated, subject any officer, director, or
employee of CASINO to criminal penalties or to civil liabilities
not adequately covered by insurance of enforceable
indemnification maintained by CASINO.
(b) AIC shall have complied in all material respects with its
agreements and covenant , s herein, and all representations and
warranties of AIC herein shall be true and correct in all
material respect at the time of consummation of the merger and if
made at the time, except to the extent they expressly relate to
an earlier date, and CASINO shall have received a certificate to
that effect to the best of the knowledge of AIC, signed by the
President of AIC.
(c) The holders of no more than ten percent (10%) of the issued
and outstanding shares of common stock of AIC with respect to
which such merger is proposed shall have exercised their right to
dissent as dissenting stockholders.
(d) CASINO shall have received from the accountants for AIC, an
opinion, in form and substance satisfactory to AIC, that there
has been no material or adverse change in the financial condition
of AIC as of the date of consummation of the merger, or reflected
in the Financial Statements.
5.03 Conditions to Each Company's Obligations. The obligation of
each company to consummate the merger contemplated by this
Agreement is subject to the satisfaction, at or before the
consummation of such merger, of each of the following conditions:
(a) The stockholders of CASINO shall have duly approved the
merger in accordance with applicable law.
(b) The stockholders of AIC shall have duly approved the merger
in accordance with applicable law.
(c) No action shall have been taken, and no statute, rule,
regulation or order shall have been promulgated, enacted,
entered, enforced or deemed applicable to the merger by any
federal, state or foreign government or governmental authority or
by any court domestic or foreign, including the entry of a
preliminary or permanent injunction, which would (i) make the
merger illegal, or (ii) if the merger is consummated, subject any
officer, director or employee of CASINO or AIC to criminal
penalties or to civil liability not adequately covered by
insurance or enforceable indemnification arrangements maintained
by CASINO or AIC.
(d) No action or proceeding before any court or governmental
authority domestic or foreign, by any government or governmental
authority or by any other person, domestic or foreign, shall be
threatened, instituted or pending which would reasonably be
expected to result in any of the consequences referred to in
clauses (i) and (ii) of paragraph (c) above,
(e) The Registration Statement filed under the Securities Act of
1933 and any Proxy Statement filed under the Exchange Act of 1934
shall have become effective and not be subject to a stop order or
any threatened stop order.
(f) The officers and directors of AIC and CASINO shall each have
executed releases for any claims for compensation or other
payment for services rendered as of the closing date-
(g) Each party's satisfactory completion of due diligence
review.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Transfer of Restricted Shares. At closing under the terms of
this Merger Agreement, Joe Logan, Jr., Diran Kaloustian and
Consolidated Equities (collectively referred to as "Existing
Shareholders") shall convey to William Forhan one and one-half
million (1,500,000) shares of common stock of AIC; Existing
Shareholders shall also convey to James Muldowney five hundred
thousand (500,000) shares of common stock of AIC. It is agreed
and acknowledged that the shares to be conveyed pursuant to this
paragraph are issued and outstanding shares owned by Existing
Shareholders and are restricted against resale. Existing
Shareholders shall also grant voting proxies to William Forhan to
vote 2,500,000 of shares retained by them for a period of thirty
six (36) months after consummation of the merger, or sale of the
shares to bona-fide third party purchasers, whichever first
occurs, provided that in the event of a block trade (being
defined as a trade of over 150, 000 shares) , the sale will be
subject to the unexpired term of the proxies. In addition,
375,000 shares owned by Existing Shareholders shall be retired
and returned to treasury upon consummation of the merger.
6.02 Cita Americas, Inc. The merger contemplated herein is
conditioned upon and subject to Joe Logan, Jr. and Diran
Kaloustian, and/or their assigns, being able to acquire all of
AIC's interest in Cita Americas, Inc., without adverse tax or
accounting consequence. Provided that Joe Logan, Jr. and Diran
Kaloustian receive necessary opinions of accountants or other
professionals that there will be no such adverse consequences, on
the effective date of the merger (unless the conveyance is made
prior thereto) AIC shall convey all of its interest in Cita
Americas, Inc. to Joe Logan, Jr. and Diran Kaloustian in
satisfaction of loans made by them to AIC, or for such other
consideration as the parties may agree.
ARTICLE VII
INDEMNIFICATION AND WAIVER OF CLAIMS
7.01 Survival of Representations and Warranties. Notwithstanding
the closing of the transactions contemplated by this Agreement or
any investigation made by or on behalf of AIC or CASINO, the
representations and warranties of AIC and CASINO contained in
this Agreement or in any certificate, schedule, chart, list,
letter, compilation or other document delivered pursuant hereto,
shall survive the Closing for a period of one (1) year; provided,
however, that the representations and warranties contained in
Sections 2.05 and 3.05 with respect to tax matters shall be
deemed to survive for so long as any applicable statute of
limitations with respect to tax claims shall not have expired,
shall have been suspended or shall have been waived or extended,
and for thirty (30) days thereafter; provided further, however,
that as to any breach of or misstatement in any such
representation or warranty as to which the non-breaching party
has given notice to the breaching party an or prior to the
expiration of the applicable period as to tax or non-tax matters,
as above set forth, the same shall continue to survive beyond
said period, but only as to the matters contained in such notice.
7.02 Indemnification. AIC hereby agrees to indemnify and hold
CASINO, its officers, directors, employees and agents harmless
from and against the following:
(a) Any and all liabilities, losses, damages, claims, costs and
expenses of AIC of any nature, whether absolute, contingent or
otherwise, which are not expressly assumed by CASINO as herein
provided, including but not limited to any and all claims or
rights to dissent from the shareholders of AIC, purported
shareholders of AIC, claims of AIC creditors, Federal or State or
Local taxing authorities, and other claimants of AIC.
(b) Any and all damages or deficiencies resulting from any
misrepresentation, breach of any warranty, or non-fulfillment of
any covenant or agreement on the part of AIC contained in this
Agreement or in any statement or certificate furnished or to be
furnished to CASINO pursuant hereto or in connection with the
transactions contemplated hereby; and
(c) AIC, as of the date immediately preceding this Agreement,
will indemnify and hold harmless CASINO, from and against any and
all losses, claims, damages, expenses or liabilities, joint or
several, to which it may become subject within the meaning of the
Securities Exchange Act of 1934 and the Securities Act of 1933
(collectively the "Act") or under any other statutes or at common
law or otherwise, and will reimburse and indemnify CASINO and its
officers and directors for any legal or other expense including
the cost of any investigation and preparation reasonably incurred
by them or any of them in connection with investigating or
defending any litigation or claim, whether or not resulting in
any liability insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of are based upon any untrue
statement or alleged untrue statement or a material fact
contained in any annual reports, Forms 10K or other $EC filings,
Prospectus, Private Placement Memorandums, Offering Circulars,
Proxy Statements, and Verbal, Written and other representations
in connection with or related to Limited Partnership Offerings,
Joint Ventures, any stock or bond offering, stock conversion
rights granted, investment contracts, or other security as that
term is define under the Act or any State Security Act (as
amended or as supplemented) or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading or any negligent
misrepresentation of any officer, director, agent, or employee of
AIC; or any failure to perform any of the terms or conditions of
this Agreement. CASINO agrees upon its receipt of written notice
of the commencement of any action against them as aforesaid, in
respect of which indemnity may be sought from AIC, on account of
the indemnity agreement contained in this section 7.02, to notify
AIC promptly in writing of the commencement thereof. CASINO
agrees to notify AIC promptly of the commencement of any
litigation or proceeding against it or any of the officers or
directors of CASINO of which it may be advised in connection with
the issue and sale of any of its securities.
7.03 Indemnification by CASINO. CASINO hereby agrees to indemnify
and hold AIC, its officers, directors, employees and agents
harmless from and against the following:
(a) Any and all liabilities, losses, damages, claims, costs and
expenses of CASINO of any nature, whether absolute, contingent or
otherwise, which are not expressly assumed by AIC as herein
provided, including but not limited to any and all claims or
rights to dissent from the shareholders of CASINO, purported
shareholders of CASINO, claims of CASINO creditors, Federal or
State or Local taxing authorities and other claimants of CASINO;
(b) Any and all damages or deficiencies resulting from any
misrepresentation, breach of any warranty, or non-fulfillment of
any covenant or agreement on the part of CASINO contained in this
Agreement or in any statement or certificate furnished or to be
furnished to CASINO pursuant hereto or in connection with the
transactions contemplated hereby; and
(c) CASINO, as of the date immediately preceding this Agreement,
will indemnify and hold harmless AIC from and against any and all
losses, claims, damages, expenses or liabilities, joint or
several, to which they or any of them become subject within the
meaning of the Securities Exchange Act of 1934 and the Securities
Act of 1933 (collectively the "Act") or under any other statutes
or a common law or otherwise, and will reimburse and indemnify
AIC and its officers and directors for any legal or other
expenses including the cost of any investigation and preparation
reasonably incurred by them or any of them in connection with
investigating or defending any litigation or claim, whether or
not resulting in any liability insofar as such losses, claims,
damages, expenses, liabilities or actions arise out of are based
upon any untrue statement or alleged untrue statement or a
material fact contained in any annual reports, Forms 10K or other
SEC filings, Prospectus, Private Placement Memorandum, Offering
Circulars, Proxy Statements, and Verbal, Written and other
representations in connection with or related to Limited
Partnership Offerings, Joint Ventures, any stock or bond
offering, stock conversion rights granted, investment contracts,
or other security as that term is defined under the Act or any
State Security Act (as amended or as supplemented) or arise out
of or are based upon the omission or alleged omission to state
therein in a material fact required to be saved therein or
necessary in order to make the statements therein not misleading;
or any negligent misrepresentation of any officer, director,
agent, or employee of CASINO; or any failure to perform any of
the terms or conditions of this Agreement. AIC agrees upon its
receipt of written notice of the commencement of any action
against them as aforesaid, in respect of which indemnity may be
sought from CASINO, its Directors and officers on account of the
indemnity agreement contained in this section 7.03, to notify
CASINO promptly in writing of the commencement thereof. AIC
agrees to notify CASINO promptly of the commencement of any
litigation or proceeding against it or against any of the
officers or directors of CASINO of which it may be advised, in
connection with the issue and sale of any of its securities.
ARTICLE VIII
CLOSING DATE
8.01 The closing for the consummation of the merger contemplated
by this Agreement shall, unless another date or place is agreed
to in writing by the parties hereto, take place at the Office of
Atlas Pearlman Trop & Borkson, P.A., on the date which is no
later than the fifth business day after the last to occur of the
following dates:
(a) The date the Registration Statement required for the
transactions contemplated herein becomes effective pursuant to
applicable rules and regulations of the SEC.
(b) The date the stockholders of AIC and CASINO shall have given
the approval referred to in Section 5.01 (a) and 5.01 (b); or
(c) The date on which all the conditions set forth in Article V
hereof shall have been satisfied, except to the extent any such
conditions are capable of being waived and shall have been waived
by AIC or CASINO.
(d) December 31, 1998.
ARTICLE IX
RESIGNATION AND ELECTION
9.01 Once this Agreement is signed by all parties, AIC shall
cause to be held a meeting of its shareholders at which time
William Forhan, James Muldowney, Steve York, James Ponder and
Derek Lewin shall be elected to the Board of Directors of AIC and
Joe Logan, Jr., shall resign as a member of the Board of
Director, such that the Board shall be comprised of six (6)
members- William Forhan, James Muldowney, Steve York, James
Ponder, Derek Lewin, and Diran Kaloustian. Diran Kaloustian, or
his nominee, shall remain on the Board for so long as William
Forhan holds the voting proxies provided for in Section 6.01. It
is agreed and understood that in the event the merger
contemplated herein is not consummated for any reason, including
AIC a dissatisfaction with due diligence, Forhan, Muldowney,
York, Ponder and Lewin shall promptly tender their resignations
as members of the Board of Directors and, if applicable, officers
of AIC.
9.02 At the closing, AIC will cause all of its officers to resign
from office and those persons designated by AIC's Board as
constituted pursuant to Section 9.01, shall be appointed.
ARTICLE X
INTENTIONALLY LEFT BLANK
ARTICLE XI
MISCELLANEOUS
11.01 Termination. With respect to each company, this
Agreement may be terminated and the merger to which such company
is proposed to be a party as contemplated herein may be abandoned
(i) by the mutual consent of AIC and CASINO at any time; (ii) by
either CASINO or AIC if the merger has not been consummated prior
to December 31, 1998; (iii) in the event of any material adverse
change in the business, property, or financial condition of AIC
or CASINO; (iv) in the event of any action, suit, or proceeding
at law or equity against either CASINO or AIC or by any Federal,
State, Local government agency or commissions, board or agency,
where any unfavorable decision would materially adversely affect
the business, property or financial condition or income of CASINO
or AIC; (v) by a party (the "terminating party") in the event of
the failure of the other party to comply with a condition
described in Article V and such condition is not waived by the
terminating party (provided that the terminating party is not
itself in default); or (vi) in the event the merger violates any
federal or state statue, rule or regulation. In the event of such
termination and abandonment, neither AIC nor CASINO (or any of
its directors or officers) shall have any liability or further
obligation to any other party to this Agreement, except that
nothing herein will relieve any party from liability for any
willful breach of this Agreement.
11.02 Expenses. Whether or not any merger is consummated, all
out-of-pocket costs and expenses incurred in connection with the
merger and this agreement will be paid by the party incurring
such expenses.
11.03 Indebtedness of CASINO. As disclosed elsewhere herein
or in a Schedule hereto, CASINO is currently indebted to certain
persons in the aggregate amount of approximately $350,000
including accrued interest. This indebtedness is not disclosed in
the Financial Statements of CASINO previously delivered to AIC
(but will be set forth on Schedule 3.04 to this Agreement).
CASINO is currently in default of its payment obligation to such
persons. It is intended by the parties that, on or after the
effective date of the merger contemplated hereby, this
indebtedness of CASINO will be converted into an aggregate of
approximately 200,000 shares of AIC common stock. The precise
structure of this debt conversion is to be reviewed by
professional advisors to CASINO and AIC and their recommendations
will be taken into account in determining the final structure of
the conversion.
11.04 Tax Structure of Merger. The merger contemplated by
this Agreement is intended to qualify as a tax-free
reorganization, as contemplated by Section 368(A) of the Internal
Revenue Code of 1986, as amended. To the extent that the parties'
legal, tax and accounting advisors indicate that all or a portion
of the transactions contemplated hereby adversely affect the tax-
free nature of such transactions, the parties agree to negotiate,
in good faith, modifications to this Agreement so as to enable
the parties to consummate the transactions contemplated hereby
without adverse tax consequences to the parties or their
shareholders.
11.05 Schedules. The parties agree that the Schedules
contemplated by this Agreement shall be delivered by each party
to the other not more than 10 days following the date hereof. The
information set forth on the Schedules shall be subject to the
parties due diligence review and to the provisions of Section
5.03.
11.06 CTC Acquisitions. The parties acknowledge that prior to
the date hereof, CASINO entered into a letter of intent to
acquire all of the outstanding securities of Corporate Travel
Consultants ("CTC"). Notwithstanding the foregoing, the parties
hereto contemplate that subsequent to the execution of this
Agreement and prior to the closing hereof, AIC will endeavor to
acquire all of the outstanding stock of CTC. In the event that
AIC completes the acquisition of CTC, and the transactions
contemplated by this Agreement are not consummated, AIC hereby
agrees to sell all of the outstanding securities to CASINO at a
price equal to the value of the consideration paid by AIC for the
securities of CTC.
11.07 Brokers. No broker or finder is entitled to any
brokerage or finder's fee or other commission or fee from any
Company or based upon arrangements made by or on behalf of any
Company with respect to the transactions contemplated by this
Agreement.
11.08 Arbitration. Any controversy arising out of, connected
to, or relating to any matters herein or the transactions
contemplated by this Agreement, or the breach thereof, including,
but not limited to any claims of violations of Federal and/or
State Securities Acts, Banking Statutes, Consumer Protection
Statutes, Federal and/or State anti-Racketeering (e.g. RICO)
claims as well as any common law claims and any State Law claims
of fraud, negligence, negligent misrepresentations, and/or
conversion shall be settled by arbitration in Washington, D.C.,
under the rules of the American Arbitration Association; and
judgment on the arbitrator's award may be entered in any court
having jurisdiction thereof in accordance with the provisions of
the law of the State of Nevada. In the event of such a dispute,
each party to the conflict shall select an arbitrator, both of
whom shall select a third arbitrator which shall constitute the
three person arbitration board. The decision of a majority of the
board of arbitrators shall be binding upon the parties.
11.09 Other Actions. Each of the parties hereto agrees to
execute and deliver such other documents, certificates,
agreements and other writings and -to take such other actions as
may be necessary or desirable to consummate the transactions
contemplated by this Agreement.
11.10 Waiver and Amendment. Any provision of this Agreement
may be waived at any time by the party which is or whose
stockholders are, entitled to the benefits thereof and this
Agreement may be amended or supplemented at any time. No such
waiver, amendment or supplement shall be effective unless in
writing and signed by the party or parties necessary thereto.
11.11 Entire Agreement. This Agreement contains the entire
agreement between AIC and CASINO with respect to the merger and
the other transactions contemplated hereby.
11.12 Applicable Law. This agreement shall be governed by and
construed in accordance with the laws of the State of Nevada.
11.13 Descriptive Headings. The descriptive headings are for
convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.14 Notices. All notes or other communications hereunder
shall be in writing and shall be deemed to have been duly given
if delivered personally or sent by registered or certified mail
postage prepaid, addressed as follows:
If to AIC, to: AVIATION INDUSTRIES CORP.
1580 Lemoine Avenue, Suite 8
Fort Lee, NJ 07024
and to: SONNENBLICK PARKER & SELVERS,
P.C.
Attention; Mark S. Vincent,
Esq.
4400 Route 9 South, Suite 3000
Freehold, NJ 07728
If to CASINO, to: INTEGRATED MARKETING
PROFESSIONALS, INC.
888 E. Las Olas Blvd., Ste.
701
Fort Lauderdale, FL 33301
and to: ATLAS, PEARLMAN, TROP &
BORKSON, PA
Attention: Steven I.
Weinberger, Esq.
200 E. Las Olas Blvd.
Fort Lauderdale, FL 33301
11.15 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute but one
agreement.
11.16 Signatures. Each of the undersigned, have been duly
authorized to execute this Agreement on behalf of AIC and CASINO,
respectively, and, to the extent the undersigned ate directors
and shareholders of AIC and CASINO, respectively, each of the
undersigned hereby agree to vote all shares held of record by him
and to recommend to the shareholders a vote, in favor of the
transactions contemplated by the within Agreement at the meeting
of shareholders of said corporation contemplated by this
Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto
as of the date first hereinabove written.
AVIATION INDUSTRIES CORP.
By: /s/ Gerald D'Ambrosio
GERALD D'AMBROSIO, PRESIDENT
INTEGRATED MARKETING PROFESSIONALS, INC.
By: /s/ William Forhan
WILLIAM FORHAN, PRESIDENT
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
AVIATION INDUSTRIES CORPORATION
(FORMERLY NEVADA COMMERCIAL MANAGEMENT INC.)
KNOW ALL MEN BY THESE PRESENTS:
That I, the undersigned, for the purpose of association to
establish a corporation for the transaction of business and the
promotion and conduct of the objects and purposes hereinafter
stated, under the provisions of and subject to the requirements
of the laws of the State of Nevada, do make, record and file
these Articles of Incorporation in writing and I do hereby
certify:
I.
That the name of said Corporation shall be: NEVADA COMMERCIAL
MANAGEMENT, INC.
II.
That the principal office and place of business of the
corporation shall be 7088 Delwood, Las Vegas, Nevada 89117 and
that the Resident Agent in charge thereof shall be Lawana
Beckett.
III.
That the purpose for which said corporation is formed and the
nature of the objects to be transacted and carried on by it are:
To engage in any and all lawful activity,
IV.
This corporation is authorized to issue 2,000,000 shares of
Common Stock of no par value.
The initial number of Stockholders will be less than three. Any
and all shares issued by the corporation, the fixed consideration
for which has been paid or delivered, shall be deemed fully paid
stock and not liable for any further call or assessment thereon,
and the holders of such stock shall not be liable for any further
assessments.
If, for any reason, the amount of outstanding capital stock of
the corporation is to be increased, such increase shall be
offered to, and may be subscribed for by, the then existing
shareholders in proportion to their shareholdings at that tine
for such amount as may be determined at the offering price of the
stock to either shareholders or non-shareholders.
V.
The governing board of the corporation shall consist of not less
than two nor more than ten, the exact amount to be fixed by the
by-laws of the corporation, provided that the number so fixed by
the by-laws may be increased or decreased from time to time. The
first Board of Directors, consisting of one member is:
FIRST BOARD OF DIRECTORS
NAME POST OFFICE
ADDRESS
Lawana Beckett 7088 Delwood, Las Vegas, NV
89117
VI.
The name of the incorporators signing these Articles are as
follows:
NAME POST OFFICE
ADDRESS
Lawana Beckett 7088 Delwood, Las Vegas, NV
89117
VII.
At all elections for directors of this corporation, each holder
of stock shall be entitled to as many votes as shall equal the
number of his shares of stock, multiplied by the number of
directors to be elected, and he may cast all such notes for a
single director or may distribute them among the number to be
noted for, or any two or more of them, as he wishes.
VIII.
This Corporation shall have perpetual existence.
IN WITNESS WHEREOF, the undersigned incorporator has executed
these Articles of Incorporation this 22nd day of January, 1988.
/s/ Lawana Beckett
Lawana Beckett
BY-LAWS
OF
NEVADA COMMERCIAL DEVELOPMENT, INC.
ARTICLE I. OFFICES
The principal office of the corporation in the State of Nevada
shall be located in the City of Las Vegas, Country of Clark. The
corporation may have such other offices, either within or without
the State of Nevada, as the Board of Directors may designate or
as the business of the corporation may require from time to time.
ARTICLE II. SHAREHOLDERS
SECTION 1. Annual Meeting: The annual meeting of the shareholders
shall be held on the 22nd day in the month of January in each
year, beginning with the year 1989, at the hour of 1:00 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 in the State of Nevada, such meeting shall be held on the
next succeeding business day. If the election of Directors shall
not be held on the day designated herein for any annual meeting
of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special
meeting of the shareholders as soon thereafter as conveniently
may be.
SECTION 2. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise
prescribed by statute, may be called by the President or by the
Board Directors, and shall be called by the President at the
request the holders of not less than twenty-five per cent of all
the outstanding shares of the corporation entitled to vote at the
meeting.
SECTION 3. Place of Meeting. The Board of Directors may designate
any place, either within or without the State of Nevada unless
otherwise prescribed by statute, as the place of meeting for any
annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled
to vote at a meeting may designate any place, either within or
without the State of Nevada, unless otherwise prescribed by
statute, as the place for the holding of such meeting. If no
designation is made, or if a special meeting be Otherwise called,
the place of meeting shall be the principal office of the
corporation in the State of Nevada.
SECTION 4. Notice of Meeting. Written notice stating the place,
day and hour of the meeting and, in case of special meeting, the
purpose or purposes for which the meeting is called, shall unless
otherwise prescribed by statute, be delivered not less than ten
nor more than thirty 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 persons calling the meeting, to each
shareholder 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 shareholder
at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid.
SECTION 5. Closing of Transfer Books or Fixing of Record Date.
For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment
thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of 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, ten
days. If the stock transfer books shall be closed for the purpose
of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least
ten days immediately preceding such meeting. In lieu of closing
the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than ten days
and, in case of a meeting of shareholders, not less than ten days
prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock
transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at
a meeting of shareholders, or shareholders 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 Board of
Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any
meeting of shareholders 'has been made as provided in this
section, such determination shall apply to any adjournment
thereof.
SECTION 6. Voting Lists. The officer or agent having charge of
the stock transfer books for shares of the corporation shall make
a complete list of the shareholders entitled to vote at each
meeting of shareholders or any adjournment thereof. Such list
shall be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
SECTION 7. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders. If less
than a majority 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 noticed. The shareholders
present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
SECTION 8. Proxies. At all meetings of shareholders, a
shareholder may vote in person or by proxy executed in writing by
shareholder 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. No proxy shall be valid after one
month from the date of its execution, unless otherwise provided
in the proxy.
SECTION 9. Voting of Shares. Each outstanding share entitled to
vote shall be entitled to one vote upon each matter submitted to
a vote at a meeting of shareholders.
SECTION 10. Voting of Shares by Certain Holders. Shares standing
in the name of another corporation may be voted by such officer,
agent or proxy as the by-laws of such corporation may prescribe,
or, in the absence of such provision, as the board of directors
of such corporation may determine.
Shares held by an administrator, executor, guardian or
conservator may be voted by him, either in person or by proxy,
without a transfer of such shares into his name. Shares standing
in the name of a trustee may be voted by him, either in person or
by proxy, but no trustee shall be entitled to vote shares held by
him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver
may be voted by such receiver without the transfer thereof into
his name if authority so to do be contained in an appropriate
order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name
of the pledgee, and thereafter the pledgee shall be entitled to
vote the shares so transferred.
Shares of its own stock belonging to the corporation shall not be
voted, directly or indirectly, at any meeting, and shall not be
counted in determining the total number of outstanding shares at
any given time.
SECTION 11. Informal Action by Shareholders. 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.
ARTICLE III. BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the
corporation shall be managed by its Board of Directors.
SECTION 2. Number, Tenure and Qualifications. The number
directors of the corporation shall be no less than one. Each
director shall hold office until the next annual meeting of
shareholders and until his successor shall have been elected and
qualified.
SECTION 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this bylaw
immediately after, and at the same place as, the annual meeting
of shareholders. The Board of Directors may provide, by
resolution, the time and place for the holding of additional
regular meetings without other notice than such resolution.
SECTION 4. Special meetings. Special meetings of the Board
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 Board of Directors may fix the place for
holding any special meeting of the Board of Directors called by
them.
SECTION 5. Notice. Notice of any special meeting shall be given
at least ten days previously thereto by written notice delivered
personally or mailed to each director at his business address, or
by telegram. 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. Any director may waive notice
of any meeting. 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.
SECTION 6. Quorum. A majority of the number of directors fixed by
Section 2 of this Article III shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors,
but if less than such majority is present at a meeting, a
majority the directors present may adjourn the meeting from time
to time without further notice.
SECTION 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 Board of Directors.
SECTION S. Action Without A Meeting. Any action that may be taken
by the Board of Directors at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so to
be taken, shall be signed before such action by all of the
Directors.
SECTION 9. Vacancies. Any vacancy occurring in the Board
Directors may be filled by the affirmative vote of a majority of
the remaining directors though less than a quorum of the Board of
Directors, unless otherwise provided by law. A director elected
to fill a vacancy shall be elected for the unexpired term of his
predecessor in office. Any directorship to be filled by reason of
an increase in the number of directors may be filled by election
by the Board of Directors for a term of office continuing only
until the next election of Directors by the shareholders.
SECTION 10. Compensation. By resolution of the Board of
Directors, each Director may be paid his expenses, if any, of
attendance at each meeting of the Board of Directors, and may be
paid a stated salary as director or a fixed sum for attendance at
each meeting of the Board of Directors or both. No such payment
shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
SECTION 11. Presumption of Assent. A director of the corporation
who is present at a meeting of the Board of 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.
ARTICLE IV. OFFICERS
SECTION 1. Number. The officers of the corporation shall be a
President, a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and
assistant officers as may be deemed necessary may be elected or
appointed by the Board of Directors.
SECTION 2. Election and Term of office. The officers of the
corporation to be elected by the Board of Directors shall be
elected annually by the Board of Directors at the first meeting
of the Board of Directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as
conveniently may be. 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 manner hereinafter provided.
SECTION 3. Removal. Any officer or agent may be removed by the
Board of Directors whenever in its judgment, the best interests
of the corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent
shall not of itself create contract rights.
SECTION 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be
filled by the Board of Directors for the unexpired portion of the
term.
SECTION 5. President. The President shall be the principal
executive officer of the corporation and, subject to the control
of the Board of 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 shareholders and of
the Board of Directors. He may sign, with the Secretary or any
other proper officer of the corporation thereunto authorized by
the Board of Directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be
executed, except in cases where the signing and execution thereof
shall be expressly delegated by the Board of 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 perform all duties incident to the office of
President and such other duties as may be prescribed by the Board
of Directors from time to time.
SECTION 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 Board of Directors.
SECTION 7. Secretary. The Secretary shall: (a) keep the minutes
of the proceedings of the shareholders and of the Board of
Directors in one or more books provided for that purpose; (b) see
that all notices are duly given in accordance with the provisions
of these By-Laws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation and see that
the seal of the corporation is affixed to all documents the
execution of which on behalf of the corporation under its seal is
duly authorized; (d) keep a register of the post office address
of each shareholder which shall be furnished to the Secretary by
such shareholder; (e). sign with the President, certificates for
shares of the corporation, the issuance of which shall have been
authorized by resolution of the Board of Directors; (f) have
general charge of the stock transfer books of the corporation;
and (g) 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 Board of Directors.
SECTION 8. Treasurer. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the
corporation; (b) 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 the provisions of Article V of these By-Laws;
and (c) 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 Board of
Directors. If required by the Board of 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 Board of
Directors shall determine.
SECTION 9. Salaries. The salaries of the officers shall be fixed
from time to time by the Board of 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.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. The Board of 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.
SECTION 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 Board of
Directors. Such authority may be general or confined to specific
instances.
SECTION 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 Board of Directors.
SECTION 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
depositories as the Board of Directors may select.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing
shares of the corporation shall be in such form as shall be
determined by the Board of Directors. Such certificates shall be
signed by the President and by the Secretary or by such other
officers authorized by law and by the Board of Directors so to
do, and sealed with the corporate seal. All certificates for
shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares represented
thereby are issued, with 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 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
Board of Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the
corporation shall be made only on the stock transfer books of the
corporation by the holder of record thereof or by his legal
representative, who shall furnish proper evidence of authority to
transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the
corporation, and on surrender for cancellation of the certificate
for such shares. The person in whose name shares stand on the
books of the corporation shall be deemed by the corporation to be
the owner thereof for all purposes.
ARTICLE VII. FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of
January and end on the 31st day of December in each year.
ARTICLE VIII. DIVIDENDS
The Board of 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 and its
articles of incorporation.
ARTICLE IX. CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall
be circular in form and shall have inscribed thereon the name of
the corporation and the state of incorporation and the words,
"Corporate Seal".
ARTICLE X. WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required
to be given to any shareholder or director of the corporation
under the provisions of these By-Laws or under the provisions of
the articles of incorporation or under the provisions of the
Business Corporation Act, 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 the Board of Directors at any regular or
special meeting of the Board of Directors.
ARTICLES OF INCORPORATION
OF
INTEGRATED MARKETING PROFESSIONALS, INC.
Pursuant to the provisions of Act 284, Public Acts of 1972, as
amended, the undersigned corporation executes the following
Articles:
I.
The name of the corporation is: INTEGRATED MARKETING
PROFESSIONALS, INC.
II.
The purpose or purposes for which the corporation is organized is
to engage in any activity within the purposes for which
corporations may be organized under the Business Corporation Act
of Michigan.
III.
The total authorized capital stock is:
1. Common Shares 20,000 Class A Voting - Par Value Per Share
$1.00
Common Shares 40,000 Class B Non-Voting - Par Value Per
Share $1.00
The common shares will be identical in all respects with the
sole exception of the voting rights held solely by the Class
"A" common.
2. A statement of all or any of the relative rights, preference
and limitations of each class is as follows:
This Corporation is a small business corporation as defined
in the Internal Revenue Code of 1986, and such common shares
as shall be issued shall qualify to receive the benefits of
Section 1244 of said Internal Revenue Code.
No shares of stock in this Corporation shall be transferred
without first offering the same to the Corporation through its
President for a period of ten (10) days and then to the
stockholders pro-rata for an additional thirty (30) days. No
stock in this Corporation may pass by intestate succession or
bequest without compliance with the Stock Transfer Agreement
signed by all shareholders and on file at the offices of the
Corporation.
BYLAWS
FOR THE REGULATION OF
CASINO AIRLINK, INC.
A NEVADA CORPORATION
(EXCEPT AS OTHERWISE PROVIDED BY
STATUTE OR ITS ARTICLES OF INCORPORATION)
ARTICLE I
Offices
Section 1. Principal Executive Office. The Board of Directors
shall fix the location of the Principal Executive Office of the
Corporation at any place within or outside the State of Nevada.
If the Principal Executive Office is located outside of the State
of Nevada, and the Corporation has one (1) or more business
offices in the State of Nevada, the Board of Directors shall fix
and designate a Principal Business Office in the State of Nevada.
Section 2. Other Offices. Branch or Subordinate offices may at
any time be established by the Board of Directors at any place or
places where the Corporation is qualified to do business.
ARTICLE II
Meetings of Shareholders
Section 1. Place of Meetings. All annual meetings of shareholders
and all other meetings of shareholders shall be held at the
Principal Executive Office of the Corporation, unless another
place within or outside the State of Nevada is designated by the
Board of Directors or by the written consent of all persons
entitled to vote thereat and not present at the meeting, given
either before or after the meeting and filed with the Secretary
of the Corporation.
Section 2. Annual Meetings. The annual meeting of the
shareholders shall be held each year on a date and time
designated by the Board of Directors, note more than fifteen
months after the organization of the Corporation or after its
last annual meeting. At each annual meeting directors shall be
elected, reports of the affairs of the Corporation shall be
considered, and any other business may be transacted which is
within the powers of the shareholders.
Section 3. Notice of Annual Shareholders' Meetings: Reports.
Written notice of each annual shareholders' meeting shall be
given to each shareholder entitled to vote thereat, either
personally or by first class mail, or if the Corporation has
outstanding shares held of record by 500 or more persons
(determined in accordance with the General Corporation Law of
Nevada) on the record date for the shareholders' meeting, by
third-class mail, or by other means of written communication,
addressed to the shareholder at the address of the shareholder
appearing on the books of the Corporation or given by the
shareholder to the Corporation for the purpose of notice. Reports
shall be given to the shareholders in the same manner as notices
of shareholders meetings.
If any notice or report addressed to the shareholder at the
address of such shareholder appearing on the books of the
Corporation is returned to the Corporation by the United States
Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice or report to the
shareholder at such address, all future notices or reports shall
be deemed to have been duly given without further mailing if the
same shall be available for the shareholder upon written demand
of the shareholder at the Principal Executive Office of the
Corporation for a period of one (1) year from the date of the
giving of the notice or report to all other shareholders. If a
shareholder gives no address, or if no notice appears on the
books of the Corporation, the notice or report shall be deemed to
have been given to the shareholder if sent by mail or other means
of written communication addressed to the place where the
Principal Executive Office of the Corporation is located, or if
published at least once in a newspaper of general circulation in
the county in which said Principal Executive Office is located
Written notices of a shareholders meeting shall be given to each
shareholder entitled thereto not less than ten (or, if sent by
third-class mail, thirty (30)) days nor more than sixty (60) days
before the meeting. At such notice or any report shall be deemed
to have been given at the time when delivered personally or
deposited in the mail or sent by other means of written
communication. An affidavit of mailing or otherwise giving of any
such notice or report in accordance with the foregoing
provisions, executed by the Secretary, Assistant Secretary, or
any transfer agent of the Corporation shall be prima facie
evidence of the giving of the notice or report.
Such notices shall specify:
the place, the date and the hour of such meeting:
those matters which the Board of Directors, at the time of
the mailing of the notice, intends to present for action by
the shareholders;
if directors are to be elected, the names of nominees
intended at the time of the notice to be presented by the
Board of Directors for election;
the general nature of a proposal, if any to take action with
respect to approval of (i) a contract or other transaction
with an interested director or with another corporation in
which a director of the Corporation has a material financial
interest, (ii) amendments of the Articles of Incorporation,
(iii) a reorganization of the Corporation, as defined in the
General Corporation Law of Nevada. (iv) voluntary
dissolution of the Corporation, or (v) a distribution of
dissolution not in accordance with the liquidation rights of
outstanding preferred shares, if any; and
such other matter, if any, as may be expressly required by
statute
Any information contained in proxy statement sent with such
notice or other soliciting material sent with such notice shall
be deemed to be a part of the notice.
Section 4. Special Meetings. Special meetings of the
shareholders, for the purpose of taking any action permitted by
the shareholders under the General Corporation Law of Nevada and
the Articles of Incorporation of this Corporation, may be called
at any time by the Board of Directors, the Chairman of the Board,
the President, one (1) or more shareholders holding shares in the
aggregate entitled to cast not less than ten percent (10%) of the
votes at that meeting, or by any other person or persons
subsequently designated by the Articles of Incorporation or
Bylaws. If a special meeting is called by any person or persons
other than the Board of Directors, a written request to give
notice of the meeting, specifying the time of such meeting and
the general nature of the business proposed to be transacted,
shall be delivered personally, or sent by registered mail or by
telegraphic or other facsimile transmission to the Chairman of
the Board, the President, any Vice President, or the Secretary of
the Corporation. Upon such a request, the officer receiving the
request shall forthwith cause notice to be given to shareholders
entitled to vote that a meeting will be held at the time
requested by the person or persons calling the meeting, not less
than thirty-five (35) nor more than sixty (60) days after receipt
of the request. If the notice is not given within twenty (20)
days after receipt of the request, the persons entitled to call
the meeting may give the notice. Except in special cases where
other express provision is made by statute, notice of such
special meetings shall be given in the same manner as annual
meetings of shareholders. In addition to the matters required by
subsection (a) and, if applicable, (c) of Section 3 of this
Article II, notice of any special meeting shall specify the
general nature of the business to be transacted, and no other
business may be transacted at such meeting.
Section 5. Quorum. The presence in person or by proxy of the
persons entitled to vote a majority (unless a different
percentage is specified in the Articles of Incorporation) of the
voting shares at any meeting shall constitute a quorum for the
transaction of business. If a quorum is present, the affirmative
vote of a majority of the shares represented and voting at a duly
held meeting (which shares voting affirmatively also constitute
at least a majority of the required quorum) shall be the act of
the shareholders, unless the vote of a greater number or voting
by classes is required by the General Corporation Law of Nevada
or the Articles of Incorporation.
In the absence of a quorum, no business other than adjournment
may be transacted; provided that the shareholders present at a
duly called or held meeting at which a quorum is present may
continue to transact business until adjournment notwithstanding
the withdrawal of enough shareholders to leave less than a
quorum, if any action taken (other than adjournment) is approved
by at least a majority of the shares required to constitute a
quorum.
Section 6. Adjourned Meeting and Notice Thereof. Any meeting of
shareholders, whether or not a quorum is present, may be
adjourned from time to time by the vote of a majority of the
shares represented either in person or by proxy.
When a shareholders meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the
adjournment is taken, provided that the meeting is not adjourned
for more than forty-five (45) days, and provided further that
after the adjournment a new record date is not fixed for the
adjourned meeting. At the adjourned meeting the Corporation may
transact any business which might have been transacted at the
original meeting. Notice of any other adjourned meeting shall be
given as if it were an original meeting, as provided in Section 3
of this Article II.
Section 7. Voting.
Procedures. Except as provided in subsection (b) of this Section
7 with respect to cumulative voting for directors, or as
otherwise provided in the Articles of Incorporation, each
outstanding share, regardless of class, shall be entitled to one
(1) vote on each matter submitted to a vote of the shareholders.
Voting may be by voice or ballot, provided that an election of
directors must be by ballot if demanded by any shareholder at the
meeting before the voting begins.
Any holder of shares entitled to vote on any matter may vote part
of the shares in favor of the proposal and refrain from voting
the remaining shares or vote them against the proposal, other
than elections to office, but if a shareholder fails to specify
the number of shares such shareholder is voting affirmatively, it
will be conclusively presumed that the shareholder's approving
vote is with respect to all shares such shareholder is entitled
to vote.
The record date for voting purposes, subject to the provisions of
the General Corporation Law of Nevada (which provide for voting
procedures for shares held by an administrator, executor,
guardian, conservator, custodian, or receiver, pledged shares,
shares under control of an attorney in fact, and shares standing
in the name of a minor, corporation, or two (2) or more persons),
shall be fixed as provided in Section 1 of Article V of the
Bylaws.
Cumulative Voting - Election of Directors. Every shareholder
entitled to vote at any election of directors shall have the
right to cumulate such shareholder's vote and give one (1)
candidate a number of votes equal to the number of directors to
be elected multiplied by the number of votes to which such
shareholder's shares are normally entitled, or to distribute such
shareholder's votes on the same principle among as many
candidates as the shareholder thinks fit, provided that such
candidate's name or names have been placed in nomination prior to
the voting and at least one (1) shareholder has given notice at
the meeting prior to the voting of the shareholder's intention to
cumulate votes. If any one (1) shareholder has given such notice,
such fact shall be announced to all shareholders and proxies
present, who may then cumulate their votes for candidates in
nomination. The candidates, up to the number of directors to be
elected, receiving the highest number of affirmative votes shall
be elected. Votes against the director and votes withheld shall
have no legal effect.
Section 8. Waiver of Notice or Consent by Absent Shareholders.
The transaction of any meeting of shareholders, however called
and noticed, and wherever held, shall be as valid as though had
at a meeting duly held after regular call and notice, if a quorum
is present either in person or by proxy, and if, either before or
after the meeting, each of the persons entitled to vote, not
present in person or by proxy, or who, though present, has, at
the beginning of the meeting, properly objected to the
transaction of any business because the meeting was not lawfully
called or convened, or to particular matters of business legally
required to be included in the notice, but not so included, signs
a written waiver of notice or a consent to the holding of the
meeting or an approval of the minutes thereof. Each waiver,
consent, or approval shall be filed with the corporate records or
made a part of the minutes of the meeting.
Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting unless the person objects at the beginning
of the meeting to the transaction of any business because the
meeting is not lawfully called or convened. Attendance at a
meeting shall not be a waiver of any right to object to the
consideration of matters not included in the notice (and required
by law to be included in the notice) if such objection is
expressly made at the meeting. With the exception of any
shareholder consideration or approval of (a) a contract or other
transaction with an interested director or with another
corporation in which a director of the Corporation has a material
financial interest, (b) amendments of the Articles of
Incorporation, (c) a reorganization of the Corporation, as
defined in the General Corporation Law of Nevada, (d) a voluntary
dissolution of the Corporation, and (e) a plan of distribution in
dissolution not in accordance with the liquidation rights of
outstanding preferred shares, if any, neither the business to be
transacted at nor the purpose of any regular or special meeting
of the shareholders need be specified in any written waiver of
notice, consent to the holding of the meeting, or approval of the
minutes thereof.
Section 9. Action Without Meeting. Any action which, under any
provisions of the General Corporation Law of Nevada, may be taken
at any annual or special meeting of shareholders, may be taken
without a meeting and without prior notice, if a consent in
writing, setting forth the action so taken, shall be signed by
the holders of outstanding shares having not less than a minimum
number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted.
Directors may be elected by written consent without a meeting
only if the unanimous written consents of all outstanding shares
entitled to vote are obtained, except that a vacancy on the Board
of Directors (other than a vacancy created by removal of a
director) not filled by the Board of Directors may be filled by
written consent of a majority of the outstanding shares entitled
to vote.
All such consents shall be filed with the Secretary of the
Corporation and shall be maintained in the corporate records. Any
shareholder giving a written consent, or the shareholder's
proxyholder(s), or a transferee of the shares, or a personal
representative of the shareholder, or their respective
proxyholders, may revoke the consent by a writing received by the
Secretary of the Corporation before written consents of the
number of shares required to authorize the proposed action have
been filed with the Secretary of the Corporation, but may not do
so thereafter. Such revocation is effective upon its receipt by
the Secretary of the Corporation. The record date for the
determination of the shareholders entitled to notice of and to
give such written consent shall be set as provided in Section I
of Article V of these Bylaws.
If the Corporation has outstanding shares held of record by one-
hundred (100) or more persons (determined in accordance with the
General Corporation Law of Nevada) but does not have an
outstanding class of securities registered under Section 12 of
the Securities Exchange Act of 1934, or exempt from such
registration by Section 12(g)(2) of that Act, any form of proxy
or written consent distributed to ten (10) or more shareholders
shall afford an opportunity on the proxy or form of written
consent to specify a choice between approval or disapproval of
each matter or group of related matters intended to be acted upon
at the meeting for which such proxy is solicited or by such
written consent, other than elections to office, and shall
provide, subject to reasonable specified conditions, that where
the person solicited specifies a choice with respect to any such
matters the shares will be voted in accordance therewith.
In any election of directors, any form of proxy in which the
directors to be voted upon are named therein as candidates and
which is marked "withhold" or otherwise marked in a manner
indicating that the authority to vote for the election of
directors is withheld shall not be voted for the election of a
director.
Section 10. Proxies. Every person entitled to vote shares shall
have the right to do so either in person or by one (1) or more
agents authorized by a written proxy signed by the person and
filed with the Secretary of the Corporation. Any proxy purporting
to be executed in accordance with the provisions of the General
Corporation Law of Nevada shall be presumptively valid. No proxy
shall be valid after the expiration of the eleven (11) months
from the date thereof unless otherwise provided in the proxy.
Every proxy continues in full force and effect until revoked by
the person executing it prior to the vote pursuant thereto,
except as otherwise provided in this Section 10. Such revocation
may be effected by a writing delivered to the Corporation stating
that the proxy is revoked or by a subsequent proxy executed by
the person executing the prior proxy and presented to the
meeting, or as to any meeting by attendance at such meeting and
voting in person by the person executing the proxy. The dates
contained on the forms of proxy shall presumptively determine the
order of execution, regardless of the postmark dates on the
envelopes in which they are mailed. A proxy is not revoked by the
death or incapacity of the maker unless, before the vote is
counted, written notice of such death or incapacity is received
by the Corporation.
A proxy which states that it is irrevocable is irrevocable for
the period specified therein, notwithstanding the death or
incapacity of the maker, when it is held by any of the following
or a nominee of any of the following:
a pledgee;
a person who has purchased or agreed to purchase or holds an
option to purchase the shares or a person who has sold a
portion of such person's shares in the Corporation to the
maker of the proxy;
a creditor or creditors of the Corporation or the
shareholder who extended or continued credit to the
Corporation or the shareholder in consideration of the proxy
if the proxy states that it was given in consideration of
such extension or continuation of credit and the name of the
person extending or continuing credit;
a person who has contracted to perform services as an
employee of the Corporation, if a proxy is required by the
contract of employment and the proxy states that it was
given in consideration of such contract of employment, the
name of employee and the period of employment contracted
for;
a person designated by or under an agreement under the
General Corporation Law of Nevada; or
a beneficiary of a trust with respect to shares held by the
trust.
Notwithstanding the period of irrevocability specified, the proxy
becomes revocable when the pledge is redeemed, the option or
agreement to purchase is terminated or the seller no longer owns
any shares of the Corporation or dies, the debt of the
Corporation or the shareholder is paid, the period of employment
provided for in the contract of employment has terminated, the
agreement under the General Corporation Law of Nevada has
terminated, or the person ceases to be a beneficiary of the
trust. In addition to the foregoing subsections (a) through (f),
a proxy may be irrevocable, notwithstanding the death or
incapacity of the maker, if it is given to secure the performance
of a duty or to protect a title, either legal or equitable, until
the happening of events which, by its terms, discharge the
obligations secured by it.
A proxy may be revoked, notwithstanding a provision making it
irrevocable, by a transferee of shares without knowledge of the
existence of the provisions unless the existence of the proxy and
its irrevocability appear, in the case of certificated
securities, on the certificate representing such shares, or in
the case of uncertificated securities, on the initial transaction
statement and written statements.
Section 11. Voting Trust. Shares of the Corporation may be
transferred by a written agreement to trustees in order to confer
upon them the right to vote and otherwise represent the shares
for such a period of time, not exceeding ten (10) years, as may
be specified in the agreement. The validity of a voting trust
agreement, otherwise lawful, shall not be affected during the
period of ten (10) years from the date when it was created or
last extended as herein after provided by the fact that under its
terms it will or may last beyond such ten (10) year period. At
any time within two (2) years prior to the time of expiration of
any voting trust agreements as originally fixed or at last
extended as provided in this Section 11, one (1) ore more
beneficiaries under the voting trust agreement may, by written
agreement and with the written consent of the voting trustee or
trustees, extend the duration of the voting trust agreement with
respect to their shares for an additional period not exceeding
ten (10) years from the expiration date of the trust as
originally fixed or as last extended as provided in this Section
11. A duplicate of the voting trust agreement and any extension
thereof shall be filed with the Secretary of the Corporation and
shall be open to inspection by a shareholder, a holder of a
voting trust certificate, or the agent of either, upon the same
terms as the record of shareholders of the Corporation is open to
inspection.
Section 12. Inspectors of Election. In advance of any meeting of
shareholders, the Board of Directors may appoint any persons,
other than nominees for office, as inspectors of election to act
at the meeting and any adjournment thereof.
If inspectors of election are not so appointed, or if any person
so appointed fails to appear or refuses to act, the chairman of
any meeting of shareholders may, and on the request of any
shareholder or a shareholder's proxy shall, appoint inspectors of
election (or to replace those who so fail or refuse) at the
meeting.
The numbers of inspectors shall be either one (1) or three (3).
If appointed at a meeting on the request of one (1) or more
shareholders or proxies, the majority of shares represented in
persons or by proxy shall determine whether one (1) or three (3)
inspectors are to be appointed.
The inspectors of election shall (a) determine the number of
shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum and the
authenticity, validity, and effect of proxies, (b) receive votes,
ballots, or consents, (c) hear and determine all challenges and
questions in any way arising in connection with the right to
vote, (d) count and tabulate all votes or consents, (e) determine
when the polls shall close, (f) determine the results, and (g) do
such other acts as may be proper to conduct the election or vote
with fairness to all shareholders.
The inspectors of election shall perform their duties
impartially, in good faith, to the best of their ability, and as
expeditiously as is practical. If there are three (3) inspectors
of election, the decision, act, or certificate or a majority is
effective in all respects as the decision, act, or certificate of
all. Any report or certificate made by the inspectors of election
is prima facie evidence of the facts stated therein.
ARTICLE III
Directors
Section 1. Powers. Subject to the provisions of the General
Corporation Law of Nevada and any limitations in the Articles of
Incorporation relating to action required to be approved by the
shareholders or by the outstanding shares, or by a less than
majority vote of a class or series of preferred shares, the
business and affairs of the Corporation shall be managed and all
corporate powers shall be exercised by or under the direction of
the Board of Directors. The Board of Directors may delegate the
management of the day-to-day operation of the business of the
Corporation to a management company or other persons, provided
that the business and affairs of the Corporation shall be managed
and all corporate powers shall be exercised under the ultimate
direction of the Board of Directors.
Section 2. Number of Directors. The number of directors of the
Corporation shall be note less than two (2) nor more than seven
(7). The exact number of directors shall be fixed within the
limit specified, by a duly adopted resolution of the shareholders
or of the Board of Directors, provided that a resolution of the
shareholders shall be controlling in the event that there is
conflict between a resolution of the shareholders and a
resolution of the Board of Directors.
After the issuance of shares, a bylaw specifying or changing a
fixed number of directors or the maximum or minimum number or
changing from a fixed to a variable Board of Directors or vise
versa may only be adopted by approval of the outstanding shares
(as defined in the General Corporation Law of Nevada); provided,
however, that a bylaw or amendment of the Articles of
Incorporation reducing the fixed number or the minimum number of
directors to a number less than five (5) cannot be adopted if the
votes cast against its adoption at a meeting, or the shares not
consenting in the case of an action by written consent, are equal
to more than sixteen and two-thirds percent (16-2/3 %) of the
outstanding shares entitled to vote. No amendment may establish a
range of authorized directors such that the stated maximum number
of authorized directors is greater than two (2) times the stated
minimum numbers of directors minus one (1).
The number of directors of this Corporation shall be two (2)
until changes as authorized by this Section 2.
Section 3. Election and Term of Office. At each annual meeting of
shareholders, directors shall be elected to hold office until the
next annual meeting. Each director, including a director elected
to fill a vacancy, shall hold office until the expiration of the
term for which elected and until a successor has been elected and
qualified.
Section 4. Nomination For Director. Nominations for election of
members of the Board of Directors may be made by the Board of
Directors or by any shareholder of any outstanding class of
voting stock of the Corporation entitled to vote for the election
of directors. Notice of intention to make any nomination or
nominations, other than by the Board of Directors, shall be made
in writing and shall be received by the President or Chairman of
the Board of the Corporation no more than (60) days prior to any
meeting of shareholders called for the election of directors, no
more than ten (10) days after the date the notice of such meeting
is sent to shareholders pursuant to Section 3 of Article II of
these Bylaws, and not later than the time fixed in the notice of
the meeting for the opening of the meeting. Notwithstanding the
preceding sentence, if notice of such meeting is sent by third-
class mail, as permitted by Section 3 of Article II of these
Bylaws, a notice of intention to make any nomination may be
received up to the time fixed in the notice of the meeting for
the opening of the meeting.
Any notice of intention to make any nomination or nominations for
election of members of the Board of Directors, other than by the
Board of Directors, shall contain the following information to
the extent know to the notifying shareholder:
the name and address of each proposed nominee;
the principal occupation of each proposed nominee;
the number of shares of voting stock of the Corporation
owned by each proposed nominee;
the name and residence address of the notifying shareholder;
and
the number of shares of voting stock of the Corporation
owned by the notifying shareholder.
Nominations not made in accordance herewith may be disregarded by
the then chairman of the meeting, and the inspectors of election
shall then disregard all votes cast for each such nominee.
Section 5. Vacancies. Unless otherwise provided in the Articles
of Incorporation or Bylaws and except for a vacancy created by
the removal of a director, vacancies on the Board of Directors
may be filled by approval of the Board of Directors or, if the
number of directors then in office is less than a quorum, by (a)
the unanimous written consent of the directors the in office, (b)
the affirmative vote of a majority of the directors then in
office at a meeting held pursuant to notice or waivers complying
with the General Corporation Law of Nevada, or (c) a sole
remaining director. Unless the Articles of Incorporation or a
bylaw adopted by the shareholders provide that the Board of
Directors may fill vacancies occurring by reason of the removal
of directors, such vacancies may be filled only be approval of
the shareholders (as defined in the General Corporation Law of
Nevada).
A vacancy or vacancies on the Board of Directors exists when any
authorized position of director is not then filled by a duly
elected director, whether caused by death, resignation, removal,
change in the authorized number of directors, or the failure of
shareholders at any meeting of shareholders at which any director
or directors are elected to elect the number of directors to be
voted for at that meeting or otherwise.
The shareholders may elect a director at any time to fill any
vacancy not filled by the directors. Any such election by written
consent other than to fill a vacancy created by removal requires
the consent of a majority of the outstanding shares entitled to
vote.
Any director may resign effective upon giving written notice to
the Chairman of the Board, the President, the Secretary, or the
Board of Directors of the Corporation, unless the notice
specifies a later time for effectiveness of such resignation. If
the resignation is effective at a future time, a successor may be
elected to take office when the resignation becomes effective
Any reduction of the authorized number of directors does not
remove any director prior to the expiration of such director's
term of office.
If, after the filing of any vacancy by the directors, the
directors then in office who have been elected by the
shareholders shall constitute less than a majority of the
directors then in office, then both of the following shall be
applicable: (a) any holder or holders of an aggregate of five
percent (5%) or more of the total number of shares at the time
outstanding having the right to vote for those directors may call
a special meeting of shareholders to be held to elect the entire
Board of Directors, or (b) the superior court of the proper
county shall, upon application of such shareholder or
shareholders, summarily order a special meeting of shareholders,
to be held to elect the entire Board of Directors. The term of
office of any director shall terminate upon that election of a
successor.
Section 6. Declaration of Vacancy. The Board of Directors may
declare vacant the office of a director who has been declared of
unsound mind by an order of court or convicted of a felony.
Section 7. Removal of Shareholders. Any or all of the directors
may be removed without cause if such removal is approved by the
outstanding shares (as defined in the General Corporation Law of
Nevada), provided that, unless the entire Board of Directors is
removed, no director shall be removed when the votes cast against
removal, or not consenting in writing to such removal, would be
sufficient to elect such director if voted cumulatively at an
election at which the same total number of vote were cast (or, if
such action is taken by written consent, all shares entitled to
vote were voted) and the entire number of directors authorized at
the time of the director's most recent election were then being
elected, and provided further that when the provisions of the
Articles of Incorporation the holders of the shares of any class
or series, voting as a class or series, are entitled to elect one
(1) or more directors, any directors, any directors so elected
may be removed only by the applicable vote of the holders of the
shares of that class or series.
Section 8. Board Meetings. Unless otherwise provided in the
Articles of Incorporation or in these Bylaws (except that the
Bylaws may not alter the required vote for any director or
shareholder action):
(a). Meetings of the Board of Directors may be called by the
Chairman of the Board or the President or any Vice President or
the Secretary or any two (2) directors.
(b) Regular meetings of the Board of Directors may be held
without notice if the time and place of such meetings are fixed
by these Bylaws or the Board of Directors. Special meetings of
the Board of Directors shall be held upon four (4) days notice by
mail or forty-eight (48) hours notice delivered personally or by
telephone or telegraph. The Articles of Incorporation or Bylaws
may not dispense with notice of a special meeting. A notice, or
waiver of notice, need not specify the purpose of any regular or
special meeting of the Board of Directors. If notice is by
telephone, it shall be completed when the person calling the
meeting believes in good faith that the notified person has heard
and acknowledged the notice or that a person at the office of the
intended recipient has heard or acknowledged the notice and will
promptly communicate it to the intended recipient. If the notice
is by mail or telegraph, it shall be complete when deposited in
the United States mail or delivered to the telegraph office at
the place where the Corporation's principal office is located,
charges prepaid and addressed to the notified person at such
person's address appearing on the corporate records or if it is
not on the records or is not readily ascertainable, at the place
where the regular Board of Directors meeting is held.
(c) Notices of a meeting need not be given to any director who
signs a waiver of notice or a consent to holding the meeting or
an approval of the minutes thereof, whether before or after the
meeting, or who attends the meeting without protesting, prior
thereto or at its commencement, the lack of notice to such
director. All such waivers, consents and approvals shall be
filled with the corporate records or made a part of the minutes
of the meeting.
(d) A majority of the directors present, whether or not a quorum
is present, may adjourn any meeting to another time and place. If
the meeting is adjourned for more than twenty-four (24) hours,
notice of any adjournment to another time or place shall be given
prior to the time of the adjourned meeting to the directors who
were not present at the time of adjournment.
(e) Meeting of the Board of Directors may be held at any place
within or outside the state which has been designated in the
notice of the meeting or, if not stated in the notice or there is
no notice, designated in these Bylaws or resolution of the Board
of Directors.
(f) Members of the Board of Directors may participate in a
meeting through use of conference telephone or similar
communications equipment, so long as all members participating in
such means can hear one another. Participation in a meeting
pursuant to this subsection (f) constitutes presence in person at
such meeting.
A majority of the authorized number of directors constitutes a
quorum of the Board of Directors for transaction of business. The
Articles of Incorporation or Bylaws may not provide that a quorum
shall be less than one-third (1/3) of the authorized number of
directors or less than two (2), whichever is larger, unless the
authorized number of directors is one (1), in which case one (1)
director constitutes a quorum.
Every act or decision done or made by a majority of the
directors present at a meeting duly held at which a quorum is
present is the act of the Board of Directors , subject to the
provisions of Section 310 and subdivision (e) of the General
Corporation Law of Nevada concerning (1) transactions in which a
director has a material financial interest or (2) the
indemnification of a corporate agent party to a lawsuit.
(i) A valid action of the Board of Directors requires at least a
majority approval of the directors present at a meeting. A
meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if
any action taken is approved by at least a majority of the
required quorum for such meeting.
Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting, if all members of the
Board of Directors shall individually or collectively consent in
writing to such action. Such written consent or consents shall be
filed with the minutes of the proceedings of the Board of
Directors. Such action by written consent shall have the same
force and effect as a unanimous vote of such directors.
The provisions of this Section 8 apply also in the same general
manner to committees of the Board of Directors and incorporators
and action by such committees and incorporators, mutatits
mutandis.
Section 9. Fees and Compensation. Directors and members of
committees may receive compensation for their services and
reimbursements for expenses, as may be fixed or determined by
resolution of the Board of Directors.
Section 10. Committees. The Board of Directors may, by resolution
adopted by a majority of the authorized number of directors,
designate one (1) or more committees, each consisting of two (2)
or more directors, to serve at the pleasure of the Board of
Directors. The Board of Directors may designate a chairman for
each committee who shall have the sole power to call any
committee meeting other than a meeting set by the Board of
Directors. The Board of Directors may designate one (1) or more
directors as alternate members of any committee, who may replace
any absent member at any meeting of the committee. The
appointment of members or alternate members of a committee
requires the vote of the majority of the authorized number of
directors. Any such committee, to the extent provided in the
resolution of the Board of Directors or in these Bylaws, shall
have all the authority of the Board of Directors, except with
respect to:
the approval of any action for which the General Corporation Law
of Nevada requires approval of the shareholders (as defined in
the General Corporation Law of Nevada) or approval of the
outstanding shares (as defined in the General Corporation Law of
Nevada);
the filling of vacancies on the Board of Directors or in
any committee;
the fixing of compensation of directors for serving on the
Board of Directors or on any committee;
the amendment of repeal of Bylaws or the adoption of new
Bylaws;
the amendment or repeal of any resolution of the Board of
Directors which by its express terms is not so amendable or
repealable;
a distribution to the shareholders of the Corporation,
except at a rate, in a periodic amount, or within a price
range set forth in the Articles of Incorporation or
determined by the Board of Directors; or
the appointment of other committees of the Board of
Directors or the members thereof.
The provisions of those Bylaws applicable to the Board of
Directors shall apply also in the same general manner to
committees of the Board of Directors and action of such
committees.
Section 11. Duties and Liabilities of Directors. A director shall
perform the duties of a director, including duties as a member of
any committee of the Board of Directors upon which the director
may serve, in good faith, in a manner such director believes to
be in the best interests of the Corporation and its shareholders,
and with such care, including reasonable inquiry, as an ordinary
prudent person in a like position would use under similar
circumstances
In performing the duties of a director, a director shall be
entitled to rely on information, opinions, reports, or
statements, including financial statements and other financial
data, in each case prepared or presented by any of the following:
one (1) or more officers or employees of the Corporation whom
the director believes to be reliable or competent in the matters
presented;
(b) counsel, independent accountants, or other persons as to
matters which the director believes to be within such person's
professional or expert competence; or
(c) a committee of the Board of Directors upon which the director
does not serve, as to matters within its designation authority,
which committee the director believes to merit confidence;
so long as, in any such case, the director acts in good faith,
after reasonable inquiry when the need therefor is indicated by
the circumstances and without knowledge that would cause such
reliance to be unwarranted.
A person who performs the duties of a director in accordance with
this Section 11, and as may be set forth in the Articles of
Incorporation, shall have no liability based upon any alleged
failure to discharge the person's obligations as a director.
Section 12 Transactions Between the Corporation and Its Directors
or Corporations Having Interrelated Directors.
No contract or transaction between the Corporation and one (1) or
more of its directors, or between the Corporation and any
corporation, firm, or association in which one (1) or more of its
directors has a material financial interest, is either void or
voidable because such director or directors or such other
corporation, firm, or association are parties or because such
director or directors are present at the meeting of the Board of
Directors or a committee thereof which authorizes, approves, or
ratifies the contract or transaction, if
the material facts as to the transaction and as to such
director's interest are fully disclosed or known to the
shareholders and such contract or transaction is approved or
ratified in good faith by the affirmative vote of a majority of
the shares represented and voting at a duly held meeting at which
a quorum is present (which shares voting affirmatively also
constitute at least a majority of the required quorum) or by the
written consent of shareholders, with the shares owned by the
interested director or directors not being entitled to vote
thereon;
the material facts as to the transaction and as to such
director's interest are fully disclosed or known to the Board of
Directors or committee, and the Board of Directors or committee
authorizes, approves, or ratifies the contract or transaction in
good faith by a vote sufficient without counting the vote of the
interested director or directors and the contract or transaction
is just and reasonable to the Corporation at the time it is
authorized, approved, or ratified; or
as to contract or transactions not approved as provided in
paragraphs (1) or (2) of this subsection (a), the person
asserting the validity of the contract or transaction sustains
the burden of proving that the contract or transaction was just
and reasonable as to the Corporation at the time it was
authorized, approved, or ratified.
A mere common directorship does not constitute a material
financial interest within the meaning of this subsection (a). A
director is not interested within the meaning of this subsection
(a) in a resolution fixing the compensation of another director
as a director, officer, or employee of the Corporation,
notwithstanding the fact that the first directors is also
receiving compensation from the Corporation.
No contract or other business transactions between the
Corporation and any corporation or association of which one (1)
or more of its directors are directors is either void or voidable
because such director or directors are present at the meeting of
the Board of Directors or a committee thereof which authorizes,
approves, or ratifies the contract or transaction, if
(1) the material facts as to the transaction and as to such
director's other directorship are fully disclosed or known to the
Board of Directors or committee, and the Board of Directors or
committee authorizes, approves, or ratifies the contract or
transaction in good faith by a vote sufficient without counting
the vote of the common director or directors or the contract or
transaction is approved or ratified in good faith, by the
affirmative vote of a majority of the shares represented and
voting at a duly held meeting at which a quorum is present (which
shares voting affirmatively also constitute at least a majority
of the required quorum) or by the written consent of
shareholders; or
(2) as to contracts or transactions not approved as provided in
paragraph (1) of this subsection (b), the contract or transaction
is just and reasonable as to the Corporation at the time it is
authorized, approved, or ratified.
This subsection (b) does not apply to contracts or transactions
covered by subsection (a).
(c) Interested or common directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors
or a committee thereof, which authorizes, approves or ratifies a
contract or transaction.
Section 13. Inspection of Corporate Records and Property. Every
director shall have the absolute right at any reasonable time to
inspect and copy all books, records, and documents of every kind
and to inspect the physical properties of the Corporation of
which such person is a director and also of its subsidiary
corporations, domestic or foreign. Such inspection by a director
may be made in person or by agent or attorney and the right of
inspection includes the right to copy and make extracts.
Section 14. Advisory Board. The Board of Directors may establish,
pursuant to appropriate Board action, a board of advisory
directors with such duties to advise the Board of Directors as
the Board of Directors may specify.
ARTICLE IV
Officers
Section 1. Officers. The officers of the Corporation shall be a
Chairman of the Board, or a President, or both, a Secretary, a
Chief Financial Officer, and such other officers with such titles
and duties as shall be stated in these Bylaws or determined by
the Board of Directors and as may be necessary to enable it to
sign instruments and share certificates. The President is the
general manager and chief executive officer of the Corporation
unless, in the event there is both a Chairman of the Board and a
President, the Board of Directors designates that the Chairman of
the Board shall be the general manager and chief executive
officer of the Corporation. Any number of offices may be held by
the same person.
Section 2. Appointment of Officers. The officers of the
Corporation, except such officers as may be appointed in
accordance with the provisions of Section 3 or Section 5 of this
Article IV, shall be chosen by the Board of Directors, and each
shall serve at the pleasure of the Board of Directors, subject to
the rights, if any, of an officer under any contract of
employment.
Section 3. Subordinate Officers. The Board of Directors may
appoint, and may empower the President to appoint, such other
officers as the business of the Corporation may require, each of
whom shall hold office for such period, have such authority, and
perform such duties as are provided in these Bylaws or as the
Board of Directors may from time to time determine.
Section 4. Removal and Resignation of Officers. Subject to the
rights, if any, of an officer under contract of employment, any
officer may be removed, either with or without cause, by the
Board of Directors, at any regular or special meeting of the
Board of Directors, or, except in case of an officer chosen by
the Board of Directors, by any officer upon whom such power of
removal be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to
the Board of Directors. Any resignation shall take effect at the
date of the receipt of that notice or any later time if specified
in that notice; and, unless otherwise specified in that notice,
the acceptance of the resignation shall not be necessary to make
it effective. Any resignation is without prejudice to the rights,
if any, of the Corporation under any contract to which the
officer is a party.
Section 5. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause shall
be filled in the manner prescribed in these Bylaws for regular
appointment to the office.
ARTICLE V
Miscellaneous
Section 1. Record Date and Closing Stock Books. In order that the
Corporation may determine the shareholders entitled to notice of
any meeting or to vote or entitled to receive payment of any
dividend or other distribution or allotment of any rights or
entitled to give consent to corporate action without a meeting or
entitled to exercise any rights in respect of any other lawful
action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty (60) nor less than ten
(10) days prior to the date of such meeting nor more than sixty
(60) days prior to any other action. If no record date is fixed:
(a) the record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the
close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business
on the business day next preceding the day on which the meeting
is held; and
(b) the record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors has been taken, shall be
the day on which the first written consent is given;
(c) the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto, or the
sixtieth (60th) day prior to the date of such other action,
whichever is later.
A determination of shareholders of record entitled to notice of
or to vote at a meeting of shareholders shall apply to any
adjournment of the meeting unless the Board of Directors fixes a
new record date for the adjourned meeting, but the Board of
Directors shall fix a new record date if the meeting is adjourned
for more than forty-five (45) days from the date set for the
original meeting.
Shareholders at the close of business on the record date are
entitled to notice and to vote or to receive the dividend,
distribution, or allotment of rights, or to exercise the rights,
as the case may be, notwithstanding any transfer of any shares on
the books of the Corporation after the record date, except as
otherwise provided in the Articles of Incorporation or by
agreement or in the General Corporation Law of Nevada.
Section 2. Records and Reports. The Corporation shall keep
adequate and correct books and records of account and shall keep
minutes of the proceedings of its shareholders, Board of
Directors and the committees of the Board of Directors and shall
keep at its Principal Executive Office, or at the office of its
transfer agent or registrar, a record of its shareholders, giving
the names and addresses of all shareholders and the numbers and
class of shares held by each. Such minutes shall be kept in
written form. Such other books and records shall be kept either
in written form or in any other form capable of being converted
into written form.
Section 3. Inspection of the Record of Shareholder. A shareholder
or shareholders holding at lest five percent (5%) in the
aggregate of the outstanding voting shares of the Corporation or
who hold at least one percent (1%) of such voting shares and have
filed a Schedule 14B with the United States Securities and
Exchange Commission relating to the election of directors of the
Corporation shall have an absolute right to do either or both of
the following:
(a) inspect and copy the record of shareholders' names and
addresses and shareholdings during usual business hours upon five
(5) days' prior written demand upon the corporation; or
(b) obtain from the transfer agent for the Corporation, upon
written demand and upon the tender of its usual charges for such
a list (the amount of which charges shall be stated to the
shareholder by the transfer agent upon request), a list of the
shareholders' names and addresses who are entitled to vote for
the election of directors, and their shareholdings, as of the
most recent record date for which it has been compiled or as of a
date specified by the shareholders subsequent to the date of
demand.
The list shall be made available on or before the later of five
(5) business days after the demand is received or the date
specified therein as the date as of which the list is to be
compiled. The Corporation shall have the responsibility to cause
its transfer agent to comply with this Section 3.
The Corporation's record of shareholders shall also be open to
inspection and copying by any shareholder of holder of a voting
trust certificate at any time during usual business hours upon
written demand on the Corporation, for a purpose reasonably
related to such holder's interest as a shareholder or holder of a
voting trust certificate. Any inspection and copying under this
Section 3 may be made in person or by agent or attorney.
Section 4. Inspection of Bylaws. The Corporation shall keep at
its Principal Executive Office in the State of Nevada or if its
Principal Executive Office is not in Nevada at its principal
business office in Nevada, the original or a copy of its Bylaws
as amended to date, which shall be open to inspection by the
shareholders at all reasonable times during office hours. If the
Principal Executive Office of the Corporation is outside the
State of Nevada and the Corporation has no principal business
office in the State of Nevada, it shall upon the written request
of any shareholder furnish to such shareholder a copy of these
Bylaws as amended to date.
Section 5. Inspection of Corporation Records. The accounting
books and records and minutes of proceedings of the shareholders
and the Board of Directors and committees of the Board of
Directors shall be open to inspection upon written demand on the
Corporation of any shareholder or holder of a voting trust
certificate at any reasonable time during usual business hours,
for a purpose reasonably related to such holder's interest as a
shareholder or as the holder of such voting trust certificate.
The right of inspection created by this Section 5 shall extend to
the records of each subsidiary of the Corporation.
Such inspection by a shareholder or holder of a voting trust
certificate may be made in person or by agent or attorney, and
the right of inspection includes the right to copy and make
extracts.
Section 6. Checks, Drafts, Ect. All checks, drafts or other
orders for payment of money, notes, or other evidences of
indebtedness issued in the name of or payable to the Corporation
shall be signed or endorsed by the person or persons and in the
manner specified by the Board of Directors.
Section 7. Annual Report. So long as the Corporation shall have
fewer than one-hundred (100) shareholders, determined in
accordance with the General Corporation Law of Nevada, the annual
report to shareholders referred to in the General Corporation Law
of Nevada is expressly dispensed with. The Board of Directors may
cause to be sent to the shareholders annual or other periodic
reports in any form that they consider appropriate or which may
otherwise be required by law.
Section 8. Contracts, Etc., How Executed. The Board of Directors
may, except as otherwise provided in these Bylaws, authorized any
officer (or officers) or agent (or agents) to enter into any
contract or execute any instrument in the name of and on behalf
of the Corporation. This authority may be general or confined to
specific instances. Unless so authorized or ratified by the Board
of Directors, or within the agency power of an officer, no
officer, agent or employee shall have any power or authority to
bind the Corporation by any contract or engagement, to pledge its
credit, or to render it liable for any purpose or for any amount.
Section 9. Share Certificates. Every holder of shares in the
Corporation shall be entitled to have a certificate signed in the
name of the Corporation by the chief executive officer and by the
Secretary of the Chief Financial Officer, certifying the number
of shares and the class or series of shares owned by the
shareholder. Any or all of the signatures on the certificate may
be facsimile.
Any such certificate shall also contain such legend or other
statement as may be required by the General Corporation Law of
Nevada , the Corporate Securities Law of 1968, the federal
securities laws, these Bylaws, or by any agreement between the
Corporation and the holder of the Certificate. In the event any
shares are issued pursuant to a permit or exemption therefrom
requiring the imposition of a legend condition, the person or
persons issuing or transferring the shares shall make sure the
legend appears on the certificate and shall not be required to
transfer any shares free of such legend unless an amendment to
such permit or new permit authorizing such deletion is issued
prior thereto.
Section 10 Transfer of Shares. The shares of the Corporation
shall be transferred on the books of the Corporation upon
surrender and cancellation of certificates for a like number of
shares by the holder thereof in person, or by the holder's
attorney.
Section 11. Consideration for Shares. The shares of the
Corporation may be issued:
(a) for such consideration as is determined from time to time by
the Board of Directors, or by the shareholders if the Articles of
Incorporation so provide, consisting of any or all of the
following: money paid, labor done, services actually rendered to
the Corporation or for its benefit or in its formation or
reorganization, debts or securities canceled, and tangible or
intangible property actually received either by the Corporation
or by a wholly owned subsidiary; but neither promissory notes of
the purchaser (unless adequately secured by collateral other than
the shares acquired or unless permitted under Section 13 of this
Article V) nor future services shall constitute payment or part
payment for shares of the Corporation; or
(b) as a share dividend or upon a stock split, reverse stock
split, reclassification of outstanding shares into shares of
another class, conversion of outstanding shares into shares of
another class, exchange of outstanding shares for shares of
another class, or other change affecting outstanding shares.
If the Articles of Incorporation reserve to the shareholders the
rights to determine the consideration for the issue of any
shares, such determination shall be made by approval of the
outstanding shares (as defined in the General Corporation Law of
Nevada).
The Corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the
consideration to be paid therefor. On the certificate issued to
represent any such partly paid shares or, for uncertificated
securities, on the initial transaction statement for such partly
paid shares, the total amount of the consideration to be paid
therefor and the amount paid thereon shall be stated. Upon the
declaration of any dividend on fully paid shares, the Corporation
shall declare a dividend upon partly paid shares of the same
class, but only upon the basis of the percentage of the
consideration actually paid thereon.
The Board of Directors shall state by resolution its
determination of the fair value to the Corporation in monetary
terms of any consideration other than money for which shares are
issued. This paragraph does not affect the accounting treatment
of any transaction, which shall be in conformity with generally
accepted accounting principles.
Section 12. Representation of Shares of Other Corporations. The
chief executive officer or any other persons authorized to do so
by the chief executive officer is authorized to vote, represent,
and exercise on behalf of this Corporation all rights incident to
any and all shares of any other corporation or corporations
standing in the name of this Corporation. The authority herein
granted to said officers to vote or represent on behalf of this
Corporation any and all shares held by this Corporation in any
other corporation or corporations may be exercised either by such
officers in person or by any other person authorized to do so by
proxy or power of attorney duly executed by said officers.
Section 13 Stock Purchase Plans. The Corporation may adopt and
carry out a stock purchase plan or agreement or stock option plan
or agreement providing for the issue and sale for such
consideration as may be fixed of its unissued shares, or of
issued shares acquired or to be acquired to one (1) or more of
the employees or directors of the Corporation or of a subsidiary
or parent thereof or to a trustee on their behalf and for the
payment for such shares in installments or at one time, and may
provide for aiding any such persons for paying for such shares by
compensation for services rendered, promissory notes, or
otherwise.
The stock purchase plan or agreement or stock option plan or
agreement may include, among other features, the fixing of
eligibility for participation therein, the class and price of
shares to be issued or sold under the plan or agreement, the
number of shares which may be subscribed for, the method of
payment therefor, the reservation of title until payment
therefor, the effect of the termination of employment, an option
or obligation on the part of the Corporation to repurchase the
shares upon termination of employment, subject to the provisions
of the General Corporation Law of Nevada, restrictions upon
transfer of the shares, and the time limits of and termination of
the plan.
Section 14. Indemnification of Corporate Agents, Purchase of
Liability Insurance. This Corporation, to the maximum extent
permitted by the Nevada General Corporation Law, shall indemnify
any of its agents against expenses, judgements, fines,
settlements, and other amounts actually and reasonably incurred
in connection with any proceeding or potential proceeding arising
out of the relationship, and to the maximum extent permitted by
law, this Corporation shall advance the agent's reasonable
defense expenses in any such proceeding. For the purposes of this
section, "agent" means any person who is or was a director,
officer, employee, or other agent of this corporation or its
predecessor, and any person who is or was serving as a director,
officer, employee, or agent of another corporation, partnership,
joint venture, trust or other enterprise, at the request of this
Corporation or its predecessor; "proceeding" means any
threatened, pending, or completed action or proceeding, whether
civil, criminal, administrative, or investigative; and "expenses"
include but are not limited to attorneys' fees and any expenses
of establishing a right to indemnification under this section.
The Corporation shall have the right to purchase and maintain
insurance to the maximum extent permitted by law on behalf of its
officers, directors, employees, and other agents, against any
liability asserted against or incurred by any officer, director,
employee, or agent in such capacity or arising out of the
officer's, director's, employee's, or agents status as such.
Section 15. Loans and Guarantees to Directors and Officers.
Unless otherwise permitted in accordance with the General
Corporation Law of Nevada, the Corporation shall not make any
loan of money or property to, or guarantee the obligation of, any
director or officer of the Corporation or of its parent, if any
unless the transaction, or an employee benefit plan authorizing
the loans or guaranties after the disclosure of the right under
such a plan to include officers or directors, is approved by a
majority of the shareholders entitled to act thereon.
Notwithstanding the preceding sentence, the Board of Directors
shall have the power to approve a loan of money or property to an
officer, or guarantee the obligation of an officer, or approve an
employee benefit plan authorizing such a loan or guaranty to an
officer, provided that, on the date of such approval, the
Corporation has outstanding shares held of record by one-hundred
(100) or more persons and has a bylaw approved by the outstanding
shares (as defined in the General Corporation Law of Nevada)
authorizing the Board of Directors alone to approve such a loan
or guaranty to an officer, whether or not a director, or an
employee benefit plan authorizing such a loan or guaranty to an
officer. Approval shall require a determination by the Board of
Directors that the loan or guaranty may reasonably be expected to
benefit the Corporation and shall be by vote sufficient without
counting the vote of any interested director.
Section 16. Construction and Definitions. Unless the context
otherwise requires, the general provisions, rules of construction
and definitions contained in the General Corporation Law of
Nevada shall govern the construction of these Bylaws. Without
limiting the generality of the foregoing, the masculine includes
feminine and neuter, the singular number includes the plural and
the plural number includes the singular, and the term "person"
includes a corporation as well as a natural person.
ARTICLE VI
Amendments
Section 1. Amending the Articles of Incorporation. Any lawful
amendment to the Articles of Incorporation may be adopted upon
approval by a majority vote of the Board of Directors and the
outstanding shares, either before or after approval of the Board
of Directors, unless a higher percentage of approval is required
by the Articles of Incorporation. Notwithstanding the above, the
Board of Directors may adopt by itself an amendment deleting the
names and addresses of the first directors or of the initial
agent, and, if the Corporation does not have more than one (1)
class of shares outstanding, the Board of Directors may adopt by
itself an amendment effecting a stock split.
Whenever the Articles of Incorporation require for corporate
action the vote of a larger proportion or of all of the shares of
any class or series, or of a larger proportion or of all of the
directors, than is otherwise required by the General Corporation
Law of Nevada, the provision in the Articles of Incorporation
requiring such greater vote shall not be altered, amended, or
repealed except by such greater vote unless otherwise provided in
the Articles of Incorporation.
In the case of amendments adopted after the Corporation has
issued any shares, the Corporation shall file with the Secretary
of State a Certificate of Amendment, which shall consist of an
officers' certificate stating:
(a) the wording of the amendment or amended Articles of
Incorporation in accordance with the General Corporation Law of
Nevada;
(b) that the amendment has been approved by the Board of
Directors;
(c) if the amendment is one for which the approval of the
outstanding shares (as defined in the General Corporation Law of
Nevada) is required, that the amendment was approved by the
required vote of shareholders, the total number of outstanding
shares of each class entitled to vote with respect to the
amendment, and that the number of shares of each class voting in
favor of the amendment equaled or exceeded the vote required,
specifying the percentage vote required of each class entitled to
vote; and
(d) if the amendment is one which may be adopted with approval by
the Board of Directors alone, a statement of the facts entitling
the Board of Directors alone to adopt the amendment.
Section 2. Amending the Bylaws. These Bylaws may be adopted,
amended, or repealed by approval of the Board of Directors or by
the affirmative vote or written consent of a majority of the
outstanding shares entitled to vote. In case of conflict between
an action of the Board of Directors and of the shareholders, the
action taken by the shareholders shall control. In addition, the
shareholders may adopt a bylaw which restricts or deprives the
Board of Directors of the power to adopt, amend, or repeal any or
all Bylaws.
UNANIMOUS WRITTEN CONSENT
OF THE DIRECTORS OF
CASINO AIRLINK, INC.
(FORMERLY KNOWN AS
INTEGRATED MARKETING PROFESSIONALS, INC.)
The undersigned, constituting all of the directors of Casino
Airlink, Inc. (formerly known as Integrated Marketing
Professionals, Inc.) (the "corporation") acting pursuant to the
authority of Section 78.315.2 of the Nevada Revised Statutes,
hereby consent to the adoption of the following resolutions, to
have the same force and effect as if duly adopted at a meeting
duly noticed and held:
WHEREAS, the corporation's Articles of Incorporation authorize
the issuance of twenty-five million (25,000,000) shares of common
stock of the corporation with a par value of $.10 (the "Common
Stock") and, additionally, ten million (10,000,000) shares of
preferred stock, also with a par value of $.10 per share (the
"Preferred Stock"); and,
WHEREAS, the board of directors has determined that it is in the
best interest of the corporation to issue to certain investors
shares of the Company's Preferred Stock, as authorized for
issuance by the Company's Articles of Incorporation;
NOW, THEREFORE, BE IT RESOLVED, that pursuant to Section 78.1955
of the Nevada Revised Statutes, the corporation shall, and hereby
does, create a series of its Preferred Stock:
RESOLVED FURTHER, that the Series A Preferred Stock shall and
hereby does comprise a total of five million (5,000,000) shares;
and
RESOLVED FURTHER, that the rights, preferences, privileges and
restrictions granted to or imposed upon the Series A Preferred
Stock shall be, and hereby are as follows:
RESOLVED FURTHER, that the President and such other officers as
he may designate be, and each hereby is, authorized, directed and
empowered to execute all other documents and to take such other
action as they may deem necessary or advisable in order to carry
out and perform the purpose of these resolutions.
RESOLVED FURTHER, that the President and such officers as he may
designate be, and each hereby is, authorized, directed and
empowered to take such actions and execute such documents as they
may deem necessary or appropriate to effect the issuance of such
shares of the Series A Preferred Stock for such consideration.
Date: December 7, 1996.
/s/ William Forhan
William Forhan, Director
/s/ Ellen Forhan
Ellen Forhan, Director
RIGHTS, PREFERENCES, AND PRIVILEGES OF SERIES A PREFERRED STOCK
1. Voting Rights. Except as otherwise required by law or
Section 6 hereof, the holder of each share of Series A Preferred
Stock issued and outstanding shall be entitled to the number of
votes equal to the number of shares of Common Stock into which
such shares of Series A Preferred Stock could be converted at the
record date for the determination of the shareholders entitled to
vote on such matters, or, if no such record date is established,
at the date such vote is taken or any written consent of
shareholders is solicited, such votes to be counted together with
all other shares of the corporation having general voting power
and not separately as a class. Fractional votes by the holder of
Series A Preferred Stock shall not, however, be permitted, and
any fractional voting rights shall (after aggregating all shares
into which shares of Series A Preferred Stock held by each holder
could be converted) be rounded down to the nearest whole number.
2. Dividends. The holders of the Series A Preferred Stock shall
be entitled, when, as and if declared by the board of directors
of the corporation, to noncumulative dividends in such amount as
may be determined from time to time by the board of directors,
such dividends to be paid out of funds legally available
therefor. No dividend or distribution shall be declared or paid
on any shares of Common Stock (other than dividends payable
solely in common stock of the corporation) unless at the same
time an equivalent dividend or distribution is paid or declared
and set aside for payment on the Series A Preferred Stock (on an
as-if converted to Common Stock basis).
3. Liquidation Preference. In the event of any liquidation,
dissolution, or winding up of the corporation, either voluntary
or involuntary, distributions to the shareholders of the
corporation shall be made in the following manner:
(a) The holders of the Series A Preferred Stock shall be
entitled to receive, prior and in preference to any distribution
of any of the assets or surplus funds of the corporation to the
holders of the Common Stock by reason of their ownership of such
shares, an amount equal to $.63 for each shares of Series A
Preferred Stock then held by them, plus all declared but unpaid
dividends on such shares, minus an amount equal to all dividends
per share on the Series A Preferred Stock paid since the date
such shares were issued (the "Original Issuance Date") that were
not also paid with respect to the Common Stock. If the assets
and funds thus distributed among the holders of the Series A
Preferred Stock shall be insufficient to permit the payment to
such holders of the full preferential amount, then the entire
assets and funds of the corporation legally available for such
distribution shall be distributed among the holders of the Series
A Preferred Stock in proportion to the shares of Series A
Preferred Stock then held by them. After payment has been made
to the holders of the Series A. Preferred Stock of the full
amounts as to which they shall be entitled as aforesaid, the
holders of the Common Stock shall be entitled to receive ratably
all of the remaining assets.
(b) For purposed of this paragraph 3, (i) a merger or
consolidation of the corporation with or into any other
corporation or corporations, or (ii) the merger of any other
corporation or corporations into the corporation, as a result of
which consolidation or merger (A) the shareholders of the
corporation receive distributions in cash or securities or
another corporation or corporations as a result of such
consolidation or merger or (B) the shareholders of the
corporation shall own less than fifty percent (50%) of the voting
securities of the surviving corporation, or (iii) a sales of all
of substantially all of the assets of the corporation, shall be
treated as liquidation, dissolution or winding up of the
corporation.
(c) Any securities to be delivered to the holders of the
Series A Preferred Stock pursant to paragraph 3(b) above shall be
valued as follows:
(i) If traded on an securities exchange, the value shall be
deemed to be the average of the closing prices of the securities
on such exchange over the 30 day period ending three (3) days
prior to the closing;
(ii) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices
(whichever are applicable over the 30-day period ending three (3)
days prior to the closing; and
(iii) If there is no active public market, the value shall be
the fair market value thereof, as mutually determined by the
corporation and the holder of Series A Preferred Stock who would
been entitled to receive such securities or the same type of
securities and whose Series A Preferred Stock represents at least
a majority of the voting power of all then outstanding shares of
such Series A Preferred Stock.
4. Conversion. The holders of the Series A Preferred Stock
shall have conversion rights as follows (the "Conversion
Rights"):
(a) Rights to Convert. Each share of Series A Preferred Stock
shall be convertible, at the option of the holder thereof, at any
time after the date of issuance of such share at the office of
the corporation or any transfer agent for the Series A Preferred
Stock. Each shares of Series A Preferred Stock shall be
convertible into the number of fully paid and nonassessable
shares of Common Stock which results from dividing the Conversion
Price (as hereinafter defined) per share in effect for the Series
A Preferred Stock at the time of conversion into the per share
conversion value (as hereinafter defined) of such series. The
initial Conversion Price per share of Series A Preferred Stock
shall be $0.315, and the per share Conversion Value of Series A
Preferred Stock shall be $0.630, plus any declared but unpaid
dividends on the Series A Preferred Stock. The initial
Conversion Price of Series A Preferred Stock shall be subject to
adjustment from time to time as provided below. The number of
shares of Common Stock into which a share of Series A Preferred
Stock is convertible is hereinafter referred to as the
"Conversion Rate" of such series.
(b) Mechanics of Conversion. Before any holder of Series A
Preferred Stock shall be entitled to convert the same into full
shares of Common Stock and receive certificates therefor, he or
she shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the corporation or of any
transfer agent for the Series A Preferred Stock and shall give
written notice to the corporation at such office that such holder
elects to convert the same. The corporation shall issue
certificates evidencing the shares of Common Stock issuable upon
such conversion if the holder notifies the corporation or its
transfer agent that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the
corporation to indemnify the corporation from any loss incurred
by it in connection with such certificates. The corporation
shall, as soon as practicable after such delivery, or such
agreement of indemnification in the case of a lost certificate,
issue and deliver at such office to such holder of Series A
Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which the holder shall be entitled as a
foresaid and a check payable to the holder in the amount of any
cash amounts payable in lieu of conversion into fractional shares
of Common Stock as set forth below. Such conversion shall be
deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Series A
Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder
or holders of such shares of Common Stock on such date.
(c) Fractional Shares. In lieu of any fractional shares to
which the holder of Series A Preferred Stock would otherwise be
entitled, the corporation shall pay cash equal to such fraction
multiplied by the fair market value of one share of Common Stock,
as determined in the sole discretion of the board of directors of
the corporation. Whether or not fractional shares would be
issuable upon such conversion shall be determined on the basis of
the total number of shares of Series A Preferred Stock of each
holder at the time converting into Common Stock and the number of
shares of Common Stock issuable upon such aggregate conversion.
(d) Adjustment of Conversion Price. The Conversion Price of
Series A Preferred Stock shall be subject to adjustment from time
to time as follows:
(i) If the corporation shall issue any Common Stock ("Additional
Stock"), not including "Excluded Stock," as defined below, for a
consideration per share less than the conversion Price in effect
immediately prior to the issuance of such Common Stock (excluding
stock dividends, subdivisions, split-ups, combinations, dividends
or recapitalizations which are covered by subparagraph 4(d)(iii),
(iv), (v) and (vi)), the Conversion Price in effect immediately
after such issuance of Additional Stock shall forthwith (except
as provided in this paragraph 4(d) be adjusted to a price
determined by multiplying the Conversion Price in effect
immediately prior to such issuance of Additional Stock by a
fraction:
the numerator of which shall be equal to the sum of:
(x) the total number of shares of Common Stock outstanding
(including any shares of Common Stock issuable upon conversion of
the Series A Preferred Stock, or deemed to have been issued
pursuant to subdivision (3)(B), (C) and (D) of this clause (I)
immediately prior to such issuance, plus
(y) the number shares of Common Stock that the aggregate
consideration received by the corporation for the Additional
Stock would purchase at the Conversion Price in effect
immediately before such issuance of Additional Stock;
(B) and the denominator of which shall be the total number of
shares of Common Stock outstanding (including any shares of
Common Stock issuable upon conversion of the Series A Preferred
Stock or deemed to have been issued pursuant to subdivision (3)
(B), (C) and (D) of this clause (i) immediately after the
issuance of such Additional Stock.
For the purposes of any adjustment of the conversion Price
pursuant to this clause (i), the following provisions shall be
applicable:
(1) In the case of the issuance of Additional Stock for cash,
the consideration shall be deemed to be the amount of cash paid
therefor before deducting any discounts, commissions or expenses
paid or incurred by the corporation in connection with the
issuance and sale thereof.
(2) In the case of the issuance of Additional Stock for a
consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair
value thereof as determined by the board of directors of the
corporation in its sole discretion; provided, however, that if,
at the time of such determination , the corporation's Common
Stock is traded in the over-the-counter market or on a national
or regional securities exchange, such fair market value as
determined by the board of directors of the corporation shall not
exceed the aggregate "Current Market Price" (as defined below) of
the shares of Additional Stock being issued.
(3) In the case of the issuance of (i) options to purchase or
rights to subscribe for Common Stock (other than Excluded Stock),
(ii) securities by their terms convertible into or exchangeable
for Common Stock (other than Excluded Stock), or (iii) options to
purchase or rights to subscribe for such convertible or
exchangeable securities:
(A) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights
to subscribe for Common Stock shall be deemed to have been issued
at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the
manner provided in subdivisions (1) and (2) above), if any
received by the corporation upon the issuance of such options or
rights plus the minimum purchase price provided in such options
or rights for the Common Stock covered thereby;
the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities, or upon the exercise of
options to purchase or rights to subscribe for such convertible
or exchangeable securities and subsequent conversions or exchange
thereof, shall be deemed to have been issued at the time such
securities were issued or such options or rights were issued and
for a consideration equal to the consideration received by the
corporation for any such securities and related options or rights
(excluding any cash received on account of accrued interest or
accrued dividends), plus the minimum additional consideration, if
any, to be received by the corporation upon the conversion or
exchange of such securities or the exercise of any related
options or rights (the consideration in each case to be
determined in the manner provided in subdivisions (1) and (2)
above);
on any change in the number of shares of Common Stock deliverable
upon exercise of any such options or rights or conversion of or
exchange for such convertible or exchangeable securities, or on
any change in the minimum purchase price of such options, rights
or securities, other than a change resulting from the
antidilution provisions of such options, rights or securities,
the Conversion Price shall forthwith be readjusted to such
conversion Price as would have obtained had the adjustment made
upon the issuance of such options, rights or securities not
exercised, converted or exchanged prior to such change, as the
case may be, been made upon the basis of such change; and
on the expiration of any such options or rights, the termination
of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable
securities, the Conversion Price shall forthwith be readjusted to
such Conversion Price as would have obtained had the adjustment
made upon the issuance of such options, rights, convertible or
exchangeable securities or options or rights related to such
convertible or exchangeable securities, as the case may be, been
made upon the basis of the issuance of only the number of shares
of Common Stock actually issued upon the exercise of such options
or rights, upon the conversion or exchange of such convertible or
exchangeable securities or upon the exercise of the options or
tights related to such convertible or exchangeable securities, as
the case may be.
"Excluded Stock" shall mean:
all shares of Series A Preferred Stock and the Common Stock into
which the shares of Series A Preferred Stock are convertible;
shares of Common Stock or other securities issuable to employees,
directors or consultants of the corporation pursuant to plans and
arrangements approved by the board of directors of the
corporation;
all shares of Common Stock or other securities issued as a
distribution or dividend with respect to the Series A Preferred
Stock; and
all shares of Common Stock or other securities the issuance of
which gives rise to an adjustment of the conversion Price of the
Series A Preferred Stock pursuant to subparagraph 4(d)(iii) or
(iv) or a distribution with respect to the Series A Preferred
Stock pursuant to subparagraph 4(d)(v) or (vi).
(iii) If the number of shares of Common Stock outstanding at
any time after the date hereof is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up
of shares of Common Stock, then, on the date such payment is made
or such change is effective, the Conversion Price of the Series A
Preferred Stock shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of any
shares of such Series A Preferred Stock shall be increased in
proportion to such increase of outstanding shares.
(iv) If the number of shares of Common Stock outstanding at any
time after the date hereof is decreased by a combination of the
outstanding shares of Common Stock, the, on the effective date of
such combination the conversion Price of the Series A Preferred
Stock shall be appropriately increased so that the number of
shares of Common Stock issueable on conversion of any shares of
such Series A Preferred Stock shall be decreased in proportion to
such decrease in outstanding shares.
(v) In case the corporation shall declare a cash dividend upon
its Common Stock payable otherwise than out of retained earnings
or shall distribute to holders of its Common Stock shares of its
capital stock (other than Common Stock), stock or other
securities of other persons, evidences of indebtedness issued by
the corporation or other persons, asset (excluding cash
dividends) or options or rights (excluding options to purchase
and rights to subscribe for Common Stock or other securities of
the corporation convertible into or exchangeable for Common
Stock), then, in each such case, the holders of shares of Series
A Preferred Stock shall, concurrent with the distribution to
holders of Common Stock, receive a like distribution based upon
the number of shares of Common Stock into which each share of
Series A Preferred Stock is then convertible.
(vi) In case, at any time after the date hereof, of any capital
reorganization or any reclassification of the stock of the
corporation (other than as a result of s stock dividend or
subdivision, split-up or combination of shares), the shares of
the Series A Preferred Stock shall, after such reorganization or
reclassification, be convertible into the kind and number of
shares of stock or other securities or property of the
corporation or otherwise to which such holder would have been
entitled if immediately prior to such reorganization or
reclassification, he or she had converted his or her shares of
Series A Preferred Stock into Common Stock. The provisions of
this clause (vi) shall similarly apply to successive
reorganizations and reclassifications.
(vii) All calculations under this paragraph 4 shall be made
to the nearest cent or to the nearest one hundredth (1/100) of a
share, as the case may be.
(viii) For the purpose of any computation pursuant to this
paragraph 4(d), the "Current Market Price" at any date of one
share of Common Stock shall be deemed to be the closing price or
the average of the highest reported bid and the lowest reported
ask prices, as applicable, on the preceding business day as
furnished by a nationally-recognized source of quotations.
Minimal Adjustments. No adjustment in the Conversion Price need
be made is such adjustment would result in a change in the
Conversion Price of less than $0.01. Any adjustment of less than
$0.01 which is not made shall be carried forward and shall be
made at the time of and together with any subsequent adjustment
which, on a cumulative basis, amounts to an adjustment of $0.01
or more in the Conversion Price.
No Impairment. The corporation will not through any
reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the corporation, but will at all times in
good faith assist in the carrying out of all the provisions of
this paragraph 4 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion
Rights of the holders of Series A Preferred Stock against
impairment. This provision shall not restrict the corporation's
right to amend its Articles of Incorporation with the requisite
shareholder consent.
Certificate as to Adjustment. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to
this paragraph 4, the corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series A
Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The corporation shall, upon
written request at any time of any holder of Series A Preferred
Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) all such adjustments and
readjustments, (ii) the conversion Price at the time in effect,
and (iii) the number of shares of Common Stock and the amount, if
any, of other property that at the time would be received upon
the conversion of such holder's shares of Series A Preferred
Stock.
Notices of Record Date. In the event that the corporation shall
propose at any time:
(i) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities,
whether or not a regular cash dividend and whether or not out of
earnings or earned surplus;
to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class
or series or other rights;
to effect any reclassification or recapitalization of its Common
Stock outstanding involving a change in the Common Stock; or
to merge or consolidate with or into any other corporation, or
sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the corporation shall
send to the holders of the Series A Preferred Stock:
at least 10 days' prior written notice of the date on which a
record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders
of Common Stock shall be entitled thereto and the amount and
character of such dividend, distribution or right) or for
determining rights to vote in respect of the matters referred to
in (iii) and (iv) above; and
in the case of the matters referred to in (iii) and (iv) above,
at least 20 days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of
Common Stock shall be entitled to exchange their common Stock for
securities or other property deliverable upon the occurrence of
such event or the record date for the determination of such
holders if such record date is earlier).
Each such written notice shall be delivered personally or given
by first class mail, postage prepaid, addressed to the holders of
the Series A Preferred Stock at the address for each such holder
as shown on the books of the corporation.
Reservation of Stock Issuable Upon Conversion. The corporation
shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the
purpose of effecting the conversion of the shares of Series A
Preferred Stock such number of shares of its Common Stock as
shall from time to time be sufficient to effect the conversion of
all outstanding shares of Series A Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then
outstanding shares of Series A Preferred Stock, the corporation
will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
Reissuance of Converted or Contributed Shares. In case any shares
of Series A Preferred Stock are converted into Common Stock
pursuant to Section 4 hereof or contributed back to the
corporation, after the Original Issue Date of such shares, all
such shares so converted or contributed shall, upon such
conversion or contribution, resume the status of authorized, but
undesignated and unissued, shares of Series A Preferred Stock.
5. Registration Rights.
The corporation shall, at any time after January 1, 1998, upon
the written request of the holder(s) of the Series A Preferred
Stock, register under the Securities Act of 1933, as amended
(hereinafter, the "Act") all or any part of the shares of Series
A Preferred Stock, or Common Stock issued upon conversion of the
Preferred Stock, as promptly as practicable and notify all
holders of such shares thereof. No holder will be required to
register shares if he, she or it does not choose to do so. The
corporation will file such registration statement at its own cost
and expense, and will maintain such registration statement
current for a period of nine (9) months subsequent to its
effective date. The corporation's obligation hereunder is further
limited to effecting only one such registration.
If at any time the corporation shall of its own volition register
any securities on Form S-1 or Form S-18 under the Act, the
corporation will give at least thirty (30) days prior written
notice thereof to the holders of the Series A Preferred Stock
purchased hereunder (or Common Stock issued upon conversion of
such Series A Preferred Stock), and, upon request of any such
holder or holders, include in such registration, at the cost and
expense of the corporation, such shares in the amount so
requested; provided, however, that the corporation's underwriters
do not object to the inclusion of such securities in the
registration statement. The corporation's obligation hereunder is
further limited to effecting only one such registration of the
securities.
The corporation agrees to use its best efforts, at its expense,
to register or qualify the securities covered by such
registration statement under such other securities or blue sky
laws of such jurisdiction as each such holder shall reasonably
request.
In connection with any registration statement to be filed
pursuant to this Section 5, the primary responsibility for
preparing and filing such registration statement shall be that of
the corporation, but the holder whose shares are being registered
shall furnish such information to the corporation, in writing, as
it may reasonably request to assist in the preparation of such
registration statement.
The corporation agrees to furnish to such holder(s) the number of
prospectuses conforming to the requirements of the Act, and the
rules and regulations thereunder, relating to the shares so
registered, as may from time to time be requested by such
holder(s). The cost of printing such prospectuses shall be paid
in the same manner as other costs of the registration statement.
If the offering to which the proposed registration statement
relates is to be on an underwritten basis, and such holder(s)
shall not consent to have their shares of Stock distributed upon
the same terms and conditions as those applicable to the other
person(s) (including the corporation) whose securities are being
included in such registration statement, then the holder(s) will
not, without the written consent of the corporation, commence the
distribution of any shares of stock of the corporation held by
such holder(s) until ninety (90) days after the effective date of
such registration statement.
In the event of the registration of any shares of Series A
Preferred Stock, or the Common Stock into which such stock may be
converted, subject hereto, the corporation will indemnify the
holder(s) thereof and hold the holder(s) thereof harmless against
any losses, claims, damages or liabilities arising out of, or
based upon, any untrue statement or alleged untrue statement of
any material fact contained in any registration statement under
which such shares of stock are registered, any preliminary
prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or arising out of or based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the holder(s) for any
legal or any other expenses reasonably incurred by the holder(s)
in connection with investigating or defending any such loss,
claim, damage, liability or actions; provided, however, tat to
the extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, and untrue statement or alleged
untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus or said final
prospectus or any said amendment or supplement in reliance upon,
and in conformity with, written information furnished to the
corporation by any such holder(s), then such holder(s) will
indemnify and hold harmless the corporation, its officers,
directors and control persons, against any losses, claims,
damages, or liabilities to which the corporation may become
subject under the Act, but only insofar as such statement or
omission was made in reliance upon, and in conformity with,
written information furnished to the corporation by or on behalf
of such holder(s) specifically for use in the preparation
thereof, and will reimburse the corporation for any legal or
other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, damage,
liability or action.
Protective Provisions. In addition to any other rights provided
by law, so long as any Series A Preferred Stock shall be
outstanding, this corporation shall not, without first obtaining
the vote or written consent of the holders of not less than a
majority of such outstanding shares of Series A Preferred Stock:
amend or repeal any provision of, or add any provision to, this
corporation's Articles of Incorporation or bylaws if such action
would alter or change materially and adversely the preferences,
rights, privileges or powers of, or the restrictions provided for
the benefit of, the Series A Preferred Stock;
authorize or issue shares of any class or series of stock (or
securities convertible into or exchangeable for such stock)
having any rights, preferences or privileges superior to or on a
parity with any such rights, preferences or privileges of the
Series A Preferred Stock; or
authorize a sale or transfer of all or substantially all of the
assets of the corporation or a merger or consolidation of the
corporation if, as a result of such merger or consolidation, the
shareholders of the corporation shall own less than fifty percent
(50%) of the voting securities of the surviving corporation.
CASINO AIRLINK, INC.
Certificate of voting powers, designations, preferences, and
rights of preferred stock
By resolution of the Board of Directors.
We, William G. Forhan and Ellen Forhan of Casino Airlink, Inc., a
corporation organized in existing under the Business Corporation
Law of the state of Nevada, in accordance with 78.195 of the
Nevada Revised Statutes thereof, do hereby certify:
That, pursuant to authority conferred upon the Board of Directors
by the Articles of Incorporation or an amendment thereto of said
Corporation, said Board of Directors, by unanimous written
consent pursuant to Section 78.315.2 of the Nevada Revised
Statutes, on December 11, 1996 duly adopted a resolution
providing for the issuance of a series of one million seven
hundred thousand (1,700,000) shares of the Corporation's
preferred stock, to be known as its "Series B Preferred Stock,"
which resolution is as follows:
WHEREAS, the corporations Articles of Incorporation authorize the
issuance of 25 million (25,000,000) shares of common stock of the
corporation with a par value of $0.10 (the "Common Stock") and,
additionally, 10 million (10,000,000) shares of preferred stock,
also with a par value of $0.10 per share (the "Preferred Stock");
and,
WHEREAS, the Board of Directors has determined that it is in the
best interests of the Corporation to issue to certain investors
shares of the Company's Preferred Stock, as authorized for
issuance by the Company's Articles of Incorporation, with certain
rights, preferences and privileges;
NOW, THEREFORE, BE IT RESOLVED, that pursuant to Section 78.1955
of the Nevada Revised Statutes, the corporation shall, and hereby
does, create a series of one million seven hundred thousand
shares (1,700,000) of its Preferred Stock, to be and hereby known
as the Series B Preferred Stock; and
RESOLVED FURTHER, that the rights, preferences, privileges and
restrictions granted to or imposed upon the Series B Preferred
Stock shall be, and hereby are, as follows:
RIGHTS, PREFERENCES, AND PRIVILEGES OF SERIES B PREFERRED STOCK
1. No voting rights. Except as otherwise required by law or
Section 5 hereof, the holders of Series B preferred stock issued
and outstanding shall not be entitled to vote on matters
submitted to the other shareholders of the corporation and shall
not have the right to vote separately as a class on such matters.
2. Dividends. The holders of the Series B preferred stock shall
be entitled, when, as and if declared by the board of directors
of the corporation, to noncumulative dividends in such amount as
may be determined from time to time by the board of directors,
such dividends to be paid out of funds legally available
therefore. No dividend or distribution shall be declared or paid
on any shares of common stock (other than dividends payable
solely in common stock of the corporation) unless at the same
time an equivalent dividend or distribution is paid or declared
and set aside for payment on the Series B preferred stock (on an
as-if converted to common stock basis).
3. Liquidation preference. In the event of any liquidation,
dissolution, or winding up of the corporation, either voluntary
or involuntary, distributions to shareholders of the corporation
shall be made in the following manner:
(a) the holders of the Series B preferred stock shall be entitled
to receive, prior and in preference to any distribution of any of
the assets or surplus funds of the corporation to the holders of
the common stock, but after any such distribution to holders of
the series A preferred stock, by reason of their ownership of
such shares, an amount equal to $1.25 for each share of Series B
preferred stock then held by them plus all declared but unpaid
dividends on such shares, minus an amount equal to all dividends
per share on the Series B preferred stock paid since the day to
such shares were issued (the "Original Issuance Date") that were
not also paid with respect to the common stock. If the assets
and funds thus distributed among the holders of the Series B
preferred stock shall be insufficient to permit the payment to
such holders of the full preferential amount, then the entire
assets and funds of the corporation legally available for such
distribution shall be distributed among the holders of the Series
B preferred stock in proportion to the shares of Series B
preferred stock then held by them. After payment has been made
to the holders of the Series A preferred stock and Series B
preferred stock of full amounts as to which they shall be
entitled as aforesaid, the holders of the common stock should be
entitled to receive ratably all the remaining assets.
(b) for purposes of this paragraph 3, (i) a merger or
consolidation of the corporation with or into any other
corporation or corporations, or (ii) the merger of any other
corporation or corporations into the corporation, as a result of
which consolidation or merger (A) the shareholders of the
corporation receive distributions in cash or securities of
another corporation or corporations as a result of such
consolidation or merger or (B) the shareholders of the
corporation shall own less than fifty percent (50%) of the voting
securities of the surviving corporation, or (iii) a sale of all
or substantially all of the assets of the corporation, shall be
treated as a liquidation, dissolution or winding up of the
corporation
(c) any securities to be delivered to the holders of the Series B
preferred stock pursuant to paragraph 3(b) below shall be valued
as follows:
(i) If traded on a Securities Exchange, the value shall be deemed
to be the average of the closing prices three (3) days prior to
the closing;
(ii) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices
(whichever are applicable) over the 30-day period ending three
(3) days prior to the closing, and
(iii) If there is no active public market, the value shall be the
fair market value thereof, as mutually determined by the
corporation and the holders of the Series B preferred stock who
would be entitled to receive such securities or the same type of
securities and whose Series B preferred stock represents at least
a majority voting power of all then outstanding shares of such
series B preferred stock.
4. Conversion. The holders of the Series B preferred stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series B preferred stock
shall be convertible, at the option of the holder thereof, at any
time after the date of issuance of such share at the office of
the corporation or any transfer agent for the Series B preferred
stock. Each share of Series B preferred stock shall be
convertible into one (1) share of fully paid and nonassessable
Common Stock,
(b) Mechanics of Conversion. Before any holder of Series B
Preferred Stock shall be entitled to convert the same into full
shares of common stock and receive certificates therefore, he or
she shall surrender the certificate or certificates, duly
endorsed, at the office of the corporation or of any transfer
agent for the Series B Preferred Stock and shall give written
notice to the corporation at such office that such holder elects
to convert. The corporation shall issue certificates evidencing
the shares of common stock issuable upon such conversion if the
holder notifies the corporation or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the corporation to indemnify the
corporation from any loss incurred by it. The Corporation shall,
as soon as practicable after such delivery, or such agreement of
indemnification in the case of a lost certificate, issue and
deliver at such office to such holder of Series B preferred
stock, a certificate or certificates for the number of shares of
common stock to which the holder shall be entitled as aforesaid
and a check payable to the holder in the amount of any cash
amounts payable in lieu of conversion into fractional shares of
Common Stock as set forth below. Such conversion shall be deemed
to have been made immediately prior to the close of business on
the date of such surrender of the shares of Series B Preferred
Stock to be converted, and the person or persons entitled To
receive the shares of common stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders
of such shares of common stock on such date.
(c) Fractional Shares. In lieu of any fractional shares to which
the holder of Series B Preferred Stock would otherwise be
entitled, the corporation shall pay cash equal to such a fraction
multiplied by the fair market value of one share of common stock,
as determined in the sole discretion of the board of directors of
the corporation. Whether or not fractional shares would be
issuable upon such conversion shall be determined on the basis of
the total number of shares of Series B Preferred Stock at the
time converting and the number of shares of common stock issuable
upon such aggregate conversion.
(d) No Impairment. The corporation will not through any
reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the corporation, but will at all times in
good faith assist in the carrying out of all the provisions of
this paragraph 4 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion
Rights of the holders of Series B Preferred Stock against
impairment. This provision shall not restrict the corporation's
right to amend its Articles of Incorporation with the requisite
shareholder consent.
(e) Notices of Record Date. In the event that the corporation
shall propose at any time:
(i) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities,
whether or not a regular cash dividend and whether or no out of
earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of
any class or series or other rights;
(iii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock;
or
(iv) to merge or consolidate with or into any other corporation
or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the corporation shall
send to the holders of the Series B Preferred Stock:
(A) at least 10 days' prior written notice of the date on which a
record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders
of Common Stock shall be entitled thereto and the amount and
character of such dividend, distribution or right) or for
determining rights to vote in respect of the matters referred to
in (iii) and (iv) above; and
(B) in the case of the matters referred to in (iii) and (iv)
above, at least 20 days' prior written notice of the date when
the same shall take place (and specifying the date on which the
holders of Common Stock shall be entitled to exchange their
Common Stock for securities or other property deliverable upon
the occurrence of such event or the record date for the
determination of such holders if such record date is earlier).
Each such written notice shall be delivered personally or given
by first class mail, postage prepaid, addressed to the holders of
the Series B Preferred Stock at the address for each such holder
as shown on the books of the corporation.
(f) Reservation of Stock Issuable Upon Conversion. The
corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock solely for the
purpose of effecting the conversion of the shares of Series B
Preferred Stock such number of shares of its Common Stock as
shall from time to time be sufficient to effect the conversion of
all outstanding shares of Series B Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then
outstanding shares of Series B Preferred Stock, the corporation
will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
(g) Reissuance of Converted or Contributed Shares. In case any
shares of Series B Preferred Stock are converted into Common
Stock pursuant to Section 4 hereof or contributed back to the
corporation, after the Original Issue Date of such shares, all
such shares so converted or contributed shall, upon such
conversion or contribution, resume the status of authorized, but
undesignated and unissued, shares of Preferred Stock.
5. Protective Provisions. In addition to any other right provided
by law, so long as any Series B Preferred Stock shall be
outstanding, this corporation shall not, without first obtaining
the vote or written consent of the holders of not less than a
majority of such outstanding shares of Series B Preferred Stock:
(a) amend or repeal any provision of, or add any provision to,
this corporation's Articles of Incorporation or bylaws if such
action would alter or change materially and adversely the
preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Series B Preferred Stock;
(b) authorize or issue shares of any class or series of stock (or
securities convertible into or exchangeable for such stock)
having any rights, preferences or privileges superior to or on a
parity with any such rights, preferences or privileges of the
Series B Preferred Stock; or
(c) authorize a sale or transfer of all or substantially all of
the assets of the corporation or a merger or consolidation of the
corporation if, as a result of such merger or consolidation, the
shareholders of the corporation shall own less than fifty percent
(50%) of the voting securities of the surviving corporation.
IN WITNESS WHEREOF, Casino Airlink, Inc. has caused its corporate
seal to be hereunto affixed and this certificate to be signed by
William Forhan, its President and Secretary, and by Ellen Forhan,
its Chief Financial Officer, this 11th day of December, 1996.
By: /s/ William Forhan
William Forhan, President and Secretary
By: /s/ Ellen Forhan
Ellen Forhan, Chief Financial Officer
CASINO AIRLINK, INC.
1996 Stock Option Plan
GRANT OF INCENTIVE STOCK OPTION
Date of Grant: January 18, 1997.
THIS GRANT, dated as of the date of grant first stated above (the
"Date of Grant"), is delivered by Casino Airlink, Inc. a Nevada
corporation (the "Company") to William E. Forhan (the "Grantee"),
who is an employee or officer of the Company or one of its
subsidiaries (the Grantee's employer is sometimes referred to
herein as the "Employer").
WHEREAS, the Board of Directors of the Company (the "Board")
January 17, 1997, adopted, with subsequent stockholder approval,
the Company's 1996 Stock Option Plan (the "Plan");
WHEREAS, the Plan provides for the granting of incentive stock
options by the Board to directors, officers and key employees of
the Company or any subsidiary of (excluding directors and
officers who are not employees) to purchase, or to exercise
certain rights with respect to, shares of the Common Stock of the
Company, $0.10 par value (the "Stock"), in accordance with the
terms and provisions thereof; and
WHEREAS, the Board considers the Grantee to be a person who is
eligible for a grant of incentive stock options under the Pian,
and has determined that it would be in the best interest of the
Company to grant the incentive stock options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Grant of Option.
Subject to the terms and conditions hereinafter set forth, the
Company, with the approval and at the direction of the Board,
hereby grants to the Grantee, as of the Date of Grant, an option
to purchase up to two million (2,000,000) shares of Stock at a
price of $0.30 per share, the fair market value of such shares on
the date of grant. Such option is hereinafter referred to as the
"Option" and the shares of stock purchasable upon exercise of the
Option are hereinafter sometimes referred to as the "Option
Shares." The Option is intended by the parties hereto to be, and
shall be treated as, an incentive stock option (as such term is
defined under section 422 of the Internal Revenue Code of 1986).
2. Installment Exercise.
Subject to such further limitations as are provided herein, the
Option shall become exercisable in five (5) installments, the
Grantee having the right hereunder to purchase from the Company
the following number of Option Shares upon exercise of the
Option, on and after the following dates, in cumulative fashion:
(a) on and after the Date of Grant, up to one-fifth (ignoring
fractional shares) of the total number of Option Shares;
(b) on and after the first anniversary of the Date of Grant, up
to an additional one-fifth (ignoring fractional shares) of the
total number of Option Shares;
(c) on and after the second anniversary of the Date of Grant, up
to an additional one-fifth (ignoring fractional shares) of the
total number of Option Shares; and
(d) on and after the third anniversary of the Date of Grant, up
to an additional one-fifth (ignoring fractional shares) of the
total number of Option Shares; and
(e) on and after the fourth anniversary of the Date of Grant,
the remaining Option Shares.
3. Termination of Option.
(a) The Option and all rights hereunder with respect thereto, to
the extent
such rights shall not have been exercised, shall terminate and
become null and void after the expiration of ten (10) years from
the Date of Grant (the "Option Term").
(b) Upon the Occurrence of the Grantee's ceasing for any reason
to be employed by the Employer (such occurrence being a
"termination of the Grantee's employment"), the Option, to the
extent not previously exercised, shall terminate and become null
and void at the close of business on the thirtieth (30") day
following the date of termination of Grantee's employment, except
in a case where the termination of the Grantee's employment is by
reason of retirement, disability or death.
Upon a termination of the Grantee's employment by reason of
retirement, disability or death, the Option i-nay be exercised
during the following periods, but only to the extent that the
Option was outstanding and exercisable on any such date of
retirement, disability or death: (i) the one-year period
following the date of such termination of the Grantee's
employment in the case of a disability (within the meaning of
Section 22(e) (3) of the Code); (ii) the six-month period
following the date of issuance of letters testamentary or letters
of administration to the executor or administrator of a deceased
Grantee, in the case of Grantee's death during his employment by
the Employer, but not later than one year after the Grantee's
death; and (iii) the three-month period following the date of
such termination in the case of retirement on or after attainment
of age 65, or in the case of disability other than as described
in (i) above. In no event, however, shall any such period extend
beyond the Option Term.
(c) In the event of the death of the Grantee, the Option may be
exercised by the Grantee's legal representative(s), but only to
the extent that the Option would otherwise have been exercisable
by the grantee.
(d) A transfer of the Grantee's employment between the Company
and any subsidiary of the Company, or between any subsidiaries of
the Company, shall not be deemed to be a termination of the
Grantee's employment.
(e) Notwithstanding any other provisions set forth herein or in
the Plan, if the grantee shall (i) commit any act of malfeasance
or wrongdoing affecting the Company or any subsidiary of the
Company, (ii) breach any covenant not to compete, or employment
contract, with the Company or any subsidiary of the Company, or
(iii) engage in conduct that would warrant the Grantee's
discharge for cause (excluding general dissatisfaction with the
performance of the Grantee's duties, but including any act of
disloyalty or any conduct clearly tending to bring discredit upon
the Company or any subsidiary of the Company) any unexercised
portion of the Option shall immediately terminate and be void.
4. Exercise of Option.
(a) The Grantee may exercise the Option with respect to all or
any part of the number of Option Shares then exercisable
hereunder by giving the Secretary of the Company written notice
of intent to exercise. The notice of exercise shall specify the
number of Option Shares as to which the Option is to be exercised
and the date of exercise thereof, which date shall be at least
five (5) days after the giving of such notice unless an earlier
time shall have been mutually agreed upon.
(b) Full payment (in U.S. dollars) by the Grantee of the option
price for the Option Shares purchased shall be made on or before
the exercise date specified in the notice of exercise in cash,
or, with the prior written consent of the Board, in whole or in
part through the surrender of previously acquired shares of Stock
at their fair market value on the exercise date.
On the exercise date specified in the Grantee's notice or as soon
thereafter as is practicable, the Company shall cause to be
delivered to the Grantee, a certificate or certificates for the
Option Shares then being purchased (out of theretofore unissued
Stock or reacquired Stock, as the Company may elect) upon full
payment for such Option Shares. The obligation of the Company to
deliver Stock shall, however, be subject to the condition that if
at any time the Board shall determine in its discretion that the
listing, registration or qualification of the Option or the
Option Shares upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or
in connection with, the Option or the issuance or purchase of
Stock thereunder, the Option may not be exercised in whole or in
part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any
conditions not acceptable to the Board.
(c) If the Grantee fails to pay for any of the Option Shares
specified in such notice or fails to accept delivery thereof, the
Grantee's right to purchase such Option Shares may be terminated
by the Company. The date specified in the Grantee's notice as
the date of exercise shall be deemed the date of exercise of the
Option, provided that payment in full for the Option Shares to be
purchased upon such exercise shall have been received by such
date.
5. Adjustment of and Changes in Stock of the Company.
In the event of a reorganization, recapitalization, change of
shares, stock split, spin-off, stock dividend, reclassification,
subdivision or combination of shares, merger, consolidation,
rights offering, or any other change in the corporate structure
or shares of capital stock of the Company, the Board shall make
such adjustment as it deems appropriate in the number and kind of
shares of Stock subject to the Option or in the option price;
provided, however, that no such adjustment shall give the Grantee
any additional benefits under the Option.
6. Fair Market Value.
As used herein, the "fair market value" of a share of Stock shall
be the average of the high and low sale prices per share of Stock
on the stock exchange, composite tape or other recognized market
source, as determined by the Board, on the applicable date of
reference hereunder, or if there is no sale on such date, then
the average of such high and low sale prices on the last previous
day on which a sale is reported. In the event there is no
established trading market for the Stock on any date as to which
fair market value must be established, the Board shall determine
the fair market value in the exercise of its good faith business
judgment, and such determination shall be final and binding for
all purposes hereunder.
7. No Rights of Stockholders.
Neither the Grantee nor any personal representative shall be, or
shall have any of the rights and privileges of, a stockholder of
the Company with respect to any shares of Stock purchasable or
issuable upon the exercise of the Option, in whole or in part,
prior to the date of exercise of the Option.
8. Non-Transferability of Option.
During the Grantee's lifetime, the Option hereunder shall be
exercisable only by the Grantee or any guardian or legal
representative of the Grantee, and the Option shall not be
transferable except, in case of the death of the Grantee, by will
or the laws of descent and distribution, nor shall the Option be
subject to attachment, execution or other similar process. In
the event of (a) any attempt by the Grantee to alienate, assign,
pledge, hypothecate or otherwise dispose of the Option, except as
provided for herein, or (b) the levy of any attachment, execution
or similar process upon the rights or interest hereby conferred,
the Company may terminate the Option by notice to the Grantee and
it shall thereupon become null and void.
9. Employment Not Affected.
Neither the granting of the Option nor its exercise shall not be
construed as granting to the Grantee any right with respect to
continuance of employment of the Employer. Except as may
otherwise be limited by a written agreement between the Employer
and the Grantee, the right of the Employer to terminate at will
the Grantee's employment at any time (whether by dismissal,
discharge, retirement or otherwise) is specifically reserved by
the Company, as the Employer or on behalf of the Employer
(whichever the case may be). Such right is hereby acknowledged
by the Grantee.
10. Amendment of Option.
The Option may be amended by the Board at any time (i) if the
Board determines, in its sole discretion, that amendment is
necessary or advisable in the light of any addition to or change
in the Internal Revenue Code of 1986 or in the regulations issued
thereunder, or any federal or state securities law or other law
or regulation, which change occurs after the Date of Grant and by
its terms applies to the Option; or (ii) other than in the
circumstances described in clause (i), with the consent of the
Grantee.
11. Notice.
Any notice to the Company provided for in this instrument shall
be addressed to it in care of its Secretary at its executive
offices at 888 E. Las Olas Blvd., Suite 700, Fort Lauderdale, FL
33301, and any notice to the Grantee shall be addressed to the
Grantee at the current address shown on the payroll records of
the Employer. Any notice shall be deemed to be duly given if and
when properly addressed and posted by registered or certified
mail, postage prepaid.
12. Incorporation of Plan by Reference.
The Option is granted pursuant to the terms of the Plan, the
terms of which are incorporated herein by reference, and the
Option shall in all respects be interpreted in accordance with
the Plan. The Board shall interpret and construe the Plan and
this instrument, and its interpretations and determinations shall
be conclusive and binding on the parties hereto and any other
person claiming an interest hereunder, with respect to any issue
arising hereunder or thereunder.
13. Governing, Law.
The validity, construction, interpretation and effect of this
instrument shall exclusively be governed by and determined in
accordance with the law of the State of Nevada, except to the
extent preempted by federal law.
IN WITNESS WHEREOF, the Company has caused its duly authorized
officers to execute and attest this Grant of Incentive Stock
Option, and to apply the corporate seal hereto, and the Grantee
has placed his or her signature hereon, effective as of the Date
of Grant.
CASINO AIRLINK, INC.
By: /s/ William Forhan
William Forhan
President
Attest:
By: /s/ Ellen Forhan
Secretary
ACCEPTED AND AGREED TO:
By: /s/ William Forhan
Grantee
UNANIMOUS WRITTEN CONSENT
OF THE DIRECTORS OF
CASINO AIRLINK, INC.
The undersigned, constituting all of the directors of Casino
Airlink, Inc. (the "corporation") acting pursuant to the
authority of Section 78.315.2 of the Nevada Revised Statutes,
hereby consent to the adoption of the following resolutions, to
have the same force and effect as if duly adopted at a meeting
duly noticed and held:
Grant of Incentive Stock 0ptions To James Muldowney
WHEREAS, the board of directors believes it to be in the best
interest of the corporation to grant incentive stock options to
James Muldowney, under the 1996 stock option plan, in order to
ensure his commitment to the success of the corporation, to
secure his efforts to effect the profitable operation of the
corporation in the near future, and to provide an ongoing forward
looking incentive to his performance,
NOW, THEREFORE, BE IT RESOLVED, that the corporation shall and
hereby does grant to James Muldowney options to purchase up to a
total of four hundred thousand (400,000) shares of the
corporation's stock, as specified in detail and subject to the
limitations, restrictions and specifications set forth in the
Grant of Incentive Stock Option, dated as of the same date as and
accompanying these resolutions.
RESOLVED FURTHER, that such options shall be exercisable at the
price of $0.21 per share, the fair market value of the
corporation's stock as of December 31, 1997.
RESOLVED FURTHER, that the President and such other officers of
the corporation as he may designate be, and each hereby is,
authorized, directed and empowered (or in the event any such
action has already been taken it is ratified and confirmed), for
and on behalf of the corporation, to execute all other documents
and to take such other action as they may deem necessary or
advisable in order to carry out and perform the purposes of these
resolutions.
Date: January 18, 1998.
/s/ William Forhan
William Forhan, Director
/s/ Ellen Forhan
Ellen Forhan, Director
WARRANT TO PURCHASE
COMMON STOCK
OF
INTEGRATED MARKETING PROFESSIONALS, INC.
(formerly known as Casino Airlink, Inc.)
This is to certify that Joseph Charles & Associates, Inc. (the
"Holder") is entitled, subject to the terms and conditions
hereinafter set forth, to purchase Six Hundred Forty Three
Thousand Three Hundred Thirty Three (643,333) shares (the "Common
Shares") of Common Stock, $.001 par value per share (the "Common
Stock"), of INTEGRATED MARKETING PROFESSIONALS, INC. (formerly
known as Casino Airlink, Inc.), a Nevada corporation (the
"Company"), from the Company at the price per share and on the
terms set forth herein and to receive a certificate for the
Common Shares so purchased on presentation and surrender to the
Company with the subscription form attached, duly executed and
accompanied by payment of the purchase price of each share
purchased either in cash or by certified or bank cashier's check
or other check payable to the order of the Company.
Exercise
The purchase rights represented by this Warrant are exercisable
at a price per Common Share of Forty Four Cents ($0.44),
beginning April 21, 1998 and for a period of five (5) years
thereafter, subject to adjustment as hereinafter provided.
The purchase rights represented by this Warrant are exercisable
at the option of the registered owner hereof in whole or in part,
from time to time, within the period specified; provided,
however, that such purchase rights shall not be exercisable with
respect to a fraction of a Common Share. In case of the purchase
of less than all of the Common Shares purchasable under this
Warrant, the Company shall cancel this Warrant n surrender hereof
and shall execute and deliver a new Warrant of like tenor and
date for the balance of the shares purchasable hereunder.
The Company agrees at all times to take appropriate action to
reserve or hold available a sufficient number of Common Shares to
cover the number of shares issuable on exercise of this and all
other Warrants of like tenor then outstanding. The Company
agrees to obtain any authorization required from its shareholders
in order to amend its Articles of Incorporation to increase the
authorized capitalization to permit the exercise of this Warrant
and other Warrants of like tenor.
No Voting Rights
This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company, or to any
other rights whatever except the rights herein expressed, and no
dividends shall be payable or accrue in respect of this Warrant
or the interest represented hereby or the Common Shares
purchasable hereunder until or unless, and except to the extent
that, this Warrant shall be exercised.
Adjustments
The number of shares of Common Stock purchasable upon exercise of
this Warrant and the Purchase Price shall be subject to
adjustments from time to time as follows:
If the Company shall at any time prior to the expiration of this
Warrant subdivide or combine its Common Stock, by forward or
reverse stock split or otherwise, or issue additional shares of
its Common Stock as a dividend with respect to any shares of its
Common Stock, the number of Common Shares issuable upon exercise
of the Warrant shall forthwith the proportionately increased or
decreased. Appropriate adjustments shall also be made to the
purchase price, but the aggregate purchase price payable for the
total number of Common Shares purchasable under this Warrant (as
adjusted) shall remain the same. Any adjustments under this
paragraph shall become effective at the close of business on the
date the subdivision or combination becomes effective or as of
the record date of such dividend, or in the event that no record
date is fixed, upon the making of such dividend.
In the event of any reclassification, capital reorganization or
other change in the Common Stock of the Company or in the event
of any sale of all or substantially all of the Company's assets
or any merger, consolidation or restructuring to which the
Company is a party in which the Company's stockholders before the
transaction or series of transactions hold less than 50% of the
voting power of the surviving entity immediately after the
transaction or series of transaction (other than as a result of a
subdivision, combination or stock dividend provided for above),
lawful provision shall be made, and duly executed documents
evidencing the same shall be made and shall be delivered to the
Holder in substitution for the Holder's rights under this
Warrant, so that the Holder shall have the right at any time and
from time to time prior to the expiration of this Warrant to
purchase at a total price equal to that payable upon exercise of
this Warrant immediately prior to such event, the kind and amount
of shares of stock or other securities or property receivable in
connection with such reclassification, reorganization or change
by a Holder of same number of shares of Common Stock as were
purchasable by the Holder immediately prior to such
reclassification, reorganization or change. In any such case,
appropriate provisions shall be made with respect to the rights
and interest of the Holder so that the provisions hereof shall
hereafter be applicable with respect to any shares of stock or
other securities or property deliverable upon exercise hereof,
and appropriate adjustment shall be made to the purchase price
per Common Shares payable hereunder, provided the aggregate
purchase price shall remain the same.
Upon, any adjustments of the number of Common Shares issuable
upon exercise of this Warrant or the purchase price pursuant to
this paragraph, the Company within thirty (30) days thereafter
shall cause to be prepared a certificate of the Chief Financial
or Accounting Officer of the company setting forth the number of
Common Shares issuable upon exercise of this Warrant and the
purchase price after such adjustments, and setting forth in
reasonable detail the method of calculation used and cause a copy
of such certificate to be mailed to the Holder of the Warrant.
In the event of dissolution, liquidation, merger or combination
of the Company in which the Company is not a surviving
corporation, this Warrant shall terminate, but the registered
owner of this Warrant shall have the right, immediately prior to
such dissolution, liquidation, merger or combination, to exercise
this Warrant in whole or in part, to the extent that it shall not
have theretofore been exercised.
The foregoing adjustments and the manner of application of the
foregoing provisions may provide for the elimination of
fractional share interests.
Registration Rights
The Company has agreed to grant the Holders of the Common Shares
issued upon exercise of the Warrants evidenced hereby,
"piggyback" registration rights in connection with a registration
statement (the "Registration Statement") subsequently filed by
the Company with the Securities and Exchange Commission (the
"SEC"), whereby the company seeks to register shares of its
Common Stock for sale to the public, for the account of the
Company or any of its principal shareholders. The Company will
undertake to include in any such Registration Statement, subject
to the approval of the Underwriter, and in a registration
statement other than Form S-8, S-4 or comparable, the Common
Shares issued upon exercise of the Warrants. The Company has
agreed to pay form, all costs and expenses incident to the
issuance, offer, sale and delivery of the Common Shares,
including, but not limited to, all expenses and fees of
preparing, filing and printing the Registration Statement and
Prospectus and related exhibits, amendments and supplements
thereto and mailing of such items. However, the Company will not
pay selling commissions and expenses associated with the Holders'
sale of Common Shares, nor shall the company pay transfer taxes
in connection with such sale of the Common Shares or fees and
expenses of the Holders' counsel. The Company has agreed to
indemnify the selling security Holders against civil liabilities
including liabilities under the Securities Act of 1933.
The Holders will be required to furnish certain information to
the Company and to indemnify the Company against certain civil
liabilities, including liabilities arising under the Act with
respect to such information. There can be no assurance that any
such registration statement will become effective under the Act.
Indemnification
When pursuant hereto a Registration Statement registering the
resale of Common Shares or this Warrant is filed under the Act,
amended or supplemented by the Company will indemnify and hold
harmless each Holder of the Common Shares and Warrant covered by
such Registration Statement, amendment or supplement and each
person, if any, who controls (within the meaning of the Act) the
Holder, and each underwriter (within the meaning of the Act) of
such securities and each person, if any, who controls (within the
meaning of the Act) any such underwriter, against any losses,
claims, damages or liabilities, joint or several, to which the
Holder, any such controlling person or any such underwriter may
become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities, or actions in resect
thereof, arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
such Registration Statement or any preliminary prospectus or
final prospectus constituting a part thereof or any amendment or
supplement thereto, or arising out of or based upon the omission
or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement therein
not misleading and will reimburse the Holder or such controlling
person or underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action,
provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in
said Registration Statement, said preliminary prospectus, and
final prospectus or said amendment or supplement in reliance upon
and in conformity with written information furnished by such
Holder or any other Holder for use in the preparation thereof.
The Holder will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed said
Registration Statement and such amendments and supplements
thereto, and each person, if any, who controls the Company
(within the meaning of the Act) against any losses, claims,
damages or liabilities, joint or several, to which the Company or
any such director, officer or controlling person may become
subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities, or actions in respect thereof,
arise out of or are based upon the omission or the alleged
omission to the state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to extent, but only to the extent, that
such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission
or alleged omission made in Registration Statement, said
preliminary prospectus, and said final prospectus or said
amendment or supplement in reliance upon and in conformity with
written information furnished by such Holder for use in
preparation thereof; and will reimburse the Company or any such
director, officer or controlling person for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action.
Promptly after receipt by an indemnified party under this
paragraph of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party, give the indemnifying party
notice of the commencement thereof, but the omission so to notify
the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than under
this paragraph.
In case any such action is brought against any indemnified party,
and it notices an indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate in and, to
the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party
(however, in the event of disagreement as to the selection of
counsel, the indemnified party shall have the right to select
such counsel), and after notice from the indemnifying party will
not be liable to such indemnified party under this paragraph for
any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other
than reasonable costs of investigation. Any settlement of such
action shall require the indemnifying party's consent, which
shall not be unreasonably withheld.
MISCELLANEOUS
The Company shall not be required to issue or deliver any
certificate for Common Shares purchased on exercise of this
Warrant or any portion thereof to fulfillment of all the
following conditions:
(a) The completion of any registration or other qualifications
of such shares under any federal law or under the rulings or
regulations of the Securities and Exchange Commission or any
other government regulatory body which is necessary;
(b) The obtaining of any approval or other clearance from any
federal or state government agency which is necessary;
(c) The obtaining from the registered owner of the Warrant a
representation in writing that the owner is acquiring such Common
Shares for the owner's own account for investment and not with a
view to, or for sale in connection with, the distribution of any
part thereof, if the Warrants and the related shares have not
been registered under the Act; and;
(d) The placing on the certificate of an appropriate legend and
the issuance of stop transfer instructions in connection
therewith if this Warrant and the related, Common Shares have not
been registered under the Act to the following effect;
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE LAWS OF ANY
STATE AND HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION FROM
REGISTRATION PERTAINING TO SUCH SECURTIES AND PURSUANT TO A
REPRESENTATION BY THE SECURITY HOLDER NAMED HEREON THAT SAID
SECURITIES HAVE BEEN ACQUIRED FOR PURPOSES OF INVESTMENT AND MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF REGISTRATION. FURTHERMORE, NO OFFER, SALE,
TRANSFER, PLEDGE OR HYPOTHECATION IS TO TAKE ACCORDANCE WITH THE
ABOVE INSTRUCTIONS."
The Company may make any changes or corrections in the Warrant
(i) that it shall deem appropriate to cure any ambiguity or to
correct any defective or inconsistent provision or manifest
mistake or error herein contained; or (ii) that it may deem
necessary or desirable and which shall not adversely affect the
interest of the Holder; provided, however, that this Warrant
shall not otherwise be modified, supplemented or altered in any
respect except with the consent in writing of the Holders
representing no less than 50% of the Warrants then outstanding;
and provided, further, that no change in the number or nature of
the securities purchasable upon the exercise of any Warrant, or
any increase in the purchase price therefor, or any shortening of
the Warrant exercise period shall be made without the consent in
writing of the Holders representing such Warrant, other than such
changes as are specifically prescribed by this Warrant as
originally executed.
The terms and provisions of this Warrant shall inure to the
benefit of, and be binding upon, the Company and its successors
and assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by the signature of its duly authorized officer.
INTEGRATED MARKETING PROFESSIONALS, INC.
By: /s/ William Forhan
William Forhan, President
Dated:
SUBSCRIPTION FORM
(To be executed by the registered holder to exercise the rights
to purchase Common Shares evidenced by the within Warrant.)
Integrated Marketing Professionals, Inc.
888 Las Olas Blvd.
Fort Lauderdale, FL 33301
Gentlemen:
The undersigned hereby irrevocably subscribes for Common Shares
pursuant to and in accordance with the terms and conditions of
this Warrant, and herewith makes payment of $ therefor, and
requests that a certificate for such Common Shares be issued in
the name of the undersigned and be delivered to the undersigned
at the address stated below, and if such number of shares shall
not be all of the shares purchasable hereunder, that a new
Warrant of like tenor for the balance of the remaining Common
Shares purchasable hereunder shall be delivered to the
undersigned at the address stated below.
Dated: Signed:
Address:
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of January, 1998
(the "Commencement Date") by and among Integrated Marketing
Professionals, Inc., a Nevada Corporation (hereinafter the
"Company"), and William Forhan an individual residing in Florida
("Employee");
RECITAL
WHEREAS, the Company desires to retain the services of Employee
and Employee is willing to continue employment by Company, on the
terms and subject to the conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, the parties as follows:
Section 1. As used in this Agreement, the following terms shall
have the meanings set forth below:
"Affiliate" shall mean a corporation which, directly or
indirectly, controls, is controlled by or is under common control
with the Company, or which is a successor in interest to the
Company, and for purposes hereof, "control" shall mean the
ownership of 20% or more of the voting shares of the corporation
in question.
"Basic Salary" shall have the meaning assigned to it in Section 5
of this Agreement.
"The Business" shall mean the business conducted by the Company
in the past and on the date of execution of this Agreement,
including business Activities under investigation or in
developmental stages, all other business activities which flow
therefrom by a reasonable expansion of the present activities of
the Company, all business activities which may be developed by
the Company during the Term, and all business activities now
conducted by the Company or any Affiliate thereof or which may be
developed by the Company or such Affiliates, during the term of
this Agreement, as reasonable expansions of their present
activities.
"Commencement Date" shall be the effective date of this
Agreement, as stated on page 1.
"Confidential Information" shall include, without limitation,
trade "know-how," trade secrets, subscriber, advertiser and
customer lists, pricing policies, operational methods, methods of
doing business, technical processes, formulae, designs and design
projects, inventions, research projects, and other business
affairs of the Company or its Subsidiaries and Affiliates, which
(i) were, in the case of the Company, or is or are designed to be
used in or are or may be useful in connection with the business
of the Company or any Subsidiary or Affiliate thereof, or which,
in the case of any of these entities, results from any of the
research or development activities of any such entity, which (ii)
is private or confidential in that it is not generally known or
available to the public, except as the result of unauthorized
disclosure by or information supplied by Employee or (iii) which
gives the Company or any Subsidiary or Affiliate of the Company
an opportunity or the possibility of obtaining an advantage over
competitors who may not know or use such information or who are
not lawfully permitted to use the same.
"Employment Year" shall mean each twelve-month period, or part
thereof, during which Employee is employed hereunder, commencing
on the Commencement Date or on January I of any subsequent
calendar year, the first such subsequent Employment Year being
the twelve-month period which will begin on January 1, 1998.
"Fiscal Quarter" shall mean each four-month period, or part
thereof, during which Employee is employed hereunder, commencing
on the Commencement Date or on January I of any subsequent
calendar year, the first such subsequent Fiscal Quarter being the
four-month period which will begin on January 1, 1998.
"Incentive Bonus" shall have the meaning assigned to it in
Section 6.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit
corporation, entity or government (whether Federal, state,
county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or
department thereof).
"Restricted Period" shall mean the term of employment of Employee
under this Agreement or any extension thereof and the twelve-
month month period thereafter, or such shorter period as may be
provided pursuant to any sections of this Agreement; provided,
however, that the Restricted Period shall terminate immediately
upon the occurrence of any termination of the employment of
Employee by the Company other than pursuant to this Agreement or
as authorized by law.
"Subsidiary" shall mean a corporation, 50% or more of the
outstanding voting shares of which is owned or controlled
directly or indirectly by the Company.
"Term" shall mean the term of employment of Employee under this
Agreement.
"Termination Date" shall have the meaning assigned to it in
Section 8.
"Termination Payment" shall have the meaning assigned to it in
Section 8.
Wherever from the context it appears appropriate, each word or
phrase stated in either the singular or the plural shall include
the singular and the plural and each pronoun stated in the
masculine, feminine or neuter gender shall include the masculine,
feminine and neuter.
Section 2. Employment and Duties of Employee.
2.1. Employment; Title, Duties. The Company hereby employs
Employee, and Employee
hereby accepts appointment as, and his election as, President and
Chief Executive Officer of the Company. The principal duty of
Employee shall be to serve in such capacities. In such
capacities, Employee shall render such services as are necessary
and desirable to protect and advance the best interests of the
Company, acting, in all instances, under the supervision of and
in accordance with the policies set by the Board of Directors.
2.2. Place of Employment. The principal place of employment of
Employee shall be 888 E. Las Olas Blvd., Suite 700, Fort
Lauderdale, Florida, 33301, or such other location as is
consented to by Employee and the Company. It is however
distinctly understood and agreed that Employee may be required in
connection with the performance of his duties, to work from time
to time at other locations designated by the Board of Directors
or as required in connection with the Business of the Company.
When required to travel to and/or spend time at such other
locations, Employee's reasonable traveling and temporary living
expenses shall be reimbursed to him by the Company, upon his
submittal of detailed written vouchers, supported by appropriate
documentation and subject to the general reimbursement policies
of the Company with respect to executive officers. Employee may
not be assigned duties that would require Employee to change his
principal residence to a location outside the state of Florida.
2.3. Performance of Duties. Employee shall devote his full
working time and efforts to the performance of his duties as an
executive of the Company and to the performance of such other
duties as are assigned him from time to time by the Board of
Directors of the Company. Employee shall not engage in or become
employed, directly or indirectly, in the commercial or
professional business of any other Person, without the prior
written consent of the Board of Directors of the Company, nor
shall he act as a consultant to or provide any services to,
whether on a remunerative basis or otherwise, the commercial or
professional business of any other Person, without such written
consent, which, in both instances, may be given or withheld by
the Board of Directors in its absolute discretion. Attention to
Employee's personal investments shall not be deemed to violate
this Subsection to the extent such attention does not constitute
the conduct of a separate business.
2.4. Services to the Company and/or its Affiliates. During the
term of this Agreement, it is understood that Employee may be
requested from time to time to provide assistance or consultative
or other services to, or to act temporarily as an Executive of an
Affiliate or Subsidiary of the Company. Employee shall perform
such services and, if elected as an officer or director of any
such other company, shall hold such office (and discharge its
duties) without additional compensation other than the
compensation set forth in this Agreement. During the term of
this Agreement, Employee shall also accept election or
appointment, and serve, during all or any part of the Term, as an
officer and director of any Subsidiary of the Company, and
perform the duties appropriate thereto, without additional
compensation other than as set forth in this Agreement.
Section 3. Term of Employment
The employment of Employee pursuant to this Agreement shall
commence as of the Commencement Date and end on the earlier to
occur of (i) January 1, 2008, or (ii) the first date on which
such employment is terminated in accordance with Section 10
hereof (the "Termination Date").
Section 4. Compensation and Benefits.
The Company shall pay Employee as compensation for all of the
services to be rendered by him hereunder during the Term, and in
consideration of the various restrictions imposed upon Employee
during the Term and the Restricted Period, and otherwise under
this Agreement, the Basic Salary and other benefits as provided
for and determined to Sections 5 to 10, inclusive, of this
Agreement.
Section 5. Basic Salary.
The Company shall pay Employee, as compensation for all of the
services to be rendered hereunder by him during the Term a salary
of one hundred ninety-nine thousand dollars ($199,000) per year
(the "Basic Salary"), payable in accordance with the regular
payroll practices of the Company for executives, less such
deductions or amounts as are required to be deducted or withheld
by applicable laws or regulations and less such other deductions
or amounts, if any, as are authorized by Employee. Such Basic
Salary may be increased but not decreased, from time to time in
the sole discretion of the Board of Directors.
Section 6. Incentive Bonus.
6.1. Obligation to Pay Incentive Bonus. Employee shall be
eligible to receive as additional compensation, 30 days after the
day the Board of Directors approves interim financial statements
for the last-ended Fiscal Quarter, a payment equal to five
percent (5%) of the Company's pre-tax net income for the last-
ended Fiscal Quarter for each Fiscal Quarter during the term be
after December 31, 1996 (the "Incentive Bonus"). It is the
intention of the parties that Employee's right to receive
Incentive Bonus payments shall be offset by an equal percentage
of pre-tax net losses, if any, realized from time to time. In
the event of a pre-tax net loss for a Fiscal Quarter, there shall
be set up an offset amount equal to five percent (5%) of such net
loss, which amount shall be deducted from, or offset against the
entirety of, the next Incentive Bonus payment to which Employee
becomes eligible. Likewise, if there are consecutive loss Fiscal
Quarters, the offset amounts shall accumulate and Employee shall
not be entitled to receive a further Incentive Bonus payment
until the entire accumulated loss amounts have been offset
against amounts earned in subsequent profitable Fiscal Quarters.
It is also the intention of the parties that Employee shall
receive the benefit of, or suffer the detriment resulting from,
any adjustment to the pre-tax net profit or loss as reported in
the final audited financial statements for each Fiscal Quarter
subject to the provisions of this Section 6. Any additions to, or
subtraction from, any Incentive Bonus payment made on the basis
of interim financial statements shall be taken into account and
used to adjust, as appropriate, the next Incentive Bonus payment
which Employee shall become entitled to receive. Notwithstanding
any such adjustment or subsequent net loss Fiscal Quarter, in no
event shall Employee be obligated to return to the Company any
amount which he shall have received in good faith pursuant to the
terms of this Subsection 6. 1, it being expressly understood and
agreed that all such amounts may only be used to offset future
Incentive Bonus payment obligations arising hereunder.
6.2. Partial Quarter Adjustment Provisions.
If, at any time during the Term, Employee is employed hereunder
for less than a full Fiscal Quarter as a result of the
termination of this Agreement (except in the case of termination
pursuant to Subsections 9.3 or 9.6 hereof), then the Incentive
Bonus in respect of such Fiscal Quarter shall be prorated by
determining the Incentive Bonus which would have been payable if
Employee had been employed for the entire Fiscal Quarter, and
multiplying the resultant Incentive Bonus by the Fiscal Quarter
Fraction. The Fiscal Quarter Fraction shall mean the number of
days in any period of less than a full Fiscal Quarter during
which Employee is employed hereunder divided by 91.
6.3. No Assignment. Employee shall have no right to assign or
give any third parties any rights in and to the Incentive Bonus,
except that his rights thereto, in the event of his death, shall
be transferred to the personal representatives of his estate.
6.4. Limitation on Payments. Employee's right to receive an
Incentive Bonus shall be determined on a quarterly basis and
shall not be subject to cumulation, nor to diminution by reason
of an excess or underage of gross business receipts in any other
Fiscal Quarter.
Section 7. Additional Benefits and Reimbursement for Expenses
7.1. Additional Benefits. The Company shall provide the
following additional benefits to Employee during the Tern:
(i) Payment of premiums on a term life insurance policy to be
maintained by the Company on Employee's life, to pay benefits in
the aggregate amount of $1 million to a beneficiary or
beneficiaries designated by Employee. It is understood that the
Company shall report the amount of premiums paid on such policy
to the Internal Revenue Service in accordance with the Internal
Revenue Code and the Regulations issued thereunder as income
payable to Employee;
(ii) Participation on an equitable basis in medical
hospitalization or accident/disability insurance plans and health
programs; and
(iii) Four (4) weeks vacation with pay in each Employment
Year comparable to that afforded other executives of the Company
and its subsidiaries. Provided however, Employee shall not be
entitled to take more than ten (10) consecutive business days as
vacation days without prior approval of the Company's Board of
Directors upon Employee's request made not less than three (3)
weeks prior to the intended vacation days, which approval shall
not be unreasonably withheld. There will be no carryover of
unused vacation time or pay from year to year. Employee shall
also be entitled to all holiday privileges regularly observed by
the Company during the Tern.
(iv) Company car shall be provided for Employee, monthly cost not
to exceed $ 1,000.
In addition, the Company, in its sole discretion, may include
Employee in any benefit plans which it now maintains or
establishes in the future for executives.
7.2. Reimbursement for Expenses. The Company shall pay or
reimburse Employee for all reasonable expenses actually incurred
or paid by him during the Term in the performance of his services
under this Agreement, upon presentation of such bills, expense
statements, vouchers or such other supporting information as the
Company may reasonably require. The Board of Directors may from
time to time require prior approval for individual expense items
in excess of pre-established aggregate amounts for a fixed period
or in excess of pre-established amounts for any type of
expenditure during any fixed period.
Section 8. Termination of Employment.
8.1 Death. If Employee dies during the Term, within sixty (60)
days of his death, the Company shall pay his designated
beneficiary an amount equal to one year's salary, in equal
payments over the next twelve months. If Employee dies during
the Term, his rights to receive his Incentive Bonus hereunder for
any Fiscal Quarter which has ended shall remain vested in his
estate, but his right to receive his Incentive Bonus for the
Fiscal Quarter in which he has died shall be prorated to the date
of his death. If Employee dies during the Term, neither Employee
nor his estate shall have any further right to receive an
Incentive Bonus except as stated hereinabove.
8.2. Disability.
8.2.1. If during the Term, Employee becomes physically or
mentally disabled, whether totally or partially, so that he is
unable to perform substantially all his services hereunder for
(i) a period of six (6) consecutive months, or (H) for shorter
periods aggregating six (6) months during any twelve (12) month
period, the Company may, at any time after the last day of the
sixth consecutive month of disability, or after the day on which
the shorter periods of disability shall have equaled an aggregate
of six (6) months, reduce compensation due Employee from that day
forward by twenty-five percent (25%). Employee's full
compensation shall be reinstated upon the Board of Directors'
determination that Employee has become able again to perform all
his services hereunder. If, during the Term, Employee's
disability continues such that Employee is unable to perform
substantially all his services hereunder for (i) a period of nine
(9) consecutive months, or (ii) for shorter periods aggregating
nine (9) months during any twelve (12) month period, the Company
may, at any time after the last day of the ninth consecutive such
month, or after the last day on which the shorter periods of
disability shall have equaled an aggregate of nine (9) months,
terminate Employee's employment by written notice to him. The
date on which Company sends written notice of termination under
this Subsection 8.2 shall be the Termination Date hereunder. In
case of any dispute as to whether or not Employee is disabled
within the meaning of this Subsection 8.2, the determination of
disability is to be made by a licensed physician selected by the
Board of Directors of the Company and acceptable to Employee, in
his reasonable judgment, which physicians decision shall be final
and binding on the parses hereto. In the event Employee's
employment is terminated pursuant to this Subsection 8.2, the
Company shall pay him an amount equal to all compensation
remaining unpaid at the time of the Termination Date plus any
compensation that would accrue to Employee through the end of the
month of the Termination Date. If Employee's employment is
terminated under this Subsection 8.2, his right to receive his
Incentive Bonus hereunder for any Fiscal Quarter which has ended
shall remain vested, but his right to receive his Incentive Bonus
for the Fiscal Quarter in which he is terminated shall be
prorated to the Termination Date, as provided in Subsection 6.2,
and Employee shall have no right to receive further Incentive
Bonus payments thereafter.
8.2.2. The Company shall maintain a disability insurance
policy for the benefit of Employee in the amount of $150,000
annually.
8.3. Termination for Cause. If Employee is convicted of or
indicted for an offense involving (i) fraud, (ii) embezzlement,
or (iii) any other crime involving moral turpitude, or if
Employee commits (iv) gross or willful neglect of duty, (v) a
breach of any of the material provisions of this Employment
Agreement, on his part to be performed (including breach of the
representations and warranties of Section 9), (vi) such conduct
as results or as is likely to result in substantial damage to the
reputation of the Company, or any of its Subsidiaries or
Affiliates, or (vii) if Employee declines to follow any
significant instruction adopted by the Board of Directors of the
Company and communicated to Employee, and if Employee adheres to
persistent refusal or neglect to follow such instructions or
policy, the Company may at any time thereafter terminate
Employee's employment hereunder by written notice to him
effective immediately and the date of the notice shah be the
Termination Date hereunder. Any such termination shall be deemed
to be termination for cause, for purposes of this Agreement. If
Employee's employment is terminated for cause hereunder, then
Employee shall be entitled to receive only the following
payments: any portion of his Basic Salary accrued to the date of
such termination and not theretofore paid to him- and any
Incentive Bonus to which he is entitled for any completed Fiscal
Quarter under this contract which has not theretofore been paid
to him; plus reimbursement for any expenses properly incurred by
Employee, and supported by appropriate vouchers, which expenses
have been incurred prior to the date of such termination and
which have not theretofore been reimbursed. Except as set forth
in the immediately preceding sentence, all of Employee's rights
to compensation hereunder shall be terminated, in the event of
termination for cause, as of the Termination Date.
8.4. Constructive Termination of Employee. In the event the
Company removes Employee from the position of President and Chief
Executive Officer, or if Employee is removed as a Director of the
Company without his consent (or fails to be re-elected at any
meeting of the Board of Directors of the Company held for the
purpose of electing or re-electing Directors of the Company) or
substantially changes his duties or his reporting responsibility
to the Board of Directors under Section 2. 1, the employment of
Employee, at his option, exercisable by written notice given to
the Company at any time within sixty (60) days following such
event (or failure to re-elect) (time of notice being deemed to be
of the essence), shall be deemed to have been constructively
terminated by the Company hereunder, as of the date of Employee's
notice, provided, however, that such constructive notice shall
not be deemed a breach by the Company of its obligations under
this Agreement and further provided, however, that termination
for cause pursuant to Subsection 8.3 shall make the provisions of
this Subsection 8.4 inapplicable. The date of such written
notice shall be deemed the Termination Date hereunder.
If Employee's employment is terminated under this Subsection 8.4,
and the Termination Date is within four years of the Commencement
Date, Employee shall receive, within thirty (30) days of such
written notice to the Company, a Termination Payment, which shall
be determined according to the following schedule: (i) if the
Termination Date hereunder is within one year of the Commencement
Date, the Termination Payment shall be two million dollars
($2,000,000); (ii) if the Termination Date is within two years of
the Commencement Date, the Termination Payment shall be one
million eight hundred thousand dollars ($1,800,000); (ii) if the
Termination Date is within three years of the Commencement Date,
the Termination Payment shall be one million six hundred thousand
dollars ($1,600,000); (iv) if the Termination Date is within four
years of the Commencement Date, the Termination Payment shall be
one million four hundred thousand dollars ($1,400,000); and so
forth. Additionally, Employee shall continue to receive the
additional benefits provided in Subsection 7.1 for a period of
two (2) years from the Termination Date.
If Employee's employment is terminated under this Subsection 8.4,
and the Termination Date is later than four years after the
Commencement Date, Employee shall receive an amount equal to his
aggregate Base Salary for two (2) years following the date of
such Constructive Termination, or an amount equal to his
aggregate Base Salary through the end of the Term whichever is
the lesser amount, and Employee shall continue to receive the
additional benefits provided in Subsection 7.1 during the period
he is entitled to receive Base Salary pursuant to the provisions
of this Subsection 8.4.
In the event of the Constructive Termination of Employee's
Employment pursuant to this Section 8.4, Employee's right to
receive an Incentive Bonus for each Fiscal Quarter completed
during the period of such continued Base Salary payments shall
remain in effect, and Employee's right to remove an Incentive
Bonus on account of the year in which his employment terminated
by virtue of Constructive Termination shall be prorated to the
date of such termination.
8.5. Other Termination of Employment by the Company. In the
event the Company terminates the employment of Employee hereunder
other than pursuant to any of the prior provisions hereof without
Employee's consent, Employee shall be deemed to have been
constructively terminated by the Company, and such termination
shall be subject to the provisions of Subsection 8.4.
8.6. Other Termination of Employment by Employee If Employee
quits his employment (other than as authorized under Subsection
8.4 hereof), he shall be deemed to have been terminated by the
Company for cause and shall be subject to the provisions of
Subsection 8.3 hereof.
Section 9. Representations and Warranties by Employee.
Employee hereby represents and warrants, the same being part of
the essence of this Agreement, that, as of the Commencement Date,
he is not a party to any agreement, contract or understanding,
and no other facts or circumstances exist, which would in any way
restrict or prohibit him from undertaking or performing any of
his obligations under this Agreement. The foregoing
representation and warranty shall remain in effect throughout the
Term.
Section 10. Confidential Information and Proprietary
Interests.
10.1. Acknowledgment of Confidentility. Employee understands and
acknowledges that he may obtain Confidential Information in the
perfomance of his services. Employee further acknowledges that
the services to be rendered by him are of a special, unique and
extraordinary character and that, in connection with such
services, he will have access to Confidential Information vital
to the Company's, its Subsidiaries' and Affiliates' business and
perhaps vital to the business of the Company. Accordingly,
Employee agrees that he shall not, either during the Term or at
any time thereafter, (i) use or disclose any such Confidential
Information outside the Company, and its Subsidiaries and
Affiliates- (ii) publish any works, speeches or articles with
respect thereto; or (iii), except as required in the proper
performance of his services hereunder, remove or aid in the
removal from the premises of the Company, or its Subsidiaries or
Affiliates, of any Confidential Information or any property or
material relating thereto.
The foregoing confidentiality provisions shall cease to be
applicable to any Confidential Information which becomes
generally available to the public (except by reason of or in
consequence of a breach by Employee of his obligations under this
Section 10).
In the event Employee is required by law or a court order to
disclose any such Confidential Information, he shall promptly
notify the Company of such requirement and provide the Company
with a copy of any court order or of any law which in his opinion
requires such disclosure and, if the Company so elects, permit
the Company an adequate opportunity, at its own expense, to
contest such law or court order.
10.2. Delivery of Material. Employee shall promptly, and
without charge, deliver to the Company on the termination of his
employment hereunder, or at any other time the Company may so
request, all memoranda, notes, records, reports, manuals,
computer disks, videotapes, drawings, blueprints and other
documents (and all copies thereof) relating to the business of
the Company, and its Subsidiaries and Affiliates, and all
property associated therewith, which he may then possess or have
under his control.
10.3. Customer Lists. Employee acknowledges that (i) all
fists of suppliers, advertisers, customers and vendors of the
Company or of its Subsidiaries or Affiliates developed during the
course of Employee's employment and/or by the Company are and
shall be the sole and exclusive property of the Company, its
Subsidiaries or Affiliates, as the case may be, and Employee
further acknowledges and agrees that he neither has nor shall
have any personal right, title or interest therein; (ii) that
such lists are and must continue to be confidential- and (iii)
that such lists are not readily accessible to competitors of the
Company or its Subsidiaries or Affiliates.
10.4. Ideas, Programs, Etc. If during the Term, Employee
invents or develops any ideas, programs, formats, software
systems or the likes, source codes, proprietary codes or the
like, relating to or useful in connection with the Business of
the Company, the same are and shall remain the property of the
Company, and he will promptly deliver all copies of the same to
the Company, assign his interest therein to the Company and
execute such documents as the Company's counsel may request to
convey title thereto to the Company including, but not limited to
patent applications, copyright applications, trademark
Applications and the like. Employee shall not be entitled to any
compensation, other than as provided in this Agreement, for
carrying out his obligations to the Company under Subsection 10.4
or any other Subsection of this Section 10.
Section 11. Non-Competition Provisions.
Employee agrees that he will not, during the Restricted Period,
compete directly or indirectly with the business of the Company.
The phrase "compete directly or indirectly with the business of
the Company" shall be deemed to include, without limitingting the
generality thereof (1) engaging or having a material interest,
directly or indirectly, as owner, employee, officer, director,
partner, sales representative, stockholder, capital investor,
lessor, renderer of consultation services or advise, either alone
or in association with another or others, in the opmfion of any
aspect of any type of business or enterprise competitive with the
business or operation of the Company, (2) soliciting any of the
employees of the Company to leave the employ of the Company, or
so soliciting any employee of any Subsidiary or Affiliate of the
Company; (3) soliciting any of the employees of the Company to
become employees of any other Person, or so soliciting any
employee of any Subsidiary or Affiliate of the Company; or (4)
soliciting any customer or supplier of the Company or any
Affiliate or Subsidiary of either of them with respect to their
business. Similarly, Employee shall not raid, entice or induce
any Person who on the Termination Date is, or within one (1) year
immediately preceding the Termination Date was, a customer or
supplier of the Company, or any of its Subsidiaries or
Affiliates, to become a customer of any other Person for products
or services the same as, or similar to, those products and
services as from time to time shall be provided by the Company,
or any of its Subsidiaries and Affiliates, and Employee shall not
approach any Person for such purpose- nor shall Employee raid,
entice or induce any Person who on the Termination Date is, or
within one year immediately preceding the Termination Date was,
an employee of the Company or any of its Subsidiaries or
Affiliates, to become employed by any other Person, similarly,
Employee shall not approach any such employee for such purpose or
authorize or knowingly approve the taking of such actions by any
other Person or assist any such other Person in taking any such
action.
The phrase "compete directly or indirectly with the business of
the Company" shall not be deemed to include an ownership interest
as an inactive investor, which, for purposes of this Agreement,
shall mean only the beneficial ownership of less than five (5%)
percent of the outstanding shares of any series or class of
securities of any competitor of the Company, which securities of
such series or class are publicly traded in the securities
market.
Section 12. Disputes and Remedies.
12.1. Waiver of Jury Trial. EMPLOYEE AND THE COMPANY HEREBY
WAIVE THE RIGHT TO A BY JURY IN THE EVENT OF ANY DISPUTE WHICH
ARISES UNDER THIS AGREEMENT.
12.2. Injunctive Relief If Employee commits a breach, or
threatens to commit a breach, of any of the provisions of Section
2 or of Sections 10 or I 1, the Company shall have the following
rights and remedies (each of which shall be independent of the
other, and shall be severally enforceable, and all of which shall
be in addition to, and not in lieu of any other rights and
remedies available to the Company):
(i) the right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity
jurisdiction, it being acknowledged by Employee that any such
breach or threatened breach will or may cause irreparable injury
to the Company and that money damages will or may not provide an
adequate remedy to the Company; and
(ii) the right and remedy to require Employee to account for and
pay over to the Company all compensation profits, monies,
increments, things of value or other benefits, delivered or
received by Employee as the result of any acts or transactions
constituting a breach of any of the provisions of Section 2 or of
Sections 10 or 11 of this Agreement, and Employee hereby agrees
to account for and pay over all such compensation, profits,
monies, increments, things of value or other benefits to the
Company.
Employee specifically agrees not to object to any application
made by the Company to any court having equity jurisdiction,
seeking an injunction restraining him from committing,
threatening or continuing any violation of Section 2 or Sections
10 or 11 of this Agreement.
12.3. Partial Enforceability. If any provision contained in
Section 2 or in Section 10 or 11, or any part thereof is
construed to be invalid or unenforceable, the same shall not
affect the remainder of Employee's agreements, covenants and
undertakings, or the other restrictions which he has accepted, in
Section 2 or in Sections 10 or 11, and the remaining such
agreements, covenants, undertakings and restrictions shall be
given the fullest possible effect, without regard to the invalid
parts.
12.4 Adjustment of Restrictions. Despite the prior provisions of
this Section 12, if any covenant or agreement contained in
Sections 2, 10 or 11, or any part thereof is held by any court of
competent jurisdiction to be unenforceable because of the
duration of such provision or the geographic area covered
thereby, the court making such determination shall have the power
to reduce the duration or geographic area of such provision and,
in its reduced form such provision shall be enforceable.
12.5. Attorneys Fees and Expenses In the event that any
action, suit or other proceeding at law or in equity is brought
to enforce the provisions of this Agreement, or to obtain money
damages for the breach thereof, and such action results in the
award of a judgment for money damages or in the granting of any
injunction in favor of the Company, then all reasonable expenses,
including, but not limited to, reasonable attorneys' fees and
disbursements (including those incurred on appeal) of the Company
in such action, suit or other proceeding shall (on demand of the
Company) forthwith be paid by Employee. If such action results
in a judgment in favor of Employee, then all reasonable expenses,
including but not limited to, reasonable attorney's fees and
disbursements (including those incurred on appeal) of Employee in
such action, suit or other proceeding shall (on demand of
Employee) forthwith be paid by the Company.
12.6. Limited Enforceability . In the event that Employee
elects to terminate this Agreement pursuant to Subsection 8.4, or
the Company terminates the employment of Employee hereunder other
than pursuant to any of the provisions of this Agreement,
Employee shall be released as of the Termination Date from any
and all further restrictions pursuant to Section 2 and Section
11.
Section 13. Survival.
The provisions of Sections 10, 11, 12 and this Section 13 shall
survive termination of this Agreement and remain enforceable
according to their terms.
Section 14. Severability.
The invalidity or unenforceability of any provision of this
Agreement shall in no way affect the validity or enforceability
of any other provisions hereof
Section 15. Notices.
All notices, demands and requests required or permitted to be
given under the provisions of this Agreement shall be deemed duly
given if made in writing and delivered personally or mailed by
postage prepaid certified or registered mail, return receipt
request, accompanied by a second copy sent by ordinary mail,
which notices shall be addressed as follows:
If to the Company:
Casino Airlink, Inc.
888 East Las Olas Blvd., Suite 700
Fort Lauderdale, FL 33301
with a copy to:
Niesar & Diamond LLP
90 New Montgomery Street, 9th Floor
San Francisco, CA 94105
If to Employee:
William Forhan
888 East Las Olas Blvd., Suite 700
Fort Lauderdale, FL 33301
By notifying the other parties in writing, given as aforesaid,
any party may from time to time change its address or the name of
any person to whose attention notice is to be given, or may add
another person, to whose attention notice is to be given, in
connection with notice to any party.
Section 16. Assignment and Successors.
Neither this Agreement nor any of his rights or duties hereunder
may be assigned or delegated by Employee. This Agreement is not
assignable by the Company except to any successor in interest
which takes over all or substantially all of the business of the
Company, as it is conducted at the time of such assignment. Any
corporation into or with which the Company is merged or
consolidated or which takes over all or substantially all of the
business of Company shall be deemed to be a successor of the
Company for purposes hereof This Agreement shall be binding upon
and, except as aforesaid, shall inure to the benefit of the
parties and their respective successors and ed assigns.
Section 17. Entire Agreement and Waiver.
17.1. Integration. This Agreement contains the entire agreement
of the parties hereto on its subject matter and supersedes all
previous agreements between the parties hereto, written or oral,
express or implied, covering the subject matter hereof. No
representations, inducements, promises or agreements, oral or
otherwise, not embodied herein shall be of any force or effect.
Provided, however, that this Agreement shall not affect or
operate to reduce any benefit or compensation inuring to Employee
of a kind elsewhere provided and not expressly provided in this
Agreement, including, without limitation, any grant of Incentive
Stock Options to Employee.
17.2. No Waiver. No waiver or modification of any of the
provisions of this Agreement shall be valid unless in writing and
signed by or on behalf of the party granting such waiver or
modification. No waiver by any party of any breach or default
hereunder shall be deemed a waiver of any repetition of such
breach or default or shall be deemed a waiver of any other breach
or default, nor shall it in any way affect any of the other terms
or conditions of this Agreement or the enforceability thereof No
failure of the Company to exercise any power given it hereunder
or to insist upon strict compliance by Employee with any
obligation hereunder, and no custom or practice at variance with
the terms hereof shall constitute a waiver of the right of the
Company to demand strict compliance with the terms hereof
Employee shall not have the right to sign any waiver or
modification of any provisions of this Agreement on behalf of the
Company, nor shall any action taken by Employee, as the Vice
President of Marketing of the Company, or otherwise, reduce Ins
obligations under this Agreement.
This Agreement may not be supplemented or rescinded except by
instrument in writing signed by all of the parties hereto after
the Commencement Date. Neither this Agreement nor any of the
rights of any of the parties hereunder may be terminated except
as provided herein.
Section 18. Governing Law.
This Agreement shall be governed by and construed, and the rights
and obligations of the parties hereto enforced, in accordance
with the laws of the State of Florida.
Section 19. Headings.
The Section and Subsection headings contained herein are for
reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date written above, which shall be deemed to be the
Commencement Date.
"The Company"
INTEGRATED MARKETING PROFESSIONALS, INC.
By: /s/ William Forhan
William Forhan, President and CEO
"Employee"
/s/ William Forhan
William Forhan
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of January, 1998
(the "Commencement Date") by and among Integrated Marketing
Professionals, Inc., a Nevada Corporation (hereinafter the
"Company"), and James Muldowney, an individual residing in
Georgia ("Employee");
R E C I T A L
WHEREAS, the Company desires to retain the services of Employee
and Employee is willing to continue employment by Company, on the
terms and subject to the conditions set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, the parties as follows:
Section 1. As used in this Agreement, the following terms share
have the meanings set forth below:
"Affiliate" shall mean a corporation which, directly or
indirectly, controls, is controlled by or is under common control
with the Company, or which is a successor in interest to the
Company, and for put-poses hereof, "control" shall mean the
ownership of 20% or more or the voting shares of the corporation
in question.
"Basic Salary" shall have the meaning assigned to it in Section 5
of this Agreement.
"The Business" shall mean the business conducted by the Company
in the past and on the date of execution of this Agreement,
including business activities under investigation or in
developmental stages, all other business activities which flow
therefrom by a reasonable expansion of the present activities of
the Company, all business activities which may be developed by
the Company during the Term, and all business activities now
conducted by the Company or any Affiliate thereof or which may be
developed by the Company or such Affiliates, during the term of
this Agreement, as reasonable expansions of their present
activities.
"Commencement Date" shall be the effective date of this
Agreement, as stated on page 1.
"Confidential Information" shall include, without limitation,
trade "know-how," trade secrets, subscriber, advertiser and
customer lists, pricing policies, operational methods, methods of
doing business, technical processes, formulae, designs and design
projects, inventions, research projects, and other business
affairs of the Company or its Subsidiaries and Affiliates, which
(i) were, in the case of the Company, or is ot- are designed to
be used in or are or may be useful in connection with the
business of the Company or any Subsidiary or Affiliate thereof or
which, in the case of any of these entities, results from any of
the research or development activities of any such entity, which
(ii) is private or confidential in that it is not generally known
or available to the public, except as the result of unauthorized
disclosure by or information supplied by Employee or (iii) which
gives the Company or any Subsidiary or Affiliate of the Company
an opportunity or the possibility of obtaining an advantage over
competitors who may not know or use such information or who are
not lawfully permitted to use the same.
"Employment Year" shall mean each twelve-month period, or part
thereof, during which Employee is employed hereunder, commencing
on the Commencement Date or on January I of any subsequent
calendar - year, the first such subsequent Employment Year being
the twelve-month period which will begin on January 1, 1998.
"Fiscal Quarter" shall mean each four-month period, or part
thereof, during which Employee is employed hereunder, commencing
on the Commencement Date or on January 1 of any subsequent
calendar year, the first such subsequent Fiscal Quarter being the
four-month period which will begin on January 1, 1998.
"Incentive Bonus" shall have the meaning assigned to it in
Section 6.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit
corporation, entity or government (whether Federal, state,
county, city, municipal or otherwise, including, without
limitation, any instrumentality , division, agency, body or
department thereof).
"Restricted Period" shall mean the term of employment of Employee
under this Agreement or any extension thereof and the twelve-
month period thereafter, or such shorter period as may be
provided pursuant to any sections of this Agreement- provided,
however, that the Restricted Period shall terminate immediately
upon the Occurrence of any termination of the employment of
Employee by the Company other than pursuant to this Agreement or
as authorized by law.
"Subsidiary" shall mean a corporation, 50% or more of the
outstanding voting shares of which is owned or controlled
directly or indirectly by the Company.
"Term" shall mean the ten-n of employment of Employee under this
Agreement.
"Termination Date" shall have the meaning assigned to it in
Section 8.
"Termination Payment" shall have the meaning assigned to it in
Section 8.
Wherever from the context it appears appropriate, each word or
phrase stated in either the singular or the plural shall include
the singular and the plural, and each pronoun stated in the
masculine, feminine or neuter gender shall include the masculine,
feminine and neuter.
Section 2. Employment and Duties of Employee.
2.1. Employment; Title; Duties. The Company hereby employs
Employee, and Employee hereby accepts appointment as, and his
election as, Executive Vice President of the Company, and
President of the Subsidiary, Casino Airlink. The principal duty
of Employee shall be to serve in such capacities. In such
capacities, Employee shall tender such services as are necessary
and desirable to protect and advance the best interests of the
Company, acting, in all instances, under the supervision of and
in accordance with the policies set by the Board of Directors.
2.2. Place of Employment. The principal place of employment of
Employee shall be 5590 Ulmerton Road, Clearwater, Florida, 34620,
or such other location as is consented to by Employee and the
Company. It is however distinctly understood and agreed that
Employee may be required, in connection with the performance of
his duties, to work from time to time at other locations
designated by the Board or Directors or as required in connection
with the Business of the Company. When required to travel to
and/or spend time at such other locations, Employee's reasonable
traveling and temporary living expenses shall be reimbursed to
him by the Company, upon his submittal of detailed written
vouchers, supported by appropriate documentation and subject to
the general reimbursement policies of the Company with respect to
executive officers. Employee may not be assigned duties that
would require Employee to change his principal residence to a
location outside the state of Florida.
2.3 Performance of Duties. Employee shall devote his full
working time and efforts to the performance of his duties as an
executive of the Company and to the performance of such other
duties as are assigned him from time to time by the Board of
Directors of the Company. Employee shall not engage in or become
employed, directly or indirectly, in the commercial or
professional business of any other Person, without the prior
written consent of the Board of Directors of the Company, nor
shall he act as a consultant to or provide any services to,
whether on a remunerative basis or otherwise, the commercial or
professional business of any other Person, without such written
consent, which, in both instances, may be given or withheld by
the Board of Directors in its absolute discretion. Attention to
Employee's personal investments shall not be deemed to violate
this Subsection to the extent such attention does not constitute
the conduct of a separate business.
2.4 Services to the Company and/or its Affiliates. During the
term of this Agreement, it is understood that Employee may be
requested from time to time to provide assistance or consultative
or other services to, or to act temporarily as an Executive of an
Affiliate or Subsidiary of the Company. Employee shall perform
such services and, if elected as all officer or director of any
such other company, shall hold such office (and discharge its
duties) without additional compensation other than the
compensation set forth in this Agreement. During the term of
this Agreement, Employee shall also accept election or
appointment, and serve, during all or any part of the Term, as an
officer and director of any Subsidiary of the Company, and
perform the duties appropriate thereto, without additional
compensation other than as set forth in this Agreement.
Section 3. Term of Employment.
The employment of Employee pursuant to this Agreement shall
commence as of the Commencement Date and end on the earlier to
occur of (i) December 31, 2008, or (ii) the first date on which
such employment is terminated in accordance with Section 10
hereof (the "Termination Date").
Section 4. Compensation and Benefits.
The Company shall pay Employee as compensation for all of the
services to be rendered by him hereunder during the Tenn, and in
consideration of the various restrictions imposed upon Employee
during the Term and the Restricted Period, and otherwise under
this Agreement, the Basic Salary and other benefits as provided
for and determined pursuant to Sections 5 to 10, inclusive, of
this Agreement.
Section 5. Basic Salary
The Company shall pay Employee, as compensation for all of the
services to be rendered hereunder by him during the Term, a
salary of one hundred fifty thousand dollars ($150,000) per year
(the "Basic Salary"), payable in accordance with the regular
payroll practices of the Company for executives, less such
deductions oi- amounts as are required to be deducted or withheld
by applicable laws or regulations and less such other deductions
or amounts, if any, as are authorized by Employee. Such Basic
Salary may be increased, but not decreased, from time to time in
the sole discretion of the Board of Directors.
Section 6. Incentive Bonus.
6.1. Obligation to Pay Incentive Bonus. Employee shall be
eligible to receive as additional compensation, 30 days after the
day the Board of Directors approves interim financial statements
for the last-ended Fiscal Quarter, a payment equal to two and one-
half percent (2.5%) of the Company's pre-tax net income for the
last-ended Fiscal Quarter for each Fiscal Quarter during the term
beginning after December- 31, 1997 (the "Incentive Bonus"). It
is the intention of the parties that Employee's right to receive
Incentive Bonus payments shall be offset by ail equal percentage
of pre-tax net losses, if any, realized from time to time. In
the event of a pre-tax net loss for a Fiscal Quarter, there shall
be set up ail offset amount equal to two and one-half percent
(2.5%) of such net loss, which amount shall be deducted from, or
offset against the entirely of, the next Incentive Bonus payment
to which Employee becomes eligible. Likewise, if there are
consecutive loss Fiscal Quarters, the offset amounts shall
accumulate and Employee shall not be entitled to receive a
further Incentive Bonus payment until the entire accumulated loss
amounts have been offset against amounts carried in subsequent
profitable Fiscal Quarters. It is also the intention of the
parties that Employee shall receive the benefit of, or suffer the
detriment resulting from, any adjustment to the pre-tax net
profit or loss as reported in the final audited financial
statements for each Fiscal Quarter subject to the provisions of
this Section 6. Any additions to, or subtraction from, any
Incentive Bonus payment made on the basis of interim financial
statements shall be taken into account and used to adjust, as
appropriate, the next Incentive Bonus payment which Employee
shall become entitled to receive. Notwithstanding any such
adjustment or subsequent net loss Fiscal Quarter, in no event
shall Employee be obligated to return to the Company any amount
which lie shall have received in good faith pursuant to the terms
of this Subsection 6.1, it being expressly understood and agreed
that all such amounts may only be used to offset future I
incentive Bonus payment obligations arising hereunder.
6.2. Partial Quarter Adjustment Provisions.
1f, at any time during the Term, Employee is employed hereunder
for less than a full Fiscal Quarter as a result of the
termination of this Agreement (except in the case of termination
pursuant to Subsections 9.3 of- 9.6 hereof), then the Incentive
Bonus in respect of such Fiscal Quarter shall be prorated by
determining the Incentive Bonus which would have been payable if
Employee had been employed for the entire Fiscal Quarter, and
multiplying the resultant Incentive Bonus by the Fiscal Quarter
Fraction. The Fiscal Quarter Fraction shall mean the number of
days in any period of less than a full Fiscal Quarter during
which Employee is employed hereunder divided by 91.
6.3 No Assignment. Employee shall have no fight to assign or
give any third parties any rights in and to the Incentive Bonus,
except that his rights thereto, in the event of his death, shall
be transferred to the personal representatives of his estate.
Section 7. Additional Benefits and Reimbursement for Expenses.
7.1. Additional Benefits. The Company shall provide the
following additional benefits to Employee during the Term:
(i) Participation on an equitable basis in medical,
hospitalization or accident/disability insurance plans and health
programs; and
(ii) Four (4) weeks vacation with pay in each Employment Year
comparable to that afforded other executives of the Company and
its subsidiaries. Provided however, Employee shall riot be
entitled to take more than ten (10) consecutive business days as
vacation days without prior approval of the Company's Board of
Directors upon Employee's request made riot less than three (3)
weeks prior to the intended vacation days, which approval shall
not be unreasonably withheld. There will be no carryover of
unused vacation time or pay from year to year. Employee shall
also be entitled to all holiday privileges regularly observed by
the Company during the Term, and
(iii) Payment of premiums on a term life insurance policy to
be maintained by the Company on Employee's life, to pay benefits
in the aggregate amount of $400,000 to a beneficiary or
beneficiaries designated by Employee. It is understood that the
Company shall report the amount of premiums paid on such policy
to the Internal Revenue Service in accordance with the Internal
Revenue Code and the Regulations issued thereunder as income
payable to Employee, and
(iv) Company Car shall be provided for employee, monthly cost not
to exceed $500.
In addition, the Company, in its sole discretion, may include
Employee in any benefit plans which it now maintains or
establishes in the future for executives.
7.2. Reimbursement for Expenses. The Company shall pay or
reimburse Employee for all reasonable expenses actually incurred
or paid by him during the 1'en-n in the performance of his
services under this Agreement, upon presentation of such bills,
expense statements, vouchers or such other supporting information
as the Company may reasonably require. The Board of Directors
may from time to time require prior approval for individual
expense items in excess of pre-established aggregate amounts for
a fixed period or in excess of pre-established amounts for any
type of expenditure during any fixed period.
Section 8. Termination of Employment.
8.1. Death. If Employee dies during the Term, the Company shall
pay his designated beneficiary an amount equal to one year's
compensation, in equal payments over the next twelve months. If
Employee dies during the Term, his rights to receive his
Incentive Bonus hereunder for any Fiscal Quarter which has ended
shall remain vested in his estate, but his fight to receive his
Incentive Bonus for the Fiscal Quarter in which he has died shall
be prorated to the date of his death. If Employee dies during
the Term, neither Employee nor his estate shall have any further
fight to receive an Incentive Bonus except as stated hereinabove.
8.2. Disability.
8.2.1. If, during the Term, Employee becomes physically or
mentally disabled, whether totally or partially, so that he is
unable to perform substantially all his services hereunder for
(i) a period of six (6) consecutive months, or (ii) for shorter
periods aggregating six (6) months during any twelve ( 12) month
period, the Company may, at any time after the last day of the
sixth consecutive month of disability, or after the day on which
the shorter periods of disability shall have equaled an aggregate
of six (6) months, reduce compensation due Employee from that day
forward by twenty-five percent (25%). Employee's full
compensation shall be reinstated upon the Board of Directors'
determination that Employee has become able again to perform all
his services hereunder. If, during the Term, Employee's
disability Continues Such that Employee is unable to perform
substantially all his services hereunder for (i) a period or nine
(9) consecutive months, or (ii) for shorter periods aggregating
nine (9) months during any twelve (12) month period, the Company
may, at any time after the last day of the ninth consecutive such
month, or after the last day on which the shorter periods of
disability shall have equaled an aggregate of nine (9) months,
terminate Employee's employment by written notice to him. The
date on which Company sends written notice, of termination under
this Subsection 8.2 shall be the Termination Date hereunder. In
case of any dispute as to whether or not Employee is disabled
within the meaning of this Subsection 8.2, the determination of
disability is to be made by a licensed physician selected by the
Board of Directors of the Company and acceptable to Employee, in
his reasonable judgment, which physician's decision shall be
final and binding on the parties hereto. In the event Employee's
employment is terminated pursuant to this Subsection 8.2, the
Company shall pay him an amount equal to all compensation
remaining unpaid at the time of the Termination Date plus any
compensation that would accrue to Employee through the end of the
month of the Termination Date. If Employee's employment is
terminated under this Subsection 8.2, his right to receive his
Incentive Bonus hereunder for any Fiscal Quarter which has ended
shall remain vested, but his right to receive his Incentive Bonus
for the Fiscal Quarter in which he is terminated shall be
prorated to the Termination Date, as provided in Subsection 6.2,
and Employee shall have no right to receive further Incentive
Bonus payments thereafter.
8.3 Termination for Cause. If Employee is convicted of or
indicted for an offense involving (i) fraud, (ii) embezzlement,
or (iii) any other crime involving moral turpitude, or if
Employee commits (iv) gross or willful neglect of duty, (v) a
breach of any of the material provisions of this Employment
Agreement, on his part to be performed (including breach of the
representations and warranties of Section 9), (vi) such conduct
as results or as is likely to result in substantial damage to the
reputation of the Company, or any of its Subsidiaries or
Affiliates, or (vii) if Employee declines to follow any
significant instruction adopted by the Board of Directors of the
Company and communicated to Employee, and if Employee adheres to
persistent refusal or neglect to follow such instructions or
policy, the Company may at any time thereafter terminate
Employee's employment hereunder by written notice to him,
effective immediately and the date of the notice shall be the
Termination Date hereunder. Any Such termination shall be deemed
to be termination for cause, for purposes of this Agreement. It'
Employee's employment is terminated for cause hereunder, then
Employee shall be entitled to receive only the following
payments: any portion of his Basic Salary accrued to the date of
such termination and not theretofore paid to him; and any
Incentive Bonus to which he is entitled for any completed Fiscal
Quarter under this contract which has not theretofore been paid
to him; plus reimbursement for any expenses properly incurred by
Employee, and supported by appropriate vouchers, which expenses
have been incurred prior to the date of such termination and
which have not theretofore been reimbursed. Except as set forth
in the immediately preceding sentence, all of Employee's rights
to compensation hereunder shall be terminated, in the event of
termination for cause, as of the Termination Date.
8.4 Constructive Termination of Employee. In the event the
Company removes Employee from the position of Executive Vice
President, or if Employee is removed as a Director of the Company
without his consent (or fails to be re-elected at any meeting of
the Board of Directors of the Company held for the purpose of
electing or reelecting Directors of the Company) or substantially
changes his duties or his reporting responsibility to the Board
of Directors under Section 2.1, the employment of Employee, at
his option, exercisable by written notice given to the Company at
any time within sixty (60) days following such event (or failure
to re-elect) (time of notice being deemed to be of the essence),
shall be deemed to have been constructively terminated by the
Company hereunder, as of the date of Employee's notice; provided,
however, that such constructive termination shall not be deemed a
breach by the Company of its obligations under this Agreement and
further provided, however, that termination for cause pursuant to
Subsection 8.3 shall make the provisions of this Subsection 8.4
inapplicable. The date of such written notice shall be deemed
the Termination Date hereunder.
If Employee's employment is terminated under this Subsection 8.4,
and the Termination Date is within four years of the Commencement
Date, Employee shall receive, within thirty (30) days of such
written notice to the Company, a Termination Payment, which shall
be determined according to the following schedule: (i) if the
Termination Date hereunder is within one year of the Commencement
Date, the Termination Payment shall be one million five hundred
thousand dollars ($1,500,000); (ii) if the Termination Date is
within two years of the Commencement Date, the Termination
Payment shall be one million three hundred fifty thousand dollars
($1,350,000); (ii) if the Termination Date is within three years
of the Commencement Date, the Termination Payment shall be one
million two hundred thousand dollars ($1,200,000); (iv) if the
Termination Date is within four years of the Commencement Date,
the Termination Payment shall be one million fifty thousand
dollars ($1,050,000), and so forth. Additionally, Employee shall
continue to receive the additional benefits provided in
Subsection 7.1 for a period of two (2) years from the Termination
Date.
If Employee's employment is terminated under this Subsection 8.4,
and the Termination Date is later than four years after the
Commencement Date, Employee shall receive an amount equal to his
aggregate Base Salary for two (2) years following the date of
such Constructive Termination, or an amount equal to his
aggregate Base Salary through the end of the Term, whichever is
the lesser amount, and Employee shall continue to receive the
additional benefits provided in Subsection 7.1 during the period
lie is entitled to receive Base Salary pursuant to the provisions
of this Subsection 8.4.
In the event or the Constructive Termination of Employee's
Employment pursuant to this Section 8.4, Employee's tight to
receive an Incentive Bonus for each Fiscal Quarter completed
during the period of such continued Base Salary payments shall
remain in effect, and Employee's fight to receive an Incentive
Bonus on account of the year in which his employment terminated
by virtue of Constructive Termination shall be prorated to the
date of such termination.
8.5. Other Termination of Employment by the Company. In the
event the Company terminates the employment of Employee hereunder
other than pursuant to any of the prior provisions hereof,
without Employee's consent, Employee shall be deemed to have been
constructively terminated by the Company, and such termination
shall be subject to the provisions of Subsection 8.4.
8.6. Other Termination of Employment by Employee. If Employee
quits his employment (other than as authorized under Subsection
8.4 hereof), he shall be deemed to have been terminated by the
Company for cause and shall be subject to the provisions of
Subsection 8.3 hereof
Section 9. Representations and Warranties by Employee.
Employee hereby represents and warrants, the same being part of
the essence of this Agreement, that, as of the Commencement Date,
he is not a party to any agreement, contract or understanding,
and no others facts or circumstances exist, which would in any
way restrict or prohibit him from undertaking or performing any
or his obligations under this Agreement. The foregoing
representation and warranty shall remain in effect throughout the
Term.
Section 10. Confidential Information and Proprietary Interests.
10.1. Acknowledgment of Confidentiality . Employee
understands and acknowledges that he may obtain Confidential
Information in the performance of his services. Employee further
acknowledges that the services to be rendered by him are of a
special, unique and extraordinary character and that, in
connection with such services, lie will have access to
Confidential Information vital to the Company's, its
Subsidiaries' and Affiliates' business and perhaps vital to the
business of the Company. Accordingly, Employee agrees that he
shall not, either during the Term or at any time thereafter, (i)
use or disclose any such Confidential Information outside the
Company, and its Subsidiaries and Affiliates; (ii) publish any
works, speeches or articles with respect thereto; or (iii),
except as required in the proper performance of his services
hereunder, remove or aid in the removal 1'roi-n the premises of
the Company, or its Subsidiaries or Affiliates, of any
Confidential Information or any property or material relating
thereto.
The foregoing confidentiality provisions shall cease to be
applicable to any Confidential Information which becomes
generally available to the public (except by reason of or in
consequence of a breach by Employee of his obligations under this
Section 10).
In the event Employee is required by law or a court order to
disclose any such Confidential Information, he shall promptly
notify the Company of such requirement and provide the Company
with a copy of any court order or of any law which in his opinion
requires such disclosure and, if the Company so elects, permit
the Company an adequate opportunity, at its own expense, to
contest such law or court order
10.2. Delivery of Material. Employee shall promptly, and
without charge, deliver to the Company on the termination of his
employment hereunder, or at any other time the Company may so
request, all memoranda, notes, records, reports, manuals,
computer disks, videotapes, drawings, blueprints and other
documents (and all copies thereof relating to the business of the
Company, and its Subsidiaries and Affiliates, and all property
associated therewith, which he may then possess or have under his
control.
10.3. Customer Lists. Employee acknowledges that (i) all
lists of suppliers, advertisers, customers and vendors of the
Company or of its Subsidiaries or Affiliates developed during the
course or Employee's employment and/or by the Company are and
shall be the sole and exclusive property of the Company, its
Subsidiaries or Affiliates, as the case i-nay be, and Employee
further acknowledges and agrees that lie neither has nor shall
have any personal right, title or interest therein; (ii) that
such lists are and must continue to be confidential-, and (iii)
that such lists are not readily accessible to competitors of the
Company or its Subsidiaries or Affiliates.
10.4. Ideas, Programs, Etc. If, during the Term, Employee
invents or develops any ideas, programs, formats, software
systems or the likes, source codes, proprietary codes or the
like, relating to or useful in connection with the Business of
the Company, the same are and shall remain the property of the
Company, and lie will promptly deliver all copies of the same to
the Company, assign his interest therein to the Company and
execute such documents as the Company's counsel may request to
convey title thereto to the Company including, but not limited to
patent applications, copyright applications, trademark
applications and the like. Employee shall not be entitled to any
compensation, other than as provided in this Agreement, for
carrying out his obligations to the Company under Subsection 10.4
or any other Subsection of this Section 10.
Section 11. Non-Competition Provisions.
Employee agrees that he will not, during the Restricted Period,
compete directly or indirectly with the business of the Company.
The phrase "compete directly or indirectly with the business of
the Company" shall be deemed to include, without limiting the
generality thereof, (1) engaging or having a material interest,
directly or indirectly, as owner, employee, officer, director,
partner, sales representative, stockholder, capital investor,
lessor, renderer of consultation services or advise, either alone
or in association with another or others, in the operation of any
aspect of any type of business or enterprise competitive with the
business or operation of the Company- (2) soliciting any of the
employees of the Company to leave the employ of the Company, or
so soliciting any employee of any Subsidiary or Affiliate of the
Company; (3) soliciting any of the employees of the Company to
become employees of any other Person, or so soliciting any
employee of any Subsidiary or Affiliate of the Company, or (4)
soliciting any customer or supplier of the Company or any
Affiliate or Subsidiary of either of them, with respect to their
business. Similarly, Employee shall not raid, entice or induce
any Person who on the Termination Date is, or within one (1) year
immediately preceding the Termination Date was, a customer or
supplier of the Company, or any of its Subsidiaries or
Affiliates, to become a customer of any other Person for products
or services the same as, or similar to, those products and
services as from time to time shall be provided by the Company,
or any of its Subsidiaries and Affiliates, and Employee shall not
approach any Person for such purpose; nor shall Employee raid,
entice or induce any Person who on the Termination Date is, or
within one year immediately preceding the Termination Date was,
an employee of the Coi-npany or any of its Subsidiaries or
Affiliates, to become employed by any other Person; similarly,
Employee shall not approach any such employee for such purpose or
authorize or knowingly approve the taking of such actions by any
other Person or assist any such other Person in taking any such
action.
The phrase "compete directly or indirectly with the business of
the Company" shall not be deemed to include all ownership
interest as an inactive investor, which, for purposes of this
Agreement, shall mean only the beneficial ownership of less than
five (5%) percent of the outstanding shares of any series or
class of securities of any competitor of the Company, which
securities of such series or class are publicly traded in the
securities market.
Section 12. Disputes and Remedies.
12.1. Waiver of Jury Trial. EMPLOYEE AND THE COMPANY HEREBY
WAIVE THE RIGHT TO A TRIAL BY JURY IN THE EVENT OF ANY DISPUTE
WHICH ARISES UNDER THIS AGREEMENT.
12.2. Injunctive Relief. If Employee commits a breach, or
threatens to commit a breach, of any of the provisions of Section
2 or of Sections 10 or 11, the Company shall have the following
rights and remedies (each of which shall be independent of the
other, and shall be severally enforceable, and all of which shall
be in addition to, and not in lieu of, any other rights and
remedies available to the Company)
(i) the right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity
jurisdiction, it being acknowledged by Employee that any such
breach or threatened breach will or may cause irreparable injury
to the Company and that money damages will or may not provide an
adequate remedy to the Company- and
(ii) the right and remedy to require Employee to account for and
pay over to the Company all compensation, profits, monies,
increments, things of value or other benefits, derived or
received by Employee as the result of any acts or transactions
constituting a breach of any of the provisions of Section 2 or of
Sections 10 or 11 of this Agreement, and Employee hereby agrees
to account for and pay over all such compensation, profits,
monies, increments, things of value or other benefits to the
Company.
Employee specifically agrees not to object to any application
made by the Company to any court having equity jurisdiction,
seeking an injunction restraining him from committing,
threatening or continuing any violation of Section 2 or Sections
10 or 11 of this Agreement.
12.3. Partial Enforceability. If any provision contained in
Section 2 or in Section 10 or 11, or any part thereof is
construed to be invalid or unenforceable, the same shall not
affect the remainder of Employee's agreements, covenants and
undertakings, or the other restrictions which he has accepted, in
Section 2 or in Sections 10 or 11, and the remaining such
agreements, covenants, undertakings and restrictions shall be
given the fullest possible effect, without regard to the invalid
parts.
12.4 Adjustment of Restrictions. Despite the prior provisions of
this Section 12, if any covenant or agreement contained in
Sections 2, 10 or 11, or any part thereof, is held by any court
of competent jurisdiction to be unenforceable because of the
duration of such provision or the geographic area covered
thereby, the court making such determination shall have the power
to reduce the duration or geographic area of such provision and,
in its reduced form, such provision shall be enforceable.
12.5. Attorneys Fees and Expenses. In the event that any
action, suit or other proceeding at law or in equity is brought
to enforce the provisions of this Agreement, or to obtain money
damages for the breach thereof, and such action results in the
award of a judgment for money damages or in the granting of any
injunction in favor of the Company, then all reasonable expenses,
including, but not limited to, reasonable attorneys' fees and
disbursements (including those incurred on appeal) of the Company
in such action, suit or other proceeding shall (on demand of the
Company) forthwith be paid by Employee. If such action results
in a judgment in favor of Employee, then all reasonable expenses,
including but not limited to, reasonable attorney's fees and
disbursements (including those incurred on appeal) of Employee in
such action, suit or other proceeding shall (on demand of
Employee) forthwith be paid by the Company.
12.6. Limited Enforceability. In the event that Employee
elects to terminate this Agreement pursuant to Subsection 8.4, or
the Company terminates the employment of Employee hereunder other
than pursuant to any of the provisions of this Agreement,
Employee shall be released as of the Termination Date from any
and all further restrictions pursuant to Section 2 and Section
11.
Section 13. Survival
The provisions of Sections 10, 11, 12 and this Section 13 shall
survive termination of this Agreement and remain enforceable
according to their terms.
Section 14. Severability.
The invalidity or unenforceability of any provision or this
Agreement shall in no way affect the validity or enforceability
of any other provisions hereof.
Section 15. Notices.
All notices, demands and requests required or permitted to be
given under the provisions of this Agreement shall be deemed duly
given if made in writing and delivered personally or mailed by
postage prepaid certified or registered mail, return receipt
request, accompanied by a second copy sent by ordinary mail,
which notices shall be addressed as follows;
If to the Company:
Integrated Marketing Professionals, Inc.
888 East Las Olas Blvd., Suite 700
Fort Lauderdale, FL 33301
With a copy to:
Niesar & Diamond LLP
90 New Montgomery Street, 9th Floor
San Francisco, CA 94105
If to Employee:
James Muldowney
c/o Casino Airlink
5590 Ulmerton Road
Clearwater, FL 34620
By notifying the other parties in writing, given as aforesaid,
any party may from time to time change its address or the name or
any person to whose attention notice is to be given, or may add
another person, to whose attention notice is to be given, in
connection with notice to any party,
Section 16. Assignment and Successors.
Neither this Agreement nor any of his fights or duties hereunder
may be assigned or delegated by Employee. This Agreement is not
assignable by the Company except to any successor in interest
which takes over all or substantially all of the business of the
Company, as it is conducted at the time of such assignment. Any
corporation into or with which the Company is merged or
consolidated or which takes over all or substantially all of the
business of Company shall be deemed to be a successor of the
Company for purposes hereof this Agreement shall be binding upon
and, except as aforesaid, shall inure to the benefit of the
parties and their respective successors and permitted assigns.
Section 17. Entire Agreement and Waiver.
17.1. Integration. This Agreement contains the entire agreement
of the parties hereto on its subject matter and supersedes all
previous agreements between the parties hereto, written or oral,
express or implied, covering the subject matter hereof No
representations, inducements, promises or agreements, oral or
otherwise, not embodied herein, shall be of any force or effect.
Provided, however, that this Agreement shall not affect or
operate to reduce any benefit or compensation inuring to Employee
of a kind elsewhere provided and not expressly provided in this
Agreement, including, without limitations any grant of Incentive
Stock Options to Employee.
17.2. No Waiver. No waiver or modification of any of the
provisions of this Agreement shall be valid unless in writing and
signed by or on behalf of the party granting such waiver or
modification. No waiver by any party of any breach or default
hereunder shall be deemed a waiver of any repetition of such
breach or default or shall be deemed a waiver of any other breach
or default, nor shall it in any way affect any of the other terms
or conditions of this Agreement or the enforceability thereof. No
failure of the Company to exercise any power given it hereunder
or to insist upon strict compliance by Employee with any
obligation hereunder, and no custom or practice at variance with
the terms hereof, shall constitute a waiver of the right of the
Company to demand strict compliance with the terms hereof
Employee shall not have the right to sign any waiver or
modification of any provisions of this Agreement on behalf of the
Company, nor shall any action taken by Employee, as the Vice
President of Marketing of the Company, or otherwise, reduce his
obligations under this Agreement.
This Agreement may not be supplemented or rescinded except by
instrument in writing signed by all of the parties hereto after
the Commencement Date. Neither this Agreement nor any of the
rights of any of the parties hereunder may be terminated except
as provided herein.
Section 18. Governing Law.
This Agreement shall be governed by and construed, and the rights
and obligations of the parties hereto enforced, in accordance
with the laws of the State of Florida.
Section 19. Headings.
The Section and Subsection headings contained herein are for
reference purposes only and shall not in any way affect the
meaningg or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above, which shall be deemed to be the
Commencement Date.
"The Company"
INTEGRATED MARKETING PROFESSIONALS, INC.
By: /s/ William Forhan
William Forhan
Its President and CEO
"Employee"
/s/ James Muldowney
James Muldowney
Integrated Marketing Professionals, Inc.
Letter To Shareholders
To All Shareholders:
Turnaround! That word best describes 1997 at Integrated Marketing
Professionals, Inc. Turnaround; That was the goal of the new
management team: Jim Muldowney, President of Casino Airlink, and
myself. When we took control of Casino Airlink on December 8,
1996, we had the challenge of making Casino Airlink profitable.
Our goal was to focus on increasing market penetration in our
Florida departure cities and stop the losses incurred with the
Midwest departure gateways. Our Florida customers are unique;
they can travel midweek (Sunday through Thursday), assuring
Casino Airlink full air charters seven days per week, plus they
will travel to an exciting gaming destination year-round.
Highlights of changes in 1997 included:
Eliminated all Midwest departure cities to the Mississippi Gulf
Coast Focused on Florida tour & travel marketplace Started
scheduled air service in April 1997 from Tampa, Orlando, and
Atlanta Invested $250,000 marketing dollars into new departure
city: Atlanta, Georgia Increased marketing budget in all Florida
cities, creating 30 second TV and 60 second radio ads Results
for 1997 are $1,046,041 profit, including extraordinary income
Strategic planning also paid off for IMPI: we decided to reduce
Casino Airlink's aircraft commitments from two planes to one in
an effort to eliminate risk. The reduction in aircraft reduced
casino junket revenue, but management felt it was important to
build our tour and travel product (casino vacations to
individuals). We accomplished that goal with our strategic
alliance with Reno Air, offering daily scheduled service from
Orlando, Tampa, and Atlanta, and charter service from Ft.
Lauderdale, Palm Beach, and Ft. Myers, to the Mississippi Gulf
Coast. We also implemented a "yield management" philosophy from
all departure cities, which called for special promotional prices
to fill seats on flights with low bookings. This philosophy
maximized our profits.
The results are more clearly reflected in the financial section
of this annual report: 1997 Profits of $1,046,041 versus a 1996
loss of $1,569,964; and a 1997 per share value of $0.092 versus a
per share loss of $0.42.
That's a turnaround.
IMPI's management team and employees from Casino Airlink and
ReSer Corporation look forward to the challenges in the future;
our team is dedicated to increasing profits, improving supplier
and customer relations, and continuing to create a company of
enthusiastic employees.
We thank you, our shareholders, for your support.
"Turnaround. That word best describes 1997 at Integrated
Marketing Professionals, Inc".
Sincerely,
William Forhan, Chairman; CEO
Integrated Marketing Professionals, Inc.
Executive Summary
Integrated Marketing Professionals' challenge for 1998 is to
promote the company to new investors, increase stock value, and
complete a secondary offering; providing the cash required for
acquisitions; and working capital to expand our two subsidiaries:
ReSer Corporation and Casino Airlink.
The company has targeted several profitable travel-related
companies to acquire; these acquisitions will increase revenues
and profits, plus provide synergism with Integrated Marketing
Professionals' current subsidiaries.
The corporate objective is to be a diversified holding company
focusing on TRAVEL - RELATED industries.
Integrated Marketing Professionals, Inc.
Subsidiary Information
Subsidiary Information: ReSer Corp.
ReSer Corp. is an ARC appointed travel agency that specializes in
planning, organizing, and presenting educational seminars to
travel agents across the United States.
In 1997, ReSer held 40 seminars to which over 2,000 agents
attended to learn about Latin America, Florida, Mexico, and
Colorado.
Another major activity at ReSer is to process reservations for
tour operators. The expansive hardware and software owned by
ReSer is perfect for small tour operators who do not wish to have
the overhead expenses of their own reservation center.
During 1997, ReSer was brought on-line with the Casino Airlink
operations center in Clearwater, Florida, providing effective
disaster recovery both from a system and telephone reservation
standpoint. In the fourth quarter of 1997, ReSer began accepting
Casino Airlink reservations from clients in Georgia, North
Carolina, and South Carolina.
Subsidiary Information: Casino Airlink
Casino Airlink is a wholesale travel company that is currently
the exclusive provider of packaged casino vacations from five
cities in Florida and from Atlanta, Georgia to the Mississippi
Gulf Coast. Casino Airlink's travel packages include non-stop,
round-trip jet service, destination airport transfers, ground
handling, 2-3 night deluxe hotel accommodations, nightly buffet
meals, and access to 24-hour Las Vegas style gaming and
entertainment.
Casino Airlink offers air service from Ft. Lauderdale, Palm
Beach, Orlando, Tampa, Ft. Myers, and Atlanta, Georgia. A total
of 75 flights operate round-trip monthly.
Casino Airlink promotes its packages via television and radio
advertising, travel agent faxes, and weekly newspaper ads in
Sunday travel sections. The customers call Casino Airlink's
reservations offices in Tampa or Atlanta, or their local travel
agent to book their travel dates. Casino Airlink sends travel
documents via mail, and greets all travelers upon arrivals in
Gulfport, Mississippi.
Casino Airlink delivered over 85,000 passengers to the
Mississippi Gulf Coast in 1997.
The future of Casino Airlink is to specialize in offering casino
vacations to other gaming destinations: Tunica (Mississippi),
Atlantic City, Las Vegas, and Reno, Nevada.
Integrated Marketing Professionals, Inc.
Market Conditions || Marketing Strategies
Market Conditions
Mississippi Gulf Coast
The travel industry is enjoying record growth and profits. The
economy is strong and Americans have more disposable income with
which to experience the excitement of travel.
Casino Airlink is capitalizing on the growth of retirees in
Florida by offering a great travel value to the Mississippi Gulf
Coast, one of the fastest growing gaming destinations in the
world.
The Mississippi Gulf Coast is expanding with new casinos, hotels,
and enlarged convention centers. Legalized gambling has grown
this sleepy village into an exciting resort destination that
features 7,000 deluxe casino hotel rooms, 13 casinos open 24
hours per day, 19 challenging golf courses, and entertainment in
hotel lounges and showrooms.
The Mississippi Gulf Coast is expanding and Casino Airlink
intends to add new departure cities from the Carolinas, Texas,
and other nearby states. Casino Airlink's goal is to maintain
being the largest travel supplier to this exciting destination.
Marketing Strategies
Integrated Marketing Professionals' strategy for growth is to
acquire companies in TRAVEL-RELATED industries and to grow the
revenues and profits of Casino Airlink and ReSer Corporation.
Casino Airlink's growth will be generated by increasing current
marketplaces and adding new departure gateways to the Mississippi
Gulf Coast.
ReSer Corporation's marketing strategy is to sell its teleservice
capabilities to Convention & Visitor's Bureaus, and wholesale
travel companies; plus continue expanding their destination
travel seminars to travel agents.
Acquisitions, of travel-related companies, will be done
throughout 1998 utilizing cash and stock to acquire companies
from the following industries:
Wholesale Travel
Corporate Travel
Incentive Travel
Retail Travel
Integrated Marketing Professionals, Inc.
Management Team
WILLIAM FORHAN,
Chairman; CEO of Integrated Marketing Professionals:
William Forhan's goal is to expand IMPI through Mergers and
Acquisitions of travel-related companies. His responsibility is
to improve shareholders' return on investment and provide the
vision to grow revenues and net income.
JIM MULDOWNEY,
President; Casino Airlink:
Jim Muldowney's challenge is to grow Casino Airlink and increase
its net income. The challenge is to find new markets interested
in the Mississippi Gulf Coast, minimizing risk and maximizing
market penetration.
SUE GUTTOWSKY,
Vice President; Casino Airlink:
Sue Guttowsky oversees the operations of Casino Airlink:
reservations center, customer service, and coordination of air
and hotel manifests to suppliers. Her responsibility starts with
the customer's initial phone inquiries and extends through the
traveler's completed trip.
TRICIA WYS,
Vice President; ReSer Corporation:
Tricia Wys' twenty years of experience in travel, reservations
centers, and teleservices are an asset to ReSer. She is
responsible for day-to-day operations and accomplishing the
business plan goals.
Integrated Marketing Professionals, Inc.
Financial Information
Harvey Judkowitz
CERTIFIED PUBLIC ACCOUNTANT
14281 S.W. 74 Terrace (305) 387 - 2968
Miami, Florida 33183 Fax: (305) 383 - 1559
Independent Auditor's Report
I have audited the accompanying consolidated balance sheet of
Casino Airlink, Inc. and subsidiaries as of December 31, 1997 and
the related consolidated statements of operations, changes in
stockholders' equity and cash flows for the year then ended.
These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion
on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes, examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Casino Airlink, Inc. and subsidiaries as of December 31, 1997 and
the results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting
principles.
Certified Public Accountant
Miami, Florida
February 23, 1998
NOTE: The financial statements are included by reference to Item
13 of the Form 10.
Integrated Marketing Professionals, Inc.
Notes To Consolidated Financial Statements
December 31, 1997
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Organization
The Company was formed in the state of Michigan on January 14,
1994, under the name of Integrated Marketing Professionals, Inc.
to serve as a full service travel agency, specializing in cruises
and tour packages. In October, 1995 the Company reincorporated in
the state of Nevada and increased its authorized shares to
25,000,000, $0.10 par value shares. Accordingly, the shares
already issued were split 100 to 1. In May, 1996 the Company
purchased the outstanding capital stock of Dav-Jen, Inc., doing
business under the name of Casino Airlink. Casino Airlink is a
wholesale tour and travel company, which operates tours between
Florida cities and Biloxi, Mississippi. The transaction has been
treated as a purchase transaction in accordance with generally
accepted accounting principles.
On October 31, 1996, the Company's name was changed to Casino
Airlink, Inc. In November, 1996, the Company authorized the
issuance of 2,000,000 shares of Series A Preferred stock and
1,700,000 shares of Series B Preferred stock. Each share of
Preferred A stock carries a $0.10 par value, has voting rights
and is convertible into two shares of common stock. Each share of
Preferred B is convertible into one share of common stock. There
are no voting rights associated with the Series B Preferred.
In December 1996, the Company purchased the outstanding capital
stock of ReSer Corporation, a Georgia Corporation, engaged in the
Travel Service and Seminar Business. This transaction has also
been treated as a purchase transaction in accordance with
generally accepted accounting principles.
Fixed Assets
Fixed assets are carried at cost. The Company provides
depreciation over the estimated useful lives of fixed assets
using the straight line method. Upon retirement or sale of fixed
assets, their net book value is removed from the accounts and the
difference between such net book value and proceeds received is
recorded as income or loss. Expenditures for maintenance and
repairs are charged to income while renewals and betterments are
capitalized.
Estimated useful lives are as follows: Furniture: 7 years Office
equipment: 5 years
Income Taxes
The Company has adopted SFAS 109. The Company has not made a
provision for income tax purposes due to incurring losses since
inception. The net losses of approximately $1,580,000 can be
carried forward to offset future taxable income. The net
operating loss carry forward begins to expire in 2009.
Revenue Recognition
The Company receives reservations for tours for future dates. The
amount received is booked as unearned revenues and is not
recognized as income until the tour actually occurs. At the date
that the tour commences, the unearned revenues are taken into
income and the estimated cost to complete the tour are accrued.
Intangible Assets
In connection with the purchase of Casino Airlink, the Company
paid costs in excess of the net tangible assets acquired. (See
Note 6) The cost paid in excess of the net tangible assets is
attributable to long-lived intangible assets having continuing
value. These intangible assets will be amortized over their
estimated useful lives, as follows:
Non compete agreement: 5 years Trademark: 10 years Customer
lists: 7 years Goodwill: 40 years
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and footnotes thereto. Actual results
may differ from those estimates.
Net Income Per Share
The Company has elected early adoption of SFAS 128, Earnings per
Share issued by the Financial Accounting Standards Board. It
replaces the presentation of primary and fully diluted EPS with
basic and diluted EPS. Basic EPS excludes all dilution. It is
based on the weighed average number of common shares outstanding
during the period. Diluted EPS reflects the potential dilution
that would occur if securities or other contracts to issue common
stock were exercised or converted into common stock. The Series A
and Series B preferred shares were issued on December 7, 1996 and
December 12, 1996, respectively.
NOTE 2: LEASES
Operating Leases
The Company leases office space in Ft. Lauderdale, Florida on a
month to month basis. The Company also leases office facilities
and certain equipment, in Clearwater, Florida, under non
cancelable operating leases which expire at various dates through
the year 2000, as follows:
1998: $105,000 1999: $110,000 2000: $57,500 Total: $272,500
Rent expense for the year ended December 31, 1997 was $101,040.
Capitalized Leases
The Company acquired office equipment under provisions of a long-
term lease. Cost and accumulated amortization of such assets
totaled $84,453. At December 31, 1997 future annual payments are
as follows:
1998:$ 2,0691999:1,978Total:4,047Less current portion:2,069Amount
due long-term:$ 1,978
NOTE 3: RECAPITALIZATION
The Company became a Nevada Corporation in late 1995 and
restructured its capital stock to authorize 25,000,000 shares of
common stock, $0.10 par value. The outstanding 5,000 shares of
$1.00 par value thereby became 500,000 shares of the new Common
stock. Accordingly, an additional 495,000 shares of common stock
were issued to the Company's shareholders and the par value on
the balance sheet was adjusted to reflect the shares issued. This
non monetary transaction necessitated an increase in par value
and a decrease in additional paid-in capital of $45,000. In
December, 1995 an additional 2,500,000 shares of Common stock
were sold.
NOTE 4: PURCHASE OF DAV-JEN
The purchase price of Dav-Jen was originally $3,500,000, subject
to adjustment, if necessary upon completion of an audit of the
Casino Airlink financial statements at May 31, 1996. The amount
was payable in seven successive equal quarterly payments of
$500,000 beginning June 3, 1996. Additional payments were due on
the first day of September and December 1996 and March, June,
September and December 1997. The outstanding balance was to bear
interest at the rate of 8% per year commencing September 1, 1996.
On June 3, the Company paid $500,000 to the former principal
stockholder of Casino Airlink as the initial quarterly payment.
The audit of Casino Airlink for the five months ended May 31,
1996 required an adjustment (reduction) to the purchase price in
the amount of $684,198. Accordingly, the scheduled quarterly
payment for September 3, 1996 of $500,000 was canceled and the
amount due at December 3, 1996 was reduced to $315,802.
In addition, the Company was to pay $2.50 for each passenger
flying via Casino Airlink for a period of two years, in
consideration for Mr. Schoen's guarantee of a Surety Bond owned
by the Company, and the guarantee of the Company's credit card
merchant account.
The allocation of the $3,500,000 purchase price, less the
adjustment of $684,198 was as follows:
Non compete agreement$500,000Office furniture and
equipment200,000Customer
list700,000Trademark100,000Goodwill1,856,100
On December 6, 1996, the sales agreement was amended, retroactive
to May 31, 1996. The outstanding debt was reduced to $745,000
payable over a 24 month period commencing on January 15, 1997
bearing interest at 10%. In addition the sellers received
1,700,000 shares of Series B Convertible preferred stock.
NOTE 5: PURCHASE OF RESER CORP.
The purchase price of ReSer Corp. was the net asset value of the
Company at December 31, 1996 a total of $252,720 in excess of the
net worth of the Company. This excess was accounted for as
follows: Notes payable in the amount of $195,000 and the issuance
of 156,000 shares of common stock, which were valued at $.37 per
share, or $57,720.
In the event that the trading price of the Company's Common stock
is less than $1.25 a share, on January 3, 1999, the Company is
liable to pay the seller the amount of 156,000 shares multiplied
by the difference of $1.25 and the actual selling price on that
date. Therefore the Company is contingently liable for this
difference.
NOTE 6: EMPLOYMENT CONTRACTS
On June 17, 1996 , the Company entered into employment contracts
with certain key employees, as follows: Mr. William Forhan;
President, $149,000 per annum. As an incentive bonus, Mr. Forhan
is eligible to receive, 30 days after the Board of Directors
approves interim financial statements for the last-ended fiscal
quarter, a payment equal to five percent (5%) of the Company's
pre-tax net income for the last-ended fiscal quarter for each
fiscal quarter after December 31, 1996. Mr. Forhan's right to
receive this incentive bonus will be offset by an equal
percentage of pre-tax net losses, if any, realized from time to
time.
Mr. James Muldowney; President of Casino Airlink, $150,000 per
annum. Mr. Muldowney is also eligible to receive the same bonus
as Mr. Forhan, above. However, Mr. Muldowney's rate of bonus is
2.5%.
As part of the amendment to the Purchase agreement, Mr. Steven
Schoen's contract was amended and he will receive $125,000 a year
for a five year consulting agreement, plus a 5% bonus of Casino
Airlink (Subsidiary) pre-tax income.
NOTE 7: 1996 STOCK OPTION PLAN
Effective December 27, 1996, the 1996 Stock Option Plan has been
adopted to encourage stock ownership by directors and employees
of Casino Airlink, Inc., in order to increase the proprietary
interest in the success of the Company and to encourage them to
provide future services to the Company.
On January 18, 1997, William Forhan was granted an incentive
stock option to purchase up to 2,000,000 shares of Common stock
at a price of $0.30 per share, the fair market value of the
Company's stock at the date of grant. The expiration date of this
grant is January 18, 2007.
In December, 1997, James Muldowney was granted an incentive stock
option to purchase 400,000 shares of common stock at a price of
$0.21 per share, the fair market value of the Company's stock at
the date of grant. The expiration of this grant is December 29,
2008.
NOTE 8: CUMULATIVE EFFECT OF ACCOUNTING CHANGE
As of December 31, 1996, the Company had accrued $375,000 for
federal excise taxes. During the six months ended June 30, 1997,
it was determined that this amount was not due and an adjustment
was made to correct the over accrual. This amount is reflected in
the accompanying statement of operations as a cumulative effect
of an accounting change.
NOTE 9: MODIFICATION OF TERMS - CARRYING VALUE OF DEBT EXCEEDS
FUTURE CASH PAYMENTS
On December 29, 1997, the Company modified the terms of its 10%
Notes payable to the seller. The amount of debt at December 31,
1997 was $1,676,846 and the seller has agreed to accept
$1,360,000 at the same 10% rate over the same period.
Accordingly, the amount of the note has been reduced by $316,846
and an extraordinary gain of $316,846 ($0.05 a share) has been
included in net income in 1997.
NOTE 10: SETTLEMENT OF EQUITY CLAIMS
During the year ended December 31, 1997, certain claims against
the Company were settled by the issuance of Common stock. Under
the terms of these settlements, 670,483 shares were issued in
exchange of $160,901 in claims. The difference between the par
value of $67,048 and the $160,901 in claims, or $93,852, was
charged against income during the year.
Integrated Marketing Professionals, Inc.
Corporate & Shareholders' Information
GENERAL INFORMATION
Incorporation Date10/31/96Original State of
incorporationMichiganCurrent State of IncorporationNevadaStandard
& Poor's ListingYesMoody's OTC Industrial ListingNoFiscal Year
End 12/31Annual Shar. Meeting DateFloatsIn Good StandingYes
TRADING & QUOTATION DATA
OTC Bulletin BoardSymbol "POKR"Bid Price$0.19Offer 12/31/97$0.21
REPORTING STATUS
1933 - Act Registration No1934 - Act RegistrationNo
BENEFIT AND OTHER PLANS
1996 Employee Stock Compensation Plan
1996 Stock Option Plan
TRANSFER AGENT
United Stock Transfer
13275 East Fremont Place, Suite 302
Englewood, Colorado 80112-3910
Tel.: (303) 792-3650 - Fax: (303) 792-3675
AUDITOR
Harvey Judkowitz, CPA
14281 SW 74 Terrace - Miami, FL 33183
Tel.: (305) 387-2968 - Fax: (305) 383-1559
OFFICERS
William ForhanChairman of the Board;
Chief Executive Officer
James Muldowney Director; Secretary/Treasurer;
President of Casino Airlink
IMPI BOARD OF DIRECTORS William Forhan Chairman of Board James
Muldowney Director Derek Lewin Director; James Ponder Director;
VP of Target Marketing, Jefferson Pilot Steve York Director;
President of Contract Professionals, Inc.
LEGAL COUNSEL Charles Pearlman, ATLAS PEARLMAN
TROP & BORKSON, PA200 E. Las Olas Blvd., Ste. 1900 - Ft.
Lauderdale, FL 33301 Tel.: (954) 763-1200 - Fax: (954) 766-7800
COMPANY ADDRESS
888 E. Las Olas Blvd., Ste. 700 - Ft. Lauderdale, FL 33301
Tel.: (954) 938-2500 - Fax: (954) 523-4820
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
I am a certified public accountant, licensed by the State of
Nevada. I make this statement with the understanding that it will
be filed with a Form 10-SB for Aviation Industries. I performed
the audit for Nevada Commercial Management, Inc. (later known as
Aviation Industries) for the years ended December 31, 1995 and
1996, and the six months ended June 30, 1997. I issued an
Independent Auditors' Report, concerning those periods, on July
1, 1997, including a Balance Sheet, Statement of Operations,
Statement of Stockholders' Equity, and Statement of Cash Flows,
together with Notes to those Financial Statements. At the time of
this audit, the company was a development stage company whose
business plan was to find a merger partner.
For the audit for the year-ended December 31, 1997, the company
decided to use another auditor. This change was not due to any
dispute or disagreement concerning the previous audit, but was
made because of my preference to audit companies in their
developmental stage.
Barry L. Friedman
Certified Public Accountant
AVIATION INDUSTRIES COMPLETES
ITS FIRST TRAVEL INDUSTRY ACQUISITION
Acquisition Program Underway; More Transactions Planned as
Prelude to Pending Merger with Integrated Marketing Professionals
Fort Lauderdale, Florida, August 12, 1998-William Forhan,
recently appointed Chairman and CEO of Aviation Industries
Corporation (OTC Bulletin Board: AVIA), today reported that the
Company's acquisition program, targeting candidates in the travel
and leisure industry is now fully underway with the completion of
the purchase of Norcross, Georgia-based Business Travel, Inc.
The Company acquired Business Travel, a corporate travel agency
with annual sales of approximately $25 million, in exchange for
$1.2 million, consisting of a combination of cash and restricted
common stock. Further terms of the transaction were not yet
disclosed.
Founded in 1982, Business Travel specializes in corporate travel,
with over 400 corporate accounts, of which approximately half
operate on a fee basis and with the majority of their account
averaging between $100,000 and $250,000 annually.
"This transaction marks our first acquisition since the
management of Integrated Marketing Professionals assumed
operational control of Aviation Industries," commented William G.
Forhan, Chairman of both Aviation Industries and Integrated
Marketing Professionals. "Business Travel fits perfectly with
our overall business mix, particularly Integrated Marketing's
Reser Corporation subsidiary, an Atlanta, Georgia-based
reservations center that services wholesale travel companies.
Additionally, we foresee opportunities to market packaged casino
vacations offered by Integrated Marketing to the more than 20,000
people employed by Business Travel's corporate clients. We are
now working to complete additional transactions in the weeks
ahead that are designed to further enhance our vertical
integration and expand our growth in the travel and leisure
industry. Overall, our acquisition strategy is centered on
companies that compliment the business mix expected to develop as
a result of the pending merger of Aviation Industries and
Integrated Marketing Professionals."
As previously reported, Aviation Industries Corporation has
agreed to acquire Integrated Marketing Professionals, Inc. (OTC
Bulletin Board: POKR) in a transaction valued at approximately
$11.9 million. Pursuant to the terms of the definitive merger
agreement, Aviation Industries reconstituted its Board of
Directors to consist of the five members of the Board of
Directors of Integrated Marketing Professionals, as well as Diran
Kaloustian, previously a director of Aviation Industries.
Completion of the transaction is subject to the completion of
regulatory review by the Securities and Exchange Commission, as
well as approval by shareholders of each company.
Aviation Industries Corp, which holds an equity position in
Newark, N.J-based KIWI International Air Lines, is recently
formed investment concern seeking acquisition opportunities in
the travel and leisure industry.
Integrated Marketing Professionals, Inc., formerly known as
Casino Airlink, Inc., is a diversified travel and leisure
company. The Company is currently the exclusive provider of
packaged casino vacations from five cities in Florida and
Atlanta, Georgia to the Mississippi Gulf Coast, which include non-
stop, round trip jet service, destination airport transfers,
ground handling, 2-3 night deluxe hotel accommodations, nightly
buffet meals and access to 24-hour Las Vegas style gaming and
entertainment. Additional information regarding Integrated
Marketing Professionals may be found on the Internet at PR
Newswire's Web sit (http://www.prnewswire.com) under Company News
On-Call, or accessed directly at
http://www.prnewswire.com/gh/cnoc/comp/123827.html.
Statements about the Company's future expectations, including
future revenues and earnings, and all other statements in the
press release other than historical facts are "forward-looking
statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company intends that such
forward-looking statements be subject to the safe harbors created
thereby. Since these statements involve risks and uncertainties
and are subject to change at any time, the Company's actual
results could differ materially from expected results.
AVIATION INDUSTRIES COMPLETES AQUISITON
OF MAGNOLIA TOURS AND TRANSPORTATION
Transaction Marks Second Acquisition Completed
Fort Lauderdale, Florida, August 18, 1998-Aviation Industries
Corporation (OTC Bulletin Board: AVIA) today reported that it has
completed the acquisition of Biloxi, Mississippi-base Magnolia
Tours and Transportation, a motor coach transportation company
operating in the Mississippi Gulf Coast area. Terms of the
transaction were not disclosed.
Magnolia Tours and Transportation provides a wide range of motor
coach-based transportation services, including airport transfers
for visitors traveling to and from Mississippi Gulf Coast casino
and hotel, shuttle services and local area tours.
"This transaction marks the second acquisition undertaken as a
prelude to our pending merger with Integrated Marketing
Professionals," commented William G. Forhan, Chairman of Aviation
Industries. "Magnolia is well established in the Gulf Coast
market and offers opportunities to further expand our revenue
base. Our immediate plans call for the replacement of its fleet
of five motor coaches with brand new 54 passenger coaches
offering state-of-the-art audio and visual equipment, first class
passenger amenities, and the utmost in comfort and safety. We
also plan to use these new coaches to offer vacationers optional
trips to places such as New Orleans. This will allow us to
further capitalize on the continued growth of the Gulf Coast
market, including the increasing growing number of large groups
and conventions being drawn to the area."
Aviation Industries Corp., which holds an equity position in
Newark, N. J.-based KIWI International Air Lines, is in the
process of acquiring Integrated Marketing Professionals, Inc.
Integrated Marketing Professionals, Inc. formerly known as Casino
Airlink, Inc. is a diversified travel and leisure company. The
Company is the exclusive provider of packaged casino vacations
from five cities in Florida, three cities in Texas, Tulsa,
Oklahoma, and Atlanta, Georgia to the Mississippi Gulf Coast,
which include non-stop, round trip jet service, destination
airport transfers, ground handling, 2-3 night deluxe hotel
accommodations, nightly buffet meals and access to 24-hour Las
Vegas style gaming and entertainment.
Statements about the Company's future expectations including
future revenues and earnings, and all other statements in the
press release other than historical facts are "forward-looking
statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company intends that such
forward-looking statements be subject to the safe harbors created
thereby. Since these statements involve risks and uncertainties
and are subject to change at any time, the Company's actual
results could differ materially from expected results.
FOR IMMEDIATE RELEASE CONTACT: Barry A. Rothman
B. Alan Associates, Inc.
(561) 483-7743
William G. Forhan
Integrated Marketing Professionals, Inc.
(954) 938-2500
INTEGRATED MARKETING PROFESSIONALS REPORTS
TERMS OF MERGER WITH AVIATION INDUSTRIES
Fort Lauderdale, Florida, July 16, 1998-Integrated Marketing
Professionals, Inc. (OTC Bulletin Board: POKR), formerly known as
Casino Airlink, today reported terms of its previously announced
definitive merger agreement with Aviation Industries Corporation
(OTC Bulletin Board: AVIA). Under the terms of the agreement,
shares of the Company's common stock will be valued at $.62 per
share in determining the share exchange rate. As a result,
shares of POKR common stock will be exchanged for one share of
Aviation Industries common stock at a rate determined by dividing
the average closing price of Aviation Industries common stock
(calculated over the ten trading days commencing five trading
days prior to the effective date of the merger) by 0.62 (avg.
price / 0.62 = number of shares of POKR exchange per one share of
AVIA). Completion of the transaction is subject to the
completion of regulatory review by the Securities and Exchange
Commission, as well as approval by shareholders of each company.
As previously reported, Aviation Industries has agreed to
reconstitute its Board of Directors to consist the members of the
Board of Directors of Integrated Marketing Professionals, as well
as Diran Kaloustian, currently Chairman of Aviation Industries.
Mr. Forhan, currently CEO of Integrated Marketing Professionals,
will assume the post of Chairman, President and CEO of Aviation
Industries.
We expect this merger, "commented William G. Forhan, CEO of
Integrated Marketing Professionals, "to greatly facilitate the
expansion of our business plan. We look to benefit from Aviation
Industries' wide range of travel industry and investment banking
relationships."
Aviation Industries Corp., which holds an equity position in
Newark, N.J.-based KIWI International Air Lines, is a newly
formed investment concern concentrating its efforts on the
regional and charter aviation markets.
Integrated Marketing Professionals, Inc. formerly know as Casino
Airlink, is a wholesale travel company that is currently the
exclusive provider of packaged casino vacation from five cities
in Florida and Atlanta, Georgia to the Mississippi Gulf Coast.
Casino Airlink provides non-stop, round trip jet service,
destination airport transfers, ground handling, 2-3 night deluxe
hotel accommodations, nightly buffet meals and access to 24-hour
Las Vegas style gaming and entertainment. The Company, with
revenues of $18.3 million in 1997, delivered more than 85,000
passengers to the Mississippi Gulf Coast area via their chartered
and scheduled air service in 1997.
Statements about the Company's future expectations, including
revenues and earnings, and all other statements in the press
release other than historical facts are "forward-looking
statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company intends that such
forward-looking statements be subject to the safe harbors created
thereby. Since these statements involve risks and uncertainties
and are subject to change at any time, the Company's actual
results could differ materially from expected results.
FOR IMMEDIATE RELEASE CONTACT: Barry A. Rothman
B. Alan Associates, Inc.
(561) 483-7743
William G. Forhan
Integrated Marketing Professionals, Inc.
(954) 938-2500
INTEGRATED MARKETING PROFESSIONALS' BOARD ASSUMES
CONTROL OF AVIATION INDUSTRIES' BOARD OF DIRECTORS
William Forhan Also names Chairman, President and CEO of Aviation
Industries
Fort Lauderdale, Florida, August 3, 1998-Aviation Industries
Corporation (OTC Bulletin Board: AVIA) today reported that, as
agreed upon in its definitive merger agreement with Integrated
Marketing Professionals, Inc. (OTC Bulletin Board: POKR), all
members of its Board of Directors, with the exception of Mr.
Diran Kaloustian, have resigned and the Board has been
reconstituted to consist of William Forhan, James Muldowny, Steve
York, James Ponder, and Derek Lewin, currently members of the
Board of Directors of Integrated Marketing Professionals, as well
as Diran Kaloustian, previously Chairman of Aviation Industries.
Concurrently, the Board appointed Mr. Forhan, Chairman of
Integrated Marketing Professionals, to also assume the post of
Chairman, President and Chief Executive Officer of Aviation
Industries. As previously reported, completion of the
transaction is subject to the of regulatory review by the
Securities and Exchange Commission, as well as approval by
shareholders of each company.
"We have now completed this important first step toward becoming
one entity," commented William G. Forhan, Chairman of both
Aviation Industries and Integrated Marketing Professionals.
"Moving forward, we will now begin to more aggressively implement
various aspects of our business plan to facilitate our expansion
into new markets and the development of new products and
services. In the upcoming weeks we plan to complete several key
acquisitions in the travel and leisure industry that will further
enhance our vertical integration and expand our growth."
Aviation Industries Corp., which holds an equity position in
Newark, N.J-based KIWI International Air Lines, is a recently
formed investment concern seeking acquisition opportunities in
the travel and leisure industry.
Integrated Marketing Professionals, Inc., formerly known as
Casino Airlink, Inc. is a diversified travel and leisure
company. The Company is currently the exclusive provider of
packaged casino vacations from five cities in Florida and
Atlanta, Georgia to the Mississippi Gulf Coast, which include non-
stop, round trip jet service, destination airport transfers,
ground handling, 2-3 night deluxe hotel accommodations, nightly
buffet meals and access to 24-hour Las Vegas style gaming and
entertainment. Additional information regarding Integrated
Marketing Professionals may be found on the Internet at PR
Newswire's Web site (http://www.prnewswire.com) under Company New
On-Call, or accessed directly at
http://ww.prnewswire.com/gh/cnoc/comp/12387.html.
Statements about the Company's future expectations, including
future revenues and earnings, and all other statements in the
press release other than historical facts are "forward-looking
statements' within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company intends that such
forward-looking statements be subject to the safe harbors created
thereby. Since these statements involve risks and uncertainties
and are subject to change at any time, the Company's actual
results could differ materially from expected results.
Aviation Industries Completes Acquisition Of Cruising in Style,
Inc.
Transaction Marks Third Acquisition Completed
FORT LAUDERDALE, Fla., Oct. 6 /PRNewswire/ -- Aviation Industries
Corporation (OTC Bulletin Board: AVIA) today reported that it has
completed the acquisition of Cruising in Style, Inc., a Durham,
North Carolina-based travel agency with approximately $2 million
in annual revenues. Cruising in Style specializes in the sale of
upscale Alaska, Caribbean, Europe and Trans- Canal cruise
packages. Terms of the transaction were not disclosed.
Aviation Industries' management noted that it plans to expand the
agency's operations to include the active marketing of more
moderately priced cruise packages, focusing on 3, 4 and 7 night
Caribbean itineraries, as well as a variety of land and sea
packages for such cruise itineraries.
Commenting further, William G. Forhan, Chairman of Aviation
Industries, noted, "This acquisition fits extremely well with our
growing base of travel and leisure operations. In particular, we
foresee opportunities to actively cross market cruise vacation
packages to the more than 20,000 people employed by our Business
Travel subsidiary's corporate clients, as well as the over 80,000
passengers delivered annually by Integrated Marketing's Casino
Airlink unit to the Mississippi Gulf Coast through its sale of
packaged casino vacations."
Aviation Industries Corporation, which is in the process of
acquiring Integrated Marketing Professionals, Inc., recently
completed the purchase of Norcross, Georgia-based Business
Travel, Inc., a corporate travel agency with annual sales of
approximately $25 million, and Biloxi, Mississippi-based Magnolia
Tours and Transportation, a motor coach transportation company
operating in the Mississippi Gulf Coast area. Aviation
Industries also holds an equity position in Newark, N.J.-based
KIWI International Air Lines.
Integrated Marketing Professionals, Inc. is a diversified travel
and leisure company that is the exclusive provider of packaged
casino vacations from five cities in Florida, three cities in
Texas, Tulsa, Oklahoma and Atlanta, Georgia to the Mississippi
Gulf Coast, which include non-stop, round trip jet service,
destination airport transfers, ground handling, 2-3 night deluxe
hotel accommodations, nightly buffet meals and access to 24-hour
Las Vegas style gaming and entertainment.
Statements about the Company's future expectations, including
future revenues and earnings, and all other statements in the
press release other than historical facts are "forward-looking
statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company intends that such
forward-looking statements be subject to the safe harbors created
thereby. Since these statements involve risks and uncertainties
and are subject to change at any time, the Company's actual
results could differ materially from expected results.
