U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS
ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Fairfax Group, Inc.
(Name of Small Business Issuer in its charter)
Florida 65-0832025
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6758 N. Military Trail, Unit 303 West Palm Beach, Florida 33407
(Address of principal executive offices)(Zip Code)
Issuer's telephone number, (561) 840-9100
With Copy To:
David M. Bovi, Esq.
David M. Bovi, P.A.
324 Datura Street, Suite 200
West Palm Beach, Florida 33401
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.01 Par Value
(Title of class)
(Title of class)
<PAGE>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
DESCRIPTION OF BUSINESS.
GENERAL
Fairfax Group, Inc. (the "Company"), was incorporated under the laws of
the State of Florida on April 23, 1998 as a wholly owned subsidiary of Fairfax
Group, Inc., a Nevada corporation ("Fairfax Nevada"). On September 8, 1998,
the Company became the successor corporation to a merger between Fairfax
Nevada and the Company.
Fairfax Nevada was incorporated under the laws of the State of Nevada on
March 9, 1982 as Resorts Marketing Unlimited, Inc. It was authorized to issue
Twenty Five Million (25,000,000) shares of common stock, $0.001 par value.
Since its inception, Fairfax Nevada never engaged in any substantive
commercial business or other business operations. In July, 1995, Fairfax
Nevada had a shareholder base of approximately 500 shareholders with
approximately 2,050,000 shares outstanding. On July 11, 1995, Mr. Fred
Keller, an individual, purchased an aggregate of 1,800,000 shares from Twelve
(12) Fairfax Nevada shareholders and became the sole affiliate shareholder of
the Company. In September 1995, Fred Keller, Trustee, Keller Trust,
assigned certain judgments (the "Judgements") to Fairfax Nevada in Exchange
for Four Million (4,000,000) shares of Fairfax Nevada valued at $100,000 or
$0.025 per share issued to Fred Keller, an individual. Fairfax Nevada never
successfully collected on the Judgments, and on February 24, 1998, Fairfax
Nevada reassigned the Judgements to Fred Keller in exchange for $1,000 cash
and Fred Keller making a $1,000 loan to the Company.
As described above, on September 8, 1998, the Company and Fairfax Nevada
merged, and the Company is the successor corporation to the merger. The
primary purpose of the merger was to redomicile Fairfax Nevada to the State of
Florida in order for Fairfax Nevada to become a Florida corporation. Among
other things, the plan of merger provided that each share of the Company's
capital stock issued and outstanding prior to the merger, and each share of
the Company's capital stock held in treasury prior to the merger, would cease
to exist; and each share of Fairfax Nevada's capital stock issued and
outstanding prior to the merger, and each share of the Fairfax Nevada's
capital stock held in treasury prior to the merger, would cease to exist and
be converted into an equal number of shares of the Company's capital stock
identical with the Fairfax Nevada shares being exchanged.
The Company is in its early developmental and promotional stages. The
Company is a "shell" company conducting virtually no business operation, other
than its efforts to seek merger partners or acquisition candidates. The
Company does not engage in any substantive commercial business or other
business operations. The Company has no full time employees and owns no real
estate.
The Company is a corporate vehicle created to seek to effect a merger,
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exchange of capital stock, asset acquisition or other similar business
combination (a "Business Combination") with an operating or development stage
business (the "Target Business") which desires to employ the Company to become
a reporting corporation under the Securities Exchange Act of 1934 ("Exchange
Act"). On February 5, 1999, the Company elected to register the Company's
common stock, par value $0.01 (the "Common Stock") pursuant to this Form 10-SB
registration statement on a voluntary basis in order to create a reporting
"shell" company. The Company has a shareholder base of approximately 500
shareholders and 6,150,000 shares of Common Stock outstanding, 5,800,000 of
which are restricted pursuant to Rule 144 of the Securities Act of 1933, as
amended (the "Securities Act"). See "Description of Securities". Pursuant to
resolution of the Company's board of directors, no Business Combination may
occur prior to the Company obtaining the requisite audited financial
statements required pursuant to Form 8-K (or its equivalent) promulgated under
the Exchange Act.
Upon the effectiveness of this registration statement, the Company
intends to seek potential business opportunities and effectuate a Business
Combination with a Target Business with significant growth potential which, in
the opinion of management, could provide a profit to the Company and its
shareholders. The Company intends to seek opportunities demonstrating the
potential of long term growth as opposed to short term earnings. The
Company's efforts in identifying a prospective Target Business are expected to
emphasize businesses primarily located in the United States; however, the
Company reserves the right to acquire a Target Business located primarily
elsewhere. While the Company may, under certain circumstances, seek to effect
Business Combinations with more than one Target Business, as a result of its
limited resources, the Company will, in all likelihood, have the ability to
effect only a single Business Combination. The Company may effect a Business
Combination with a Target Business which may be financially unstable or in its
early stages of development or growth. The Company will not restrict its
search to any specific business, industry or geographical location, and the
Company may participate in a business venture of virtually any kind or nature.
Present management of the Company may become involved in management of the
Target Business and/or may hire qualified but as yet unidentified individuals
to manage such Target Business. Presently, the Company has no plan, proposal,
agreement, understanding or arrangement to acquire or merge with any specific
business or company, and the Company has not identified any specific business
or company for investigation and evaluation.
The discussion of the proposed business under this caption and throughout
this registration statement is purposefully general and is not meant to be
restrictive of the Company's virtually unlimited discretion to search for and
enter into potential business opportunities.
"SHELL" CORPORATION
Background.
Since the Company conducts virtually no business operations, other than
its efforts to effectuate a Business Combination, the Company can be
characterized as a "shell" corporation. As a shell corporation, the Company
faces special risks inherent in the investigation, acquisition, or involvement
<PAGE> 3
in a new business opportunity. Further, as a new or "start-up" company, the
Company faces all of the unforeseen costs, expenses, problems, and
difficulties related to new companies. The Company is dependent upon its
officers and directors and their efforts to effectuate a Business Combination.
Accordingly, the Company's shareholders will not have an opportunity to
evaluate the specific merits or risks of any one or more Business Combinations
and will have no control over the decision making relating to such. In the
event the Company loses the services of any of these officers or directors,
the Company could be adversely affected.
Due to the limited capital available to the Company, the consummation of
a Business Combination will likely involve the acquisition of, or merger or
consolidation with, a company that does not need substantial additional
capital but which desires to establish a public trading market for its shares,
while avoiding what it might deem to be the adverse consequences of
undertaking a public offering itself, such as the time delays and significant
expenses incurred to comply with the various federal and state securities laws
that regulate initial public offerings. A Target Business might desire, among
other reasons, to create a public market for their shares in order to enhance
liquidity for current shareholders, facilitate raising capital through the
public sale of securities of which a prior existence of a public market for
its securities exists, and/or acquire additional assets through the issuance
of securities rather than for cash.
No trading market in the Company's securities presently exists. In light
of the restrictions concerning shell companies contained in many state blue
sky laws and regulations, it is not likely that a trading market will be
created in the Company's securities until such time as a Business Combination
occurs with a Target Business. No assurances are given that subsequent to such
a Business Combination that a trading market in the Company's securities will
develop. The Company presently has 6,150,000 shares of Common Stock
outstanding, of which 5,800,000 of such shares are deemed to be "restricted
securities", as that term is defined under Rule 144 promulgated under the
Securities Act, in that such shares were issued in private transactions not
involving a public offering. Presently, so long as all other conditions of
Rule 144 are met, 5,800,000 of such shares are eligible for sale under Rule
144, as currently in effect. No assurances are made; however, that Rule 144
will be available at any time for any shareholder's shares. The Company has
not provided to any shareholder registration rights to register under the
Securities Act any shareholder's shares for sale. See "Market for Common
Equity and Related Stockholder Matters".
The Company cannot estimate the time that it will take to effectuate a
Business Combination. It could be time consuming; possibly in excess of many
months or years. Additionally, no assurance can be made that the Company will
be able to effectuate a Business Combination on terms favorable to the
Company. The Company might identify and effectuate a Business Combination with
a Target Business which proves to be unsuccessful for any number of reasons,
many of which are due to the fact that the Target Business is not identified
at this time. If this occurs, the Company and its shareholders might not
realize any type of profit.
<PAGE> 4
Unspecified Industry and Target Business.
The Company will seek to acquire a Target Business without limiting
itself to a particular industry. Most likely, the Target Business will be
primarily located in the United States, although the Company reserves the
right to acquire a Target Business primarily located outside the United
States. In seeking a Target Business, the Company will consider, without
limitation, businesses which (i) offer or provide services or develop,
manufacture or distribute goods in the United States or abroad, including,
without limitation, in the following areas: real estate, health care and
health products, educational services, environmental services,
consumer-related products and services (including amusement, entertainment
and/or recreational services), personal care services, voice and data
information processing and transmission and related technology development or
(ii) is engaged in wholesale or retail distribution. To date, the Company has
not selected any particular industry or any Target Business in which to
concentrate its Business Combination efforts. Accordingly, the Company is only
able to make general disclosures concerning the risks and hazzards of
effectuating a Business Combination with a Target Business since there is
presently no current basis for the Company to evaluate the possible merits or
risks of the Target Business or the particular industry in which the Company
may ultimately operate. Any Target Business that is selected will be required
to have audited financial statements prior to the commencement of a the
Business Combination. To the extent the Company effects a Business
Combination with a financially unstable company or an entity in its early
stage of development or growth (including entities without established records
of sales or earnings), the Company will become subject to numerous risks
inherent in the business and operations of financially unstable and early
stage or potential emerging growth companies. In addition, to the extent that
the Company effects a Business Combination with a Target Business in an
industry characterized by a high level of risk, the Company will become subject
to the currently unascertainable risks of that industry. An extremely high
level of risk frequently characterizes certain industries which experience
rapid growth. Although management will endeavor to evaluate the risks inherent
in a particular industry or Target Business, there can be no assurances that
the Company will properly ascertain or assess all significant risk factors.
Probable Lack of Business Diversification.
As a result of the limited resources of the Company, the Company, in all
likelihood, will have the ability to effect only a single Business
Combination. Accordingly, the prospects for the Company's success will be
entirely dependent upon the future performance of a single business. Unlike
certain entities that have the resources to consummate several Business
Combinations or entities operating in multiple industries or multiple segments
of a single industry, it is highly likely that the Company will not have the
resources to diversify its operations or benefit from the possible spreading
of risks or offsetting of losses. The Company's probable lack of
diversification could subject the Company to numerous economic, competitive
and regulatory developments, any or all of which may have a material adverse
impact upon the particular industry in which the Company may operate
subsequent to consummation of a Business Combination. The prospects for the
Company's success may become dependent upon the development or market
acceptance of a single or limited number of products, processes or services.
Accordingly, notwithstanding the possibility of management assistance to the
<PAGE> 5
Target Business by the Company, there can be no assurance that the Target
Business will prove to be commercially viable.
Limited Ability to Evaluate Target Business' Management.
While the Company's ability to successfully effect a Business Combination
will be dependent upon certain key personnel, the future role of such
personnel in the Target Business cannot presently be stated with any
certainty. It is unlikely that any of the Company's key personnel will remain
associated in any operational capacity with the Company following a Business
Combination. Moreover, there can be no assurances that such personnel will
have any experience or knowledge relating to the operations of the particular
Target Business. Furthermore, although the Company intends to closely
scrutinize the management of a prospective Target Business in connection with
evaluating the desirability of effecting a Business Combination, there can be
no assurances that the Company's assessment of such management will prove to
be correct, especially since none of the Company's current key personnel are
professional business analysts. See "Directors, Executive Officers, Promoters
and Control Persons". Accordingly, the Company will be dependant, in some
significant respects, on the ability of the management of the Target Business
who are unidentifiable as of the date hereof. In addition, there can be no
assurances that such future management will have the necessary skills,
qualifications or abilities to manage a public company. The Company may also
seek to recruit additional managers to supplement the incumbent management of
the Target Business. There can be no assurances that the Company will have the
ability to recruit such additional managers, or that such additional managers
will have the requisite skill, knowledge or experience necessary or desirable
to enhance the incumbent management.
Opportunity for Shareholder Evaluation or Approval of Business Combinations.
Non-affiliate shareholders, if any, of the Company will, in all
likelihood, neither receive nor otherwise have the opportunity to evaluate any
financial or other information which will be made available to the Company in
connection with selecting a potential Business Combination until after the
Company has entered into an agreement to effectuate a Business Combination.
Such agreement to effectuate a Business Combination, however, will be subject
to shareholder approval pursuant to applicable law. As a result, non-affiliate
shareholders of the Company will be almost entirely dependent on the judgment
and experience of management in connection with the selection and ultimate
consummation of a Business Combination. In addition, under Florida law, the
form of Business Combination could impact upon the availability of dissenters'
rights (i.e., the right to receive fair payment with respect to the Company's
Common Stock) to shareholders disapproving the proposed Business Combination.
See "Certain Relationships and Related Transactions".
Selection of a Target Business and Structuring of a Business Combination.
The Company's management anticipates that the selection of a Target
Business will be complex and risky because of competition for such business
opportunities among all segments of the financial community. The nature of the
<PAGE> 6
Company's search for the acquisition of a Target Business requires maximum
flexibility inasmuch as the Company will be required to consider various
factors and circumstances which may preclude meaningful direct comparison
among the various business enterprises, products or services investigated.
Investors should recognize that the possible lack of diversification among the
Company's acquisitions may not permit the Company to offset potential losses
from one venture against profits from another. Management of the Company will
have virtually unrestricted flexibility in identifying and selecting a
prospective Target Business. In addition, in evaluating a prospective Target
Business, management will consider, among other factors, the following factors
which are not listed in any particular order:
- financial condition and results of operation of the
Target Business;
- growth potential and projected financial performance of
the Target Business and the industry in which it
operates;
- experience and skill of management and availability of
additional personnel of the Target Business;
- capital requirements of the Target Business;
- the availability of a transaction exemption from
registration pursuant to the Securities Act for the
Business Combination;
- the location of the Target Business;
- competitive position of the Target Business;
- stage of development of the product, process or service
of the Target Business;
- degree of current or potential market acceptance of the
product, process or service of the Target Business;
- possible proprietary features and possible other
protection of the product, process or service of the
Target Business;
- regulatory environment of the industry in which the
Target Business operates;
- costs associated with effecting the Business Combination; and
- equity interest in and possible management participation
in the Target Business.
<PAGE> 7
The foregoing criteria are not intended to be exhaustive; any evaluation
relating to the merits of a particular Business Combination will be based, to
the extent relevant, on the above factors as well as other considerations
deemed relevant by management of the Company in connection with effecting a
Business Combination consistent with the Company's business objective. In many
instances, it is anticipated that the historical operations of a Target
Business may not necessarily be indicative of the potential for the future
because of the possible need to shift marketing approaches substantially,
expand significantly, change product emphasis, change or substantially augment
management, or make other changes. The Company will be dependent upon the
owners of a Target Business to identify any such problems which may exist and
to implement, or be primarily responsible for the implementation of, required
changes. Because the Company may engage in a Business Combination with a
newly organized firm or with a firm which is entering a new phase of growth,
the Company will incur further risks, because in many instances, management of
the Target Business will not have proven its abilities or effectiveness, the
eventual market for the products or services of the Target Business will
likely not be established, and the Target Business may not be profitable
subsequent to a Business Combination.
The Company's limited funds and the lack of full-time management will
likely make it impracticable to conduct a complete and exhaustive
investigation and analysis of a Target Business before the Company commits its
capital or other resources thereto. Management decisions, therefore, will
likely be made without detailed feasibility studies, independent analysis,
market surveys and the like which, if the Company had more funds available to
it, would be desirable. The Company will be particularly dependent in making
decisions upon information provided by the promoter, owner, sponsor, or others
associated with the business opportunity seeking the Company's participation.
In connection with its evaluation of a prospective Target Business, management
anticipates that it will conduct a due diligence review which will encompass,
among other things, meetings with incumbent management and inspection of
facilities, as well as review of financial or other information which will be
made available to the Company. The time and costs required to select and
evaluate a Target Business (including conducting a due diligence review) and
to structure and consummate the Business Combination (including negotiating
relevant agreements and preparing requisite documents for filing pursuant to
applicable securities laws and state "blue sky" and corporation laws) cannot
presently be ascertained with any degree of certainty. The Company's
management intends to devote only a small portion of their time, approximately
25%, to the affairs of the Company and, accordingly, consummation of a
Business Combination may require a greater period of time than if the
Company's management devoted their full time to the Company's affairs.
However, each officer and director of the Company will devote such time as
they deem reasonably necessary, up to 100%, to carry out the business and
affairs of the Company, including the evaluation of potential Target
Businesses and the negotiation of a Business Combination and, as a result, the
amount of time devoted to the business and affairs of the Company may vary
significantly depending upon, among other things, whether the Company has
identified a Target Business or is engaged in active negotiation of a Business
Combination. Any costs incurred in connection with the identification and
evaluation of a prospective Target Business with which a Business Combination
<PAGE> 8
is not ultimately consummated will result in a loss to the Company and reduce
the amount of capital available to otherwise complete a Business Combination
or for the resulting entity to utilize. In the event the Company depletes its
present cash reserves, the Company might be forced to cease operations and a
Business Combination might not occur.
The Company anticipates that it will locate and make contact with Target
Businesses primarily through the reputation and efforts of its management, who
will meet personally with existing management and key personnel, visit and
inspect material facilities, assets, products and services belonging to such
prospects, and undertake such further reasonable investigation as management
deems appropriate. The Company's management and affiliate shareholder have a
network of contacts in the State of Florida, and will most likely concentrate
its search efforts for a Target Business in this geographic area. Management
does not intend to actively solicit or contact prospective Targets directly.
Rather, management believes that prospective Target Businesses will be
referred to the Company through management's network of contacts. Existing
clientele of the Company's affiliate shareholder may be considered potential
Target Businesses; however, the Company will not engage in any discussions
regarding the possibility a Business Combination with the Company until after
the effective time of this registration statement. The Company also expects
that many prospective Target Businesses will be brought to its attention from
various other non-affiliated sources, including securities broker-dealers,
investment bankers, venture capitalists, bankers, and other members of the
financial community. The Company has neither the present intention, nor does
the present potential exist for the Company, to consummate a Business
Combination with a Target Business in which the Company's management,
promoters, or their affiliates or associates directly or indirectly have a
pecuniary interest, although no existing corporate policies of the Company
would prevent this from occurring. The Company will not advertise or promote
itself in any financial or trade publications, or any other type of written
publications or other type of media, to seek potential Target Businesses.
Although there are no current plans to do so, the Company may engage the
services of professional firms that specialize in finding business
acquisitions and pay a finder's fee or other compensation. Since the Company
has no current plans to utilize any outside consultants or advisors to assist
in a Business Combination, no policies have been adopted regarding use of such
consultants or advisors, the criteria to be used in selecting such consultants
or advisors, the services to be provided, the term of service, or regarding
the total amount of fees that may be paid. However, because of the limited
resources of the Company, it is likely that any such fee the Company agrees to
pay would be paid in stock and not in cash. In no event will the Company pay
a finder's fee or commission to officers or directors of the Company or any
entity with which they are affiliated for such service. Moreover, in no event
shall the Company issue any of its securities to any officer, director or
promoter of the Company, or any of their respective affiliates or associates,
in connection with activities designed to locate a Target Business.
As a general rule, Federal and state tax laws and regulations have a
significant impact upon the structuring of business combinations. The Company
will evaluate the possible tax consequences f any prospective Business
Combination and will endeavor to structure a Business Combination so as to
achieve the most favorable tax treatment to the Company, the Target Business
and their respective stockholders. There can be no assurance that the Internal
Revenue Service or relevant state tax authorities will ultimately assent to
<PAGE> 9
the Company's tax treatment of a particular consummated Business Combination.
To the extent the Internal Revenue Service or any relevant state tax
authorities ultimately prevail in recharacterizing the tax treatment of a
Business Combination, there may be adverse tax consequences to the Company,
the Target Business and their respective stockholders. Tax considerations as
well as other relevant factors will be evaluated in determining the precise
structure of a particular Business Combination, which could be effected
through various forms of a merger, consolidation or stock or asset
acquisition.
Although the Company has no commitments as of the date of this
registration statement to issue any shares of Common Stock, preferred stock,
options or warrants, other than as described in this registration statement,
the Company will, in all likelihood, issue a substantial number of additional
shares in connection with the consummation of a Business Combination. To the
extent that such additional shares are issued, dilution to the interests of
the Company's stockholders will occur. Additionally, if a substantial number
of shares of Common Stock are issued in connection with the consummation of a
Business Combination, a change in control of the Company is likely to occur
which will likely affect, among other things, the Company's ability to utilize
net operating loss carry forwards, if any. Any such change in control may
also result in the resignation or removal of the Company's present officers
and directors. If there is a change in management, no assurance can be given
as to the experience or qualification of such persons, either in the operation
of the Company's activities or in the operation of the business, assets or
property being acquired. Management considers it likely that in order to
consummate a Business Combination, a change in control will occur; therefore,
management anticipates offering a controlling interest in the Company to a
Target Business in order to effectuate a Business Combination.
The officers and directors of the Company may actively negotiate for or
otherwise consent to the disposition of any portion of their Common Stock as a
condition to or in connection with a Business Combination. Therefore, it is
possible that the terms of any Business Combination will provide for the sale
of some shares of Common Stock held by management or affiliates of management.
It is likely that no other shareholder of the Company will be afforded the
right to sell their shares of Common Stock in connection with a Business
Combination pursuant to the same terms that such selling officers and
directors will be provided. Pursuant to Section. 607.0902(5) of the Florida
Business Corporation Act, the Company has inserted certain provisions in its
articles of incorporation, as amended, which has the effect of removing the
Company from the purview of the control-share acquisition statute promulgated
under Section 607.0902 of the Florida Business Corporation Act and hence, the
protection afforded by such statute. Section. 607.0902 of the Florida
Business Corporation Act denies corporate control to an acquirer of control
shares by extinguishing the voting rights of shares of an "issuing public
corporation", as defined therein, acquired in a "control share acquisition",
as defined therein. Voting rights may be reinstated to the extent provided in
a shareholders' resolution approved by (1) each class or series entitled to
vote separately on the proposal by a majority of all votes entitled to be cast
by such class or series and (2) each class or series entitled to vote
separately on the proposal by a majority of all votes entitled to be cast by
such class or series, excluding all "interested shares" (ie., generally
speaking, those shares that may be voted by or at the direction of a person
who made a control-share acquisition or an officer or employee/director of the
<PAGE> 10
subject "issuing public corporation"). The acquisition of shares is not
directly affected, only the voting rights attendant to control shares. Other
shares of the same corporation that are owned or acquired by the same person
are not affected. The stated purpose of the control share acquisitions statute
is to protect Florida shareholders by affording them an opportunity to decide
whether a change in corporate control is desirable. By removing the Company
from the purview of Florida's control-share acquisition statute, shares of an
"issuing public corporation" acquired pursuant to a control acquisition are
not deemed to be "control-share acquisitions", which, in the Company's case,
effectively denies non-management/non-affiliate shareholders an opportunity
to approve or consent to an acquirer's purchase of such management or
affiliate's stock pursuant to a Business Combination. See "Description of
Business - Shell Corporation - Conflicts of Interest".
There are currently no limitations relating to the Company's ability to
borrow funds to increase the amount of capital available to the Company to
effect a Business Combination or otherwise finance the operations of the
Target Business. However, the Company's limited resources and lack of
operating history could make it difficult for the Company to borrow additional
funds from other sources. The amount and nature of any borrowings by the
Company will depend on numerous considerations, including the Company's
capital requirements, potential lenders' evaluation of the Company's ability
to meet debt service on borrowings and the then prevailing conditions in the
financial markets, as well as general economic conditions. The Company does
not have any arrangements with any bank or financial institution to secure
additional financing and there can be no assurance that such arrangements if
required or otherwise sought, would be available on terms commercially
acceptable or otherwise in the best interests of the Company. The inability of
the Company to borrow funds required to effect or facilitate a Business
Combination, or to provide funds for an additional infusion of capital into a
Target Business, may have a material adverse effect on the Company's financial
condition and future prospects, including the ability to effect a Business
Combination. To the extent that debt financing ultimately proves to be
available, any borrowings may subject the Company to various risks
traditionally associated with indebtedness, including the risks of interest
rate fluctuations and insufficiency of cash flow to pay principal and
interest. Furthermore, a Target Business may have already incurred debt
financing and, therefore, all the risks inherent thereto.
If securities of the Company are issued as part of an acquisition, such
securities are required to be issued either in reliance upon exemptions from
registration under applicable federal or state securities laws or registered
for public distribution. The Company intends to primarily target only those
companies where an exemption from registration would be available; however,
since the structure of the Business Combination has yet to be determined, no
assurances can be made that the Company will be able to rely on such
exemptions. Registration of securities typically requires significant costs
and time delays are typically encountered. In addition, the issuance of
additional securities and their potential sale in any trading market which
might develop in the Company's Common Stock, of which there is presently no
trading market and no assurances can be given that one will develop, could
depress the price of the Company's Common Stock in any market which may
develop in the Company's Common Stock. Further, such issuance of additional
<PAGE> 11
securities of the Company would result in a decrease in the percentage
ownership of the Company's present shareholders.
Due to the Company's small size and limited amount of capital,
considerable business constraints could be imposed on the Company with respect
to its ability to raise additional capital if and when needed. Until such time
as any enterprise, product or service which the Company acquires generates
revenues sufficient to cover operating costs, it is conceivable that the
Company could find itself in a situation where it needs additional funds in
order to continue its operations. This need could arise at a time when the
Company is unable to borrow funds and when market acceptance for the sale of
additional shares of the Company's Common Stock does not exist. See
"Management's Discussion and Analysis or Plan of Operation".
Conflicts of Interest.
None of the Company's affiliates, officers and directors are required to
commit their full time to the affairs of the Company and, accordingly, such
persons may have conflicts of interest in allocating management time among
various business activities. The affiliates, officers and directors of the
Company may engage in other business activities similar and dissimilar to
those engaged in by the Company. To the extent that such persons engage in
such other activities, they will have possible conflicts of interest in
diverting opportunities to other companies, entities or persons with which
they are or may be associated or have an interest, rather than diverting such
opportunities to the Company.
Presently, Mr. Keller and Mr. Porter are involved in overseeing and
controlling their various holdings and investments. Mr. Ritts is the Chief
Financial Officer of Kellway Company, and Mr. Korte is involved in the
management of Kellway Company, a private commercial/industrial real estate
investment and management company. See "Directors, Executive Officers,
Promoters and Control Persons". Also, certain affiliates, officers and
directors of the Company may in the future become affiliated with additional
other entities, which may engage in business activities similar to those
intended to be conducted by the Company. Such potential conflicts of interest
include, among other things, time, effort and corporate opportunity involved
in their participation in other business transactions. As no policy has been
established for the resolution of such a conflict, the Company could be
adversely affected should such affiliates, officers or directors choose to
place their other business interests before those of the Company. No
assurance can be given that such potential conflicts of interest will not
cause the Company to lose potential opportunities.
In the course of their other business activities, including private
investment activities, the Company's affiliates, officers, and directors may
become aware of investment and business opportunities which may be appropriate
for presentation to the Company as well as the other entities with which they
are affiliated. Such persons may have conflicts of interest in determining to
which entity a particular business opportunity should be presented. In
general, officers and directors of corporations are required to present
certain business opportunities to such corporations. Accordingly, as a result
of multiple business affiliations, the Company's officers and directors may
<PAGE> 12
have similar legal obligations relating to presenting certain business
opportunities to multiple entities. In addition, conflicts of interest may
arise in connection with evaluations of a particular business opportunity by
the board of directors with respect to the foregoing criteria. There can be no
assurances that any of the foregoing conflicts will be resolved in favor of
the Company. The Company may consider Business Combinations with entities
owned or controlled by persons other than those persons described above. There
can be no assurances that any of the foregoing conflicts will be resolved in
favor of the Company.
The officers and directors of the Company may actively negotiate for or
otherwise consent to the disposition of any portion of their Common Stock as a
condition to or in connection with a Business Combination. Therefore, it is
possible that the terms of any Business Combination will provide for the sale
of some shares of Common Stock held by management or affiliates. Pursuant to
Section. 607.0902(5) of the Florida Business Corporation Act, the Company has
inserted certain provisions in its articles of incorporation, as amended,
which has the effect of removing the Company from the purview of the
control-share acquisition statute promulgated under Section 607.0902 of the
Florida Business Corporation Act and hence, the protection afforded by such
statute. Thus, it is likely that no other shareholder of the Company will be
afforded the right to sell their shares of Common Stock in connection with a
Business Combination pursuant to the same terms that such selling officers,
directors or affiliates will be provided. Also, such shareholders will not be
afforded an opportunity to approve or consent to such management or
affiliate's stock purchase. See "Description of Business - Shell Corporation
- - Selection of a Target Business and Structuring of a Business Combination".
Investment Company Act and Other Regulation
The Company may participate in a Business Combination by purchasing,
trading or selling the securities of such Target Business. The Company does
not, however, intend to engage primarily in such activities. Specifically,
the Company intends to conduct its activities so as to avoid being classified
as an "investment company" under the Investment Company Act of 1940 (the
"Investment Act"), and therefore to avoid application of the costly and
restrictive registration and other provisions of the Investment Act, and the
regulations promulgated thereunder.
The Company's plan of business may involve changes in its capital
structure, management, control and business, especially if it consummates a
Business Combination as discussed above. Each of these areas is regulated by
the Investment Act, in order to protect purchasers of investment company
securities. Since the Company will not register as an investment company,
stockholders will not be afforded these protections.
Any securities which the Company might acquire in exchange for its Common
Stock will be "restricted securities" within the meaning of the Securities Act
of 1933, as amended (the "Securities Act"). If the Company elects to resell
such securities, such sale cannot proceed unless a registration statement has
been declared effective by the Securities and Exchange Commission or an
exemption from registration is available. Section 4(1) of the Securities Act,
which exempts sales of securities not involving a public distribution by
<PAGE> 13
persons other than the issuer, would in all likelihood be available to permit
a private sale. Although the Company's plan of operation does not contemplate
the resale of an acquired Target Business' securities, if such a sale were to
be necessary, the Company would be required to comply with the provisions of
the Securities Act to effect such resale.
An acquisition made by the Company may be in an industry which is
regulated or licensed by federal, state or local authorities. Compliance with
such regulations can be expected to be a time-consuming and expensive process.
Penny Stock Regulations - State Blue Sky restrictions - Restrictions on
Marketability.
The Securities and Exchange Commission (the "Commission") has adopted
regulations which generally define "penny stock" to be any equity security
that has a market price (as defined) less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exceptions. The
Company's securities may be covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited
investors (generally institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with their spouse). For transactions covered by
the rule, the broker-dealers must make a special suitability determination for
the purchase and receive the purchaser's written agreement of the transaction
prior to the sale. Consequently, the rule may affect the ability of
broker-dealers sell the Company's securities and also may affect the ability
of shareholders of the Company to sell their shares of the Company in the
secondary market.
In addition, the Securities and Exchange Commission has adopted a number
of rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1,
15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and 15g-9 under the Securities Exchange Act
of 1934, as amended. Because the securities of the Company may constitute
"penny stocks" within the meaning of the rules, the rules would apply to
the Company and to its securities. The rules may further affect the ability
of the Company's shareholders to sell their shares in any public market which
might develop.
Shareholders should be aware that, according to Securities and Exchange
<PAGE> 14
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i)
control of the market for the security by one or a few broker-dealers that are
often related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv)
excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and (v) the wholesale dumping of the same securities by
promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with
consequent investor losses. The Company's management is aware of the abuses
that have occurred historically in the penny stock market. Although the
Company does not expect to be in a position to dictate the behavior of the
market or of broker-dealers who participate in the market, management will
strive within the confines of practical limitations to prevent the described
patterns from being established with respect to the Company's securities.
The Company has 50,000,000 shares of authorized Common Stock with
6,150,000 shares of Common Stock outstanding. See "Description of
Securities". No trading market in the Company's securities presently exists.
In light of the restrictions concerning shell companies contained in many
state blue sky laws and regulations, it is not likely that a trading market
will be created in the Company's securities until such time as a Business
Combination occurs with a Target Business. No assurances are given that
subsequent to such a Business Combination that a trading market in the
Company's securities will develop. The Company presently has 6,150,000 shares
of Common Stock outstanding, of which 5,800,000 of such shares are deemed to
be "restricted securities", as that term is defined under Rule 144 promulgated
under the Securities Act, in that such shares were issued in private
transactions not involving a public offering. Presently, so long as all other
conditions of Rule 144 are met, 5,800,000 of such shares are eligible for sale
under Rule 144, as currently in effect. No assurances are made; however, that
Rule 144 will be available at any time for any shareholder's shares. The
Company has not provided to any shareholder registration rights to register
under the Securities Act any shareholder's shares for sale. See "Market for
Common Equity and Related Stockholder Matters".
COMPETITION
The Company expects to encounter intense competition from other entities
having a business objective similar to that of the Company. Many of these
entities are well-established and have extensive experience in connection with
identifying and effecting business combinations directly or through
affiliates. Many of these competitors possess greater financial, marketing,
technical, personnel and other resources than the Company and there can be no
assurances that the Company will have the ability to compete successfully. The
Company's financial resources will be limited in comparison to those of many
of its competitors. This inherent competitive limitation could compel the
Company to select certain less attractive Target Businesses for a Business
Combination. There can be no assurances that such Target Businesses will
permit the Company to meet its stated business objective. Management
believes, however, that the Company's status as a reporting public entity
could give the Company a competitive advantage over privately held entities
having a similar business objective to that of the Company in acquiring a
Target Business with significant growth potential on favorable terms.
UNCERTAINTY OF COMPETITIVE ENVIRONMENT OF TARGET BUSINESS
In the event that the Company succeeds in effecting a Business
Combination, the Company will, in all likelihood, become subject to intense
competition from competitors of the Target Business. In particular, certain
industries which experience rapid growth frequently attract an increasingly
larger number of competitors, including competitors with increasingly greater
financial, marketing, technical and other resources than the initial
competitors in the industry. The degree of competition characterizing the
<PAGE> 15
industry of any prospective Target Business cannot presently be ascertained.
There can be no assurances that, subsequent to a Business Combination, the
Company will have the resources to compete effectively, especially to the
extent that the Target Business is in a high-growth industry.
FEDERAL SECURITIES LAWS COMPLIANCE
Under the Federal securities laws, companies reporting under the Exchange
Act must furnish stockholders certain information about significant
acquisitions, which information may require audited financial statements for a
Target Business with respect to one or more fiscal years, depending upon the
relative size of the acquisition. Consequently, the Company's policy is to
only effect a Business Combination with a Target Business that has available
the requisite audited financial statements. See "Description of
Securities--Securities Exchange Act of 1934".
FACILITIES
The executive and business office of the Company consist of office space
located at 6758 N. Military Trail, Unit 303 West Palm Beach, Florida 33407.
Pursuant to a written lease agreement (the "Lease") between the Company and
Fred Keller, Trustee, Land Trust No. 1. Mr. Keller is an affiliate
shareholder of the Company. The term of the lease is for a period of one year
beginning April 15, 1998 and ending April 14, 1999 with an annual base rent of
$26,400 per year, plus Florida tax and other increases as described in the
Lease. The Company believes this office space is adequate to serve its needs
until such time as a Business Combination occurs. The Company expects to be
able to utilize these offices, pursuant to the terms described above, until
such time as a Business Combination occurs. See "Description of Property" and
"Certain Relationships and Related Transactions".
EMPLOYEES
As of the date of this Prospectus, the Company is in the development
stage and currently has no full time employees. Management of the Company
serves the Company on a part time basis. Management of the Company expects to
use consultants, attorneys and accountants as necessary, and does not
anticipate a need to engage any full-time employees so long as it is seeking
and evaluating Target Businesses. The need for employees and their
availability will be addressed in connection with the decision whether or not
to acquire or participate in a specific Business Combination.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATION
The Company is presently a development stage company conducting virtually
no business operation, other than its efforts to effect a Business Combination
with a Target Business which the Company considers to have significant growth
<PAGE> 16
potential. To date, the Company has neither engaged in any operations nor
generated any revenue. It receives no cash flow. The Company will carry out
its plan of business as discussed above. See "Description of Business". The
Company cannot predict to what extent its liquidity and capital resources will
be diminished prior to the consummation of a Business Combination or whether
its capital will be further depleted by the operating losses, if any, of the
Target Business which the Company effectuates a Business Combination with.
Presently, the Company is not in a position to meet its cash requirements
for the remainder of its fiscal year or for the next 12 months. The Company
does not generate any cash revenue or receive any type of cash flow. Since
February of 1997 Fred Keller, Trustee, Fred Keller Trust an affiliate
shareholder of the Company, has made loans to the Company on an almost month
by month basis in the form of demand notes payable bearing interest at the
prime rate plus two percent adjusted quarterly. The Company's operating
costs, which includes professional fees and costs related to a Business
Combination, are likely to approximate $100,000 during the next 12 months.
It is likely that a Business Combination might not occur during the next 12
months. In the event the Company cannot meet its operating costs prior to the
effectuation of a Business Combination, the Company may cease operations and a
Business Combination may not occur.
Prior to the occurrence of a Business Combination, the Company may be
required to raise capital through the sale or issuance of additional
securities in order to ensure that the Company can meet its operating costs
prior to the effectuation of a Business Combination. As of the date of this
registration statement, no commitments of any kind to provide additional funds
have been made by Fred Keller, Trustee, Fred Keller Trust, management, other
present shareholders or any other third person. There are no agreements or
understandings of any kind with respect to any loans from such persons on
behalf of the Company. Accordingly, there can be no assurance that any
additional funds will be available to the Company to allow it to cover its
expenses. In the event the Company can no longer borrow funds from Fred
Keller, Trustee, Fred Keller Trust, and the Company elects to raise
additional capital prior to the effectuation of a Business Combination, it
expects to do so through the private placement of restricted securities
rather than through a public offering. The Company does not currently
contemplate making a Regulation S offering.
DESCRIPTION OF PROPERTY.
The executive and business office of the Company consist of office space
located at 6758 N. Military Trail, Unit 303 West Palm Beach, Florida 33407.
Pursuant to a written lease agreement (the "Lease") between the Company and
Fred Keller, Trustee, Land Trust No. 1, an affiliate shareholder of the
Company. The term of the lease is for a period of one year beginning April
15, 1998 and ending April 14, 1999 with an annual base rent $26,400 per year,
plus Florida tax and other increases as described in the Lease. The Company
believes this office space is adequate to serve its needs until such time as a
Business Combination occurs. The Company expects to be able to utilize these
offices, pursuant to the terms described above, until such time as a Business
Combination occurs. See "Description of Property" and "Certain Relationships
and Related Transactions".
<PAGE> 17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of the date hereof, the names,
addresses, amount and nature of beneficial ownership and percent of such
ownership of each person known to the Company to be the beneficial owner of
more than five percent (5%) of Company's Common Stock:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Owner
<S> <C> <C>
Fred Keller 5,800,000 94.3%
6758 North Military Trail, Suite 303
West Palm Beach, Florida 33407
</TABLE>
The following table sets forth, as of the date hereof, the names,
addresses, amount and nature of beneficial ownership and percent of such
ownership of the Company's Common Stock of each of the officers and directors
of the Company, and the officers and directors of the Company as a group:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Owner
<S> <C> <C>
Ernest L. Porter - 0%
6758 North Military Trail, Suite 303
West Palm Beach, FL 33407
William H. Ritts - 0%
6758 North Military Trail, Suite 303
West Palm Beach, FL 33407
Kember C. Korte - 0%
6758 North Military Trail, Suite 301
West Palm Beach, FL 33407
All Officers and Directors
as a Group (3 persons). - 0%
</TABLE>
<PAGE> 18
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The current directors and executive officers of the Company are as
follows:
Name Age Position
Earnest L. Porter 60 Director, Chief Executive Officer,
President
William H. Ritts, III 55 Director, Chief Financial Officer,
Secretary
Kember C. Korte 47 Director
_________________________
Mr. Porter has served as a Director and Chief Executive Officer of the
Company since its inception in April of 1998. From September 1997 to April
1998, Mr. Porter worked as a Senior Loan Officer at Flagship Mortgages
Services, a division of Republic Bank, West Palm Beach, Florida. From
June 1988 to September 1998, Mr. Porter served as the President and Chief
Executive Officer of Florida Realty Group, Inc. a private real estate
investment company. Mr. Porter received his Bachelor of Arts Degree in
English from Stetson University in 1961.
Mr. Ritts has served as a Director, Chief Financial Officer and Secretary
of the Company since December 1998. Mr. Ritts presently also serves as the
Chief Financial Officer of Kellway Company, a private commercial/industrial
real estate investment and management company. From 1996 to December 1998, Mr.
Ritts served as Chief Financial Officer and Senior Vice President of City Auto
Resources, Inc., a private automobile financing company. From 1994 to 1995,
Mr. Ritts served as Treasurer and Chief Financial Officer of General
Acceptance Corporation, a publically traded automobile financing company. Mr.
Ritts received his Bachelor of Science Degree in Accounting from Pennsylvania
State University in 1965.
Mr. Korte has served as a director and of the Company since February
1999. From 1987 to present, Mr. Korte also serves as a Vice President and
General Manager of Kellway Company, a private commercial/industrial real
estate investment and management company. Mr. Korte received his Bachelor of
Arts Degree in English from Salisbury State University in 1973.
For the past 40 years, Mr. Fred Keller, an affiliate shareholder of the
Company, has been a self-employed investor, investing primarily in real
estate.
There are no agreements or understandings for any officer or director to
resign at the request of another person, and none of the officers and
directors of the Company are acting on behalf of or will act at the
discretion of any other person.
<PAGE> 19
Presently, the only persons who perform material operations on behalf of
the Company are the Company's officers and directors. Until such time as a
Business Combination occurs, the officers and directors of the Company do not
expect any significant changes in the composition of the Company's officers or
board of directors. See "Directors, Executive Officers, Promoters and Control
Persons".
OTHER BLANK CHECK ACTIVITIES
None of the Company's executive officers, directors, and principal
shareholders have previously held management positions in or promoted other
blank check companies.
EXECUTIVE COMPENSATION.
<TABLE>
<CAPTION>
Executive Compensation.
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Annual Restricted Securities All Other
Name & Compen- Stock Underlying LTIP Compen-
Position Year Salary($) Bonus($) sation Award(s) Options/ Payouts sation
($) ($) Sars(#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rose Keller.
Director,
President
Secretary(1) 1998 -0- -0- -0- -0- -0- -0- -0-
Ernest L.
Porter.
Director
Chmn. of the
Board/Presi
dent/CEO 1998 30,000 -0- -0- -0- -0- -0- -0-
____________________________________
</TABLE>
(1) The positions held by Ms. Keller were with respect to
the Company's predecessor, Fairfax Group, Inc., a Nevada
Corporation.
Compensation of Directors
During 1998, no other officer or director received any type of
compensation from the Company for serving as such.
For 1999, in consideration for serving as directors of the Company, the
Company compensates each of its directors $1,000 per year plus expenses
related to serving as a director of the Company. Until the Company
effectuates a Business Combination, it is not anticipated that any other
<PAGE> 20
officer or director will receive additional compensation from the Company
other than reimbursement for out-of-pocket expenses incurred on behalf of the
Company. See "Certain Relationships and Related Transactions". The Company
has no stock option, retirement, pension, or profit-sharing programs for the
benefit of directors, officers or other employees, but the Board of Directors
may recommend adoption of one or more such programs in the future. No other
arrangements are presently in place regarding compensation to directors for
their services as directors or for committee participation or special
assignments.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company was incorporated under the laws of the State of Florida on
April 23, 1998 as a wholly owned subsidiary of Fairfax Group, Inc., a Nevada
corporation ("Fairfax Nevada"). On September 8, 1998, the Company became the
successor corporation to a merger between Fairfax Nevada and the Company. The
primary purpose of the merger was to redomicile Fairfax Nevada to the State of
Florida in order for Fairfax Nevada to become a Florida corporation. Among
other things, the plan of merger provided that each share of the Company's
capital stock issued and outstanding prior to the merger, and each share of
the Company's capital stock held in treasury prior to the merger, would cease
to exist; and each share of Fairfax Nevada's capital stock issued and
outstanding prior to the merger, and each share of the Fairfax Nevada's
capital stock held in treasury prior to the merger, would cease to exist and
be converted into an equal umber of shares of the Company's capital stock
identical with the Fairfax Nevada shares being exchanged.
No officer, director promoter or affiliate of the Company as or proposes
to have any direct or indirect material interest in any asset proposed to be
acquired by the Company through security holdings, contracts, options, or
otherwise.
It is not currently anticipated that any other salary, consulting fee, or
finder's fee shall be paid to any of the Company's directors or executive
officers, or to any other affiliate of the Company except as described in this
registration statement. See "Executive Compensation".
Although management has no current plans to cause the Company to do so,
the officers and directors of the Company may actively negotiate for or
otherwise consent to the disposition of any portion of their Common Stock as a
condition to or in connection with a Business Combination. Therefore, it is
possible that the terms of any Business Combination will provide for the sale
of some shares of Common Stock held by management or affiliates of management.
Thus, it is likely that no other shareholder of the Company will be afforded
the right to sell their shares of Common Stock in connection with a Business
Combination pursuant to the same terms that such selling officers, directors
or affiliates will be provided. Also, such shareholders will not be afforded
an opportunity to approve or consent to such management or affiliate's stock
purchase. See "Description of Business - Shell Corporation - Selection of a
Target Business and Structuring of a Business Combination". It is more likely
than not that any sale of securities by the Company's current stockholders to
an acquisition candidate would be at a price substantially higher than that
originally paid by such stockholders. Any payment to current stockholders in
<PAGE> 21
the context of an acquisition involving the Company would be determined
entirely by the largely unforeseeable terms of a future agreement with an
unidentified business entity. See "Description of Business - Shell
Corporation - Selection of a Target Business and Structuring of a Business
Combination".
Since February, 1997, Fred Keller, Trustee, Fred Keller Trust, an
affiliate shareholder of the Company, has made loans to the Company on an
almost month by month basis in the form of demand notes payable bearing
interest at the prime rate plus two percent (2%) adjusted quarterly. As of
the date of this registration statement, the aggregate value of the principle
on such loans approximate $89,400.
Pursuant to Section 607.0901(5) of the Florida Business Corporation Act,
the Company has inserted certain provisions in its articles of incorporation,
as amended, which has the effect of removing the Company from the purview of
the affiliated transaction statute promulgated under Section 607.0901 of the
Florida Business Corporation Act and hence, the protection afforded by such
statute. Section 607.0901 applies to transactions between a corporation and
an "interested shareholder" (i.e., generally speaking, a "beneficial owner" of
more than 10% of the outstanding voting shares of such corporation) or any
"affiliate" or "associate" of the interested shareholder, as defined in the
statute. In general, the statute requires that either a majority of the
disinterested directors or a super majority of the disinterested shareholders
of the corporation approve certain significant corporate transactions with
certain related or "affiliated" parties -- "affiliated transactions". By
removing the Company from the purview of Florida's affiliated transaction
statute, the special shareholder and director voting requirements of the
statute do not apply to affiliated transactions with the Company.
LEGAL PROCEEDINGS.
As of the date hereof, the Company is not a party to any material legal
proceedings, nor is it aware of any threatened litigation of a material
nature.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
MARKET INFORMATION
No public trading market presently exists for the Company's Common Stock,
and there are no present plans, proposals, arrangements or understandings with
any person with regard to the development of any trading market in any of the
Company's securities. No shares of Common Stock have been registered for resale
under the blue sky laws of any state. The holders of shares of Common Stock and
persons who may desire to purchase shares of Common Stock in any trading market
that might develop in the future, should be aware that there may be significant
state blue-sky law restrictions upon the ability of shareholders to sell their
shares and of purchasers to purchase the shares of Common Stock. Some
jurisdictions may not allow the trading or resale of blind-pool or
"blank-check" securities under any circumstances. Accordingly, shareholders
should consider the secondary market for the Company's securities to be a
limited one.
<PAGE> 22
Pursuant to resolution of the Company's board of directors, the Company
will not develop any trading market in the Company's Common Stock until such
time as a Business Combination is effectuated and the requisite audited
financial statements required pursuant to Form 8-K (or its equivalent) are
filed with the SEC. No assurances are made, however, that a trading market
for the Company's Common Stock will ever develop.
No shares of Common Stock of the Company are presently subject to
outstanding options or warrants to purchase, or securities convertible into,
common equity of the Company. Approximately 500 shareholders hold the
Company's Common Stock. The Company presently has 6,150,000 shares of Common
Stock outstanding, of which 5,800,000 of such shares are deemed to be
"restricted securities", as that term is defined under Rule 144 promulgated
under the Securities Act, in that such shares were issued in private
transactions not involving a public offering. Presently, so long as all other
conditions of Rule 144 are met, 5,800,000 of such shares are eligible for sale
under Rule 144, as currently in effect. No assurances are made; however, that
Rule 144 will be available at any time for any shareholder's shares. The
Company has not provided to any shareholder registration rights to register
under the Securities Act any shareholder's shares for sale.
In general, under Rule 144, as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or persons whose shares are aggregated), who has beneficially
owned restricted shares of Common Stock for at least one year is entitled to
sell, within any three-month period, a number of shares that does not exceed
the greater of 1% of the total number of outstanding shares of the same class
or, if the Common Stock is traded on a national securities exchange or the
NASDAQ system, the average weekly trading volume during the four calendar
weeks preceding the sale. A person who has not been an affiliate of the
Company for at least the three months immediately preceding the sale and who
has beneficially owned restricted shares of Common Stock for at least two
years is entitled to sell such shares under Rule 144 without regard to any of
the limitations described above. No assurances are made; however, that Rule
144 will be available at any time for any shareholder's shares.
The Company has no present plans, proposals, arrangements, understandings
or intention of selling any amount of shares of Common Stock in the public
market subsequent to a Business Combination. Nevertheless, in the event that
substantial amounts of Common Stock are sold in the public market subsequent
to a Business Combination, such sales may adversely affect the price for the
sale of the Company's equity securities in any trading market which may
develop. No prediction can be made as to the effect, if any, that market sales
of restricted shares of Common Stock or the availability of such shares for
sale will have on the market prices prevailing from time to time.
DIVIDENDS
The Company has not paid any dividends on its Common Stock to date and
does not presently intend to pay cash dividends prior to the consummation of a
Business Combination. The payment of cash dividends in the future, if any,
will be contingent upon the Company's revenues and earnings, if any, capital
requirements and general financial condition subsequent to the consummation of
<PAGE> 23
a Business Combination. The payment of any dividends subsequent to a Business
Combination will be within the discretion of the Company's then board of
directors. It is the present intention of the board of directors to retain all
earnings, if any, for use in the Company's business operations and,
accordingly, the board of directors does not anticipate paying any cash
dividends in the foreseeable future.
RECENT SALES OF UNREGISTERED SECURITIES.
As of the date of this registration statement, during the past three
years, no shares of the Company's Common Stock have been issued in a
transaction not registered under the Securities Act.
DESCRIPTION OF SECURITIES.
GENERAL
The Company is authorized to issue 50,000,000 shares of Common Stock. As
of the date of this registration statement 6,150,000 shares of Common Stock
are outstanding, held of record by approximately 500 shareholders. No other
type of securities are authorized by the Company at this time.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held
of record on all matters to be voted on by shareholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voted for the election of
directors can elect all of the directors. By virtue of his ownership of more
than 50% of the outstanding Common Stock, Mr. Fred Keller, the Company's sole
affiliate shareholder can elect all of the directors of the Company. Florida
law permits the holders of the minimum number of shares necessary to take
action at a meeting of shareholders (normally a majority of the outstanding
shares) to take action by written consent without a meeting, provided notice
is given within ten days to all other shareholders. The holders of Common
Stock are entitled to receive dividends when, as and if declared by the board
of directors out of funds legally available therefor. In the event of
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining available for
distribution to them after payment of liabilities and after provision has been
made for each class of stock, if any, having preference over the Common
Stock. Holders of shares of Common Stock, as such, have no conversion,
preemptive, redemption provisions or other subscription rights. All of the
outstanding shares of Common Stock are fully paid and non-assessable.
DIVIDENDS
The Company has not paid any dividends on its Common Stock to date and
does not presently intend to pay cash dividends prior to the consummation of a
Business Combination. The payment of cash dividends in the future, if any,
<PAGE> 24
will be contingent upon the Company's revenues and earnings, if any, capital
requirements and general financial condition subsequent to consummation of a
Business Combination. The payment of any dividends subsequent to a Business
Combination will be within the discretion of the Company's then board of
directors. It is the present intention of the board of directors to retain all
earnings, if any, for use in the Company's business operations and,
accordingly, the board does not anticipate paying any cash dividends in the
foreseeable future.
SECURITIES EXCHANGE ACT OF 1934
By virtue of filing this registration statement, the Company is making an
application with the Commission to register its Common Stock under the
provisions of Section 12(g) of the Exchange Act. Such registration will
require the Company to comply with periodic reporting, proxy solicitations and
certain other requirements of the Exchange Act. If the Company seeks
shareholder approval of a Business Combination at such time as the Company's
securities are registered pursuant to Section 12(g) of the Exchange Act, the
Company's proxy solicitation materials required to be transmitted to
shareholders may be subject to prior review by the Securities and Exchange
Commission. Under the federal securities laws, public companies must furnish
certain information about significant acquisitions, which information may
require audited financial statements of an acquired company with respect to
one or more fiscal years, depending upon the relative size of the acquisition.
Consequently, if a prospective Target Business did not have available and was
unable to reasonably obtain the requisite audited financial statements, the
Company could, in the event of consummation of a Business Combination with
such company, be precluded from (i) any public financing of its own securities
for a period of as long as three years, as such financial statements would be
required to undertake registration of such securities for sale to the public;
and (ii) registration of its securities under the Exchange Act. As a result
these requirements, and in order to remain in compliance with the Company's
board of director's resolution, Target Businesses will be required to possess
the requisite audited financial statements prior to the consummation of a
Business Combination. See "Description of Business- General" and "Market For
Common Equity and Related Stockholder Matters-Market Information".
In the event the Company's obligation to file periodic reports under the
Exchange Act is suspended, the Company presently intends to continue to file
such periodic reports on a voluntary basis.
CERTAIN PROVISIONS OF THE COMPANY'S BYLAWS
The Company's bylaws provide, among other things, that (i) officers and
directors of the Company will be indemnified to the fullest extent permitted
under Florida law. See "Indemnification of Directors and Officers".
<PAGE> 25
TRANSFER AGENT
The Company's transfer agent is CJB Transfer Services located at 400
Inverness Drive South, Suite 200, Englewood, Colorado 80112.
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's bylaws contain the broadest form of indemnification for its
officers and directors and former officers and directors permitted under
Florida law. The Company's bylaws generally provide that: The Company shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by, or
in the right of the Company) by reason of the fact that he is or was a
director, officer, employee or agent of the Company, or is or was serving at
the request of the Company as a director, officer, employee or agent of any
other corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorney's fees), judgments, fines, amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, including any appeal thereof, if he acted in good
faith in a manner he reasonably believed to be in, or not opposed to the best
interests of the Company, and with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contenders or its equivalent
shall not create, of itself, a presumption that the person did not act in good
faith or in a manner which he reasonably believed to be in, or not opposed to,
the best interests of the Company or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
To the extent that a director, officer, employee or agent of the Company
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to above, or in any defense of any claim, issue or
matter therein, he shall be indemnified against expenses, including attorneys
fees, actually and reasonably incurred by him in connection therewith. Any
indemnification shall be made only if a determination is made that
indemnification of the director, officer, employee or agent is proper in the
circumstances because such person has met the applicable standard of conduct
set forth above. Such determination shall be made either (1) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) by the shareholders who
were not parties to such action, suit or proceeding. If neither of the above
determinations can occur because the Board of Directors consists of a sole
director or the Company is owned by a sole shareholder, then the sole director
or sole shareholder shall be allowed to make such determination.
<PAGE> 26
Expenses incurred in defending any action, suit or proceeding may be paid
in advance of the final disposition of such action, suit or proceeding as
authorized in the manner provided above upon receipt of any undertaking by or
on behalf of the director, officer, employee or agent to repay such amount,
unless it shall ultimately be determined that he is entitled to be indemnified
by the Company.
The indemnification provided shall be in addition to the indemnification
rights provided pursuant to Chapter 607 of the Florida Statutes, and shall not
be deemed exclusive of any other rights to which any person seeking
indemnification may he entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in
such person's official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent of the Company and shall inure to the
benefit of the heirs, executors and administrators of such a person.
<PAGE>
FINANCIAL STATEMENTS
Independent Auditor's Report
To the Board of Directors and Stockholders
of Fairfax Group, Inc.
West Palm Beach, Florida
We have audited the accompanying balance sheets of Fairfax Group,
Inc. (a development stage company) as of February 28, 1998 and 1997
and the related statements of operations, changes in stockholders'
deficit, and cash flows for the years then ended and for the period
from March 1, 1991 (date of quasi-reorganization) through February
28, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Fairfax
Group, Inc. as of February 28, 1998 and 1997, and the results of
its operations and its cash flows for the fiscal years then ended
and for the period from March 1, 1991 (date of quasi-
reorganization) through February 28, 1998, in conformity with
generally accepted accounting principles.
September 4, 1998
<PAGE>
FAIRFAX GROUP, INC.
(A Development Stage Company)
BALANCE SHEETS
FEBRUARY 28, 1998 AND 1997
<TABLE>
<CAPTION>
ASSETS
1998 1997
<S> <C> <C>
CURRENT ASSETS:
Cash $ 2,758 $ 1,020
2,758 1,020
OTHER ASSETS:
Judgements receivable - 1
TOTAL ASSETS $ 2,758 $ 1,021
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 537 $ 488
Stockholder notes payable 14,301 9,190
14,838 9,678
STOCKHOLDERS' DEFICIT:
Common stock; $.001 par value, authorized
25,000,000 shares, 6,150,000 issued and
outstanding 6,150 6,150
(Deficit) accumulated during the
development sta (18,230) (14,807)
(12,080) (8,657)
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 2,758 $1,021
</TABLE>
See Independent Auditor's Report and Accompanying Notes
<PAGE> F-1
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED FEBRUARY 28, 1998 AND 1997 AND
THE PERIOD FROM MARCH 1, 1991 (Date of
Quasi-Reorganization) THROUGH FEBRUARY 28, 1998
<TABLE>
<CAPTION>
MARCH 1
1991 THROUGH
FEBRUARY 28 FEBRUARY 28 FEBRUARY 28
1998 1997 1998
<S> <C> <C> <C>
REVENUES:
Income $ - $ 2,676 $ 2,676
- 2,676 2,676
COSTS AND EXPENSES:
Advertising and promotion - - 49
Bank service charges 165 120 401
Collection costs - 1,341 1,341
Contract labor 575 - 2,075
Dues and subscriptions - - 65
Interest 993 796 1,789
Office supplies - - 152
Organizational expense
- amortization - - 2,150
Professional fees 537 64 5,271
Salaries and payroll taxes - 1,772 5,002
Transfer agent 1,153 652 2,611
3,423 4,745 20,906
NET (LOSS) $ (3,423) $ (2,069) $ (18,230)
(Loss) per share data:
Basic and diluted $ (0.00) $ (0.00) $ (0.01)
Weighted average shares
outstanding - basic 6,150,000 6,150,000 1,833,729
</TABLE>
See Independent Auditor's Report and Accompanying Notes
<PAGE> F-2
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM MARCH 1, 1991 (Date of
Quasi-Reorganization)THROUGH FEBRUARY 28, 1998
<TABLE>
<CAPTION>
(DEFICIT)
ACCUMULATED
DURING THE
COMMON STOCK DEVELOPMENT
SHARES AMOUNT STAGE TOTAL
<S> <C> <C> <C> <C>
BALANCE AT MARCH 1, 1991 2,150,000 $ 2,150 $ - $ 2,150
Net (loss) - - - -
BALANCE AT FEBRUARY 29, 1992 2,150,000 2,150 - 2,150
Net (loss) - - - -
BALANCE AT FEBRUARY 28, 1993 2,150,000 2,150 - 2,150
Net (loss) - - - -
BALANCE AT FEBRUARY 28, 1994 2,150,000 2,150 - 2,150
Net (loss) - - - -
BALANCE AT FEBRUARY 28, 1995 2,150,000 2,150 - 2,150
Stock issued at par value
for cashand judgements
(9/15/95) 4,000,000 4,000 - 4,000
Net (loss) - - (12,738) (12,738)
BALANCE AT FEBRUARY 29, 1996 6,150,000 6,150 (12,738) (6,588)
Net (loss) - - (2,069) (2,069)
BALANCE AT FEBRUARY 28, 1997 6,150,000 6,150 (14,807) (8,657)
Net (loss) - - (3,423) (3,423)
BALANCE AT FEBRUARY 28, 1998 6,150,000 $ 6,150 $ (18,230) $ (12,080)
</TABLE>
See Independent Auditor's Report and Accompanying Notes
<PAGE> F-3
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED FEBRUARY 28, 1998 AND 1997 AND
THE PERIOD FROM MARCH 1, 1991 (Date of
Quasi-Reorganization) THROUGH FEBRUARY 28, 1998
<TABLE>
<CAPTION>
MARCH 1
1991 THROUGH
FEBRUARY 28 FEBRUARY 28 FEBRUARY 28
1998 1997 1998
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (Loss) $ (3,423) $ (2,069) $ (18,230)
Adjustments to reconcile net loss
to net cash (used) in operating
activities:
Changes in assets and liabilities:
Other assets 1 - 4,057
Accounts payable 49 (974) -
Accrued expenses 1,111 796 537
NET CASH (USED) IN OPERATING
ACTIVITIES (2,262) (2,247) (13,636)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from stockholder payable 4,000 2,095 12,395
Proceeds from issuance of common
stock - - 3,999
NET CASH PROVIDED BY FINANCING
ACTIVITIES 4,000 2,095 16,394
NET INCREASE (DECREASE) IN CASH 1,738 (152) 2,758
CASH AT BEGINNING OF PERIOD 1,020 1,172 -
CASH AT END OF PERIOD $ 2,758 $ 1,020 $ 2,758
Supplemental disclosure of cash flow data
- - cash paid during the period for:
Interest $ - $ - $ -
Income Taxes $ - $ - $ -
</TABLE>
See Independent Auditor's Report and Accompanying Notes
<PAGE> F-4
FAIRFAX GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 28, 1998 AND 1997 AND THE PERIOD
FROM
MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH FEBRUARY
28, 1998
(See Independent Auditor's Report)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization:
Fairfax Group, Inc. (the Company) is a development stage
enterprise, which was incorporated under the laws of the
State of Nevada on March 1982. Subsequent to February 28,
1998, the Company was merged into a newly formed Florida
Corporation. Operations have consisted primarily of
locating and evaluating potential acquisition candidates
that would provide favorable profit opportunities.
Method of Accounting:
The company reports the results of its operations using the
accrual method of accounting for both financial and income
tax purposes. Under this method, income is recognized when
earned and expenses are deducted when incurred. The
accounting policies of the Company are in accordance with
generally accepted accounting principles and conform to the
standards applicable to development stage companies.
Use of Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
Stockholder Notes Payable:
The stockholder notes payable consists of demand notes to
the majority stockholder bearing interest at the prime rate
plus two percent adjusted quarterly.
Income Taxes:
The Company has no taxable income to date; therefore, no
provision for federal or state taxes has been made. The
Company may have a net operating loss carryforward at
February 28, 1998. No tax assets have been recognized due
to the uncertainty of future recovery for tax purposes.
<PAGE> F-5
FAIRFAX GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 28, 1998 AND 1997 AND THE PERIOD
FROM
MARCH 1, 1991 (Date of Quasi-Reorganization) THROUGH FEBRUARY
28, 1998
(See Independent Auditor's Report)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued)
Computation of Net Loss Per Share:
In February 1997, the Financial Accounting Standards Board
issued SFAS No. 128, Earnings Per Share. The Company has
reflected the provisions of SFAS No. 128 in the accompanying
consolidated financial statements for all periods presented.
SFAS 128 replaces the presentation of primary Earnings Per
Share ("EPS") with a presentation of basic EPS, which
excludes dilution and is computed by dividing income or loss
available to common shareholders by the weighted average
number of common shares outstanding for the period. The
Statement also requires the dual presentation of basic and
diluted EPS on the face of the income statement for all
entities with complex capital structures. During the periods
presented, the Company did not have a complex capital
structure.
Related Party Transactions:
All the income for the fiscal years ended February 28, 1998
and 1997 were derived from collections of certain
judgments. These judgments were contributed to the Company
by the majority shareholder in exchange for stock during
the fiscal year ended February 28, 1996.
The Company entered into a business lease agreement with an
entity affiliated with the majority shareholder as of April
8, 1998. The one year lease includes an annual base rent
of $26,400 plus sales tax for office facilities and
equipment with an effective date of April 15, 1998. Before
this date, the majority shareholder allowed the Company to
utilize the office space and equipment for free.
<PAGE> F-6
FAIRFAX GROUP, INC.
(A Development Stage Company)
BALANCE SHEET (UNAUDITED)
NOVEMBER 30, 1998
ASSETS
CURRENT ASSETS:
Cash $ 1,684
1,684
TOTAL ASSETS $ 1,684
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 35
Stockholder notes payable 83,975
84,010
STOCKHOLDERS' DEFICIT:
Common stock; $.001 par value, authorized
25,000,000 shares, 6,150,000 issued and
outstanding 6,150
(Deficit) accumulated during the
development stage (88,476)
(82,326)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,684
<PAGE> F-7
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1998 AND 1997 AND THE
PERIOD FROM MARCH 1, 1991 (Date of Quasi-Reorganization)
THROUGH NOVEMBER 30, 1998
<TABLE>
<CAPTION>
MARCH 1
1991 THROUGH
NOVEMBER 30 NOVEMBER 30 NOVEMBER 30
1998 1997 1998
<S> <C> <C> <C>
REVENUES:
Income $ - $ - $ 2,676
- - 2,676
COSTS AND EXPENSES:
Advertising and Promotion 127 - 176
Bank service charges 135 120 536
Collection costs - - 1,341
Contract labor 9,114 - 11,189
Dues and Subscriptions 408 - 473
Insurance 140 - 140
Interest 1,273 722 3,062
Licenses and Permits 350 - 350
Miscellaneous 1,451 - 1,451
Office Expense 930 - 1,082
Organizational Expense
- Amortization - - 2,150
Professional fees 12,976 537 18,247
Rent 18,656 - 18,656
Salaries and Payroll Taxes 21,586 - 26,588
Telephone 3,100 - 3,100
Transfer agent - 990 2,611
70,246 2,369 91,152
NET (LOSS) $ (70,246) $ (2,369) $(88,476)
(Loss) per share data:
Basic and diluted $ (0.01) $ (0.00) $ (0.03)
Weighted average shares
outstanding - basic 6,150,000 6,150,000 2,760,580
</TABLE>
<PAGE> F-8
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (UNAUDITED)
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1998
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
SHARES AMOUNT DEFICIT
<S> <C> <C> <C>
BALANCE AT FEBRUARY 28, 1998 6,150,000 $ 6,150 $ (18,230)
Net (Loss) - - (70,246)
BALANCE AT NOVEMBER 30, 1998 6,150,000 $ 6,150 $ (88,476)
</TABLE>
<PAGE> F-9
FAIRFAX GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1998 AND 1997
AND THE PERIOD FROMMARCH 1, 1991 (Date of
Quasi-Reorganization) THROUGH NOVEMBER 30, 1998
<TABLE>
<CAPTION>
MARCH 1
1991 THROUGH
NOVEMBER 30 NOVEMBER 30 NOVEMBER 30
1998 1997 1998
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net (Loss) $ (70,246) $ (2,639) $ (88,476)
Adjustments to reconcile net loss
to net cash (used) in operating
activities:
Changes in assets and liabilities:
Other assets - 1 4,057
Accounts payable and accrued
expenses 502 224 1,039
NET CASH (USED) IN OPERATING
ACTIVITIES (69,744) (2,414) (83,380)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from stockholder payable 68,670 2,000 81,065
Proceeds from issuance of common
stock - - 3,999
NET CASH PROVIDED BY FINANCING
ACTIVITIES 68,670 2,000 85,064
NET INCREASE (DECREASE) IN CASH (1,074) (414) 1,684
CASH AT BEGINNING OF PERIOD 2,758 1,172 -
CASH AT END OF PERIOD $ 1,684 $ 758 $ 1,684
Supplemental disclosure of cash flow data
- cash paid during the year for:
Interest $ - $ - $ -
Income Taxes $ - $ - $ -
</TABLE>
<PAGE> F-10
FAIRFAX GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1998 AND 1997
1. Basis of Presentation
The accompanying financial statements as of November 30,
1998 and for the nine months ended November 30, 1998 and
1997 are unaudited but, in the opinion of management of the
Company, contain all adjustment necessary to present fairly
the balance sheet at November 30, 1998, and the related
statements of operations, stockholders' deficit and cash
flows for the nine month period ended November 30, 1998 and
November 30, 1997. These adjustments are of a normal
recurring nature.
Certain information and footnote disclosures normally
included in financial statements that have been prepared in
accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission,
although management of the Company believes that the
disclosures contained in these financial statements are
adequate to make the information presented therein not
misleading. For further information, refer to the Company's
financial statements and notes thereto for the fiscal years
ended February 28, 1998 and 1997.
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 at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates. The results of
operations for the nine months ended November 30, 1998 are
not necessarily indicative of the results of operations to
be expected for the full fiscal year ending February 28,
1999.
2. Related Party Transactions
The Company entered into a business lease agreement with an
entity affiliated with the majority shareholder as of April
8, 1998. The one year lease includes an annual base rent of
$26,400 plus sales tax for office facilities and equipment
with an effective date of April 15, 1998. Before this date,
the majority stockholder allowed the Company to utilize the
office space and equipment for free.
The stockholder notes payable consists of demand notes to
the majority stockholder bearing interest at the prime rate
plus two percent adjusted quarterly.
<PAGE> F-11
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not Applicable.
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements for Fairfax Group, Inc.
1. Balance Sheets (Audited)
2. Statements of Operations (Audited)
3. Statements of Changes in Stockholders' Deficit (Audited)
4. Statements of Cash Flows (Audited)
5. Notes to Financial Statements (Audited)
6. Balance Sheet (Unaudited)
7. Statements of Operations (Unaudited)
8. Statements of Changes in Stockholders' Deficit (Unaudited)
9. Statements of Cash Flows (Unaudited)
10. Notes to Financial Statements (Unaudited)
(b) Pursuant to Item 601 of Regulation S-B, the Company includes the
following exhibits:
Exhibit No. Description of Exhibit Sequential Page No.
(3) Charter and Bylaws.
3.1 Articles of Incorporation.
3.2 Amended Articles of Incorporation
<PAGE> 27
3.3 Bylaws.
(4) Instruments defining the rights of
security holders.
4.1 Articles of Incorporation*
4.2 Amended Articles of Incorporation*
4.3 Bylaws.*
(10) Material Contracts.
10.1 Articles of Merger (Agreement and Plan
of Merger incorporated therein).
10.2 Business Lease.
10.3 Ernest Porter Employment Contract.
10.4 Specimen Sample of Demand Promissory
Notes made by the Company to Fred Keller.
(27) Financial Data Schedule.
27.1 Financial Data Schedule.
* Incorporated by reference to Exhibit (3) herein.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
FAIRFAX GROUP, INC.
Date: February 22, 1999 By:/s/Ernest L. Porter
Ernest L. Porter, President
<PAGE> 28
ARTICLES OF INCORPORATION
OF
FAIRFAX GROUP, INC.
The undersigned subscriber to these Articles of Incorporation,
a natural person competent to contract, hereby forms a corporation
under the laws of the State of Florida.
ARTICLE I. NAME
The name of the Corporation shall be Fairfax Group, Inc. The
principal place of business shall be 6758 N. Military Trail, West
Palm Beach, Florida 33407.
ARTICLE II. NATURE OF BUSINESS
The Corporation may engage in or transact all lawful
activities or businesses permitted under the laws of the United
States, the State of Florida, or any other state, country,
territory or nation.
ARTICLE III. CAPITAL STOCK
The total number of shares of capital stock of all classes
which the Corporation shall have authority to issue is twenty
million (20,000,000) shares of common stock, $0.01 par value per
share.
ARTICLE IV. ADDRESS
The street address of the initial registered office of the
Corporation shall be c/o Mirkin & Woolf, P.A., 1700 Palm Beach
Lakes Blvd. #580, West Palm Beach, Florida 33401 'and the name of
the initial registered agent of the Corporation at that address is
Mark H. Mirkin, Esq.
ARTICLE V. TERM OF EXISTENCE
The Corporation shall exist perpetually.
<PAGE>
ARTICLE VI. DIRECTORS
The Corporation shall have three (3) directors initially. The
names and addresses of the initial members of the Board of
Directors are David E. Baker, 6758 N. Military Trail, West Palm
Beach, Florida 33407, Fred Keller, 6758 N. Military Trail, West
Palm Beach, Florida 33407 and Ernest L. Porter, 6758 N. Military
Trail, West Palm Beach, Florida 33407.
ARTICLE VII. INCORPORATOR
The name and address of the incorporator to these Articles of
Incorporation are Mark H. Mirkin, Esq., 1700 Palm Beach Lakes Blvd.
#580, West Palm Beach, Florida 33401.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
and seal on this 20th day of April, 1998.
/s/Mark H. Mirkin, Esq.
Mark H. Mirkin, Esq.
-2-
<PAGE>
CERTIFICATE DESIGNATING PLACE OF BUSINESS
OR DOMICILE FOR THE SERVICE OF PROCESS
WITHIN THIS STATE, NAMING AGENT UPON WHOM
PROCESS MAY BE SERVED
The following is submitted in accordance with the requirements
of Chapter 48-091, Florida Statutes:
FAIRFAX GROUP, INC., desiring to organize under the laws of
the State of Florida with its registered office address, as
indicated in the Articles of Incorporation, as c/o Mirkin & Woolf,
P.A., 1700 Palm Beach Lakes Blvd. #580, West Palm Beach, Florida
33401, has named MARK H. MIRKIN, ESQ. as its agent to accept
service of process within this State.
ACKNOWLEDGEMENT
Having been named to accept service of process for the
above-stated Corporation at the place designated in this
Certificate, I hereby accept to act in this capacity and agree to
comply with the provisions of Chapter 48.091, F.S., relative to
keeping open said office.
/s/Mark H. Mirkin, Esq.
Mark H. Mirkin, Esq.
-3-
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
FAIRFAX GROUP, INC.
Pursuant to the provisions of Section 607.1006 of the Florida
Statutes, the undersigned corporation adopts the following articles
of amendment to its articles of incorporation:
1. The name of the corporation is FAIRFAX GROUP, INC.
2. The following amendments of the articles of incorporation were
adopted and approved by the shareholders on February 5, 1999. The
number of votes cast for the amendments were sufficient for
approval.
A. Article III of the original articles of incorporation
shall be deleted and replaced with the following:
ARTICLE III. CAPITAL STOCK.
The total number of shares of capital stock of all
classes which the Corporation shall have authority to
issue is Fifty Million (50,000,000) shares of common
stock, $0.01 par value;
B. Article VIII shall be added to the Company's articles of
incorporation and read as follows:
ARTICLE VIII. - NO ANTI-TAKEOVER LAW GOVERNANCE
The corporation hereby elects that the following Florida
Statutes shall not apply to the corporation:
1. F.S. 607.0901, or any laws related thereto, governing
affiliated transactions; and
2. F.S. 607.0902, or any laws related thereto, governing
control-share acquisitions.
Signed this 5th day of February, 1999.
/s/ Ernest L. Porter
Ernest L. Porter, President
BYLAWS
Of
FAIRFAX GROUP, INC.
Adopted
July 31, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I. OFFICES
1.01 Principal and Business offices . . . . . . . . . . 1
1.02 Registered Office. . . . . . . . . . . . . . . . . 1
ARTICLE II. SHAREHOLDERS
2.01 Annual Meeting. . . . . . . . . . . . . . . . . . . 1
2.02 Special Meeting . . . . . . . . . . . . . . . . . . 1
2.03 Place of Meeting. . . . . . . . . . . . . . . . . . 1
2.04 Notice of Meeting . . . . . . . . . . . . . . . . . 2
2.05 Closing of Transfer Books or Fixing of Record Date. 2
2.06 Voting Records . . . . . . . . . . . . . . . . . .. 2
2.07 Quorum . . . . . . . . . . . . . . . . . . . . . .. 3
2.08 Conduct of Meeting . . . . . . . . . . . . . . . .. 3
2.09 Proxies. . . . . . . . . . . . . . . . . . . . . .. 3
2.10 Voting of Shares . . . . . . . . . . . . . . . . .. 4
2.11 Voting of Shares by Certain Holders . . . . . . . . 4
(a) other Corporations. . . . . . . . . . . . . . . 4
(b) Legal Representatives and Fiduciaries . . . . . 4
(c) Receiver. . . . . . . . . . . . . . . . . . . . 4
(d) Pledges . . . . . . . . . . . . . . . . . . . . 4
(e) Subsidiaries. . . . . . . . . . . . . . . . . . 4
ARTICLE III. BOARD OF DIRECTORS
3.01 General Powers and Numbers . . . . . . . . . . . .. 5
3.02 Tenure and Qualifications. . . . . . . . . . . . .. 5
3.03 Regular Meetings . . . . . . . . . . . . . . . . .. 5
3.04 Special Meetings . . . . . . . . . . . . . . . . .. 5
3.05 Notice of Meetings . . . . . . . . . . . . . . . .. 5
3.06 Quorum. . . . . . . . . . . . . . . . . . . . . . . 6
3.07 Manner of Acting. . . . . . . . . . . . . . . . . . 6
3.08 Conduct of Meetings . . . . . . . . . . . . . . . . 6
3.09 Vacancies . . . . . . . . . . . . . . . . . . . . . 6
3.10 Compensation. . . . . . . . . . . . . . . . . . . . 6
3.11 Presumption of Assent . . . . . . . . . . . . . . . 7
3.12 Committees. . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV. OFFICERS
4.01 Number. . . . . . . . . . . . . . . . . . . . . . . 7
4.02 Election and Term of Office . . . . . . . . . . . . 8
4.03 Removal . . . . . . . . . . . . . . . . . . . . . . 8
4.04 Vacancies . . . . . . . . . . . . . . . . . . . . . 8
4.05 President . . . . . . . . . . . . . . . . . . . . . 8
4.06 Vice Presidents . . . . . . . . . . . . . . . . . . 9
4.07 Secretary . . . . . . . . . . . . . . . . . . . . . 9
i
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TABLE OF CONTENTS (Cont.)
ARTICLES IV. OFFICERS
4.08 Treasurer . . . . . . . . . . . . . . . . . . . . .. 9
4.09 Assistant Secretaries and Assistant Treasurers . . . 10
4.10 Other Assistants and Acting Officers . . . . . . . . 10
4.11 Salaries . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.01 Contracts. . . . . . . . . . . . . . . . . . . . . . 10
5.02 Loans. . . . . . . . . . . . . . . . . . . . . . . . 11
5.03 Checks, Drafts, etc . . . . . . . . . . . . . . . .. 11
5.04 Deposits . . . . . . . . . . . . . . . . . . . . . . 11
5.05 Voting of Securities Owned by this Corporation . . . 11
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.01 Certificate for Shares . . . . . . . . . . . . . . . 12
6.02 Facsimile Signatures and Seal. . . . . . . . . . . . 12
6.03 Transfer of Shares . . . . . . . . . . . . . . . . . 12
6.04 Restrictions on Transfer . . . . . . . . . . . . . . 12
6.05 Lost, Destroyed or Stolen Certificates . . . . . . . 12
6.06 Consideration for Shares . . . . . . . . . . . . . . 13
6.07 Stock Regulations. . . . . . . . . . . . . . . . . . 13
ARTICLE VII. WAIVER OF NOTICE
ARTICLE VIII. CONSENT WITHOUT A MEETING
ARTICLE IX. INDEMNIFICATION
ARTICLE X. SEAL
ARTICLE XI. FISCAL YEAR
ARTICLE XII. AMENDMENTS
12.01 By Shareholders . . . . . . . . . . . . . . . . . . 14
12.02 By Directors. . . . . . . . . . . . . . . . . . . . 14
12.03 Implied Amendments. . . . . . . . . . . . . . . . . 14
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ARTICLE I. OFFICES
1.01. Principal and Business Offices. The corporation may have
such principal and other business offices, either within or outside
the State of Florida, as the Board of Directors may designate or as
the business of the corporation may require from time to time.
1.02. Registered Office. The registered office of the corporation
required by the Florida Business Corporation Act to be maintained
in the State of Florida may be, but need not be, identical with the
principal office in the State of Florida. The address of the
registered office may be changed from time to time by the Board of
Directors or, if within the county, by the registered agent. The
business office of the registered agent of the corporation shall be
identical to such registered office.
ARTICLE II. SHAREHOLDERS
2.01 Annual Meeting. The annual meeting of the shareholders shall
be held on the last Wednesday of April in each year at 9:00 o'clock
a.m., or at such other time and date as may be fixed by or under
the authority of the Board of Directors, 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 Florida, 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, or fixed as herein provided, 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 convenient.
2.02. Special Meeting. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute,
may be called by the President or the Board of Directors or by the
person designated in the written request of the holders of not less
than one-tenth of all shares of the corporation entitled to vote at
the meeting.
2.03. Place of Meeting. The Board of Directors may designate any
place either within or outside the State of Florida 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,
whether within or outside the State of Florida, 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 business office of the corporation in the State of
Florida or such other suitable place in the county of such
principal office as may be designated by the person calling such
meeting, but any meeting may be adjourned to reconvene at any place
designated by vote of a majority of the shares represented thereat.
<PAGE>
2.04. Notice of Meeting. Written notice stating the place, day
and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be
delivered not less than ten (10) days (unless a longer period is
required by law) nor more than thirty (30) days before the date of
the meeting, either personally or by mail, by or at the direction
of the President, the Secretary, or the person(s) 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 or her address as it appears on the stock record
books of the corporation, with postage thereon prepaid.
2.05. Closing of Transfer Book 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 may provide that the stock transfer
books shall be closed for a stated period but not to exceed, in any
case, thirty (30) 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 (10) 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 thirty (30) days and, in case of a meeting of shareholders,
not less than ten (10) 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 close
of business on the date on which notice of the meeting is mailed or
on 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 be applied to any adjournment thereof except
where the determination has been made through the closing of the
stock transfer books and the stated period of closing has expired.
2.06. Voting Records. In the event the corporation issues its
stock to more than six (6) shareholders Section 607.0901 of the
Florida Business Corporation Act dealing with affiliated
transactions and control-share acquisitions shall apply.
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<PAGE>
2.07. Quorum. Except as otherwise provided in the articles of
incorporation, a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a
meeting of shareholders but in no event shall a quorum consist of
less than one-third of the shares entitled to vote at the meeting.
When a specified item of business is required to be voted on by a
class or series of stock, a majority of the shares of such class or
series shall constitute a quorum for the transaction of such item
of business by that class or series. If a quorum is present, the
affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on the subject matter shall be the act
of the shareholders unless the vote of a greater number or voting
by classes is required by the Florida Business Corporation Act or
the articles of incorporation. If less than a quorum is 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.
2.08. Conduct of Meetings. The President, or in the President's
absence, a Vice President in the order provided under Section 4.06,
and in their absence, any person chosen by the shareholders present
shall call the meeting of the shareholders to order and shall act
as chairman of the meeting, and the Secretary shall act as
secretary of all meetings of the shareholders, but, in the absence
of the Secretary, the presiding officer may appoint any other
person to act as secretary of the meeting.
2.09. Proxies. At all meetings of shareholders, a shareholder
entitled to vote may vote in person or by proxy appointed in
writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary
before or at the time of the meeting. Unless otherwise provided in
the proxy or Section 607.101 of the Florida Business Corporation
Act, a proxy may be revoked at any time before it is voted, either
by written notice filed with the Secretary. or the acting secretary
of the meeting or by oral notice given by the shareholder to the
presiding officer during the meeting. The presence of a shareholder
who has filed a proxy shall not of itself constitute a revocation.
No proxy shall be valid after eleven (11) months from the date of
its execution, unless otherwise provided in the proxy. The Board of
Directors shall have the power and authority to make rules as to
the validity and sufficiency of proxies.
2.10. Voting of Shares. Each outstanding share shall be entitled
to one vote on each matter submitted to a vote at a
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meeting of shareholders, except to the extent that the voting
rights of the shares of any class or classes are enlarged, limited
or denied by the articles of incorporation.
2.11.Voting of Shares by Certain Holders.
(a)Other Corporations. Shares standing in the name of
another corporation, domestic or foreign, may be voted either in
person or by proxy by the president of such corporation or any
other officer appointed by such president. A proxy executed by any
principal officer of such other corporation or assistant thereto
shall be conclusive evidence of the signer's authority to act, in
the absence of express notice to this corporation, given in writing
to the Secretary of this corporation, of the designation of some
other person by the Board of Directors or the bylaws of such other
corporation.
(b)Legal Representatives and Fiduciaries. Shares held by an
administrator, executor, guardian, conservator or assignee for
- -creditors may be voted by such person, either in person or by
proxy. shares standing in the name of a trustee may be voted by him
or her, either in person or by proxy, but no trustee shall be
entitled to vote shares held by him or her without a transfer of
such shares into his or her name. Shares standing in the name of
a fiduciary may be voted by him or her, either in person or by
proxy. A proxy executed by a fiduciary shall be conclusive evidence
of the signer's authority to act in the absence of express notice
given in writing to the Secretary that such manner of voting is
prohibited or otherwise directed by the document creating the
fiduciary relationship.
(c)Receiver. 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 or her name if authority to do so is contained in
an appropriate court order pursuant to which such receiver was
appointed.
(d)Pledgees. A shareholder whose shares are pledged shall
be entitled to vote such shares in person or by proxy, until the
shares have been transferred into the name of the,pledgee, and
thereafter the pledgee or his or her nominee shall be entitled to
vote the shares so transferred.
(e)Subsidiaries. Neither shares of the corporation's stock
owned by another corporation, the majority of the voting stock of
which is owned or controlled by it, nor shares of its own stock
held by another corporation in a fiduciary capacity shall be voted,
directly or indirectly, at any meeting; and such shares shall not
be counted in determining the total number of outstanding shares
at any given time.
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ARTICLE III. BOARD OF DIRECTORS
3.01. General Powers and Number. The business and affairs of the
corporation shall be managed by its Board of Directors. The number
of directors of the corporation initially shall be a minimum of
three (3) but may be increased to not more than nine (9) without
amendment. The number of directors may be increased or decreased
from time to time by amendment to this Section adopted by the
shareholders or the Board of Directors but no decrease shall have
the effect of shortening the term of an incumbent director.
3.02. Tenure and Qualifications. Each director shall hold office
until the next annual meeting of shareholders and until the
director's successor shall have been elected, or until his or her
prior death, resignation or removal. Any director or the entire
Board of Directors may be removed from office, with or without
cause, by affirmative vote of a majority of the outstanding shares
entitled to vote for the election of such director, or the Board of
Directors. A director may resign at any time by filing a written
resignation with the Secretary of the corporation. Directors need
not be residents of the State of Florida or shareholders of the
corporation.
3.03. Regular Meetings. A regular meeting of the Board of
Directors shall be held, without other notice than this bylaw,
immediately after the annual meeting of shareholders, and each
adjourned session thereof. The place of such regular meeting shall
be the same as the place of the meeting of shareholders which
precedes it, or such other suitable place as may be announced at
such meeting of shareholders. The Board of Directors may provide,
by resolution, the time and place, either within or outside the
State of Florida, for the holding of additional regular meetings
without other notice than such resolution.
3.04.Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the President or
any two directors. The persons calling any special meeting of the
Board of Directors may fix any place, either within or outside the
State of Florida, as the place for holding any special meeting of
the Board of Directors called by them, and if no other place is
fixed the place of meeting shall be the 'principal business office
of the corporation in the State of Florida. Special meetings may
be held by means of a telephone conference circuit and connecting
to such circuit shall constitute presence at such meeting.
3.05. Notice of Meetings. Notice of each meeting of the Board of
Directors (unless otherwise provided in or pursuant to Section
3.03) shall be given by written notice delivered personally or
mailed or given by telephone or telegram to each director at his
or her business or home address or at such other ad
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dress as such director shall have designated in writing filed with
the Secretary, in each case not less than 48 hours prior thereto.
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; if by telephone, at the time the call is
completed. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a
director attends a meeting and objects thereat to the transaction
of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Board of Directors need
be specified in the notice or waiver of notice of such meeting.
3.06. Quorum. A majority of the number of directors as provided
in Section 3.01 shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, but a majority
of the directors present (though less than such quorum) may adjourn
the meeting from time to time without further notice.
3.07. 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, unless the act of a greater number is
required by the Florida Business Corporation Act, the corporation's
articles of incorporation or these bylaws.
3.08. Conduct of Meetings. The President, and in the President's
absence, a Vice President in the order provided under Section 4.06,
and in their absence, any director chosen by the directors present,
shall call meetings of the Board of Directors to order and shall
chair the meeting. The Secretary of the corporation shall act as
secretary of all meetings of the Board of Directors, but in the
absence of the Secretary, the presiding officer may appoint any
assistant secretary or any director or other person present to act
as secretary of the meeting.
3.09. Vacancies. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of
directors, may be filled until the next succeeding annual election
by the affirmative vote of a majority of the directors then in
office, though less than a quorum of the Board of Directors,
provided that in case of a vacancy created by removal of a
director(s), the shareholders shall have the right to fill such
vacancy at the same meeting or any adjournment thereof.
3.10. Compensation. The Board of Directors, by affirmative vote
of a majority of the directors then in office, and irrespective of
any personal interest of any of its members, may establish
reasonable compensation of all directors for services to the
corporation as directors, officers or otherwise, and the
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manner and time of payment thereof, or may delegate such authority
to an appropriate committee. The Board of Directors also shall have
authority to provide for or to delegate authority to an appropriate
committee to provide for reasonable pensions, disability or death
benefits, and other benefits or payments, to directors, officers
and employees and to their estates, families, dependents or
beneficiaries on account of prior services rendered by such
directors, officers and employees to the corporation.
3.11. Presumption of Assent. A director who is present at a
meeting of the Board of Directors or a committee thereof of which
he is a member 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.
3.12. Committees. The Board of Directors, by resolution adopted
by the affirmative vote of a majority of the number of directors
as provided in Section 3.01, may designate one or more committees,
each committee to consist of three or more directors elected by the
Board of Directors, which to the extent provided in said resolution
as initially adopted, and as thereafter supplemented or amended by
further resolution adopted by a like vote, shall have and may
exercise, when the Board of Directors is not in session, the powers
of the Board of Directors in the management of the business and
affairs of the corporation, except action in respect to dividends
to shareholders, election of the principal officers or the filling
of vacancies on the Board of Directors or committees created
pursuant to this Section. The Board of Directors may elect one or
more of its members as alternate members of any such committee who
may take the place of any absent member or members at any meeting
of such committee, upon request by the President or upon request
by the chairman of such meeting. Each such committee shall fix its
own rules governing the conduct of its activities and shall make
such reports to the Board of Directors of its activities as the
Board of Directors may request.
ARTICLE IV. OFFICERS
4.01. Number. The principal officers shall be a President, one
or more Vice Presidents (the number and designations to be
determined by the Board of Directors), a Secretary and a Treasurer,
each of whom shall be elected by the Board of Directors; the Board
of Directors may elect a chairman who if so elected shall be a
principal officer. Any two or more offices may be held by the same
person. The Board of Directors may designate
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one of the Vice Presidents as the Executive vice President. Such
other officers and assistant officers as may be deemed necessary
may be elected or appointed by the Board of Directors or the
President.
4.02. Election and Term of Office. The officers 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 or
until his prior death, resignation or removal.
4.03. 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 shall not of itself create
contract rights.
4.04. Vacancies. A vacancy in any principal office because of
death, resignation, removal, disqualification or otherwise, shall
be filled by the Board of Directors for the unexpired portion of
the term.
4.05. President. The President shall be the principal executive
officer 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 or she shall preside at all meetings
of the shareholders and of the Board of Directors. The President
shall have authority, subject to such rules as may be prescribed
by the Board of Directors, to appoint such agents and employees of
the corporation as he or she shall deem necessary, to prescribe
their powers, duties and compensation, and to delegate authority
to them. Such agents and employees shall hold office at the
discretion of the President. The President shall have authority to
sign, execute and acknowledge, on behalf of the corporation, all
deeds, mortgages, bonds, stock certificates, contracts, leases,
reports and all other documents or instruments necessary or proper
to be executed in the course of the corporation's regular business,
or which shall be authorized by resolution of the Board of
Directors; and, except as otherwise provided by law or the Board
of Directors, the President may authorize any Vice President or
other officer or agent of the corporation to sign, execute and
acknowledge such documents or instruments in his or her place and
stead. In general he 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.
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4.06. Vice Presidents. In the absence of the President, or in the
event of the President's death, inability or refusal to act, or in
the event for any reason it shall be impracticable for the
President to act personally, the Vice President (or in the event
there be more than one Vice President, the Vice Presidents in the
order designated by the Board of Directors, or in the absence of
any designation, then in the order of their election) 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. Any Vice President may sign, with the Secretary or
Assistant Secretary, certificates for shares of the corporation,
and shall perform such other duties and have such authority as from
time to time may be delegated or assigned to him or her by the
President or the Board of Directors. The execution of any
instrument of the corporation by any Vice President shall be
conclusive evidence, as to third parties, of the Vice President's
authority to act in the stead of the President.
4.07. Secretary. The Secretary shall: (a) keep the minutes of the
meetings 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 bylaws
or as required by law; (c) be custodian of the corporate records
and of the seal of the corporation, if any, and see that the seal
of the corporation, if any, is affixed to all documents which are
authorized to be executed on behalf of the corporation under its
seal; (d) keep or arrange for the keeping of 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, or a
Vice 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 have such other duties and
exercise such authority as from time to time may be delegated or
assigned to him or her by the President or by the Board of
Directors.
4.08. 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 depositaries as shall be selected in accordance
with the provisions of Section 5.04; and (c) in general perform all
of the duties incident to the office of Treasurer and have such
other duties and exercise such other authority as from time to time
may be delegated or assigned to him or her by the President or by
the Board of Directors.
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4.09. Assistant Secretaries and Assistant Treasurers. There shall
be such number of Assistant Secretaries and Assistant Treasurers
as the Board of Directors or President from time to time
authorizes. The Assistant Secretaries may sign with the President
or a Vice President certificates for shares of the corporation the
issuance of which shall have been authorized by a resolution of the
Board of Directors. The Assistant Secretaries and Assistant
Treasurers, in general, shall perform such duties and have such
authority as from time to time shall be delegated or assigned to
them by the Secretary or the Treasurer, respectively, or by the
President or the Board of Directors.
4.10. Other Assistants and Acting Officers. The Board of
Directors and the President shall have the power to appoint any
person to act as assistant to any officer, or as agent for the
corporation in the officer's stead, or to perform the duties of
such officer whenever for any reason it is impracticable for such
officer to act personally, and such assistant or acting officer or
other agent so appointed by the Board of Directors or President
shall have the power to perform all the duties of the office to
which that person is so appointed to be assistant, or as to which
he or she is so appointed to act, except as such power may be
otherwise defined or restricted by the Board of Directors or
President.
4.11. Salaries. Salaries may be paid to the principal officers
of the corporation at the discretion of the Board of Directors, and
if so paid, shall be fixed from time to time by the Board of
Directors or by a duly authorized committee thereof, and no officer
shall be prevented from receiving such salary by reason of the fact
that such officer is also a director of the corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.01. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute
or deliver any instrument in the name of and on behalf of the
corporation, and such authorization may be general or confined to
specific instances. No contract or other transaction between the
corporation and one or more of its directors or any other
corporation, firm, association or entity in which one or more of
its directors are directors or officers or are financially
interested, shall be either void or voidable because of such
relationship or interest 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 such contract or
transaction or because the votes of the interested director(s) are
counted for such purpose, if (1) the fact of such relationship or
interest is disclosed or known to the Board of Directors or
committee which authorizes, approves or ratifies the contract or
transaction by a vote or consent sufficient for the
-10-
<PAGE>
purpose without counting the votes or consents of such interested
directors; or (2) the fact of such relationship or interest is
disclosed or known to the shareholders entitled to vote and they
authorize, approve or ratify such contract or transaction by vote
or written consent; or (3) the contract or transaction is fair and
reasonable to the corporation. Common or interested 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 such contract or transaction.
5.02. Loans. No indebtedness for borrowed money shall be
contracted on behalf of the corporation and no evidences of such
indebtedness shall be issued in its name unless authorized by or
under the authority of a resolution of the Board of Directors. Such
authorization may be general or confined to specific instances.
5.03. 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(s), employee(s) or agents of the corporation and in such
manner as shall from time to time be determined by or under the
authority of a resolution of the Board of Directors.
5.04. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositaries
as may be selected by or under the authority of a resolution of the
Board of Directors.
5.05. Voting of Securities Owned by this Corporation. Subject
always to the specific directions of the Board of Directors, (a)
any shares or other securities issued by any other corporation and
owned or controlled by this corporation may be voted at any meeting
of security holders of such other corporation by the President of
this corporation if he or she is present, or in the President's
absence, by any Vice President of this corporation who may be
present, and (b) whenever, in the judgment of the President, or in
the President's absence, of any Vice President, it is desirable for
this corporation to execute a proxy or written consent with respect
to any shares or other securities issued by any other corporation
and owned by this corporation, such proxy or consent shall be
executed in the name of this corporation by the President or one
of the Vice Presidents of this corporation, without necessity of
any authorization by the Board of Directors, affixation of
corporate seal or countersignature or attestation by another
officer. Any person or persons designated in the manner above
stated as the proxy or proxies of this corporation shall have full
right, power and authority to vote the shares or other securities
issued by such other corporation and owned by this corporation the
same as such shares or other securities might be voted by this
corporation.
-11-
<PAGE>
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFERS
6.01. Certificate for Shares. Certificates representing shares
of the corporation shall be in such form, consistent with law, as
shall be determined by the Board of Directors. Such certificates
shall be signed by the President. 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 the date of issue, shall be
entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be
cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered
and cancelled, except as provided in Section 6.05.
6.02. Facsimile Signatures and Seal. The seal of the corporation,
if the corporation has elected to have a seal, on any certificates
for shares may be a facsimile. The signature of the President upon
a certificate may be a facsimile if the certificate is manually
signed on behalf of a transfer agent or a registrar, other than the
corporation itself or an employee of the corporation.
6.03. Transfer of Shares. Prior to due presentment of a
certificate for shares for registration of transfer, the
corporation may treat the registered owner of such shares as the
person exclusively entitled to vote, to receive notifications and
otherwise to have and exercise all the rights and powers of an
owner. Where a certificate for shares is presented to the
corporation with a request to register for transfer, the
corporation shall not be liable to the owner, or any other person
suffering loss as a result of such registration of transfer if (a)
there were on or with the certificate the necessary endorsements,
and (b) the corporation had no duty to inquire into adverse claims
or has discharged any such duty. The corporation may require
reasonable assurance that said endorsements are genuine and
effective and in compliance with such other regulations as may be
prescribed by or under the authority of the Board of Directors.
6.04. Restrictions on Transfer. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation
of any restriction imposed by the corporation upon the transfer of
such shares.
6.05. Lost, Destroyed or Stolen Certificates. Where the owner
claims that his or her certificate for shares has been lost,
destroyed or wrongfully taken, a new certificate shall be issued
in place thereof if the owner (a) so requests before the
corporation has notice that such shares have been acquired by a
bona fide purchaser, and (b) if required by the corporation, files
with the corporation a sufficient indemnity bond, and (c)
-12-
<PAGE>
satisfies such other reasonable requirements as may be prescribed
by or under the authority of the Board of Directors.
6.06. Consideration for Shares. The shares of the corporation may
be issued for such consideration as shall be fixed from time to
time by the Board of Directors, provided that any shares having a
par value shall not be issued for a consideration less than the par
value thereof. The consideration to be paid for shares may be paid
in whole or in part, in money, in other property, tangible or
intangible, or in labor or services actually performed for the
corporation. When payment of the consideration for which shares are
to be issued shall have been received by the corporation, such
shares shall be deemed to be fully paid and nonassessable by the
corporation. No certificate shall be issued for any share until
such share is fully paid.
6.07. Stock Regulations. The Board of Directors shall have the
power and authority to make all such rules and regulations not
inconsistent with the statutes of the State of Florida as it may
deem expedient concerning the issue, transfer and registration of
certificates representing shares of the corporation.
ARTICLE VII. WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions
of the Florida Business Corporation Act or under corresponding
provisions of the corporation's articles of incorporation or
bylaws, a waiver thereof in writing, signed at any time, whether
before or after the time of the meeting, by the person or persons
entitled to such notice, shall be deemed equivalent to the giving
of such notice. Such waiver by a shareholder in respect of any
matter of which notice is required under any provision of the
Florida Business Corporation Act shall contain the same information
as would have been required to be included in such notice under any
applicable provisions of said Law, except that the time and place
of meeting need not be stated.
ARTICLE VIII. CONSENT WITHOUT A MEETING
Any action required by the articles of incorporation or these
bylaws or any provisions of the Florida Business Corporation Act
to be taken at a meeting or any other action which may be taken at
a meeting may be taken without a meeting if a consent in writing
setting forth the action so taken shall be signed by the requisite
number of shareholders or directors under law or all of the members
of a committee thereof entitled to vote with respect to the subject
matter thereof and such consent shall have the same force and
effect as a vote.
ARTICLE IX. INDEMNIFICATION
The corporation shall indemnify all directors and officers to the
fullest extent now or hereafter permitted by the
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<PAGE>
Florida Statues. This bylaw shall not limit the rights of such
persons or other persons to indemnification as provided or
permitted as a matter of law, under the Florida Statutes or
otherwise.
ARTICLE X. SEAL
The Board of Directors may 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 XI. FISCAL YEAR
Except as the Board of Directors may otherwise determine, the
fiscal year of the corporation shall be the year ending on the last
day of February of each year.
ARTICLE XII. AMENDMENTS
12.01. By Shareholders. These bylaws may be altered, amended or
repealed and new bylaws may be adopted by the shareholders by
affirmative vote of not less than a majority of the shares present
or represented at an annual or special meeting of the shareholders
at which a quorum is in attendance.
12.02. By Directors. These bylaws may also be altered, amended
or repealed and new bylaws may be adopted by the Board of Directors
by affirmative vote of a majority of the number of directors
present at any meeting at which a quorum is in attendance; but no
bylaw adopted by the shareholders shall be amended or repealed by
the Board of Directors if the bylaw so adopted so provides.
12.03. Implied Amendments. Any action taken or authorized by the
shareholders or by the Board of Directors which would be
inconsistent with the bylaws then in effect but is taken or
authorized by affirmative vote of not less than the number of
shares or the number of directors required to amend the bylaws so
that the bylaws would be consistent with such action, shall be
given the same effect as though the bylaws had been temporarily
amended or suspended so far, but only so far, as is necessary to
permit the specific action so taken or authorized.
-14-
ARTICLES OF MERGER
Pursuant to the provisions of the Florida Business Corporation Act
and the Nevada Revised Statutes, the undersigned corporations adopt
the following Articles of Merger for the purpose of merging them
into one of such corporations:
FIRST:The names of the undersigned corporations and the states
under the law of which they are respectively organized are:
FAIRFAX GROUP, INC., a Florida corporation
FAIRFAX GROUP, INC., a Nevada corporation
SECOND:The laws of each of Florida and Nevada permit such
merger.
THIRD:The name of the surviving corporation is Fairfax Group,
Inc. and it is to be governed by the laws of the State of Florida.
FOURTH:On July 31, 1998, the following Agreement and Plan of
Merger was approved by the shareholders of each of the undersigned
corporations in the manner prescribed by the Florida Business
Corporation Act and the Nevada Revised Statutes, respectively, and
was approved by each of the undersigned corporations in the manner
prescribed by the laws of the state under which it is organized:
See Exhibit A attached hereto
and by this reference incorporated herein
FIFTH: As to each of the undersigned corporations, the number of
shares outstanding and the designations and number of outstanding
shares of each class entitled to vote as a class on such Agreement
and Plan of Merger are as follows:
<TABLE>
<CAPTION>
Number Number
of Shares of Shares
Name of Corporation Outstanding Designation Authorized
<S> <C> <C> <C>
Fairfax Group, Inc., 6,150,000 Common 25,000,000
a Nevada corporation
Fairfax Group, Inc.,100 Common 20,000,000
a Florida corporation
</TABLE>
SIXTH: As to each of the undersigned corporations, the total
number ofshares voted for and against such Agreement and Plan of
Merger, respectively, and, as to each class entitled to vote
thereon as a class, the number of shares of such class voted for
and against such Agreement and Plan of Merger, respectively, are
as follows:
<PAGE>
<TABLE>
<CAPTION>
Total Voted Total Voted
Name of Corporation For Against
<S> <C> <C>
Fairfax Group, Inc., 5,800,000 0
a Nevada corporation
Fairfax Group, Inc., 100 0
a Florida corporation
</TABLE>
SEVENTH: The surviving corporation is to be governed by the laws
of the State of Florida and hereby (a) agrees that it may be served
with process in the State of Nevada in any proceeding for the
enforcement of the rights of a dissenting shareholder of such
corporation against the surviving corporation, (b) irrevocably
appoints the Secretary of State of the State of Nevada as its agent
to accept service of process in any such proceeding (and directs
the Secretary of State to mail a copy of any process served to the
surviving corporation at 6758 N. Military Trail, West Palm Beach,
Florida 33407, Attn. Ernest L. Porter), (c) agrees that it will
furnish a copy of the Agreement and Plan of Merger to any of its
shareholders or to any person who was a shareholder of Fairfax
Group, Inc., a Nevada corporation, upon written request and without
charge, and (d) agrees that it will promptly pay to the dissenting
shareholders of such Nevada corporation the amount, if any, to
which they shall be entitled under the provisions of the Nevada
Revised Statutes with respect to the rights of dissenting
shareholders.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
-2-
<PAGE>
Dated: July30, 1998
Fairfax Group, Inc.,
a Nevada corporation
BY:/s/Ernest L. Porter
Ernest L. Porter, President
Fairfax Group, Inc.,
a Florida corporation
BY:/s/Ernest L. Porter
Ernest L. Porter, President
STATE OF FLORIDA
ss.
COUNTY OF PALM BEACH
The foregoing instrument was subscribed, sworn to and acknow-
ledged before me this 30th day of July, 1998, by Ernest L. Porter
who is personally known to me or who has produced Florida State or
__________________ State Driver's License, Number
As identification and who did take an oath.
Executed this 30th day of July, 1998.
/s/H.A. Ross
SEAL Signature of Notary
H.A. Ross
Name of Notary Printed
-3-
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER made and entered into as of the 31st
day of July, 1998 by and between FAIRFAX GROUP, INC., a Nevada
corporation (the "Nevada Company"), and FAIRFAX GROUP, INC., a
Florida corporation (the "Florida Company").
Recitals:
A. The Nevada Company and the Florida Company (individually
sometimes called a "Constituent Corporation" and together some
times called the "Constituent Corporations") desire that the Nevada
Company merge with and into the Florida Company, a wholly owned
subsidiary of the Nevada Company.
B. The Florida Company's Articles of Incorporation were filed,
pursuant to the Florida Statutes, in the office of the Secretary of
State of the State of Florida on April 22, 1998, and the Florida
Company has an authorized capital stock of twenty million
(20,000,000) shares of common stock, par value $0.01 per share, of
which one hundred (100) shares are now issued and outstanding.
C. The Nevada Company's Articles of Incorporation were filed,
pursuant to the Nevada Revised Statutes, in the office of the
Secretary of State of the State of Nevada on March 9, 1982, and the
Nevada Company has an authorized capital stock of twenty five
million (25,000,000) shares of common stock, par value $.001 per
share, of which six million one hundred fifty thousand (6,150,000)
shares are now issued and outstanding.
D. The principal office of the Florida Company in the State of
Florida is located at 6758 N. Military Trail, West Palm Beach,
County of Palm Beach, Florida 33407. The registered office of the
Florida Company in the State of Florida is located at c/o Mirkin &:
Woolf, P.A., 1700 Palm Beach Lakes Boulevard #580, West Palm Beach,
Florida 33401, and the name of its registered agent is Mark H.
Mirkin, Esq. The principal and registered office of the Nevada
Company in the State of Nevada is located at 1422C E. Hacienda, Las
Vegas, Nevada and the name of its registered agent is Bradford T.
Cayne.
E. The respective Boards of Directors and shareholders of each
Constituent Corporation, each acting by written consent in lieu of
a meeting, have approved and adopted this Agreement and Plan of
Merger and deem it desirable that the Nevada Company be merged with
and into the Florida Company in accordance with the Florida
Statutes and the Nevada Revised Statutes, respectively, as well as
in accordance with the parties, respective corporate charters and
Bylaws.
<PAGE>
F. The respective Boards of Directors of each Constituent
Corporation desire that the merger provided for herein be a
tax-free reorganization pursuant to Section 368 (a) (1) (F) of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements and provisions hereinafter contained, the Constituent
Corporations do hereby prescribe the terms and conditions of said
merger and mode of carrying the same into effect as follows:
1. The Florida Company hereby merges into itself the Nevada
Company, and the Nevada Company is hereby merged into the Florida
Company. The Florida Company shall be the surviving corporation and
the name of the surviving corporation shall be "Fairfax Group,
Inc.".
2. The Articles of Incorporation of the Florida Company, as in
effect on the date of the merger provided for in this Agreement and
Plan of Merger, shall continue in full force and effect as the
Articles of Incorporation of the surviving corporation. The
surviving corporation shall be governed by the laws of the State of
Florida and shall have as it; purpose the continuation of the
business conducted heretofore by the Nevada Company.
3. The manner of converting the outstanding shares of the capital
stock of each of the Constituent Corporations into the shares or
other securities of the surviving corporation shall be as follows:
(a) Each share of the Florida Company's capital stock that is
issued and outstanding immediately prior to the date on which the
merger of the Nevada Company into the Florida Company shall become
effective shall, by virtue of the merger and without further
action, cease to exist and all certificates representing such
shares shall be canceled.
(b) Each share of the Nevada Company's capital stock issued
and outstanding and each share of the Nevada Company's capital
stock held in the treasury of the Nevada Company on the date on
which the merger of the Nevada Company into the Florida Company
shall become effective shall, by virtue of the merger and without
further action, cease to exist and shall be converted into an equal
number of shares of the Florida Company's capital stock identical
with that share being exchanged.
(c) After the effective date of the merger, each holder of an
outstanding certificate representing shares of the Nevada Company's
capital stock shall surrender the same to the Florida Company and
each holder shall be entitled upon such surrender to receive a new
certificate or certificates for the number of shares of the Florida
Company's capital stock to which such holder shall have become
entitled on the basis provided herein. Un
-2-
<PAGE>
til so surrendered, the outstanding shares of the capital stock of
the Nevada Company to be converted into the capital stock of the
Florida Company as provided herein shall be treated by the Florida
Company for all corporate purposes as evidencing the ownership of
shares of the Florida Company as though said surrender and exchange
had taken place.
4. The terms and conditions of the merger are as follows:
(a) The Bylaws of the Florida Company as they shall exist on
the effective date of the merger shall be and remain the Bylaws of
the surviving corporation until the same shall be altered, amended
or repealed as therein provided.
(b) The directors and officers of the Florida Company as of
the effective date of the merger shall be the directors and
officers of the surviving corporation and shall continue in office
until the shareholders of the Florida Company shall elect and
qualify successor directors.
(c) The merger shall become effective upon filing of Articles
of Merger with the Secretary of State of the State of Florida
pursuant to the Florida Statutes and with the Secretary of State
of the State of Nevada pursuant to the Nevada Revised Statutes.
(d) Upon the effective date of the merger, all property,
rights, privileges, franchises, patents, trademarks, licenses,
registrations and other assets of every kind and description of the
Nevada Company shall be transferred to, vested in and devolved upon
the Florida Company without further act or deed and all property,
rights and every other interest of the Florida Company and the
Nevada Company shall he as effectively the property of the Florida
Company as they were of the Florida Company and the Nevada Company,
respectively. All rights of creditors of the Nevada Company shall
be preserved unimpaired, and all debts, liabilities and duties of
the Nevada Company shall attach to the Florida Company and may be
enforced against it to the same extent as if said debts,
liabilities and duties had been incurred or contracted by it. At
any time, or from time to time, after the effective date of the
merger, the last acting officers of the Nevada Company, or the
corresponding officers of the Florida Company, may, in the name of
the Nevada Company, execute and deliver or cause to be executed and
delivered all such deeds and instruments and to take or cause to be
taken such further or other action as the Florida Company may deem
necessary or desirable in order to vest in the Florida Company
title to and possession of any property of the Nevada Company
acquired or to be acquired by reason of or as a result of the
merger herein provided for and otherwise to carry out the intents
and purposes hereof, and the proper officers and directors of the
Florida Company are fully authorized in the name of the Nevada
Company or
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<PAGE>
otherwise to take any and all such action.
(e) The Florida Company hereby agrees that it may be served
with process in the State of Nevada in any proceeding for the
enforcement of any obligations of the Nevada Company and in any
proceeding for the enforcement of the rights of a dissenting
shareholder of the Nevada Company pursuant to the Nevada Revised
Statutes, and irrevocably appoints the Nevada Secretary of State,
101 W. Carson Street, Carson City, Nevada as its agent to accept
service of process in any such proceeding.
5. Anything herein or elsewhere to the contrary notwithstanding,
this Agreement and Plan of Mercer may be terminated and abandoned
by the Boards of Directors of the Constituent Corporations at any
time prior to the date that the requisite Articles of Merger are
filed in the offices of the Secretary of State of Florida and the
Secretary of State of Nevada, provided that an amendment made
subsequent to the approval of this Agreement and Plan of Merger by
the shareholders of either Constituent Corporation shall not (1)
alter or chance the amount or kind of shares, securities, cash,
property and/o~ rights to be received in exchange for or on
conversion of all or any of the shares of any class or series
thereof of such Constituent Corporation, (2) alter or change any
term of the Articles of Incorporation of the surviving corporation
to be effected by the merger or (3) alter or change any of the
terms and conditions of this Agreement and Plan of Merger if such
alteration or change would adversely affect the holders of any
class or series thereof of such Constituent Corporation.
6. This Agreement and Plan of Mercer and the legal relations
between the parties hereto shall be governed by and construed in
accordance with the laws of the State of Florida.
7. Each of the Florida Company and the Nevada Company 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 in order to consummate or implement the
transactions contemplated by this Agreement and Plan of Merger.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
-4-
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement and Plan of
Merger, pursuant to the approval and authority duly given by
resolutions adopted by their respective Boards of Directors, have
caused this document to be executed by the President and attested
to by the Secretary of each party hereto as the respective act,
deed and agreement of each of said corporations, as of the date
first above written.
Fairfax Group, Inc.,
a Florida corporation
BY:/s/Ernest L. Porter
Ernest L. Porter, President
ATTEST:
By:/s/David E. Baker
David E. Baker, Secretary
[CORPORATE SEAL]
Fairfax Group, Inc.,
a Nevada corporation
By:/s/Ernest L. Porter
Ernest L. Porter, President
ATTEST:
By:/s/Ernest L. Porter
Ernest L. Porter, Secretary
(CORPORATE SEAL]
-5-
BUSINESS LEASE
THIS AGREEMENT, entered into this day of APRIL, 1998
between FRED KELLER, TRUSTEE, hereinafter called the Lessor,
party of the first part and, FAIRFAX GROUP, INC. of the County
of PALM BEACH and State of FLORIDA, hereinafter called the Lessee
or tenant, party of the second part:
WITNESSETH, That the said Lessor does this day lease unto
said Lessee, and said Lessee does hereby hire and take as tenant
under said Lessor 6758 N. MILITARY TRAIL, UNIT 303, WEST PALM
BEACH, 33407 , situate in Palm Beach County, Florida, to be used
and occupied by the Lessee as BUSINESS OFFICES, and for no other
purposes or uses whatsoever, for the term of 1 year, beginning
the 15TH day of APRIL, 1998 and ending the 14TH day of
APRIL,1999 at and for the agreed total rental of *$ 26,400.00
plus Florida Sales Taxes, plus rent increases/C.P.I. increases
as below payable as follows:
Annual Base Rent: *$ 26,400.00
payable in monthly payments of $ 2200.00
Plus Florida Sales Tax (Currently 6%) $ 132.00
Payments due beginning 4/15/98 and on the
fifteenth day of each month: $ 2332.00
Lessor shall pay all utilities for leased area, except telephone
charges. Lessor shall provide janitorial services and office
furniture as required.
Lessee also agrees to pay any appropriate increase in Florida
Sales Taxes.
Lessee will pay a Late Fee termed additional rent of $ 25.00
per day for any rent received by Lessor after the 20th of the
month. All parties agree that these charges are assessed because
unpaid rent increases Lessor's bookkeeping, clerical and
administrative costs. All parties agree that the amount of
damages caused by unpaid rent is not readily ascertainable, and
late fees as provided herein are a reasonable charge. All parties
agree that all other charges in addition to rent plus tax shall be
deemed additional rent.
*Total Figure is based on first year's rate. Thereafter,
rents shall be increased based on the national figures of the
Consumer Price Index (C.P.I.) for All Urban Consumers as
promulgated by the United States Government, utilizing the first
year of this lease as the base, or 3 percent annual increase,
whichever is greater. Any C.P.I. increases will be due and
effective on the anniversary date of this Lease, and will be back-
charged to the anniversary date of the Lease on which they become
effective if notice of the increase is not given in advance.
Lessee will be given the option to renew this Lease for 1
additional 1 year period, providing Lessee has not been or
currently is in default of any of the terms and conditions
hereunder, unless written notification to the contrary from Lessee
is received by Lessor 30 days before the expiration of the base
lease term. If no notification is received all parties
acknowledge that Lessee has exercised said option.
All payments are to be made to the Lessor, Fred Keller,
Trustee on the fifteenth day of each and every month in advance
without demand at the office of: 6758 N. Military Trail, Suite
301, in the City of West Palm Beach, Florida 33407 or at such
other place and to such other person, as the lessor may from time
to time designate in writing. Such payments shall be made in cash
or cashier's check at the sole discretion of the lessor.
RADON GAS: Radon is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities,
may present health risks to persons who are exposed to it over
time. Levels of radon that exceed federal and state guidelines
have been found in buildings in Florida. Additional information
regarding radon and radon testing may be obtained from your county
public health unit.
The following express stipulations and conditions are made a
part of this lease and are hereby assented to by the Lessee:
FIRST: The Lessee shall not assign this Lease, nor sub-let
the premises, or any part thereof, nor use the same, or any part
thereof, nor permit the same or any part thereof, to be used for
any other purpose than as above stipulated, nor make any
alterations therein, and all additions thereto, without the
written consent of the Lessor, and all additions, fixtures or
improvements which may be made by Lessee, except movable office
furniture, shall become the property of the Lessor and remain upon
the premises as a part thereof, and be surrendered with the
premises at the termination of this Lease.
SECOND: All personal property placed or moved in the
premises above described shall be at the risk of the Lessee or the
owner thereof, and Lessor shall not be liable for any damage to
said personal property, or to the Lessee arising from the bursting
or leaking of water pipes, or from any act of negligence of any
co-tenant or occupants of the building or of any other person
whomsoever.
THIRD: That the Lessee shall promptly execute and comply
with all statutes, ordinances, rules, orders, regulations and
requirements of the Federal State and City Government and of any
and all their Departments and Bureaus applicable to said premises,
for the correction, prevention, and abatement of nuisances or
other grievances, in upon, or connected with said premises during
said term; and shall also promptly comply with and execute all
rules, orders and regulations of the Southeastern Underwriters
Association for the prevention of fires, at Lessee's own cost and
expense.
FOURTH: In the event the premises shall be destroyed or so
damaged or injured by fire or other casualty during the life of
this agreement, whereby the same shall be rendered untenantable,
then the Lessor shall have the right to render said premises
tenantable by repairs within ninety days therefrom. If said
premises are not rendered tenantable within said time, it shall be
optional with either party hereto to cancel this lease, and in the
event of such cancellation the rent shall be paid only to the date
of such fire or casualty. The cancellation herein mentioned shall
be evidenced in writing.
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FIFTH: The prompt payment of the rent for said premises upon
the dates named, and the faithful observance of the rules and
regulations printed upon this lease, and which are hereby made a
part of this covenant, and of such other and further rules or
regulations as may be hereafter made by the Lessor, are the
conditions upon which the lease is made and accepted and any
failure on the part of the Lessee to comply with the terms of said
lease, or any of said rules and regulations, shall at the option
of the Lessor, work a forfeiture of this lease, and all of the
rights of the Lessee hereunder, and thereupon the Lessor, his
agents or attorneys shall have the right to enter said premises,
and remove all persons therefrom according to Florida statutes.
Further, it is mutually agreed by and between Lessor and
Lessee that they hereby waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto
against the other on any matters whatsoever arising out of or in
any way connected with this lease, the relationship of Lessor and
Lessee, Lessee's use and occupancy of said premises, and/or any
claim of injury or damage, and any emergency statutory or any
other statutory remedy.
Any unpaid rents or other amounts due under the lease shall
earn interest at the highest rate allowed by law. The Lessee
agrees to pay the Lessor a reasonable fee of $100.00 to compensate
lessor for the processing and delivery of a "3 Day Notice" for
non-payment of monies owed, as well as a fee of $100.00 for the
costs of administration of an eviction in addition to any other
costs reasonably and necessarily incurred, as and for liquidated
damages. These fees are termed additional rent.
SIXTH: If the Lessee shall abandon or vacate said premises
before the end of the term of this lease, or shall suffer the rent
to be in arrears, the Lessor may, at his option, forthwith cancel
this lease or he may enter said premises as the agent of the
Lessee, by force or otherwise, without being liable in any way
therefor, and relet the premises with or without any furniture
that may be therein, as the agent of the Lessee, at such price and
upon such terms and for such duration of time as the Lessor may
determine, and receive the rent therefore, applying the same to
the payment of the rent due by these presents, and if the full
rental herein provided shall not be realized by lessor over and
above the expenses to Lessor in such re-letting, the said Lessee
shall pay any deficiency, and if more than the full rental is
realized Lessor will pay over to said Lessee the excess of demand.
SEVENTH: DELETED
EIGHTH: The rights and remedies of the Lessor under this
Lease if Lessee breaches this Lease, shall be cumulative and may
be exercised singly, independently, and/or as Lessor may otherwise
desire and the failure on the part of Lessor to exercise any
rights given hereunder shall not operate to forfeit any such
rights, including without limitation, Lessors right to receive and
deposit rent as defined in this Lease with actual knowledge of a
default or other non-compliance by Lessee. Lessor's rights shall
include, without limitation, all rights and remedies provided for
under this Lease and/or in accordance with Florida law, including
without limitation, the right and option of declaring the balance
of the total rent for the entire term of this Lease to be
immediately due and payable for Lessee's breach.
NINTH: The said Lessee hereby pledges and assigns to the
Lessor all the furniture, fixtures, goods and chattels of said
Lessee, which shall or may be brought or put on said premises as
security for the payment of the rent herein reserved, and the
Lessee agrees that the said lien may be enforced by distress
foreclosure or otherwise at the election of the said Lessor.
Pursuant to Florida Statutes section 83.67(3) the undersigned
Lessor and Lessee agree that in the event Lessee leaves any
personal property behind on the premises after Lessee surrenders
or abandons the rental unit, Lessor is not liable or responsible
for storage or disposition of the personal property.
TENTH: The Lessor, or any of his agents, shall have the
right to enter said premises during all reasonable hours, to
examine the same to make such repairs, additions, or alterations
as may be deemed necessary for the safety, comfort, or
preservation thereof, or of said building, or to exhibit said
premises, and to put or keep upon the doors or windows thereof a
notice "FOR RENT" at any time within ninety (90) days before the
expiration of this lease. The right of entry shall likewise exist
for the purpose of removing placards, signs, fixtures,
alterations, or additions, which do not conform to this agreement,
or to the rules and regulations of the building.
ELEVENTH: Lessee hereby accepts the premises in the
condition they are ("as-is") at the beginning of this lease and
agrees to maintain said premises and to make good to said Lessor
immediately upon demand, any damage to water apparatus, or
electric lights or any fixture, appliances or appurtenances of
said premises, or of the building. Lessor?s maintenance crew
shall perform requested maintenance, if desired by Lessee, at a
charge of $25.00 per hour plus material costs. Such costs shall
be paid with the next month?s rent check and shall be considered
as "additional" rent.
TWELFTH: No untagged or unregistered motor vehicles or
trailers will be permitted to be parked outside the units for more
than two days. Lessee hereby irrevocably appoints Lessor as
attorney in fact for lessee, so that Lessor may have said vehicles
or trailers towed away at Lessee's sole expense and liability. No
repairs are to be done outside of unit nor any vehicles in
disrepair shall be parked outside of unit. Lessee subject to
Industrial Park Rules to be distributed to Lessee at time of lease
signing. A failure to adhere to these rules shall be a breach of
this agreement. Lessee acknowledges and agrees that leased space
includes outside parking area comprising 10 parking spaces. Any
vehicles controlled by lessee utilizing any additional spaces
shall be excess usage. Such excess parking shall be assessed
$25.00 per vehicle per month or any portion thereof. Parking
shall be monitored by owners agent and excess parking fees shall
be enforced at the sole discretion of lessor. These fees are
termed additional rent.
THIRTEENTH: If the Lessee shall become insolvent or if
bankruptcy proceedings shall be begun by or against the Lessee,
before the end of said term the Lessor is hereby irrevocably
authorized at its option, to forthwith cancel this lease, as for
a default. Lessor may elect to accept rent from such receiver,
trustee, or other judicial officer during the term of their
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occupancy in their fiduciary capacity without effecting Lessor's
rights as contained in this contract, but no receiver, trustee or
other judicial officer shall ever have any right, title or
interest in or to the above described property by virtue of this
contract.
FOURTEENTH: DELETED
FIFTEENTH: This contract shall bind the Lessor and its
assigns or successors, and the heirs, assigns, administrators,
legal representatives, executors or successors as the case may be,
of the Lessee.
SIXTEENTH: It is understood and agreed between the parties
hereto that time is of the essence of this contract and this
applies to all terms and conditions contained herein.
SEVENTEENTH: It is understood and agreed between the parties
hereto that written notice mailed or delivered to the premises
leased hereunder shall constitute sufficient notice to the Lessee
and written notice mailed or delivered to the office of the Lessor
shall constitute sufficient notice to the Lessor, to comply with
the terms of this contract.
EIGHTEENTH: The rights of the Lessor under the foregoing
shall be cumulative, and failure on the part of the Lessor to
exercise promptly any rights given hereunder shall not operate to
forfeit any of the said rights.
NINETEENTH: It is further understood and agreed between the
parties hereto that any charges against the Lessee by the Lessor
for services or for work done on the premises by order of the
Lessee or otherwise accruing under this contract shall be
considered as rent due and shall be included in any lien for rent
due and unpaid.
TWENTIETH: It is hereby understood and agreed that any signs
or advertising to be used, including awnings, in connection with
the premises leased hereunder shall be first submitted to the
Lessor for approval before installation of same.
TWENTY-FIRST: This lease shall be interpreted to the maximum
benefit of Lessor.
TWENTY-SECOND: If by reason of the specific use of the
premises by the Lessee, any governmental agencies shall require a
modification to the demised premises, or the installation of any
special equipment or safety features, such modifications or
installation shall be made solely at the expense of the Lessee,
and such requirement shall not excuse the Lessee from the
requirement of this lease.
TWENTY-THIRD: The operation of a forklift or any similar
vehicle or equipment upon the asphalt of the premises and adjacent
to the demised premises is prohibited, unless proper mats are
placed on the asphalt surface. Any damage to the premises, or
asphalt, shall be deemed the responsibility of the Lessee and
shall be charged by the Lessor for repair of the same.
TWENTY-FOURTH: Lessee shall comply with all laws, orders and
regulations of federal, state, city, county and municipal
authorities, fire insurance rating organizations, the Americans
with Disabilities Act, and Federal and State environmental laws,
statute and regulations which shall now or hereafter affect the
premises, including but not limited to the compliance required by
any change on the above referenced items.
TWENTY-FIFTH: In the event that there is fire, safety,
burglar alarm, or related equipment within the leased premises, or
in the event the Lessor installs such equipment in the future,
Lessee shall hereby agree to allow Lessor to let such equipment
remain or be installed, as the case may be, at Lessor's sole
expense.
Lessee shall agree not to interfere, nor allow others to interfere
with the normal operation of such equipment through lessee's
actions or inactions, nor shall Lessee be entitled to any
abatement or discount in rent by reason of the existence of such
equipment.
TWENTY-SIXTH: Rent, plus applicable Florida Sales Tax, shall
be due on the fifteenth day of each month, time being strictly of
the essence, without demand, notice, offset, deduction, or
abatement, at Lessor's address, or elsewhere as may be designated
from time to time by Lessor's written notice to Lessee.
TWENTY-SEVENTH: Lessee shall take good care of the premises
and shall promptly make all repairs in and about the premises
required by reason of the installation, use, or operation of
equipment, machinery, or property in the premises, the moving of
Lessee's property in, on or about the premises, and/or the misuse,
act, or neglect of Lessee or any of its employees, agents,
contractors, or invitee. All repairs shall be in compliance with
any applicable governmental rules and regulations, including
Lessee's obtaining any necessary building permits and licenses if
required, and the cost thereof shall be at Lessee's sole expense
and paid by Lessee in cash or its equivalent so that the demised
premises shall at all times be free of liens for labor and
materials supplied or claimed to have been supplied to the demised
premises. Any alterations shall immediately become the property
of Lessor, subject only to the use of same by Lessee during the
term of this Lease. It is hereby agreed and understood between
Lessor and Lessee that in the event the Lessor decides to remodel,
alter or demolish all or any part of the premises leased
hereunder, or in the event of the sale or long term lease of all
or any part of the premises requiring this space, the Lessee
hereby agrees to vacate same upon receipt of sixty (60) days
written notice and the return of any advance rental paid on
account of this lease.
Lessee covenants that during the term of this lease it will, at
its expense, keep in good order and repair the leased premises,
including but not by way of limitation, all air conditioning
equipment, doors, wiring, plumbing and sewerage equipment,
overhead doors, and lighting fixtures located therein. In the
event Lessee requests Lessor to perform routine overhead door or
lighting fixture maintenance, Lessee agrees to reimburse Lessor
for any materials used on the job as well as Lessor's labor rate
of $25.00 per hour. In addition, Lessee agrees that it shall not
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cause accumulation of waste, garbage or other debris, in the
exterior area of the Lessor's property. The Lessee will not erect
tents, nor store any trailers, vans, shacks, tanks or any other
temporary buildings or structures without the written consent of
the Lessor. In the event Lessee should fail to make the repairs
required of Lessee forthwith upon notice by Lessor, Lessor, in
addition to all other remedies available hereunder or by law and
without waiving any of said alternative remedies, may make same
and Lessee agrees to repay Lessor the cost thereof as part of the
rental payable as such on the next day upon which rent becomes as
failure to pay any installment of rental. Lessee waives all right
to make repairs at the expense of Lessor as provided for in any
statute or law in effect at the time of execution of this lease or
any amendment thereof or any other statute or law which may be
hereafter enacted during the term of this lease and agrees upon
the expiration of the term of this lease or sooner termination
hereof to surrender unto Lessor the demised premises in the same
condition as received, ordinary wear and tear and damage by
earthquake, act of God, the elements, or fire not attributable in
any respect to Lessee, alone excepted. Lessor agrees to make
necessary repairs to the roof, exterior walls, foundations and
parking areas only, within reasonable time after Lessee has
notified Lessor in writing of the need for such repair. Lessee
agrees during the full term of this lease, at its own cost and
expense, to make all other repairs and replacements of whatever
kind or nature, either to the exterior, including walks, or to the
interior of said premises, less repairs to roof, exterior walls,
foundations and parking areas, unless said last mentioned damage
was done by Lessee, or its agents, employees, contractors or
servants.
TWENTY-EIGHTH: Lessee shall not suffer or permit any
mechanic's liens or other encumbrance to be filed against the
property in respect of work done at the order of or on behalf of
Lessee. In the event any such lien or encumbrance should be
filed, Lessee, at its own sole cost and expense, and within five
(5) days notice by Lessor, shall cause such lien or encumbrance to
be removed. In the event Lessee shall fail to cause such lien to
be removed, Lessor, at its option, may cause it to be removed, and
the cost and expense hereby incurred by Lessor, including
reasonable attorney's fees, shall be immediately due and payable
from Lessee as and for additional rent, and this failure to act
shall constitute a breach of this Lease by Lessee.
TWENTY-NINTH: Lessor reserves the right to place "For Lease"
or "For Rent" signs on the premises at any time within ninety (90)
days of the expiration of the Lease, if Lessee has not exercised
any option to renew, if provided for herein, and Lessee agrees to
permit Lessor to do so. During said ninety day period, Lessor may
show property to new prospective tenants at any reasonable time.
Lessee agrees not to conduct "Quitting Business," "Lost Our
Lease," "Bankruptcy," or other such types of sales or notices on
the premises without Lessor's written consent which may be
unreasonably withheld.
THIRTIETH: Lessee shall obtain, at Lessee's sole expense,
comprehensive public liability and property damage insurance in
limits of not less than $300,000.00 - $500,000.00. All insurance
policies shall name Lessor as ADDITIONAL INSURED AND/OR LOSS
PAYEE, and keep such insurance in force and effect throughout the
Lease term. Lessee shall provide Lessor with certificates of
insurance certifying that such insurance is in full force and
effect within seven (7) days of the date of written demand and
that the policies shall not be canceled or changed without at
least fifteen (15) days prior written notice to the Lessor. If
Lessee fails to abide by this provision and/or if Lessee's acts or
omissions increase any hazard insurance premium, then Lessor, in
Lessor's sole discretion, may purchase such insurance for the
benefit of Lessee and/or pay any such increase in hazard insurance
premium and such expense shall be deemed additional rent and be
due with the next monthly rental payment.
THIRTY-FIRST: Lessee shall indemnify and save Lessor
harmless against and from any and all liability, damages, costs
and expenses, including reasonable attorney's fees on the trial
and appellate levels, costs, actions, judgement, and claims
whatsoever based upon or by reason of any injury and/or damage of
any kind, nature, or description sustained during the terms
hereof, to person or property on, in or about the lease premises,
and arising out of the use, occupancy, management, or control of
the lease premises by the Lessee and any of Lessee's agents,
employees, and/or invitee. The Lessee will retain competent
counsel to defend any and all such suits and actions brought
against Lessor or in which Lessor is a designated party defendant.
THIRTY-SECOND: It is expressly understood by and between the
parties to this agreement, that the Lessor shall not be liable for
any damage or injury by water, which may be sustained by the said
tenant or other person or for any other damage or injury resulting
from the carelessness, negligence, or improper conduct on the part
of any other tenant or agents, or employees, or by reason of the
breakage, leakage, or obstruction of the water, sewer or soil
pipes, or other leakage including roof leakage about the said
building. Lessee assumes all risk of any injury, loss, claim,
demand or damage of and to any person(s) or property of any kind
or nature that may occur by reason of any of the following:
casualty, accident, occurrence, incident, and/or act of God,
damage resulting from water, wind, rain, the bursting or leaking
of any pipes, waste or sewage, from any act of negligence of
Lessor and any persons or occupant in, on or about the premises
and/or common area property, theft, vandalism, graffiti, or other
criminal activity, fire or hurricane. All property of any kind or
nature placed or moved in and about the premises shall be at the
sole risk of Lessee, or owner thereof. Lessor has no insurance
for such purposes and Lessee shall obtain any desired insurance at
Lessee's own expense, and Lessee will self-insure to fully protect
itself and Lessor from any and all events, conditions, or matters
set forth or alluded to herein. Lessee hereby expressly assumes
the risk of loss to any and all property that Lessee may bring in,
on or about the premises, including without limitation, any
property of Lessee's invitee and/or guests. Lessee expressly
waives any and all claims, demands, rights, or remedies whatsoever
that it may, could or would otherwise have against Lessor, except
for the express assumption of risk as set forth in this paragraph.
Lessee acknowledges duty to report immediately to Lessor any
broken water pipes, running or leaking faucets or toilets, etc.
If such leaks are not reported to Lessor resulting in excessive
water use, Lessee is liable for payment of such excess use
immediately upon notification of such excess use by lessor.
THIRTY-THIRD: This Lease shall be subject and subordinate to
any mortgage which may now or hereafter affect the lease premises
and/or Lessor's interest therein, to all renewals, modifications,
consolidations, replacements and extensions thereof. This clause
shall be self-operative and no further instrument of subordination
shall be required. If confirmation of such subordination is
requested, Lessee shall promptly execute any certificate that
Lessor may request and the failure to do so shall be a material
breach of this Lease.
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THIRTY-FOURTH: Lessee shall not keep or have on the premises
any article or thing of a dangerous, inflammable, or
explosive character that might unreasonably increase the damage of
fire or other casualty in, on or about the premises or that might
be considered hazardous by any responsible insurance company.
Lessee further agrees not to use, consume, handle, store,
transport, or dispose of hazardous or toxic materials, chemicals,
or substances in, on, or about the lease premises, including any
common area portion(s), and further, shall indemnify and hold the
Lessor harmless from all losses, damages, penalties, fines,
liabilities, expenses, and costs to clean up; or corrective-
measure expenses, including reasonable attorney's fees, arising
from or out of any violation of this provision.
THIRTY-FIFTH: If Lessee remains in possession of the
premises after the expiration date of this Lease without Lessor's
written extension or renewal thereof, Lessee shall be deemed to be
a tenant at sufferance holding over without the consent of the
Lessor. Lessee acknowledges that Lessor is entitled to twice the
sum of the monthly rent for any holding over by Lessee under
Florida law and this Lease provision puts Lessee on notice that
Lessor shall demand and be entitled to recover double rent for any
such time period, and all other rights, remedies, and relief
provided for under this Lease and Florida law.
THIRTY-SIXTH: If any term, covenant, or condition of this
Lease or the application thereof to any person or circumstance
shall, to any extent, be invalid or unenforceable, the remainder
of this Lease of the application of such terms, covenant, or
condition to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected
thereby, and each term, covenant, or condition of this Lease shall
be enforceable to the fullest extent permissible by law.
THIRTY-SEVENTH: The Lease and any attached Addendum
("Lease") represents the entire agreement of the Parties. Lessor
and Lessee each stipulate and acknowledge to each other that no
other representations, promises, or inducements of any other kind
or nature were made to the other prior to the signing of this
Lease. This Lease constitutes the entire agreement of the parties
and accurately sets forth their intent.
THIRTY-EIGHTH: Lessee agrees to pay any insurance rates that
are increased by the nature of the Lessee's storage, and/or use of
the premises. Such charges shall be deemed additional rent.
Lessee agrees to pay any pro-rata increase in lessor's insurance
if due to nature of Lessee?s business.
THIRTY-NINTH: Lessee agrees not to store any equipment,
material, trash, or debris outside the leased unit and agrees to
remove any such material, trash or debris from the inside of the
leased unit when vacating the premises. Lessee is responsible for
all costs associated with clean-up of leased premises and/or
repairs made to leased premises performed by Lessor upon Lessee's
vacating the premises.
FORTIETH: Lessee acknowledges having been advised that
Lessee is not to dispose of any toxic/hazardous waste products on
leased property, and that Lessee must make satisfactory disposal
arrangements for any such waste, in accordance with appropriate
Federal, State, and local laws. Lessee further warrants to hold
the owner of the property harmless from any liability, as well as
taking full responsibility for any liability that may be caused as
a result of Lessee's action/non-action as a result of Lessee's
activity on said premises. Lessee agrees that failure to dispose
of toxic/hazardous waste in accordance with the aforesaid
laws/regulations, the receipt of a Notice of Violation (N.O.V)
from a state, federal or local environmental agency, any loss of
environmental operating permits, or lessor's notification to
lessee advising discovery of poor or hazardous housekeeping
practices or business operations likely to cause imminent
contamination problems constitute a breach of this Lease, and
Lessee will be subject to criminal and civil penalties.
Lessee agrees to provide to Lessor within 5 business days, a copy
of any Notice of Violation or similar environmental notification.
All parties agree, at the inception of this lease, that there are
no existing discernible environmental problems or hazardous wastes
at the leased premises. If Lessee receives a Notice of Violation,
or similar notification, Lessee agrees to immediately correct the
problem in accordance with all laws and regulations, and agrees to
perform, at Lessee's sole cost and expense, a subsequent
environmental audit at the expiration of the lease term to insure
to all parties that the site has been properly remediated.
FORTY-FIRST: In the event of default of this Lease by
Lessee, and/or the necessity to pursue collection of monies due
for any reason associated with this Lease, including, but not
limited to recovery of unpaid rent, bounced check charges,
repairs or cleanup performed by Lessor, removal of unauthorized
signs, Lessor shall be entitled to all costs and expenses of
collection incurred on both the trial and appellate levels,
including a reasonable attorney's fee, and in all other post
judgement proceedings of any kind or nature in any state in the
United States, including without limitation, all professional
fees, costs, and expenses paid, or incurred, including after
judgement, and/or which reduce or limit the amount awarded by
judgement or court order, such as, any contingency or flat fee
paid to any attorney or collection agent, which amount shall be
equal to the amount(s) awarded less the amount actually received
by Plaintiff in any state in the United States.
FORTY-SECOND: In the event Lessee's check in payment of any
obligation under this Lease is deposited and/or cashed by Lessor
and said check is not paid by Lessee's bank for any reason, then
Lessee hereby agrees to a "Bad Check Fee" of twenty-five dollars
($25.00) or five percent (5%) of the amount of the check,
whichever is greater. Re-depositing said check a second time and
the check's subsequent clearing does not alleviate the above
mentioned "Bad Check Fee." All other rights of the Lessor under
this Lease remain in effect. This fee shall be termed additional
rent.
FORTY-THIRD: In the event of a breach of this Lease by
Lessee, the Lessee hereby agrees that Lessor shall have the right
to lock the Lessee out of the leased premises by means of changing
keys, locks, adding locks, barricading, or any other means
available to Lessor according to Florida Statutes and that Lessee
hereby waives any right to recover damages for said lockout caused
for any reason, including but not limited to loss of business.
All other rights of the Lessor under this Lease remain in effect.
FORTY-FOURTH: Lessee shall not in any way pledge, mortgage,
or encumber this Lease or its rights under it.
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FORTY-FIFTH: Any holding over after the expiration of the
term of this Lease with consent of Lessor shall be construed to be
a renewal on a month to month basis only, unless a new written
lease or a new written addendum to this Lease has been agreed to
and ratified by both Lessor and Lessee.
FORTY-SIXTH: A security deposit in the amount of $ 0
is hereby acknowledged by Lessor, and Lessee hereby agrees that
said security deposit cannot be used as payment of rent, including
payment of last month's rent. Rent must be paid in advance in
accordance with this Lease and the security deposit shall be held
by Lessor until the expiration of this Lease and may be applied
against any monies due or for damages incidental to this Lease.
If Lessee should be overdue in the payment of monthly rent or
other sums payable to Lessor on at least two or more occasions
during a year, Lessor may-require Lessee to increase the amount of
Security Deposit now held by Lessor by an amount sufficient to
cover at least two month?s rent. In this event, upon receipt of
the additional security sum, Lessor and Lessee shall evidence such
receipt by a letter signed and acknowledged by both parties to be
incorporated as part of this Lease.
FORTY-SEVENTH: The parties signing below as Lessee, or on
behalf of the Lessee, hereby certify that they have the authority
of the Lessee to sign this lease and make this lease legally
binding upon said Lessee.
FORTY-EIGHTH: If Lessee is a corporation or a partnership,
the person signing this Lease on behalf of such corporation or
partnership hereby warrants that he has full authority from such
corporation or partnership to sign this Lease and obligate the
corporation or partnership hereunder, and said person and the
corporation hereunder and said person and corporation or
partnership shall be jointly and severally liable for all rent and
any and all other amount that may be due and owing to Lessor under
the terms of this Lease, including attorney's fees and costs.
FORTY-NINTH: Lessee shall not commit, or allow to be
committed, any waste on the premises, create or allow any nuisance
to exist on the premises, or use or allow the premises to be used
for any unlawful purposes.
FIFTIETH: In the event Lessor has determined that Lessee,
either through the normal course of his business or for any other
reason, is using an excessive amount of water, an additional
water usage fee based on the pro-rata increase over the previous
period shall be paid by the Lessee to compensate Lessor for such
excessive water usage. Such charges shall be deemed additional
rent.
IN WITNESS WHEREOF, the parties hereto have hereunto executed
this instrument for the purpose herein expressed, the day and year
below written.
Signed, sealed and delivered in the presence of:
DATE 4/8/98 /s/Fred Keller (Seal)
WITNESS AS TO LESSOR FRED KELLER, TRUSTEE, LESSOR
DATE 4/8/98 FAIRFAX GROUP, INC., LESSEE
(Seal)
WITNESS AS TO LESSEE
BY:/s/Ernest L. Porter
Ernest L. Porter, President
PRINT NAME AND TITLE
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of April 23, 1998 by and between
Fairfax Group, Inc., a Nevada corporation (the "Company"), and
Ernest L. Porter ("Employee").
WHEREAS, the availability of Employee's services is regarded
by the Company as vitally important to its corporate growth and
success, and
WHEREAS, Employee desires to formalize his employment with the
Company and to maximize the security of his position, and
WHEREAS, the Company and Employee desire to enter into an
employment agreement which will set forth the terms and conditions
upon which Employee shall be employed by the Company and upon which
the Company shall compensate Employee.
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties have agreed, and do hereby
agree, as follows:
Section 1: Employment.
The Company employs Employee and Employee accepts employment
upon the terms and conditions set forth.
Section 2: Term.
Subject to the provisions for termination as provided in
Section 9 hereof, the term of this agreement shall begin on April
23, 1998, and shall terminate on at the will of either the Company
and or the Employee upon 30 days written notice.
Section 3: Compensation.
For all services rendered by Employee under this agreement,
the Company shall pay Employee an annual base salary, to be
determined by its board of directors (the "Board"), but in no event
shall the annual salary be less than $30,000 per year, payable in
equal monthly installments on the first day of each month. The
Board shall meet at least annually for the purpose of determining
Employee's annual base salary based on the then apparent value of
his services.
Section 4: Duties.
Employee shall serve as President and Chief Executive Officer
of the Company, and shall assume other duties as the Board may
assign. In these capacities, Employee shall be responsible for
managing and overseeing the Company's day to day operations. The
services to be performed by Employee may be extended or curtailed
from time to time at the direction of the Board. As of the date of
execution of this agreement, Employee is serving as a director of
the Company and Employee agrees to continue to serve in that
capacity without compensation. Nothing, however, shall be
construed as requiring the Company or any other person to cause the
continuation, election, or appointment of Employee as a director,
or as any specific officer.
Section 5: Extent of Services.
It is recognized by the Company that Employee now engages in
businesses other than the Company's business, and nothing in this
agreement shall be construed to limit Employee's freedom to
continue to engage in such other businesses. It is agreed,
however, that Employee will devote his best efforts to the needs of
the Company, and shall not allow his other business activities to
materially interfere with his duties to the Company.
Section 6: Expenses.
Employee is authorized to incur reasonable expenses on behalf
of the Company in performing his duties, including expenses for
general administration of the Company's office, travel,
transportation, entertainment, gifts and similar items, which
expenses shall be paid by the Company.
Section 7: Vacations.
Employee shall be entitled each year to a vacation of Twenty
(20) weekdays, no two of which need be consecutive, during which
time compensation shall be paid in full.
Section 8: Intentionally Left Blank.
Section 9: Termination.
Employee's employment hereunder shall automatically terminate
upon (i) his death; (ii) Employee's voluntarily leaving the employ
of the Company; (iii) the Company's discretion with or without
cause.
Section 10: Confidential Information.
The Employee agrees not to divulge, furnish or make available
to anyone (other than in the regular course of business of the
Company) any knowledge or information with respect to confidential
or secret methods, processes, plans or materials of the Company or
with respect to any other confidential or secret aspect of the
Company's activities.
Section 11: Intentionally Left Blank.
Section 12: Notices.
Any notice required or permitted to be given to Employee
pursuant to this Agreement shall be sufficiently given if hand
delivered or sent to Employee by certified mail, return receipt
requested, addressed to him at the following address:
6758 North Military Trail
Suite 303
West Palm Beach, Florida 33407
or at such other address as he shall designate by notice to the
Company, and any notice required or permitted to be given to the
Company pursuant to this Agreement shall be sufficiently given if
hand delivered or sent to the Company by certified mail, return
receipt requested, addressed to it at 6758 North Military Trail,
Suite 303, West Palm Beach, Florida 33407, or at such other address
as the Company shall designate by notice to the Employee.
Section 13: Waiver of Breach.
The waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
subsequent breach. If any provision of this Agreement shall be
held to be invalid or unenforceable, such invalidity or
unenforceability shall attach only to such provision and not in any
way effect or render invalid or unenforceable any other provisions
of this Agreement, and this Agreement shall be carried out as if
such invalid or unenforceable provision were not embodied therein.
Section 14: Assignment.
This Agreement, as it relates to the employment of Employee,
is a personal contract and the rights and interests of Employee
hereunder may not be sold, transferred, assigned, pledged or
hypothecated. Except as otherwise herein expressly provided, this
Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns including, without
limitation, any corporation or other entity into which the Company
is merged or which acquires all of the outstanding Company's common
stock, or all or substantially all of the assets, of the Company.
Section 15: Entire Agreement.
This Agreement constitutes the entire agreement between the
parties and there are no representations, warranties or commitments
except as set forth herein. This Agreement supersedes all prior
and contemporaneous agreements, understandings, negotiations and
discussions, whether written or oral, of the parties hereto
relating to the transactions contemplated by this Agreement. This
Agreement may be amended only in writing executed by the parties
hereto affected by such amendment.
Section 16: Governing Law.
This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of Florida
applicable to agreements made and to be performed entirely in
Florida.
Section 17: Arbitration.
Any controversy or claim arising out of, or relating to, this
Agreement or its breach, shall be settled by arbitration in
accordance with the governing rules of the American Arbitration
Association at the time of the arbitration. Judgment upon the
award rendered may be entered in any court of competent
jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the 23 day of April, 1998.
WITNESS: FAIRFAX GROUP, INC.
_________________________ By: /s/ Ernest L. Porter
Ernest L. Porter, President
WITNESS: Employee
_________________________ /s/ Ernest L. Porter
Ernest L. Porter
ADDENDUM TO EMPLOYMENT AGREEMENT
ADDENDUM TO EMPLOYMENT AGREEMENT dated as of September 8,
1998, by and between by and between Fairfax Group, Inc., a Florida
corporation (f/k/a/ Fairfax Group, Inc., a Nevada corporation)
(the "Company"), and Ernest L. Porter ("Employee").
WHEREAS, on April 23, 1998 Employee formalized his employment
with the Company pursuant to that Employment Agreement dated April
23, 1998 between Employee and the Company (the "Employment
Agreement");
WHEREAS, since the date of the Employment Agreement a
corporate reorganization has occurred with respect to the Company, in that
the corporation known as Fairfax Group, Inc., a Nevada corporation
disappeared pursuant to a merger between Fairfax Group, Inc., a Nevada
corporation and Fairfax Group, Inc., a Florida corporation, whereby
the Company is now known as Fairfax Group, Inc., a Florida corporation ; and
WHEREAS, the continued availability of Employee's services is
regarded by the Company as vitally important to its corporate growth and
success, and
WHEREAS, the Company and Employee desire to maintain the Employment
Agreement in full force and effect so that the corporate reorganization shall
not alter or amend any of the terms or conditions of the Employment Agreement.
NOW, THEREFORE, the Company and Employee hereby agree that for
consideration which is hereby received and acknowledged, the Employment
Agreement shall be maintained in full force and effect without altering or
amending any of the terms or conditions of the Employment Agreement.
The undersigned have executed this Agreement as of the 8th day of
September, 1998.
FAIRFAX GROUP, INC.
By: /s/ Ernest L. Porter
Ernest L. Porter, President
Employee
/s/ Ernest L. Porter
Ernest L. Porter
PROMISSORY NOTE
$ PALM BEACH COUNTY, FLORIDA
Date:
FOR VALUE RECEIVED, Fairfax Group, Inc., A Florida
Corporation, represented by the undersigned, do hereby promise to
pay to the order of FRED KELLER, TRUSTEE, the principal sum of
SIX THOUSAND DOLLARS AND NO/100 ($6,000.00), together with
interest thereon at Prime + 2% adjusted quarterly quarterly, (April
1, July 1, October 1, & January 1) payable at 6758 N. Military
Trail, Suite 301, West Palm Beach, Florida, 33407, hereof; the
entire amount of principal and accrued interest thereon, shall be
due and payable in full ON DEMAND.
The Fairfax Group, Inc. shall have the right to prepay in
any amount, at any time, without premium, penalty or notice.
In the event that the note holder must initiate
procedures against Fairfax Group, Inc. for collection, the note
holder shall be entitled to all costs and expenses of collection
incurred on both the trial and appellate levels, including a
reasonable attorney?s fee, and in all other post judgment
proceedings of any kind or nature in any state in the United
States, including without limitation, all professional fees, costs,
and expenses paid, or incurred, after judgment, and/or which reduce
or limit the amount awarded by judgment or court order, such as,
any contingency or flat fee paid to any attorney or collection
agent, which amount shall be equal to the amount (s) awarded less
the amount actually received by the note holder in any state in the
United States. Maker hereby waives any and all rights to trial by
jury.
Fairfax Group, Inc. agrees to pay all costs of
collection, when incurred, including reasonable attorney?s fees.
WITNESS the following signatures and seals:
DATE: Name: Ernest L. Porter
Title: CEO, Fairfax Group, Inc
Tax ID Number:65-0832025
Fairfax Group, Inc.
State: Florida
Phone: 561-840-9100
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements included in the Company's Registration
Statement on Form 10-SB as filed with the Securities & Exchange Commission, and
is qualified in its entirety by reference to such Financial Statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> FEB-28-1998 FEB-28-1999
<PERIOD-END> MAR-1-1997 MAR-1-1998
<CASH> 2,758 1,684
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 2,758 1,684
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 2,758 1,684
<CURRENT-LIABILITIES> 14,838 84,010
<BONDS> 0 0
0 0
0 0
<COMMON> 6,150 6,150
<OTHER-SE> (18,230) (88,476)
<TOTAL-LIABILITY-AND-EQUITY> 2,758 1,684
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 993 1,273
<INCOME-PRETAX> (3,423) (70,246)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (3,423) (70,246)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,423) (70,246)
<EPS-PRIMARY> 0 (0.01)
<EPS-DILUTED> 0 (0.01)
</TABLE>
