THIS DOCUMENT IS A COPY OF THE ANNUAL REPORT FILED ON MARCH 31,
2000 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended December 31, 1999
or
[ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required)
Commission File No. 000-26645
Spacial Corporation
-------------------
(Name of Small Business Issuer in its Charter)
Delaware 13-4031423
- ------------------------------ ---------------------
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification Number
317 Madison Avenue, Suite 2310, New York, New York 10017
- -------------------------------------------------- --------
Address of principal executive office Zip Code
Issuer's telephone number: (212) 949-9696
--------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT
Common Stock, $0.001 Par Value
------------------------------
(Title of Class)
Check whether the issuer has (i) filed all reports required by Section 13 or
15(d) of the Exchange Act during the past 12 months, and (ii) been subject to
such filing requirements for the past ninety (90) days. Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
regulation S-B not contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-KSB or any
amendment to this Form 10-KSB. [X]
The Company's revenues for Fiscal Year ended December 31, 1999 were $0.00.
As of December 31, 1999, 2,170,000 shares of Common Stock were outstanding and
the aggregate market value of the Common Stock held by non-affiliates (170,000
shares) was $42,500.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
<PAGE>
Part I
Item 1. Description of Business.
Spacial Corporation (the "Company") was incorporated in Delaware in
October 1998 and was formed by Mr. James A. Prestiano, a stockholder, officer,
and director of the Company. The Company's principal executive offices are
located at 317 Madison Avenue, Suite 2310, New York, NY 10017. The Company has
been in the developmental stage since inception and has no operating history
other than organizational matters.
The Company has no operating business. The Company does not intend to
develop its own operating business but instead will seek to effect a merger (a
"Merger") with a corporation or other business entity which owns an operating
business and wishes to undertake a Merger for its own corporate purposes (a
"Merger Target"), generally related to achieving liquidity for its stockholders.
The primary activity of the Company currently involves seeking a Merger Target.
As such, the Company can be defined as a "shell" company, whose sole purpose at
this time is to locate a Merger Target and consummate a Merger. The Company has
not yet selected or entered into any substantive discussions with any potential
Merger Target and does not intend to limit potential candidates to any
particular field or industry, but does retain the right to limit candidates, if
it so chooses, to a particular field or industry. The Company may effect a
Merger with a Merger Target which may be financially unstable or in its early
stages of development or growth.
Mr. Prestiano serves as the sole director and officer of nine other
companies (identified in Part III, Item 12 below) that contemplate the same
business activities as the Company and thus compete directly with the Company.
As a result, there may be a conflict of interest with respect to prospective
Merger Targets and presenting the corporate opportunity to the Company. In
general, officers and directors of a corporation incorporated under the laws of
the State of Delaware are required to present certain business opportunities to
such corporation. As a result of Mr. Prestiano's business associations with
multiple companies he will have conflicting interests. Therefore, the Company
has agreed that with respect to conflicts of interest amongst these companies
related to the allocation of opportunities to negotiate and Merge with Merger
Targets, the Company will waive any conflict or claim related to Mr. Prestiano's
fiduciary duty. Mr. Prestiano and the Company have no formal plan relating to
the allocation of business or Merger opportunities between the Company and the
nine other companies, and thus there can be no assurance that any Merger
opportunity shall be presented to the Company, as opposed to one of the nine
other companies.
The proposed business activities described herein classify the Company as
a "blank check" or "blind pool" entity. Many states have enacted statutes,
rules, and regulations limiting the sale of securities of "blank check"
companies in their respective jurisdictions. Management can give no assurance
that any market for its Common Stock will develop until such time, if any, as
the Company has successfully implemented its business plan and completed a
Merger. However, the Company is exploring all alternative strategies to attempt
to obtain a quote for its Common Stock on the NASDAQ Over The Counter bulletin
board in order to enhance its attractiveness to potential Merger partners.
Item 2. Description of Property
The Company neither owns nor leases any real property at this time.
Pursuant to an oral agreement with The Law Offices of James A. Prestiano, Esq, a
firm controlled by James Prestiano, the Company's President, majority
stockholder and founder, the Company utilizes and will continue to utilize the
office space of such firm as its principal executive office. Such office is
located at 317 Madison Avenue, Suite 2310, New York, NY 10017, telephone: (212)
949-9696, facsimile: (212) 949-9241.
The Company has not invested in any real property at this time nor does
the Company intend to do so. The Company has no formal policy with respect to
investments in real estate or investments with persons primarily engaged in real
estate activities.
-2-
<PAGE>
Item 3. Legal Proceedings
The Company is not a party to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of shareholders in the fourth quarter
of 1999.
Part II
Item 5. Market for Company's Common Equity and Related Stockholder Matters
The Company's Common Stock is currently not traded on any public trading
market. No assurance can be given that any market for its Common Stock will
develop. However, the Company is exploring all alternative strategies to attempt
to obtain a quote for its Common Stock on the NASDAQ Over The Counter bulletin
board in order to enhance its attractiveness to potential Merger partners.
The authorized capital stock of the Company consists of 45,000,000
shares, of which 40,000,000 shares have been designated Common Stock, $0.001 par
value, and 5,000,000 shares of Preferred Stock, $0.001 par value. At March 29,
2000, there were 2,170,000 shares of Common Stock outstanding and held of record
by nine stockholders. No shares of Preffered Stock have been issued.
Item 6. Management's Discussion and Analysis or Plan of Operation
Plan of Operation
General
The Company's plan is to seek, investigate, and if such investigation
warrants, consummate a Merger with one or more Merger Targets desiring the
perceived advantages of a publicly held corporation. At this time, the Company
has no plan, proposal, agreement, understanding, or arrangement to merge with
any specific business or company, and the Company has not identified any
specific business or company for investigation and evaluation. No member of
Management or any promoter of the Company, or an affiliate of either, has had
any material discussions with any other company with respect to any Merger. The
Company will not restrict its search to any specific business, industry, or
geographical location, and may participate in business ventures of virtually any
kind or nature. Discussion of proposed plan of operation and Mergers under this
caption and throughout this Annual Report is purposefully general and is not
meant to restrict the Company's virtually unlimited discretion to search for and
enter into potential business opportunities.
The Company may seek a Merger with an entity which only recently
commenced operations, or a developing company in need of additional funds to
expand into new products or markets or seeking to develop a new product or
service, or an established business which may be experiencing financial or
operating difficulties and needs additional capital which is perceived to be
easier to raise by a public company. In some instances, a Merger may involve
merging with a corporation which does not need substantial additional cash but
which desires to establish a public trading market for its common stock. The
Company may purchase assets and establish wholly-owned subsidiaries in various
businesses or purchase existing businesses as subsidiaries.
-3-
<PAGE>
Selecting a Merger Target will be complex and extremely risky. Because
of general economic conditions, rapid technological advances being made in some
industries, and shortages of available capital, management believes that there
are numerous entities seeking the benefits of a publicly-traded corporation.
Such perceived benefits of a publicly traded corporation may include
facilitating or improving the terms on which additional equity financing may be
sought, providing liquidity for the principals of a business, creating a means
for providing incentive stock options or similar benefits to key employees,
providing liquidity (subject to restrictions of applicable statues) for all
stockholders, and other items. Potential Merger Targets may exist in many
different industries and at various stages of development, all of which will
make the task of comparative investigation and analysis of such Merger Targets
extremely difficult and complex.
The Company has insufficient capital with which to provide the owners of
Merger Targets significant cash or other assets. Management believes the Company
will offer owners of Merger Targets the opportunity to acquire a controlling
ownership interest in a public company at substantially less cost than is
required to conduct an initial public offering. Nevertheless, the Company has
not conducted market research and is not aware of statistical data which would
support the perceived benefits of a Merger or acquisition transaction for the
owners of a Merger Target.
The Company will not restrict its search for any specific kind of Merger
Target, and may merge with an entity which is in its preliminary or development
stage, which is already in operation, or in essentially any stage of its
corporate life. It is impossible to predict at this time the status of any
business in which the Company may become engaged, in that such business may need
to seek additional capital, may desire to have its shares publicly traded, or
may seek other perceived advantages which the Company may offer. However, the
Company does not intend to obtain funds in one or more private placements to
finance the operation of any acquired business opportunity until such time as
the Company has successfully consummated such a Merger.
Selection and Evaluation of Merger Targets
Management of the Company will have complete discretion and flexibility
in identifying and selecting a prospective Merger Target. In connection with its
evaluation of a prospective Merger Target, management anticipates that it will
conduct a due diligence review which will encompass, among other things, meeting
with incumbent management and inspection of facilities, as well as a review of
financial, legal and other information which will be made available to the
Company.
Under the Federal securities laws, public companies must furnish
stockholders certain information about significant acquisitions, which
information may require audited financial statements for an acquired company
with respect to one or more fiscal years, depending upon the relative size of
the acquisition. Consequently, each Company will only be able to effect a Merger
with a prospective Merger Target that has available audited financial statements
or has financial statements which can be audited
The time and costs required to select and evaluate a Merger Target
(including conducting a due diligence review) and to structure and consummate
the Merger (including negotiating relevant agreements and preparing requisite
documents for filing pursuant to applicable securities laws and corporation
laws) cannot presently be ascertained with any degree of certainty. The
Company's current executive officer and director intends to devote only a small
portion of his time to the affairs of the Company and, accordingly, consummation
of a Merger may require a greater period of time than if the Company's
management devoted his full time to the Company's affairs. While no current
steps have been taken nor agreements reached, the Company may engage consultants
and other third parties providing goods and services, including assistance in
the identification and evaluation of potential Merger Targets. These consultants
or third parties may be paid in cash, stock, options or other securities of the
Company, and the consultants or third parties may be placement agents or their
affiliates.
The Company will seek potential Merger Targets from all known sources
and anticipates that various prospective Merger Targets will be brought to its
attention from various non-affiliated sources, including securities
broker-dealers, investment bankers, venture capitalists, bankers, other members
of the financial community and affiliated sources, including, possibly, the
Company's executive officer, director and his affiliates. While the Company has
not yet ascertained how, if at all, it will advertise and promote itself, the
Company may elect to publish advertisements in financial or trade publications
seeking potential business acquisitions. While the Company does not
-4-
<PAGE>
presently anticipate engaging the services of professional firms that specialize
in finding business acquisitions on any formal basis, the Company may engage
such firms in the future, in which event the Company may pay a finder's fee or
other compensation. In no event, however, will the Company pay a finder's fee or
commission to the officer and director of the Company or any entity with which
he is 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 Merger Target.
In analyzing prospective Merger Targets, management may consider, among
other factors, such matters as;
1) the available technical, financial and managerial resources;
2) working capital and other financial requirements;
3) history of operation, if any;
4) prospects for the future;
5) present and expected competition;
6) the quality and experience of management services which may
be available and the depth of that management;
7) the potential for further research, development or exploration;
8) specific risk factors not now foreseeable but which then may be
anticipated to impact the proposed activities of the Company;
9) the potential for growth or expansion;
10) the potential for profit;
11) the perceived public recognition or acceptance of products,
services or trades; and 12) name identification.
Merger opportunities in which the Company may participate will present
certain risks, many of which cannot be adequately identified prior to selecting
a specific opportunity. The Company's stockholders must, therefore, depend on
Management to identify and evaluate such risks. The investigation of specific
Merger opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys
and others. If a decision is made not to participate in a specific Merger
opportunity the cost therefore incurred in the related investigation would not
be recoverable. Furthermore, even if an agreement is reached for the
participation in a specific Merger opportunity, the failure to consummate that
transaction may result in the loss of the Company of the related costs incurred.
There can be no assurance that the Company will find a suitable Merger
Target. If no such Merger Target is found, therefore, no return on an investment
in the Company will be realized, and there will not, most likely, be a market
for the Company's stock.
Structuring and Financing of a Merger
As a general rule, Federal and state tax laws and regulations have a
significant impact upon the structuring of Mergers. The Company will evaluate
the possible tax consequences of any prospective Merger and will endeavor to
structure a Merger so as to achieve the most favorable tax treatment to the
Company, the Merger Target and their respective stockholders. There can be no
assurance that the Internal Revenue Service or relevant state tax authorities
will ultimately assent to the Company's tax treatment of a particular
consummated Merger. To the extent the Internal Revenue Service or any relevant
state tax authorities ultimately prevail in recharacterizing the tax treatment
of a Merger, there may be adverse tax consequences to the Company, the Merger
Target and their respective stockholders. Tax considerations as well as other
relevant factors will be evaluated in determining the precise structure of a
particular Merger.
The Company may utilize available cash and equity securities in
effecting a Merger. Although the Company has no commitments as of this date to
issue any shares of Common Stock or options or warrants, other than those
already issued in the offering of its common stock pursuant to Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act")
(the "Private Placement"), each Company will likely issue a substantial number
of additional shares in connection with the consummation of a Merger, probably
in most cases equal to nine
-5-
<PAGE>
or more times the amount held by the Company's stockholders prior to the Merger.
The Company currently has no intention to issue Preferred Stock. The Company may
have to effect reverse stock splits prior to any Merger. To the extent that such
additional shares are issued, dilution to the interests of a Company's
stockholders will occur. Additionally, a change in control of the Company may
occur which may affect, among other things, the Company's ability to utilize net
operating loss carryforwards, if any.
There currently are no limitations on each Company's ability to borrow
funds to effect a Merger. However, the Company's limited resources and lack of
operating history may make it difficult to borrow funds. 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 has no 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 Merger, or to
provide funds for an additional infusion of capital into a Merger Target, may
have a material adverse effect on the Company's financial condition and future
prospects, including the ability to effect a Merger. 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 Merger Target may have already incurred
debt financing and, therefore, all the risks inherent thereto.
Competition for Merger Opportunities
The Company is, and will continue to be, an insignificant participant in
the business of seeking a Merger with a Merger Target. The Company expects to
encounter intense competition from other entities having business objectives
similar to those of the Company. Many of these entities, including venture
capital partnerships and corporations, other blind pool companies, large
industrial and financial institutions, small business investment companies and
wealthy individuals, are well-established and have extensive experience in
connection with identifying and effecting Mergers directly or through
affiliates. Many of these competitors possess greater financial, technical,
human and other resources than the Company and there can be no assurance 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 may compel the Company to
select certain less attractive Merger prospects. There can be no assurance that
such prospects will permit the Company to achieve its stated business
objectives.
Equipment and Employees
The Company has no operating business and thus no equipment and no
employees, and the Company does not expect to acquire any equipment or
employees. The Company does not intend to develop its own operating business but
instead will seek to effect a Merger with a Merger Target.
Risk Factors
This Annual Report includes projections of future results and
forward-looking statements. All statements that are included in this Annual
Report, other than statements of historical fact, are forward-looking
statements. Such statements reflect the current views of the Company with
respect to the future events and are subject to certain risks, uncertainties and
assumptions, including the following Risk Factors. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described herein as
anticipated, believed, estimated or expected. There can be no assurance that the
projected results will occur, and that these judgments or assumptions will prove
correct, that unforeseen developments will not occur or that the Company's
assumptions concerning future developments will not change.
-6-
<PAGE>
The Company Has No Operating History or Basis for Evaluating Prospects
The Company was incorporated in October 1998 and has no operating
business or plans to develop one and has not, as of the date hereof, identified
any Merger Targets. Accordingly, there is only a limited basis upon which to
evaluate the Company's prospects for achieving its intended business objectives.
To date, the Company's efforts have been limited to organizational activities
and the Private Placement.
The Company Has Limited Resources and No Present Source of Revenues
The Company has limited resources and has had no revenues to date. In
addition, the Company will not achieve any revenues (other than insignificant
investment income) until, at the earliest, the consummation of a Merger.
Moreover, there can be no assurance that any Merger Target, at the time of the
Company's consummation of a Merger, or at any time thereafter, will derive any
material revenues from its operations or operate on a profitable basis. Further,
in order to avoid status as an "Investment Company" under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), the Company will only
invest its funds prior to a Merger in limited investments which do not trigger
Investment Company status. There can be no assurance that determinations
ultimately made by the Company will permit the Company to achieve its business
objectives.
The Company May Need Additional Financing In Order to Execute Its Business Plan
The Company has had no revenues to date and will be entirely dependent
upon its limited available financial resources (consisting primarily of the
proceeds of the Private Placement) to implement its business objectives. The
Company cannot ascertain with any degree of certainty the capital requirements
for the execution of its business plan. In the event that the Company's limited
financial resources prove to be insufficient to implement the Company's business
plan (because of the size of the Merger or other reasons), the Company may be
required to seek additional financing. In addition, in the event of the
consummation of a Merger, the Company may require additional financing to fund
the operations or growth of the Merger Target.
Additional Financing May Not Be Available to the Company If Needed
There can be no assurance that additional financing, if needed, will be
available on acceptable terms, or at all. To the extent that additional
financing proves to be unavailable when needed, the Company would, in all
likelihood, be compelled to abandon plans of a Merger, and would have minimal
capital remaining to pursue other Merger Targets. The failure by the Company to
secure additional financing, if needed, could also have a material adverse
effect on the continued development or growth of the Merger Target. The Company
has no arrangements with any bank or financial institution to secure additional
financing and there can be no assurance that any such arrangement, if required
or otherwise sought, would be available on terms deemed to be commercially
acceptable and in the best interests of the Company.
The Company May Not Be Able to Borrow Funds If Needed
There currently are no limitations on the Company's ability to
borrow funds to increase the amount of capital available to the Company to
effect a Merger. However, the limited resources of the Company and lack of
operating history will make it difficult to borrow funds. The amount and nature
of any borrowings by the Company will depend on numerous considerations,
including the Company's capital requirements, the Company's perceived ability to
meet debt service on any such borrowings and the then prevailing conditions in
the financial markets, as well as general economic conditions. There can be no
assurance that debt financing, if required or sought, would be available on
terms deemed to be commercially acceptable by and in the best interests of the
Company. The inability of the Company to borrow funds required to effect or
facilitate a Merger, or to provide funds for an additional infusion of capital
into a Merger Target, may have a material adverse effect on the Company's
financial condition and future prospects. Additionally, 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 Merger Target may have already incurred
borrowings and, therefore, all the risks inherent thereto.
-7-
<PAGE>
The Company is Unable to Ascertain Risks Relating to the Industry and Nature of
Unidentified Merger Targets
The Company has not selected any particular industry or Merger Target in
which to concentrate its Merger efforts. The director and executive officer of
the Company has had no contact or discussions with any entity or representatives
of any entity regarding a consummation of a Merger. Accordingly, there is no
basis to evaluate the possible merits or risks of the Merger Target or the
particular industry in which the Company may ultimately operate, and therefore
risks of a currently unascertainable nature may arise when a specific Merger
Target and industry is chosen. For example, to the extent that the Company
effects a Merger with a financially unstable company or an entity in its early
stage of development or growth (including entities without established records
of revenues or income), 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 Merger with an entity 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 Merger Target or
industry, there can be no assurance that the Company will properly ascertain or
assess all such risks.
Scarcity of and Competition for Merger Opportunities May Hinder the
Identification of a Merger Target and the Consummation of a Merger
The Company expects to encounter intense competition from other entities
having business objectives similar to those of the Company. Many of these
entities, including venture capital partnerships and corporations, other blind
pool companies, large industrial and financial institutions, small business
investment companies and wealthy individuals, are well-established and have
extensive experience in connection with identifying and effecting Mergers
directly or through affiliates. Many of these competitors possess greater
financial, technical, human and other resources than the Company and there can
be no assurance 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 may compel the Company
to select certain less attractive Merger prospects. There can be no assurance
that such prospects will permit the Company to achieve its stated business
objectives.
The Company Has No Current Agreement With any Possible Merger Target and No
Standards for a Merger, Which May Impair the Identification, Evaluation and
Consummation of Suitable Merger Opportunities
The Company has no arrangement, agreement, or understanding with respect
to engaging in a Merger with any private entity. There can be no assurance that
the Company will successfully identify and evaluate suitable Merger
opportunities or conclude a Merger. Management has not identified any particular
industry or specific business within an industry for evaluations. Other than
issuing shares to its original stockholder and conducting the Private Placement,
the Company has never commenced any operational activities. There is no
assurance that the Company will be able to negotiate a merger on terms favorable
to the Company. The Company has not established a specific length of operating
history or a specified level of earnings, assets, net worth or other criteria
which it will require a Merger Target to have achieved. Accordingly, the Company
may enter into a Merger with a Merger Target having no significant operating
history, losses, limited or no potential for earnings, limited assets, negative
net worth, or other negative characteristics.
Success of the Company's Business Plan Depends In Large Part Upon the
Consummation of a Merger
The success of the Company's proposed plan of operation will depend to a
great extent on locating and consummating a Merger with a Merger Target.
Subsequent to any Merger, the Company's success will depend greatly on the
operations, financial condition, and management of the identified Merger Target.
While management intends to seek a Merger with a company that has an established
operating history, it cannot assure that the Company will successfully locate
candidates meeting such criteria. In the event the Company completes a Merger,
the success of the Company's operations may be dependent upon management of the
successor entity together with numerous other factors beyond the Company's
control.
-8-
<PAGE>
The Company May Be Subject to Uncertainty in the Competitive Environment of a
Merger Target
In the event that the Company succeeds in effecting a Merger, the
Company will, in all likelihood, become subject to intense competition from
competitors of the Merger Target. In particular, certain industries which
experience rapid growth frequently attract an increasingly larger number of
competitors, including competitors with greater financial, marketing, technical,
human and other resources than the initial competitors in the industry. The
degree of competition characterizing the industry of any prospective Merger
Target cannot presently be ascertained. There can be no assurance that,
subsequent to a consummation of a Merger, the Company will have the resources to
compete effectively in the industry of the Merger Target, especially to the
extent that the Merger Target is in a high- growth industry.
Probable Lack of Business Diversification Due to Limited Resources Limits the
Prospects for the Company's Success
As a result of the limited resources of the Company, the Company, in all
likelihood, will have the ability to effect only a single Merger. Accordingly,
the prospects for the Company's success will be entirely dependent upon the
future performance of a single business. Unlike certain entities which have the
resources to consummate several Mergers 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 may 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 the consummation of a Merger. 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 capital investment in and management
assistance to the Merger Target by the Company, there can be no assurance that
the Merger Target will prove to be commercially viable.
There Exist Conflicts of Interest Relating to Mr. Prestiano's Inter-Company
Conflicts
Mr. Prestiano serves as the sole director and officer of nine other
companies (identified in Item 12, Part III below) that contemplate the same
business activities as the Company and thus compete directly with the Company.
As a result, Mr. Prestiano will have a conflict of interest with respect to
prospective Merger Targets and presenting the corporate opportunity to the
Company. In general, officers and directors of a corporation incorporated under
the laws of the State of Delaware are required to present certain business
opportunities to such corporation. As a result of Mr. Prestiano's business
associations with multiple companies he will have conflicting interests.
Therefore, the Company has agreed that with respect to conflicts of interest
amongst these companies related to the allocation of opportunities to negotiate
and Merge with Merger Targets, the Company will waive any conflict or claim
related to Mr. Prestiano's fiduciary duty. However, the conflict should be
mitigated by the fact that Mr. Prestiano has the same ownership interest in each
other company as he does in the Company, and each company (including the
Company) has identical stockholders, at least initially. The conflict will be
more significant should, at a later date, these facts change.
There Exist Conflicts of Interest Relating to Mr. Prestiano's Time Commitment to
the Company
Mr. Prestiano is not required to commit his full time to the affairs of
the Company and it is likely that he will not devote a substantial amount of
time to the affairs of the Company. Mr. Prestiano will have conflicts of
interest in allocating management time among various business activities. As a
result, the consummation of a Merger may require a greater period of time than
if the Company's management devoted their full time to the Company's affairs.
However, Mr. Prestiano will devote such time as he deems reasonably necessary to
carry out the business and affairs of the Company, including the evaluation of
potential Merger Targets and the negotiation and consummation of a Merger 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 Merger Target or is engaged in active negotiation and
consummation of a Merger. Mr. Prestiano is affiliated with nine other companies
engaged in business activities similar to those to be conducted by the Company,
and may in the future become affiliated with more, and therefore may have
conflicts of interest in determining to which entity a particular business
opportunity
-9-
<PAGE>
should be presented. In general, officers and directors of a corporation
incorporated under the laws of the State of Delaware are required to present
certain business opportunities to such corporation. Accordingly, as a result of
multiple business affiliations, Mr. Prestiano may have similar legal obligations
to present certain business opportunities to multiple entities. There can be no
assurance that any of the foregoing conflicts will be resolved in favor of the
Company.
There Exist Conflicts of Interest Relating to the Compensation and Reimbursement
of Mr. Prestiano and Affiliates
Although Mr. Prestiano has received no compensation for his services as
the sole director and/or president of the Company, he and his affiliates have
been reimbursed, at cost, for the reasonable business expenses of the Company,
including those incurred in connection with the formation of the Company, the
Private Placement, and the preparation and filing of a Registration Statement on
Form 10 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Mr. Prestiano and his affiliates will also be entitled to be reimbursed
for any future reasonable business expenses of the Company, including any
expenses incurred in connection with any Merger. This will include reimbursement
for the cost of the personnel of Mr. Prestiano or his affiliates (other than Mr.
Prestiano himself) to be inclusive of all documented costs of their employment
on a reasonable hourly or daily allocation while engaged in activities on behalf
of the Company.
The Company May Pursue a Merger With a Merger Target Operating Outside the
United States: Special Additional Risks Relating to Doing Business in a Foreign
Country
The Company may effectuate a Merger with a Merger Target whose business
operations or even headquarters, place of formation or primary place of business
are located outside the United States. In such event, the Company may face the
significant additional risks associated with doing business in that country. In
addition to the language barriers, different presentations of financial
information, different business practices, and other cultural differences and
barriers that may make it difficult to evaluate such a Merger Target, ongoing
business risks result from the internal political situation, uncertain legal
systems and applications of law, prejudice against foreigners, corrupt
practices, uncertain economic policies and potential political and economic
instability that may be exacerbated in various foreign countries.
The Company Depends Upon a Single Executive Officer and Director
The ability of the Company to successfully effect a Merger will be
dependent upon the efforts of its executive officer and sole director, Mr. James
Prestiano. Notwithstanding the significance of Mr. Prestiano, the Company has
not entered into employment agreements or other understandings with Mr.
Prestiano concerning compensation or obtained any "key man" life insurance on
his life. The loss of the services of Mr. Prestiano could have a material
adverse effect on the Company's ability to successfully achieve its business
objectives. Mr. Prestiano is not required to commit a substantial amount of his
time to the affairs of the Company and, accordingly, may have conflicts of
interests in allocating management time among various business activities. The
Company will rely upon the expertise of Mr. Prestiano and does not anticipate
that it will hire additional personnel. However, if additional personnel are
required, there can be no assurance that the Company will be able to retain such
necessary additional personnel
The Company's Sole Executive Officer and Director has Limited Experience
Although Mr. Prestiano has experience in buying and selling businesses,
he has no prior experience in "blind pool" or "blank check" companies such as
the Company, nor has he been a director or officer of any public company.
Mr. Prestiano Has Centralized Control of the Company's Affairs
Mr. Prestiano owns 2,000,000 shares of Common Stock of the Company,
representing approximately 92% of the issued and outstanding shares of Common
Stock and approximately 92% of the voting power of the issued and outstanding
shares of Common Stock of the Company. In the election of directors,
stockholders are not entitled to cumulate their votes for nominees. Accordingly,
as a practical matter, management may be able to elect all of the Company's
directors and otherwise direct the affairs of the Company. Additionally,
stockholders will only be
-10-
<PAGE>
permitted to vote on a Merger if a stockholder vote is required under Delaware
General Corporation Law, and, even if allowed to vote, Mr. Prestiano controls a
majority of the stock of the Company, thus effectively giving him control.
There Exists the Likelihood of a Change in Control and Management Upon the
Consummation of a Merger
It is likely that any Merger will result in control by the Merger Target
stockholders and that the stockholders of the Company would retain only a
relatively small minority position. Any such Merger may require management of
the Company to sell, transfer or cancel all or a portion of the Company's stock
held by management, or cause Mr. Prestiano to resign or be removed as executive
officer and/or sole director and a corresponding reduction in or elimination of
his participation in the future affairs of the Company.
There is Limited Likelihood of a Regular Trading Market for the Common Stock
A public market for the Common Stock does not exist and there can be no
assurance that one will ever develop or if developed will continue. However, the
Company is exploring all alternative strategies to attempt to obtain a quote for
its Common Stock on the NASDAQ Over The Counter bulletin board in order to
enhance its attractiveness to potential Merger partners. In general, creation of
a public market for the Common Stock depends on (i) acceptance of the Company on
an exchange or interdealer quotation system, (ii) filing of a Form 15-c2-11 with
NASDAQ for trading on the Over The Counter bulletin board or (iii) registration
of the shares through a Registration Statement filed under the Securities Act.
Such actions may be costly and difficult and could potentially fail. If so, it
would substantially hinder the liquidity of the Common Stock. If no market
develops, it may be difficult or impossible for the holders of the Common Stock
to sell their securities if they should desire to do so. In addition, there are
substantial restrictions on the sale or transfer of Common Stock imposed by
federal and state security laws, if the shares of Common Stock of the Company
are not registered through a Registration Statement. If the shares are
registered, there are no assurances that a regular trading market will develop
for any of the Common Stock and that if developed any such market will be
sustained. It is unlikely any market would develop without a Merger.
There Exist Risks to Stockholders Relating to Dilution: Authorization of
Additional Securities and Reduction of Percentage Share Ownership Following
Merger
The Company's Certificate of Incorporation authorizes the issuance of
40,000,000 shares of Common Stock. There are currently 37,830,000 authorized but
unissued shares of Common Stock available for issuance. Although the Company has
no commitments as of this date to issue any of these 37,830,000 shares of Common
Stock, the Company will, in all likelihood, issue a substantial number of
additional shares in connection with or following a Merger. To the extent that
additional shares of Common Stock are issued, the Company's stockholders would
experience dilution of their respective ownership interests in the Company.
Additionally, if the Company issues a substantial number of shares of Common
Stock in connection with or following a Merger, a change in control of the
Company may occur which may affect, among other things, the Company's ability to
utilize net operating loss carry forwards, if any. Furthermore, the issuance of
a substantial number of shares of Common Stock may adversely affect prevailing
market prices, if any, for the Common Stock and could impair the Company's
ability to raise additional capital through the sale of its equity securities.
The Company may use consultants and other third parties providing goods and
services, including assistance in the identification and evaluation of potential
Merger Targets. These consultants or third parties may be paid in cash, stock,
options or other securities of the Company, and the consultants or third parties
may be Placement Agents or their affiliates. Mr. Prestiano has the sole
discretion to engage consultants and other assistance and to pay partially or in
whole with stock or options for stock of the Companies and to raise additional
funds by selling securities of the Company which may involve substantial
additional dilution to the investors.
Regulatory and Statutory Obstacles May Hinder the Company's Attractiveness to
Merger Candidates
Merger Targets are often companies which wish to become public companies
to provide liquidity to their shareholders and possibly enhance their future
ability to access the capital markets, without the risk and expense of an
initial public offering. While the Merger does not immediately provide
significant capital, it does, if the Merger is executed as intended, create a
surviving Company which is public, which owns the assets and business of the
Merger Target (usually in a subsidiary) and the Merger Targets shareholders end
up with stock in the public Company.
-11-
<PAGE>
Management believes that the Company will generally be attractive to Merger
Targets if the Company has its Common Stock being quoted by dealers and
registered under the Exchange Act. Regulatory and rulemaking authorities have,
however, taken steps to make it difficult to enable shell corporations (with no
current business other than one similar to the Company's) to have dealer
quotations for the securities of such corporations. In order to have dealers
quote a bid and ask for the common stock of the Company, in addition to other
requirements, the dealer must file a form pursuant to Rule 15c-2(11) promulgated
pursuant to the Exchange Act. Regulatory authorities may scrutinize and possibly
take action to block quotation by a dealer of stock in a shell company such as
the Company. In addition, the regulatory authorities generally will block a
dealer from quoting on stock of a company without some significant amount of
free trading shares available for trading, often referred to as the "float." All
the currently outstanding stock of the Company is held by a small number of
shareholders and currently there are no free-trading shares. As a result, there
is no assurance that the regulatory authorities will not block the attempt to
obtain dealer quotations for the Company's Common Stock.
The Company's Outstanding Shares of Common Stock Are Not Immediately Eligible
for Future Sale
None of the 2,170,000 shares of Common Stock outstanding of the Company
as of the date of the Registration Statement are eligible for sale under Rule
144 ("Rule 144") promulgated under the Securities Act. 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 owned restricted shares of Common Stock
beneficially 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 quoted
on an exchange or NASDAQ, 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 three months immediately preceding the sale and who has
beneficially owned the shares of Common Stock to be sold for at least two years
is entitled to sell such shares under Rule 144 without regard to any of the
limitations described above. No prediction can be made as to the effect, if any,
that sales of such shares of Common Stock or the availability of such shares for
sale will have on the market prices, if any, for shares of Common Stock
prevailing from time to time. Nevertheless, the sale of substantial amounts of
Common Stock in the public market would likely adversely affect prevailing
market prices for the Common Stock and could impair the Company's ability to
raise capital through the sale of its equity securities.
The Uncertain Structure of a Merger May Result in Risks Relating to the Market
for the Company's Common Stock
The Company may form one or more subsidiary entities to effect a Merger
and may, under certain circumstances, distribute the securities of subsidiaries
to the stockholders of the Company. There cannot be any assurance that a market
would develop for the securities of any subsidiary distributed to stockholders
or, if it did, any assurance as to the prices at which such securities might
trade.
Taxation Considerations May Impact the Structure of a Merger and Post-Merger
Liabilities
Federal and state tax consequences will, in all likelihood, be major
considerations in any Merger the Company may undertake. The structure of a
Merger or the distribution of securities to stockholders may result in taxation
of the Company, the Merger Target or stockholders. Typically, these transactions
may be structured to result in tax-free treatment to both companies, pursuant to
various federal and state tax provisions. The Company intends to structure any
Merger so as to minimize the federal and state tax consequences to both the
Company and the Merger Target. Management cannot assure that Merger will meet
the statutory requirements for a tax-free reorganization, or that the parties
will obtain the intended tax-free treatment upon a transfer of stock or assets.
A non-qualifying reorganization could result in the imposition of both federal
and state taxes, which may have an adverse effect on both parties to the
transaction.
The Company May Be Deemed an Investment Company and Subjected to Related
Restrictions
The regulatory scope of the Investment Company Act, which was enacted
principally for the purpose of regulating vehicles for pooled investments in
securities, extends generally to companies engaged primarily in the business of
investing, reinvesting, owning, holding or trading in securities. The Investment
Company Act may,
-12-
<PAGE>
however, also be deemed to be applicable to a company which does not intend to
be characterized as an investment company but which, nevertheless, engages in
activities which may be deemed to be within the definitional scope of certain
provisions of the Investment Company Act. The Company believes that its
anticipated principal activities, which will involve acquiring control of an
operating company, will not subject the Company to regulation under the
Investment Company Act. Nevertheless, there can be no assurance that the Company
will not be deemed to be an investment company, particularly during the period
prior to consummation of a Merger. If the Company is deemed to be an investment
company, the Company may become subject to certain restrictions relating to the
Company's activities, including restrictions on the nature of its investments
and the issuance of securities. In addition, the Investment Company Act imposes
certain requirements on companies deemed to be within its regulatory scope,
including registration as an investment company, adoption of a specific form of
corporate structure and compliance with certain burdensome reporting, record
keeping, voting, proxy, disclosure and other rules and regulations. In the event
of the characterization of the Company as an investment company, the failure by
the Company to satisfy such regulatory requirements, whether on a timely basis
or at all, would, under certain circumstances, have a material adverse effect on
the Company.
The Company Expects to Pay No Cash Dividends
The Company does not expect to pay dividends prior to the consummation
of a Merger. The payment of dividends after consummating any such Merger, if
any, will be contingent upon the Company's revenues and earnings, if any,
capital requirements, and general financial condition subsequent to consummation
of a Merger. The payment of any dividends subsequent to a Merger will be within
the discretion of the Company's then Board of Directors. The Company presently
intends to retain all earnings, if any, for use in the Company's business
operations and accordingly, the Board does not anticipate declaring any
dividends in the foreseeable future.
The Company is Authorized to Issue Preferred Stock
The Company's Certificate of Incorporation authorizes the issuance of
5,000,000 shares of preferred stock (the "Preferred Stock"), with such
designations, powers, preferences, rights, qualifications, limitations and
restrictions of such series as the Board of Directors, subject to the laws of
the State of Delaware, may determine from time to time. Accordingly, the Board
of Directors is empowered, without stockholder approval, to issue Preferred
Stock with dividend, liquidation, conversion, voting or other rights which could
adversely affect the voting power or other rights of the holders of Common
Stock. In addition, the Preferred Stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. Although the Company does not currently intend to issue
any shares of Preferred Stock, there can be no assurance that the Company will
not do so in the future. As of this date, the Company has no outstanding shares
of Preferred Stock.
Item 7. Financial Statements
See the Consolidated Financial Statements and related Report of
Independent Certified Public Accountants included herewith as pages F-1 through
F-8.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
-13-
<PAGE>
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
The following table sets forth information concerning the sole director
and executive officer of the Company:
Name Age Title
- ---- --- -----
James A. Prestiano 35 President, Secretary, and Sole Director
Mr. James A. Prestiano, age 35, is the sole director, president, and
secretary of the Company. Mr. Prestiano is the principal of the Law Offices of
James A. Prestiano. Mr. Prestiano practices law in New York, New York in the
areas of securities law, corporate law, litigation and other business matters.
Mr. Prestiano has practiced law in New York since 1993. From 1990 to 1993, Mr.
Prestiano was a Staff Attorney at the Northeast Regional Office of the United
States Securities and Exchange Commission. Mr. Prestiano is a graduate of St.
Johns University, where he received a B.A. degree in 1987 and a law degree in
1990.
Mr. Prestiano is not required to commit his full time to the affairs of
the Company and it is likely that he will not devote a substantial amount of
time to the affairs of the Company. Mr. Prestiano will have conflicts of
interest in allocating management time among various business activities. As a
result, the consummation of a Merger may require a greater period of time than
if the Company's management devoted their full time to the Company's affairs.
However, Mr. Prestiano will devote such time as he deems reasonably necessary to
carry out the business and affairs of the Company, including the evaluation of
potential Merger Targets and the negotiation and consummation of a Merger 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 Merger Target or is engaged in active negotiation and
consummation of a Merger.
Item 10. Executive Compensation
James A. Prestiano is the sole officer and director of the Company. Mr.
Prestiano receives no compensation for his services as the sole director and/or
president and secretary of the Company. Mr. Prestiano and his affiliates have
been reimbursed, at cost, for the reasonable business expenses of the Company,
including those incurred in connection with the formation of the Company, the
Private Placement, and the preparation and filing of a Registration Statement on
Form 10 under the Exchange Act. Mr. Prestiano and his affiliates will also be
entitled to be reimbursed for any future reasonable business expenses of the
Company, including any expenses incurred in connection with any Merger. This
will include reimbursement for the cost of the personnel of Mr. Prestiano or his
affiliates (other than Mr. Prestiano himself) to be inclusive of all documented
costs of their employment on a reasonable hourly or daily allocation while
engaged in activities on behalf of the Company.
While the Company does not presently anticipate engaging the services of
professional firms that specialize in finding business acquisitions on any
formal basis, the Company may engage such firms in the future, in which event
the Company may pay a finder's fee or other compensation. In no event, however,
will the Company pay a finder's fee or commission to any officer and director of
the Company or any entity with which he is 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
Merger Target.
-14-
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of this date, with respect
to Common Stock of the Company owned by James A. Prestiano, the sole director
and officer of the Company, and the only individual who owns more than 5% of the
outstanding and voting Common Stock.
Shares Percent
Beneficially of Class
Name Owned Outstanding
- ------------------------------------------- ------------------ -----------
James A. Prestiano(1) 2,000,000(2) 92.17%
All Officers and Directors as a group 2,000,000 92.17%
(one person)
- ---------------------------
(1) The address for Mr. Prestiano is c/o the Company, 317 Madison Avenue, Suite
2310, New York, NY 10017, telephone: (212) 949-9696, facsimile: (212)
949-9241.
(2) Mr. Prestiano has sole voting and investment power with respect to the
shares shown.
A Merger will, in all likelihood, result in stockholders of the Merger
Target obtaining a controlling interest in the Company. Any such Merger may
require management of the Company to sell, transfer or cancel all or a portion
of the Company's stock held by management, or cause Mr. Prestiano to resign or
be removed as executive officer and/or sole director and a corresponding
reduction in or elimination of his participation in the future affairs of the
Company
Item 12. Certain Relationships and Related Transactions
To this date, the Company has had no operating business and engaged in no
transactions in which Mr. Prestiano has had any direct or indirect material
interest. Should the Company engage in any such transaction in the future, Mr.
Prestiano's interest therein would arise only from his ownership of Common Stock
of the Company and would receive no extra or special benefit that was not shared
equally (pro rata) by all holders of Common Stock of the Company.
In addition to the Company, Mr. Prestiano serves as the sole director and
sole officer (President, Secretary and Chief Financial Officer) of nine other
companies that contemplate the same business activities as the Company and thus
compete directly with the Company. Including the Company, these companies are:
Algiers Resources, Inc.; Balstron Corporation; Daliprint, Inc.; Hartscup
Corporation; Mayall Partners, Inc.; PSLRA, Incorporated; Regal Acquisitions,
Inc.; Spacial Corporation; Voyer One, Inc.; and Voyer Two, Inc.
As a result of his role as the sole officer and director of these ten
companies, Mr. Prestiano will have a conflict of interest with respect to
prospective Merger Targets and presenting the corporate opportunity to the
Company. In general, officers and directors of a corporation incorporated under
the laws of the State of Delaware are required to present certain business
opportunities to such corporation, and the laws of the state of Delaware further
provide rights and remedies to shareholders in the event such duty is breached.
As a result of Mr. Prestiano's business associations with multiple companies he
will have conflicting interests. Therefore, the Company has agreed that with
respect to conflicts of interest amongst these companies related to the
allocation of opportunities to negotiate and Merge with Merger Targets, the
Company will waive any conflict or claim related to Mr. Prestiano's fiduciary
duty. However, the conflict should be mitigated by the fact that Mr. Prestiano
has the same ownership interest in each other company as he does in the Company,
and each company (including the Company) has identical stockholders, at least
initially. The conflict will be more significant should, at a later date, these
facts change.
Similarly, in general, officers and directors of a corporation
incorporated under the laws of the state of Delaware owe certain fiduciary
obligations to the shareholders of such corporation. Among these are the duties
of fiduciary care and loyalty, prudent business judgment, and the
above-mentioned duty regarding the presentation of
-15-
<PAGE>
corporate opportunities. Essentially, officers and directors have a duty to act
in a manner so as to advance the financial interests of the corporation and the
shareholders. When these obligations or duties are breached, aggrieved
shareholders can seek redress through a derivative action brought on behalf of
the corporation and occasionally, depending on the facts and circumstances,
through suits brought individually. However, with respect to the Company and the
nine other companies, each current shareholder was made aware at the time he or
she acquired his or her shares of the fact that Mr. Prestiano is the sole
officer and director of the Company and the nine other companies (as stated in
the offering memorandum pursuant to which each shareholder acquired his or her
shares). In addition, each shareholder at the time of his or her acquisition of
shares of the Company was required to make an equal investment in each of the
other nine companies. Thus, because each shareholder of the Company is also an
equal shareholder in each of the nine other companies that compete directly with
the Company, no shareholder of the Company would be harmed due to conflicts of
interest amongst these companies related to Mr. Prestiano's fiduciary
obligations as sole officer and director of each company and/or the allocation
of opportunities to negotiate and Merge with Merger Targets.
Mr. Prestiano and the Company have no formal plan relating to the
allocation of business or Merger opportunities between the Company and the nine
other companies, and thus there can be no assurance that any Merger opportunity
shall be presented to the Company, as opposed to one of the nine other
Companies.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number Description
- -------------- -----------
3(i) Certificate of Incorporation (CE)
3(ii) Bylaws (CE)
4.1 Form of Subscription Supplement, Lock-Up
and Registration Rights Agreement executed by
investors in the Private Placement (CE)
4.2 Form of Subscription Agreement executed by
investors in the Private Placement (CE)
4.3 Placement Agent's Warrant Agreement (CE)
10 Placement Agent Agreement (CE)
601(c) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of 1999.
-16-
<PAGE>
Signatures
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934 the Company has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SPACIAL CORPORATION
By /s/ James A. Prestiano
-----------------------
James A. Prestiano, President, Secretary and Chief
Financial Officer
Date: March 29, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934 this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
By /s/ James A. Prestiano
-----------------------
James A. Prestiano, President, Secretary and Chief
Financial Officer and sole Director
Date: March 29, 2000
-17-
<PAGE>
SPACIAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND
FOR THE PERIOD FROM OCTOBER 6, 1998
(INCEPTION) TO DECEMBER 31, 1998
<PAGE>
SPACIAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
December 31, 1999
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-1
FINANCIAL STATEMENTS
Balance Sheet F-2
Statements of Operations F-3
Statements of Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 - 8
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Spacial Corporation
We have audited the accompanying balance sheet of Spacial Corporation (a
development stage company) as of December 31, 1999, and the related statements
of operations, stockholders' equity, and cash flows for the year then ended and
the period from October 6, 1998 (inception) to December 31, 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Spacial Corporation as of
December 31, 1999, and the results of its operations and its cash flows for the
year then ended and the period from October 6, 1998 (inception) to December 31,
1998 in conformity with generally accepted accounting principles.
As discussed in Note 1, the Company has been in the development stage since its
inception on October 6, 1998. The Company has incurred losses from operations.
These factors raise substantial doubt about the Company's ability to continue as
a going concern.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
February 9, 2000
F-1
<PAGE>
SPACIAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31, 1999
ASSETS
Assets
Cash $ 30,395
--------
Total assets $ 30,395
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued expenses $ 2,790
--------
Total current liabilities 2,790
--------
Stockholders' equity
Preferred stock, $0.001 par value
5,000,000 shares authorized
no shares issued and outstanding --
Common stock, $0.001 par value
40,000,000 shares authorized
2,170,000 shares issued and outstanding 2,170
Additional paid-in capital 36,180
Contributed capital - stock warrants outstanding 2,813
Deficit accumulated during the development stage (13,558)
--------
Total stockholders' equity 27,605
--------
Total liabilities and stockholders' equity $ 30,395
========
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
SPACIAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999,
for the Period from October 6, 1998 (Inception) to December 31, 1998, and
for the Period from October 6, 1998 (Inception) to December 31, 1999
<TABLE>
<CAPTION>
For the For the
Period from Period from
October 6, October 6,
For the 1998 1998
Year Ended (Inception) to (Inception) to
December 31, December 31, December 31,
1999 1998 1999
------------- ------------- --------------
<S> <C> <C> <C>
Operating expenses $ 12,320 $ 1,238 $ (13,558)
------------- ------------- -------------
Net loss $ (12,320) $ (1,238) $ (13,558)
============= ============= =============
Basic and diluted
Loss per common share $ (0.006) $ (0.001) $ (0.006)
============= ============= =============
Weighted-average common shares
outstanding 2,155,907 2,013,953 2,117,911
============== ============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
SPACIAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Year Ended December 31, 1999 and
for the Period from October 6, 1998 (Inception) to December 31, 1998
<TABLE>
<CAPTION>
Contributed Deficit
Capital - Accumulated
Common Stock Additional Stock during the
------------------------ Paid-In Warrants Development
Shares Amount Capital Outstanding Stage Total
------ ------ ---------- ----------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, October 6, 1998 (inception) - $ - $ - $ - $ - $ -
Sale of common stock 2,020,000 2,020 2,580 4,600
Net loss (1,238) (1,238)
---------- --------- ---------- ---------- ---------- -------
Balance, December 31, 1998 2,020,000 2,020 2,580 - (1,238) 3,362
Sale of common stock 150,000 150 33,600 33,750
Issuance of stock warrants 2,813 2,813
Net loss (12,320) (12,320)
---------- --------- ---------- ---------- ---------- -------
Balance, December 31, 1999 2,170,000 $ 2,170 $ 36,180 $ 2,813 $ (13,558) $27,605
========== ========= ========== ========== ========== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
SPACIAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 1999,
for the Period from October 6, 1998 (Inception) to December 31, 1998, and
for the Period from October 6, 1998 (Inception) to December 31, 1999
<TABLE>
<CAPTION>
For the For the
Period from Period from
October 6, October 6,
For the 1998 1998
Year Ended (Inception) to (Inception) to
December 31, December 31, December 31,
1999 1998 1999
------------- ------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (12,320) $ (1,238) $ (13,558)
Adjustments to reconcile net loss to
net cash used in operating activities
Stock warrants outstanding 2,813 - 2,813
Change in
Prepaid expenses 1,888 (1,888) -
Accrued expenses 2,740 50 2,790
------------- ------------- -------------
Net cash used in operating activities (4,879) (3,076) (7,955)
------------- ------------- -------------
Cash flows from financing activities
Cash received for common stock 38,250 100 38,350
Due to stockholder (3,076) 3,076 -
------------- ------------- -------------
Net cash provided by financing activities 35,174 3,176 38,350
------------- ------------- -------------
Net increase in cash 30,295 100 30,395
Cash, beginning of period 100 - -
------------- ------------- -------------
Cash, end of period $ 30,395 $ 100 $ 30,395
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
SPACIAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Line of Business
Spacial Corporation (the "Company") was incorporated on October 6, 1998
in the State of Delaware. The Company is in the development stage, and
its intent is to operate as a capital market access corporation and to
acquire one or more existing businesses through merger or acquisition.
The Company has had no significant business activity to date.
Basis of Presentation
The Company has been in the development stage since its inception on
October 6, 1998. The Company has incurred losses from operations. These
factors raise substantial doubt about the Company's ability to continue
as a going concern.
Start-Up Costs
Start-up costs include legal and professional fees. In accordance with
Statement of Position 98-5, "Costs of Start-Up Activities," these costs
have been expensed as incurred.
Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
Loss per Share
During the period from October 6, 1998 (inception) to December 31, 1998,
the Company adopted SFAS No. 128, "Earnings per Share." Basic loss per
share is computed by dividing the loss available to common stockholders
by the weighted-average number of common shares outstanding. Diluted
loss per share is computed similar to basic loss per share except that
the denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common shares
had been issued and if the additional common shares were dilutive.
Because the Company has incurred net losses, basic and diluted loss per
share are the same.
Income Taxes
The Company uses the asset and liability method of accounting for income
taxes. The asset and liability method accounts for deferred income taxes
by applying enacted statutory rates in effect for periods in which the
difference between the book value and the tax bases of assets and
liabilities are scheduled to reverse. The resulting deferred tax asset
or liability is adjusted to reflect changes in tax laws or rates.
Because the Company is in the development stage and has incurred a loss
from operations, no benefit is realized for the tax effect of the net
operating loss carryforward due to the uncertainty of its realization.
F-6
<PAGE>
SPACIAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements
In June 1999, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 136, "Transfer of Assets to a Not-for-Profit Organization or
Charitable Trust that Raises or Holds Contributions for Others." This
statement is not applicable to the Company.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities." The Company does not expect
adoption of SFAS No. 137 to have a material impact, if any, on its
financial position or results of operations.
NOTE 2 - STOCKHOLDERS' EQUITY
The subscription receivable of $4,500 at December 31, 1998 was collected
in January 1999.
The subscription receivable represents amounts received in a master bank
account for which the President/Director of the Company is the sole
signatory. This account serves as an escrow account. Funds are
transferred from this bank account to the Company's bank account, net of
placement agent's fees for common stock subscribed and any amount paid
on behalf of the Company.
NOTE 3 - WARRANTS OUTSTANDING
On April 19, 1999, warrants to purchase 51,000 shares of the Company's
common stock, par value $0.001, were issued to the placement agent at an
exercise price of $0.255 per share. The shares vest immediately and can
be exercised within seven years from the date of issuance of the
warrants. The fair value of the warrants at the date of issuance was
approximately $2,813 based on the fair value of the placement agent's
services, less cash paid. As of December 31, 1999, the warrants were
still outstanding.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company utilizes office space of a law firm owned by its
President/Director. The Company does not pay any rent for such office
space.
The Company owed $0 and $3,076 at December 31, 1999 and 1998,
respectively, to the President/Director of the Company.
F-7
<PAGE>
SPACIAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 5 - YEAR 2000 ISSUE
Management believes that the Year 2000 Issue did not have a material
effect on the Company's financial position or results of operations.
F-8
EXHIBIT 3(i)
CERTIFICATE OF INCORPORATION
OF
SPACIAL CORPORATION
1. Name. The name of the Corporation is Spacial Corporation.
2. Registered Office. The address of the registered office of the
Corporation in the State of Delaware is 15 E. North Street in the City of Dover,
County of Kent, Delaware, 19901. The name of its registered agent at that
address is Paracorp Incorporated.
3. Business. The nature of the business or purpose of the Corporation is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
4. Capital Structure.
4.1. Authorized Shares. The total number of shares of capital stock which
the Corporation shall have authority to issue is 45,000,000 shares, consisting
of two classes of capital stock:
(a) 40,000,000 shares of Common Stock, par value $.001 per share (the
"Common Stock"); and
(b) 5,000,000 shares of Preferred Stock, par value $.001 per share (the
"Preferred Stock").
5. Incorporator. The incorporator is Lili A. Skrumbis, whose mailing
address is 2121 Avenue of the Stars, Tenth Floor, Los Angeles, California 90067.
6. Dividends.
6.1. When, as, and if dividends are declared by the Corporation's Board of
Directors, whether payable in cash, property, securities or rights of the
Corporation or any other entity, the holders of shares of Common Stock shall be
entitled to share equally in and to receive, in accordance with the number of
Common Stock held by each such holder.
6.2. Dividends payable under this Section 6 shall be paid to the holders of
record of the outstanding Common Stock as their names shall appear on the stock
register of the Corporation on the record date fixed by the Board of Directors
in advance of declaration and payment of each dividend. Any Common Stock issued
as a dividend pursuant to this Section
1
<PAGE>
shall, when so issued, be duly authorized, validly issued, fully paid and
non-assessable, and free of all liens and charges. The Corporation shall not
issue fractions of Common Stock on payment of such dividend but shall issue a
whole number of shares to such holder of Common Stock rounded up or down in the
Corporation's sole discretion to the nearest whole number, without compensation
to the stockholder whose fractional share has been rounded down or from any
stockholder whose fractional share has been rounded up.
7. Liquidation Rights. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the affairs of the Corporation, after payment shall
have been made to holders of outstanding Preferred Stock, if any, of the full
amount to which they are entitled pursuant to this Certificate of Incorporation
and any resolutions that may be adopted from time to time by the Corporation's
Board of Directors in accordance with Section 10 below, the holders of Common
Stock shall be entitled, to the exclusion of the holders of Preferred Stock, if
any, to share ratably in accordance with the number of Common Stock held by each
such holder, in all remaining assets of the Corporation available for
distribution among the holders of Common Stock, whether such assets are capital,
surplus or earnings. For purposes of this Section, neither the consolidation or
merger of the Corporation with or into any other corporation or corporations
pursuant to which the stockholders of the Corporation receive capital stock
and/or other securities (including debt securities) of the acquiring corporation
(or of the direct or indirect parent corporation of the acquiring corporation),
nor the sale, lease or transfer by the Corporation of all or any part of its
assets, nor the reduction of the capital stock of the Corporation, shall be
deemed to be a voluntary or involuntary liquidation, dissolution or winding up
of the Corporation as those terms are used in this Section 7.
8. Voting Rights.
8.1. The holders of the Common Stock shall vote as a single class on all
matters submitted to a vote of the stockholders, with each Share entitled to one
vote. The holders of Common Stock are not entitled to cumulate votes in the
election of any directors.
8.2. In the event that the shares of Common Stock shall be listed and
quoted on an exchange or other trading system, the Board of Directors of the
Corporation shall ensure, and shall have all powers necessary to ensure, that
the membership of the Board of Directors and the voting rights of the Holders of
Common Stock shall at all times be consistent with the applicable rules and
regulations, if any, for the Common Stock to be eligible for listing and
quotation on such exchange or other trading system.
9. Preferred Stock.
9.1. General. Subject to the provisions of this Certificate of
Incorporation, the Board of Directors is authorized, subject to limitations
prescribed by law, to provide for the issuance of the shares of Preferred Stock
in series, and by filing a certificate pursuant to the applicable law of the
State of Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions thereof.
2
<PAGE>
The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether dividends shall
be cumulative, and, if so, from which date or dates, and the relative rights of
priority, if any, of payment of dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to the voting
rights provided by law, and if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so, the
terms and conditions of such conversion, including provision for adjustment of
the conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date or date upon
or after which they shall be redeemable, and the amount per share payable in
case of redemption, which amount may vary under different conditions and at
different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund; and
(g) The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and the
relative rights of priority, if any, of payment of shares of that series.
10. Existence. The Corporation is to have perpetual existence.
11. Bylaws. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the bylaws of the Corporation.
12. Elections, Meetings and Books. Elections of directors need not be by
written ballot unless the bylaws of the Corporation shall so provide. Meetings
of stockholders may be held within or without the State of Delaware, as the
bylaws may provide. The books of the Corporation may be kept (subject to any
provision contained in the statutes) outside the State of Delaware at such place
or places as may be designated from time to time by the board of directors or in
the bylaws of the Corporation.
13. Amendment. The Corporation reserves the right to amend, alter change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter
3
<PAGE>
prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
14. Limitation on Director Liability. No director shall be personally
liable to the Corporation or any of its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (a) for any breach
of the director's duty of loyalty to the Corporation or its stockholders, (b)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (c) under Section 174 of the Delaware General
Corporation Law, or (d) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law hereafter is
amended to authorize the further elimination or limitation of the liability of
directors, then the liability of a director of the Corporation, in addition to
the limitations on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Delaware General Corporation law. Any
repeal or modification of this Section shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or modification.
15. Indemnification.
15.1. General. Each person who was or is made a party to or is threatened
to be made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a Director or officer of the Corporation or is or was
serving at the request of the Corporation as a Director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in any other capacity while
serving as a Director, officer, employee or agent or in any other capacity while
serving as a Director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to person who has ceased to be a Director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
Subsection 15.2, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that if the Delaware
General Corporation Law requires, the payment of such expenses incurred by a
Director or officer in his or her capacity as a Director or officer (and not in
any other capacity in which service was or is rendered by such person while a
4
<PAGE>
Director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
Director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such Director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of Directors and
officers.
15.2. Failure to Pay a Claim. If a claim under Subsection 15.1 is not paid
in full by the Corporation within thirty (30) days after a written claim has
been received by the Corporation, the claimant may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or part, the claimant shall be entitled to be paid also the
expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
15.3. Not Exclusive. The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final disposition
conferred in this Section shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of this
Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested Directors or otherwise.
15.4. Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any Director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trusts or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
15.5. Definition of the Corporation. As used in this Section, references to
"the Corporation" shall include, in addition to the resulting or surviving
corporation, any constituent corporation absorbed in a consolidation or merger
which, if its separate existence had continued, would have had power and
authority to indemnify its Directors, officers, employees and agents, so that
any person who is or was a Director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a
5
<PAGE>
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise, shall stand in the same position under the
provisions of this Section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
15.6. Severability. If this Section or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Director, officer, employee and
agent of the Corporation as to expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement with respect to any action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
a grand jury proceeding and an action by the Corporation, to the fullest extent
permitted by any applicable portion of this Section that shall not have been
invalidated or by any other applicable law.
THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose
of forming a corporation pursuant to the General Corporation Law of the State of
Delaware, does make this certificate, hereby declaring and certifying that this
is her act and deed and the facts herein stated are true, and accordingly have
hereunto set her hand this 5th day of October, 1998.
\s\ Lili A. Skrumbis
--------------------
Lili A. Skrumbis, Incorporator
6
EXHIBIT 3(ii)
BYLAWS
OF
SPACIAL CORPORATION
I
OFFICES
SECTION 1.1 Registered Office. The registered office of Spacial Corporation
(the "Corporation") in the State of Delaware shall be at the office of
Incorporating Services, Ltd., in the City of Dover, County of Kent and said
corporation shall be the registered agent of the Corporation.
SECTION 1.2 Principal Office. The principal office for the transaction of
the business of the Corporation shall be at 317 Madison Avenue, Suite 2310, New
York, New York 10017. The Board of Directors (the "Board") is hereby granted
full power and authority to change said principal office from one location to
another.
SECTION 1.3 Other Offices. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.
II
MEETINGS OF STOCKHOLDERS
SECTION 2.1 Annual Meetings. Annual meetings of the stockholders of the
Corporation for the purpose of electing directors and for the transaction of
such other proper business as may come before such meetings shall be held at
such place, time and date as the Board shall determine by resolution.
SECTION 2.2 Special Meetings. Special meetings of the stockholders for any
purpose or purposes may be called by the Board or a committee of the Board which
has been duly designated by the Board and whose powers and authority, as
provided in a resolution of the Board or in these Bylaws, include the power to
call such meetings. Unless otherwise prescribed by statute or by the Certificate
of Incorporation, special meetings may not be called by any other person or
persons. No business may be transacted at any special meeting of stockholders
other than such business as may be designated in the notice calling such
meeting.
SECTION 2.3 Place of Meetings. All meetings of the stockholders shall be
held at such places, within or without the State of Delaware, as may from time
to time be designated by the person or persons calling the respective meeting
and specified in the respective notices or waivers of notice thereof.
-1-
<PAGE>
SECTION 2.4 Notice of Meetings. Except as otherwise required by law, notice
of each meeting of the stockholders, whether annual or special, shall be given
not less than ten (10) nor more than sixty (60) days before the date of the
meeting to each stockholder of record entitled to vote at such meeting by
delivering a typewritten or printed notice thereof to him personally, or by
depositing such notice in the United States and/or Canadian mail, in a postage
prepaid envelope, directed to him at his post office address furnished by him to
the Secretary of the Corporation for such purpose or, if he shall not have
furnished to the Secretary the address for such purpose, then at his post office
address last known to the Secretary, or by transmitting a notice thereof to him
at such address by telegraph, cable or telecopier. Except as otherwise expressly
required by law, no publication of any notice of a meeting of the stockholders
shall be required. Every notice of a meeting of the stockholders shall state the
place, date and hour of the meeting, and, in the case of a special meeting,
shall also state the purpose or purposes for which the meeting is called. Notice
of any meeting of stockholders shall not be required to be given to any
stockholder who shall have waived such notice and such notice shall be deemed
waived by any stockholder who shall attend such meeting in person or by proxy,
except a stockholder who shall attend such meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Except as otherwise
expressly required by law, notice of any adjourned meeting of the stockholders
need not be given if the time and place thereof are announced at the meeting at
which the adjournment is taken.
SECTION 2.5 Quorum. Except in the case of any meeting for the election of
directors summarily ordered as provided by law, the holders of record of a
majority in voting interest of the shares of stock of the Corporation entitled
to be voted thereat, present in person or by proxy, shall constitute a quorum
for the transaction of business at any meeting of the stockholders of the
Corporation or any adjournment thereof. In the absence of a quorum at any
meeting or any adjournment thereof, a majority in voting interest of the
stockholders pre sent in person or by proxy and entitled to vote thereat or, in
the absence therefrom of all the stockholders, any officer entitled to preside
at, or to act as secretary of, such meeting may adjourn such meeting from time
to time. At any such adjourned meeting at which a quorum is present any business
may be transacted which might have been transacted at the meeting as originally
called.
SECTION 2.6 Voting.
(a) Each stockholder shall, at each meeting of the stockholders, be
entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation having voting rights on the matter in question and
which shall have been held by him and registered in his name on the books of the
Corporation:
(i) on the date fixed pursuant to Section 6.5 of these Bylaws as the
record date for the determination of stockholders entitled to notice of and
to vote at such meeting, or
-2-
<PAGE>
(ii) if no such record date shall have been so fixed, then (A) at the
close of business on the day next preceding the day on which notice of the
meeting shall be given or (B) if notice of the meeting shall be waived, at
the close of business on the day next preceding the day on which the
meeting shall be held.
(b) Shares of stock of the Corporation belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors in such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity shall
be entitled to vote such stock. Persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledgor on the books of the Corporation
he shall have expressly empowered the pledgee to vote thereon, in which case
only the pledgee, or his proxy may represent such stock and vote thereon. Stock
having voting power standing of record in the names of two or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
tenants by the entirety or otherwise, or with respect to which two or more
persons have the same fiduciary relationship, shall be voted in accordance with
the provisions of the General Corporation Law of the State of Delaware.
(c) Any such voting rights may be exercised by the stockholder entitled
thereto in person or by his proxy appointed by an instrument in writing,
subscribed by such stockholder or by his attorney thereunto authorized and
delivered to the secretary of the meeting; provided, however, that no proxy
shall be voted or acted upon after three years from its date unless said proxy
shall provide for a longer period. The attendance at any meeting of a
stockholder who may theretofore have given a proxy shall not have the effect of
revoking the same unless he shall in writing so notify the secretary of the
meeting prior to the voting of the proxy. At any meeting of the stockholders all
matters, except as otherwise provided in the Certificate of Incorporation, in
these Bylaws or by law, shall be decided by the vote of a majority of the shares
present in person or by proxy and entitled to vote thereat and thereon. The vote
at any meeting of the stockholders on any question need not be by ballot, unless
so directed by the chairman of the meeting. On a vote by ballot each ballot
shall be signed by the stockholder voting, or by his proxy, if there be such
proxy, and it shall state the number of shares voted.
SECTION 2.7 List of Stockholders. The Secretary of the Corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the duration
thereof, and may be inspected by any stockholder who is present.
-3-
<PAGE>
SECTION 2.8 Inspector of Election. If at any meeting of the stockholders a
vote by written ballot shall be taken on any question, the Board of Directors or
the chairman of such meeting may appoint an Inspector of Election to act with
respect to such vote. The Inspector of Election so appointed shall first
subscribe an oath faithfully to execute the duties of an inspector of election
at such meeting with strict impartiality and according to the best of his
ability. Such Inspector of Election shall decide upon the qualification of the
voters and shall report the number of shares represented at the meeting and
entitled to vote on such question, shall conduct and accept the votes, and, when
the voting is completed, shall ascertain and report the number of shares voted
respectively for and against the question. Reports of the Inspector of Election
shall be in writing and subscribed and delivered by them to the Secretary of the
Corporation. The Inspector of Election need not be a stockholder of the
Corporation, and any officer or director of the Corporation may be an Inspector
of Election on any question other than a vote for or against a proposal in which
he shall have a material interest.
SECTION 2.9 Conduct of Meeting. The chairman of a meeting of the
stockholders, as determined pursuant to Article IV of these Bylaws, shall
conduct such meeting in a businesslike and fair manner, but shall not be
obligated to follow any technical, formal or parliamentary rules or principles
of procedure. The chairman's ruling on procedural matters shall be conclusive
and binding on all stockholders, unless at the time of a ruling a request for a
vote is made to the stockholders entitled to vote and represented in person or
by proxy at the meeting, in which case the decision of a majority of such shares
shall be conclusive and binding on all stockholders. Without limiting the
generality of the foregoing, the chairman shall have all of the powers usually
vested in the chairman of a meeting of stockholders.
III
BOARD OF DIRECTORS
SECTION 3.1 General Powers. The property, business and affairs of the
Corporation shall be managed by the Board.
SECTION 3.2 Number and Term of Office. The authorized number of directors
shall be no less than 1 and no more than 8, with the exact number to be
determined from time to time by a resolution adopted by a majority of the Board
or by the affirmative vote of the holders of not less than a majority of the
total voting power of all outstanding shares of voting stock of the Corporation.
The initial number of authorized directors shall be one (1). Each of the
directors of the Corporation shall hold office until his successor shall have
been duly elected and shall qualify or until he shall resign or shall have been
removed in the manner hereinafter provided.
SECTION 3.3 Election of Directors. The directors shall be elected by the
stockholders of the Corporation, and at each election the persons receiving the
greatest number of votes, up to the number of directors then to be elected,
shall be the persons then elected. The election of directors is subject to any
provisions contained in the Certificate of Incorporation relating thereto,
including any provisions for cumulative voting.
-4-
<PAGE>
SECTION 3.4 Resignations. Any director of the Corporation may resign at any
time by giving written notice to the Board or to the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time is not specified, it shall take effect immediately upon
its receipt. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 3.5 Vacancies. Except as otherwise provided in the Certificate of
Incorporation, any vacancy in the Board, whether because of death, resignation,
disqualification, an increase in the number of directors, or any other cause,
may be filled by vote of the majority of the remaining directors, although less
than a quorum. Each director so chosen to fill a vacancy shall hold office until
his successor shall have been elected and shall qualify or until he shall resign
or shall have been removed in the manner hereinafter provided.
SECTION 3.6 Place of Meeting and Telephone Meetings. The Board may hold any
of its meetings at such place or places within or without the State of Delaware
as the Board may from time to time by resolution designate or as shall be
designated by the person or persons calling the meeting or in the notice of a
waiver of notice of any such meeting. Directors may participate in any regular
or special meeting of the Board by means of con ference telephone or similar
communications equipment pursuant to which all persons participating in the
meeting of the Board can hear each other, and such participation shall
constitute presence in person at such meeting.
SECTION 3.7 First Meeting. The Board shall meet as soon as practicable
after each annual election of directors and notice of such first meeting shall
not be required.
SECTION 3.8 Regular Meetings. Regular meetings of the Board may be held at
such times as the Board shall from time to time by resolution determine. If any
day fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting shall be held at the same hour and place
on the next succeeding business day not a legal holiday. Except as provided by
law, notice of regular meetings need not be given.
SECTION 3.9 Special Meetings. Special meetings of the Board may be called
by the Chairman of the Board, the Chief Executive Officer, or the President and
shall be called by the President or Secretary on the written request of two
directors. Notice of all special meetings of the Board shall be given to each
director:
(a) by first-class mail, postage prepaid, deposited in the United States
mail in the city where the principal executive office of the Corporation is
located at least five (5) days before the date of such meeting; or
(b) by telegram, charges prepaid, such notice to be transmitted by the
telegraph company in the city of the principal executive office of the
Corporation at least forty-eight (48) hours before the time of holding such
meeting; or
-5-
<PAGE>
(c) by personal delivery or telecopier, or orally in person or by
telephone, at least twenty-four (24) hours prior to the time of holding such
meeting.
Notice given in accordance with paragraph (a) above shall conclusively be
deemed to be given to a director if addressed to the director at the address the
person giving the notice has reason to believe will result in actual notice to
the director prior to the time of the meeting. Notice given in accordance with
paragraph (b) or (c) above shall conclusively be deemed to be given to a
director if delivered in writing or communicated orally either to the director
or to a person whom the person giving the notice has reason to believe will
deliver or communicate it to the director prior to the time of the meeting.
Notice given in accordance with paragraph (a), (b) or (c) above shall
conclusively be deemed given to a director if mailed or delivered to the last
address provided by the director to the Secretary of the Corporation for such
purpose. The notice need not specify the purpose of the meeting, nor need it
specify the place of the meeting if the meeting is to be held at the principal
executive office of the Corporation.
Such notice may be waived by any director and any meeting shall be a legal
meeting without notice having been given if all the directors shall be present
thereat or those not present shall, either before or after the meeting, sign a
written waiver of notice of, or a consent to, such meeting or shall after the
meeting sign the approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the Corporation's records or be made a part of the
minutes of the meeting.
SECTION 3.10 Quorum and Manner of Acting. Except as otherwise provided in
the Certificate of Incorporation or these Bylaws or by law, the presence of a
majority of the total number of directors then in office shall be required to
constitute a quorum for the transaction of business at any meeting of the Board.
Except as otherwise provided in the Certificate of Incorporation or these Bylaws
or by law, all matters shall be decided at any such meeting, a quorum being
present, by the affirmative votes of a majority of the directors present. Except
as otherwise provided in the Certificate of Incorporation, these Bylaws or by
law, a meeting at which there is a quorum initially present may continue to
transact business notwithstanding the withdrawal of a director, so long as any
action taken is approved by at least a majority of the required quorum for such
meeting. In the absence of a quorum, a majority of directors present at any
meeting may adjourn the same from time to time until a quorum shall be present.
Notice of any adjourned meeting need not be given. The directors shall act only
as a Board, and the individual directors shall have no power as such.
SECTION 3.11 Action by Consent. Any action required or permitted to be
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.
-6-
<PAGE>
SECTION 3.12 Compensation. The directors shall receive only such
compensation for their services as directors as may be allowed by resolution of
the Board. The Board may also provide that the Corporation shall reimburse each
such director for any expense incurred by him on account of his attendance at
any meetings of the Board or committees of the Board. Neither the payment of
such compensation nor the reimbursement of such expenses shall be construed to
preclude any director from serving the Corporation or its subsidiaries in any
other capacity and receiving compensation therefor.
SECTION 3.13 Executive Committee. There may be an Executive Committee
appointed by resolution passed by a majority of the Board, who may meet at
stated times, or on notice to all by any of their own number, during the
intervals between the meetings of the Board; they shall advise and aid the
officers of the Corporation in all matters concerning its interests and the
management of its business, and generally perform such duties and exercise such
powers as may be directed or delegated by the Board from time to time. To the
full extent permitted by law, the Board may delegate to such committee authority
to exercise all the powers of the Board while the Board is not in session.
Vacancies in the membership of the committee shall be filled by the Board at a
regular meeting or at a special meeting for that purpose. The Executive
Committee shall keep written minutes of its meetings and report the same to the
Board when required. The provisions of Sections 3.8, 3.9, 3.10 and 3.11 of these
Bylaws shall apply, mutatis mutandis, to any Executive Committee of the Board.
SECTION 3.14 Other Committees. The Board may, by resolution passed by a
majority of the Board, designate one or more other committees, each such
committee to consist of one or more of the directors of the Corporation. To the
full extent permitted by law, any such committee shall have and may exercise
such powers and authority as the Board may designate in such resolution.
Vacancies in the membership of a committee shall be filled by the Board at a
regular meeting or a special meeting for that purpose. Any such committee shall
keep written minutes of its meetings and report the same to the Board when
required. The provisions of Sections 3.8, 3.9, 3.10 and 3.11 of these Bylaws
shall apply, mutatis mutandis, to any such committee of the Board.
SECTION 3.15 Rights of Inspection. Every director shall have the absolute
right at any reasonable time to inspect and copy all books, records, and
documents of every kind and to inspect the physical properties of the
Corporation and also of its subsidiary corporations, domestic or foreign. Such
inspection by a director may be made in person or by agent or attorney and
includes the right to copy and obtain extracts.
-7-
<PAGE>
IV
OFFICERS
SECTION 4.1 Officers. The officers of the Corporation shall be a Chief
Executive Officer, a President, a Secretary and a Treasurer. In addition, the
Board may also elect a Chairman of the Board, one or more Vice Presidents, and
one or more Assistant Secretaries and Assistant Treasurers. No officer need be a
director of the Corporation. A person may hold more than one office.
SECTION 4.2 Other Officers. The Board may appoint such other officers as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board.
SECTION 4.3 Election. Each of the officers of the Corporation, except such
officers as may be appointed in accordance with the provisions of Section 4.1,
Section 4.2 or Section 4.4 of these Bylaws, shall be chosen annually by the
Board and shall hold his office until he shall resign or shall be removed or
otherwise disqualified to serve, or his successor shall be elected and
qualified.
SECTION 4.4 Removal; Vacancies. Subject to the express provisions of a
contract authorized by the Board, any officer may be removed, either with or
without cause, at any time by the Board or by any officer upon whom such power
of removal may be conferred by the Board. Any vacancy occurring in any office of
the Corporation shall be filled by the Board.
SECTION 4.5 The Chairman of the Board. The Chairman of the Board, if one is
elected, shall not be an officer of the Corporation unless designated as such by
the Board. He shall preside at all meetings of the stockholders and directors
and shall have such other powers and duties as may be prescribed by the Board or
by applicable law. He shall be an ex- officio member of standing committees, if
so provided in the resolutions of the Board appointing the members of such
committees. If there is no Chief Executive Officer or President, the Chairman of
the Board shall in addition be the Chief Executive Officer of the Corporation
and shall have the powers and duties prescribed in Section 4.6.
SECTION 4.6 The Chief Executive Officer. The Chief Executive Officer,
subject to the control of the Board, shall have general supervision, control and
management of the business and affairs of the Corporation, and general charge
and supervision of all officers, agents and employees of the Corporation; shall
see that all orders and resolutions of the Board are carried into effect; in
general shall exercise all powers and perform all duties usually vested in the
office of chief executive officer of a corporation; and shall have such other
powers and duties as may from time to time be assigned to him by the Board or as
may be prescribed by these Bylaws or applicable law. He may execute and deliver
in the name of the Corporation all deeds, mortgages, bonds, contracts and other
instruments, except where required by law or these Bylaws to be otherwise
executed and delivered or when such
-8-
<PAGE>
execution and delivery shall be expressly delegated by him or the Board to some
other officer or agent of the Corporation. In the absence of the Chairman of the
Board, or if there is none, the Chief Executive Officer shall preside at all
meetings of the stockholders and, if he is a director, the Board. He shall be an
ex-officio member of all the standing committees, including the executive
committee, if any.
SECTION 4.7 The President. Subject to such supervisory powers, if any, as
may be given by the Board or these Bylaws to the Chief Executive Officer or the
Chairman of the Board, if there are such officers, the President shall, subject
to the control of the Board, have the powers and duties prescribed for the
President by the Chief Executive Officer or these Bylaws. In the absence of the
Chairman of the Board and the Chief Executive Officer, or if there are none, the
President shall preside at all meetings of the stockholders and, if he is a
director, the Board. If there is no Chief Executive Officer, the President shall
in addition be the Chief Executive Officer of the Corporation and shall have the
powers and duties prescribed in Section 4.6. The President shall be an
ex-officio member of standing committees, if so provided in the resolutions of
the Board appointing the members of such committees.
SECTION 4.8 The Vice Presidents. The Vice Presidents, if any, shall perform
such duties and have such powers as the Board may from time to time prescribe.
SECTION 4.9 The Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board.
He shall disburse the funds of the Corporation as may be ordered by the
Board, making proper vouchers for such disbursements, and shall render to the
President and the Board, at its regular meetings, or when the Board so requires,
an account of all his transactions as Treasurer and of the financial condition
of the Corporation.
SECTION 4.10 The Secretary. The Secretary shall attend all meetings of the
Board and all meetings of the stockholders and record all the proceedings of the
meetings of the stockholders and of the Board in a book to be kept for that
purpose and shall perform like duties for the standing and special committees of
the Board when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board, and shall
perform such other duties as may be prescribed by the Board or the President,
under whose supervision he shall act. He shall have custody of the corporate
seal of the Corporation and he shall have authority to affix the same to any
instrument requiring it and, when so affixed, it may be attested by his
signature. The Board may give general authority to any other officer to affix
the seal of the Corporation and to attest the affixing by his signature.
-9-
<PAGE>
SECTION 4.11 The Assistant Treasurer and Assistant Secretary. The assistant
treasurer and the assistant secretary, if any, shall perform such duties and
have such powers as the Board may from time to time prescribe.
V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 5.1 Checks, Drafts, Etc.. All checks, drafts or other orders for
payment of money, notes or other evidence of indebtedness payable by the
Corporation shall be signed by such person or persons and in such manner as,
from time to time, shall be determined by resolution of the Board. Each such
person or persons shall give such bond, if any, as the Board may require.
SECTION 5.2 Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board may select, or as may
be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the purpose
of collection for the account of the Corporation, the President, any Vice
President or the Treasurer (or any other officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation who
shall from time to time be determined by the Board) may endorse, assign and
deliver checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation.
SECTION 5.3 General and Special Bank Accounts. The Board may from time to
time authorize the opening and keeping of general and special bank accounts with
such banks, trust companies or other depositories as the Board may select or as
may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
VI
SHARES AND THEIR TRANSFER
SECTION 6.1 Certificates for Stock. Every owner of stock of the Corporation
shall be entitled to have a certificate or certificates, to be in such form as
the Board shall prescribe, certifying the number and class of shares of the
stock of the Corporation owned by him. The certificates representing shares of
such stock shall be numbered in the order in which they shall be issued and
shall be signed in the name of the Corporation by the Chairman, Vice Chairman or
President or a Vice President, and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer. Any of or all of the signatures on the
certificates may be a facsimile. In case any officer, transfer agent or
registrar who has signed, or whose facsimile signature has been placed upon, any
such certificate shall have
-10-
<PAGE>
ceased to be such officer, transfer agent or registrar before such certificate
is issued, such certificate may nevertheless be issued by the Corporation with
the same effect as though the person who signed such certificate, or whose
facsimile signature shall have been placed thereupon, were such officer,
transfer agent or registrar at the date of issue. A record shall be kept of the
respective names of the persons, firms or corporations owning the shares
represented by such certificates, the number and class of shares represented by
such certificates, respectively, and the respective dates thereof, and in case
of cancellation, the respective dates of cancellation. Every certificate
surrendered to the Corporation for exchange or transfer shall be canceled, and
no new certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so cancelled, except
in cases provided for in Section 6.4.
SECTION 6.2 Transfers of Stock. Transfers of shares of stock of the
Corporation shall be made on the books of the Corporation by the registered
holder thereof, or by his attorney thereupon authorized by power of attorney
duly executed and filed with the Secretary, or with a transfer clerk or transfer
agent appointed as provided in Section 6.3, and upon surrender of the
certificate or certificates for such shares properly endorsed and the payment of
all taxes thereon. The person in whose name shares of stock stand on the books
of the Corporation shall be deemed the owner thereof for all purposes as regards
the Corporation. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, such fact shall be so expressed in the entry of
transfer if, when the certificate or certificates shall be presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6.3 Regulations. The Board may make such rules and regulations as
it may deem expedient, not inconsistent with these Bylaws, concerning the issue,
transfer and registration of certificates for shares of the stock of the
Corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer clerks or one or more transfer agents and one or more
registrars, and may require all certificates for stock to bear the signature or
signatures of any of them.
SECTION 6.4 Lost, Stolen, Destroyed and Mutilated Certificates. In any case
of loss, theft, destruction or mutilation of any certificate of stock, another
may be issued in its place upon proof of such loss, theft, destruction or
mutilation and upon the giving of a bond of indemnity to the Corporation in such
form and in such sum as the Board or the President may direct; provided,
however, that a new certificate may be issued without requiring any bond when,
in the judgment of the Board or the President, it is proper so do to.
SECTION 6.5 Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any other
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board may fix, in advance, a record date, which shall not be more
than sixty
-11-
<PAGE>
(60) nor less than ten (10) days before the date of such meeting, nor more than
sixty (60) days prior to any other action. If in any case involving the
determination of stockholders for any purpose other than notice of or voting at
a meeting of stockholders the Board shall not fix such a record date, the record
date for determining stockholders for such purpose shall be the close of
business on the day on which the Board shall adopt the resolution relating
thereto. A determination of stockholders entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of such meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.
VII
MISCELLANEOUS
SECTION 7.1 Seal. The Board shall provide a corporate seal, which shall be
in the form of a circle and shall bear the name of the Corporation and words and
figures showing that the Corporation was incorporated in the State of Delaware
and the year of incorporation.
SECTION 7.2 Waiver of Notices. Whenever notice is required to be given by
these Bylaws or the Certificate of Incorporation or by law, the person entitled
to said notice may waive such notice in writing, either before or after the time
stated therein, and such waiver shall be deemed equivalent to notice.
SECTION 7.3 Amendments. Subject to the provisions of the Certificate of
Incorporation, these Bylaws and applicable law, these Bylaws or any of them may
be amended or repealed and new Bylaws may be adopted (a) by the Board, by vote
of a majority of the number of directors then in office or (b) by the vote of
the holders of not less than a majority of the total voting power of all
outstanding shares of voting stock of the Corporation at an annual meeting of
stockholders, without previous notice, or at any special meeting of
stockholders, provided that notice of such proposed amendment, repeal or
adoption is given in the notice of special meeting. Subject to the provisions of
the Certificate of Incorporation, any Bylaws adopted or amended by the
stockholders may be amended or repealed by the Board or the stockholders.
SECTION 7.4 Voting Stock. Unless otherwise ordered by the Board, the Chief
Executive Officer shall have full power and authority on behalf of the
Corporation to attend and to act and vote at any meeting of the stockholders of
any corporation in which the Corporation may hold stock and at any such meeting
shall possess and may exercise any and all rights and powers which are incident
to the ownership of such stock and which as the owner thereof the Corporation
might have possessed and exercised if present. The Board by resolution from time
to time may confer like powers upon any other person or persons.
-12-
<PAGE>
VIII
EMERGENCY PROVISIONS
SECTION 8.1 General. The provisions of this Article shall be operative only
during a national emergency declared by the President of the United States or
the person performing the President's functions, or in the event of a nuclear,
atomic, or other attack on the United States or a disaster making it impossible
or impracticable for the Corporation to conduct its business without recourse to
the provisions of this Article. Said provisions in such event shall override all
other Bylaws of the Corporation in conflict with any provisions of this Article,
and shall remain operative so long as it remains impossible or impracticable to
continue the business of the Corporation otherwise, but thereafter shall be
inoperative; provided that all actions taken in good faith pursuant to such
provisions shall thereafter remain in full force and effect unless and until
revoked by action taken pursuant to the provisions of the Bylaws other than
those contained in this Article.
SECTION 8.2 Unavailable Directors. All directors of the Corporation who are
not available to perform their duties as directors by reason of physical or
mental incapacity or for any other reason or who are unwilling to perform their
duties or whose whereabouts are unknown shall automatically cease to be
directors, with like effect as if such persons had resigned as directors, so
long as such unavailability continues.
SECTION 8.3 Authorized Number of Directors. The authorized number of
directors shall be the number of directors remaining after eliminating those who
have ceased to be directors pursuant to Section 8.2, or the minimum number
required by law, whichever is greater.
SECTION 8.4 Quorum. The number of directors necessary to constitute a
quorum shall be one-third of the authorized number of directors as specified in
Section 8.3, or such other minimum number as, pursuant to the law or lawful
decree then in force, it is possible for the Bylaws of the Corporation to
specify.
SECTION 8.5 Creation of Emergency Committee. In the event the number of
directors remaining after eliminating those who have ceased to be directors
pursuant to Section 8.2 is less than the minimum number of authorized directors
required by law, then until the appointment of additional directors to make up
such required minimum, all the powers and authorities which the Board could by
law delegate, including all powers and authorities which the Board could
delegate to a committee, shall be automatically vested in an emergency
committee, and the emergency committee shall thereafter manage the affairs of
the Corporation pursuant to such powers and authorities and shall have all such
other powers and authorities as may by law or lawful decree be conferred on any
person or body of persons during a period of emergency.
-13-
<PAGE>
SECTION 8.6 Constitution of Emergency Committee. The emergency committee
shall consist of all the directors remaining after eliminating those who have
ceased to be directors pursuant to Section 8.2, provided that such remaining
directors are not less than three in number. In the event such remaining
directors are less than three in number, the emergency committee shall consist
of three persons, who shall be the remaining director or directors and either
one or two officers or employees of the Corporation, as the remaining director
or directors may in writing designate. If there is no remaining director, the
emer gency committee shall consist of the three most senior officers of the
Corporation who are available to serve, and if and to the extent that officers
are not available, the most senior employees of the Corporation. Seniority shall
be determined in accordance with any designation of seniority in the minutes of
the proceedings of the Board, and in the absence of such designation, shall be
determined by rate of remuneration. In the event that there are no remaining
directors and no officers or employees of the Corporation available, the
emergency committee shall consist of three persons designated in writing by the
stockholder owning the largest number of shares of record as of the date of the
last record date.
SECTION 8.7 Powers of Emergency Committee. The emergency committee, once
appointed, shall govern its own procedures and shall have the power to increase
the number of members thereof beyond the original number, and in the event of a
vacancy or vacancies therein, arising at any time, the remaining member or
members of the emergency committee shall have the power to fill such vacancy or
vacancies. In the event at any time after its appointment all members shall die
or resign or become unavailable to act for any reason whatsoever, a new
emergency committee shall be appointed in accordance with the foregoing
provisions of this Article.
SECTION 8.8 Directors Becoming Available. Any person who has ceased to be a
director pursuant to the provisions of Section 8.2 and who thereafter becomes
available to serve as a director shall automatically become a member of the
emergency committee.
SECTION 8.9 Election of Board of Directors. The emergency committee shall,
as soon after its appointment as is practicable, take all requisite action to
secure the election of a board of directors, and upon election all the powers
and authorities of the emergency committee shall cease.
SECTION 8.10 Termination of Emergency Committee. In the event, after the
appointment of any emergency committee, a sufficient number of persons who
ceased to be directors pursuant to Section 8.2 become available to serve as
directors, so that if they had not ceased to be directors as aforesaid, there
would be enough directors to constitute the minimum number of directors required
by law, then all such persons shall automatically be deemed to be reappointed as
directors and the powers and authorities of the emergency committee shall end.
-14-
<PAGE>
IX
APPROVAL OF INSIDER TRANSACTIONS
SECTION 9.1 Any transaction, agreement or understanding between the
Corporation or any of its subsidiaries and any of the officers and directors of
the Corporation, or any entity in which such officer or director has a material
financial interest, which is material to the business of the Corporation, or the
applicable subsidiary, must be approved by a majority of the directors of the
Corporation who have no interest in such transaction, agreement or
understanding. The interested director may be present at the meeting, if any, at
which such transaction, agreement or underwriting is approved.
-15-
<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, hereby certify that:
1. I am the duly elected, qualified and acting Secretary of Spacial
Corporation, a Delaware corporation.
2. The foregoing Bylaws of said corporation were duly adopted as the Bylaws
thereof by a Written Consent of the Board of Directors of said corporation, of
even date herewith, and that the same do now constitute the Bylaws of said
corporation.
Executed as of October 7, 1998.
-----------------------------
James A. Prestiano, Secretary
-16-
EXHIBIT 4.1
SUBSCRIPTION SUPPLEMENT, LOCKUP AND
REGISTRATION RIGHTS AGREEMENT
This Subscription Supplement and Registration Rights Agreements (the
"Subscription Supplement"), containing additional terms to the Subscription
Agreement between Algiers Resources, Inc., Balstron Corporation, Daliprint,
Inc., Hartscup Corporation, Mayall Partners, Inc., PSLRA, Incorporated, Regal
Acquisitions, Inc., Spacial Corporation, Voyer One, Inc., Voyer Two, Inc. (the
"Companies") and investors subscribing for shares of Common Stock of the
Companies being offered pursuant to the Companies' Confidential Offering
Memorandum (as hereinafter defined), has been incorporated by reference into the
Subscription Agreement attached hereto (the "Subscription Agreement"). Each
investor should therefore carefully review this Subscription Supplement before
signing the Subscription Agreement. Terms used herein and not otherwise defined
shall have the meaning ascribed to them in the Memorandum.
1. Subscription for Shares. I subscribe for the number of Shares of Common
Stock, par value $0.001 (the "Shares"), of each Company set forth in the
Subscription Agreement, priced at $0.25 per share.
2. Review of Memorandum. I have carefully reviewed the Confidential
Offering Memorandum in connection with the offering of Shares and any
Supplement(s) thereto provided by the Companies (collectively, the
"Memorandum"). I have been furnished with and have carefully read the
Memorandum, and very specifically the sections entitled "Risk Factors" and
"Available Information," and the documents referenced therein, including any
documents listed in "Available Information" which I wished to review, and I am a
suitable investor as described in the Memorandum.
3. Irrevocability of Subscription. I agree that this subscription is and
shall be irrevocable, but my obligations hereunder will terminate if this
subscription is not accepted by the Companies. I agree to pay for the Shares in
the manner set forth in the Subscription Agreement.
4. Illiquid Investment. I understand that investment in the Shares is an
illiquid investment. In particular, I recognize that:
(a) I must bear the economic risk of investment in the Shares for an
indefinite period of time, because the Shares have not been registered
under the Securities Act of 1933, as amended (the "Securities Act") and
therefore cannot be sold unless either they are subsequently registered
under the Securities Act or an exemption from such registration is
available and a favorable opinion of counsel for the Companies to that
effect is obtained (if requested by the Companies); and
(b) No established market will exist and it is possible that no public
market for the Shares will develop.
1
<PAGE>
5. Consent to Legends. I consent to the affixing by the Companies of such
legends on certificates representing the Shares as any applicable federal or
state securities law may require from time to time.
6. Subscriber's Representation and Warranties. I represent and warrant to
the Companies that:
(a) The financial information provided in the Subscription Agreement
is complete, true and correct;
(b) I and my investment advisors, if any, have carefully reviewed and
understand the risks of, and other considerations relating to, a purchase
of Shares, including, but not limited to, the risks set forth under "Risk
Factors" in the Memorandum;
(c) I and my investment advisors, if any, have been afforded the
opportunity to obtain any information necessary to verify the accuracy of
any representations or information set forth in the Memorandum and have had
all inquiries to the Companies answered, and have been furnished all
requested materials, relating to the Companies and the offering and sale of
the Shares and anything else set forth in the Memorandum;
(d) Neither I nor my investment advisors, if any, have been furnished
any offering literature by the Companies or any of its affiliates,
associates or agents other than the Memorandum, and the documents
referenced therein;
(e) I am acquiring the Shares for which I am subscribing for my own
account, as principal, for investment and not with a view to the resale or
distribution of all or any part of the Shares;
(f) The undersigned, if a corporation, partnership, trust or other
form of business entity, (i) is authorized and otherwise duly qualified to
purchase and hold the Shares, (ii) has obtained such additional tax and
other advice that it has deemed necessary, (iii) has its principal place of
business at its residence address set forth in the Subscription Agreement,
and (iv) has not been formed for the specific purpose of acquiring the
Shares (although this may not necessarily disqualify the subscriber as a
purchaser). The persons executing the Subscription Agreement, as well as
all other documents related to the Offering, represent that they are duly
authorized to execute all such documents on behalf of the entity. (If the
undersigned is one of the aforementioned entities, it agrees to supply any
additional written information that may be required.);
(g) All of the information which I have furnished to the Companies or
which is set forth in the Subscription Agreement (including this
Subscription Supplement) is correct and complete as of the date of the
Subscription Agreement. If any material change in this information should
occur prior to my subscription being accepted, I will immediately furnish
the revised or corrected information;
2
<PAGE>
(h) I further agree to be bound by all of the terms and conditions of
the Offering described in the Memorandum; and
(i) I am the only person with a direct or indirect interest in the
Shares subscribed for by the Subscription Agreement.
7. Certification of Information. I certify, to the best of my information
and belief, that the above information that I have supplied is true and correct
in all material respects.
8. Indemnification of Companies. I agree to indemnify and hold harmless the
Companies, the Placement Agents and their respective officers, directors,
agents, attorneys, accountants and affiliates from and against all damages,
losses, costs and expenses (including reasonable attorneys' fees) that they may
incur by reason of the failure of the undersigned to fulfill any of the terms or
conditions of this Subscription Supplement or the Subscription Agreement, or by
reason of any breach of the representations and warranties made by the
undersigned herein or in the undersigned's related Subscription Agreement, or in
any document provided by the undersigned to the Companies.
9. Nontransferability of Subscription. This subscription is not
transferable or assignable by me without the written consent of the Companies.
10. Subscribers' Joint and Several Liability. If more than one person is
executing this document, the obligations of each shall be joint and several and
the representations and warranties contained in the Subscription Agreement and
this Subscription Supplement shall be deemed to be made by, and be binding upon,
each of these persons and his or her heirs, executors, administrators,
successors and assigns.
11. Successors and Assigns. This subscription, upon acceptance by each
Company, shall be binding upon my heirs, executors, administrators, successors
and assigns.
12. Governing Law. The Subscription Agreement, including this Subscription
Supplement, shall be construed in accordance with and governed in all respects
by the laws of the State of California.
13. Registration Rights. I acknowledge and agree that I will have the
following registration rights with respect to Shares purchased by me in the
Offering:
(a) In connection with the first general registration statement (other
than Form S-8) ("Registration Statement"), if any, filed by a Company
following the closing of a merger with an operating company (a "Merger"),
such Company will use its best efforts to include the Shares of Common
Stock of that Company purchased by the Holder in the Offering in the
Registration Statement. In the event, the Company proposes to register any
of its securities following a Merger, it will give written notice to each
Holder, at least thirty (30) days prior to the filing of a Registration
Statement, of its intention to do so. Upon the written request of any
Holder given
3
<PAGE>
within fifteen (15) days after receipt of any such notice of his, her or
its or their desire to include such Holder's Registerable Securities in
such Registration Statement, the Company shall afford such Holder(s) the
opportunity to have such Holder's Registerable Securities registered under
such registration. Notwithstanding anything to the contrary contained in
this paragraph, each Company shall have the right at any time after it
shall have given written notice pursuant to this paragraph (irrespective of
whether a written request for the inclusion of such Registerable Securities
shall have been made) to elect not to file any such proposed Registration
Statement, or to withdraw the same after the filing but prior to the
effective date thereof. Any and all shares registered in a Registration
Statement will still be subject to the lock-up provisions set forth in
Paragraph 14 herein.
(b) Each Company shall undertake in good faith to file a Registration
Statement covering my shares as soon as reasonably possible after such
Merger and to keep such Registration Statement effective for a period of at
least two years. However, I acknowledge that no assurance can be given that
such agreement can be obtain or such Registration Statement will be
declared effective, and the lock-up provisions will still apply to such
registered shares, unless otherwise released.
(c) Each Company shall indemnify and hold harmless the Holders of
Registerable Securities from and against any and all losses, claims,
damages and liabilities caused by any untrue statement of material fact
contained in the Registration Statement filed by such Company under the
Securities Act by reason of this Paragraph 13, any post-effective amendment
to such Registration Statement, or any prospectus included therein or
caused by any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by
any such untrue statement or omission based upon information furnished or
required to be furnished in writing to the Company by a Holder (or the
authorized representatives or agents of the Holder) expressly for use
therein, which indemnification shall include each person, if any, who
controls the Holder within the meaning of the Securities Act and each
officer, director, employee and agent of the Holder; provided, however,
that the indemnification in this Paragraph 13(b) with respect to any
prospectus shall not inure to the benefit of the Holder (or to the benefit
of any person controlling the Holder) on account of any such loss, claim,
damage or liability arising from the sale of Registerable Securities by
such Holder, if a copy of a subsequent prospectus correcting the untrue
statement or omission in such earlier prospectus was provided to such
Holder by the Company prior to the subject sale and the subsequent
prospectus was not delivered or sent by the Holder to the purchaser of such
securities prior to such sale; and provided further, that the Company shall
not be obligated to so indemnify the Holder or any other person referred to
above unless the Holder or other person, as the case may be, shall at the
same time indemnify the Company, its directors, each officer signing the
Registration Statement and each person, if any, who controls the Company
within the meaning of the Securities Act, from and against any and all
losses, claims, damages and liabilities caused by any untrue statement of a
material fact contained in any Registration Statement or any prospectus
required to be filed or furnished in connection with such Registration
Statement or caused any omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
4
<PAGE>
misleading, insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission based upon information furnished
in writing to the Company by the Holder expressly for use therein.
If for any reason the indemnification provided for in the preceding
subparagraph is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, claim, damage, liability or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the indemnifying party,
but also the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations.
(d) All expenses, filing fees and other costs incurred by each Company
in connection with any registration of securities pursuant to this
Paragraph 13 (exclusive of underwriting discounts and selling commissions
applicable to any sale of registered securities and any fees and costs of
legal counsel engaged by the Holders) shall be borne by such Company.
In the case of the registration effected by each Company pursuant to the
provisions of this Paragraph 13, the Company will (i) furnish to the Holders of
the Registerable Securities such numbers of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such Holders may reasonably request in order to
facilitate the disposition of the Registerable Securities owned by them, and
(ii) notify each Holder of Registerable Securities covered by such Registration
Statement at any time when a prospectus relating thereto is required to be
delivered under Securities Act of the happening of any event as a result of
which the prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of circumstances then existing.
(e) For purposes hereof, the term "Registerable Securities" means the
Shares of Common Stock of a Company sold in the Offering.
(f) Notwithstanding anything to the contrary contained in this Section
13, all of the registration rights described in this Section 13 shall
expire at such time as all the Registrable Securities of a Company held by
you are saleable pursuant to Rule 144(k) of the Securities Act, or such
successor provision.
14. Lock-Up Restriction on Sale. Notwithstanding anything to the contrary
contained in the Memorandum or Paragraph 13 hereof, I acknowledge and agree that
prior to registration of any Company, the consummation of a Merger by a Company,
and either the expiration of relevant holding periods under Rule 144 of the
Securities Act or registration of the Common Stock, and for a six (6) month
period after the registration of Common Stock and Merger, I will not sell,
pledge, assign or otherwise transfer or hypothecate, any Shares of Common Stock
of any
5
<PAGE>
Company, and that, subsequent to the registration of Common Stock and Merger of
a Company, I will not sell, pledge, assign or otherwise transfer or hypothecate
fifty percent (50%) of the Shares of such Company, (including any shares of
Common Stock registered in connection with the Registration Statement described
in Paragraph 13 hereof) or other equity securities of the Company (other than
those acquired in the public market in any initial public offering by such
Company or thereafter) during the twelve (12) month period following the
consummation of the Merger without the prior written consent of such surviving
Company. Notwithstanding anything contained herein, if, subsequent to a Merger,
a Company releases Mr. James A. Prestiano from the terms of his same lock-up
agreement restricting his Shares of Common Stock held prior to the Offering in
such Company, or releases the holder of any Placement Agent Warrant from the
lock- up, my Shares will be released in a pro rata percentage from the terms of
the lock-up agreement. This "Lock Up" Agreement may be referenced in a legend on
my shares.
6
EXHIBIT 4.2
SUBSCRIPTION AGREEMENT
ALGIERS RESOURCES, INC.
BALSTRON CORPORATION
DALIPRINT, INC.
HARTSCUP CORPORATION
MAYALL PARTNERS, INC.
PSLRA, INCORPORATED
REGAL ACQUISITIONS, INC.
SPACIAL CORPORATION
VOYER ONE, INC.
VOYER TWO, INC.
Please read all instructions and the terms and conditions of your Confidential
Offering Memorandum dated ___________ __, 1998 carefully before filling out this
application. Furthermore, please review the Subscription Supplement and
Registration Rights Agreement (the "Subscription Supplement") which is attached
as Exhibit B to the Confidential Offering Memorandum and the terms of which are
incorporated by reference into and made a part of this application. Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
the Confidential Offering Memorandum. If you need assistance, please call your
registered representative.
[ ] When application is complete, deliver your investment to:
Algiers Resources, Inc.
Balstron Corporation
Daliprint, Inc.
Hartscup Corporation
Mayall Partners, Inc.
PSLRA, Incorporated
Regal Acquisitions, Inc.
Spacial Corporation
Voyer One, Inc.
Voyer Two, Inc.
c/o James A. Prestiano Prestiano, Esq.
The Law Office of James A.
317 Madison Avenue, Suite 2310
New York, NY 10017
[X] Make Separate Checks payable to each of Algiers Resources, Inc., Balstron
Corporation, Daliprint, Inc., Hartscup Corporation, Mayall Partners, Inc.,
PSLRA, Incorporated, Regal Acquisitions, Inc., Spacial Corporation, Voyer
One, Inc., Voyer Two, Inc.
I. ACCOUNT REGISTRATION - Check One
=============================================================================
[ ] Individual Account [ ] Joint Registration [ ] Pension or Profit
Sharing
[ ] Joint Tenant with Right [ ] IRA
of Survivorship
[ ] Tenants in Common
[ ] Tenants by Entirety
[ ] Community Property
[ ] Corporation, Partnership,
Trust, Association or Other
Entity
- ---------------------------------------------------------------
Name of APPLICANT, CUSTODIAN, CORPORATION, TRUST or BENEFICIARY
M or F
----------------------------------------
Date of Birth Soc. Sec. or Tax ID #
- ---------------------------------------------------------------
Name of JOINT TENANT or TRUSTEE (if applicable)
[ ] PLEASE PUT A CHECK NEXT TO
THE SOC. SEC. # OR TAX ID. #
RESPONSIBLE FOR TAXES. WE
WILL REPORT THIS NUMBER TO
THE IRS.
<PAGE>
M or F
----------------------------------------
Date of Birth Soc. Sec. or Tax ID #
[ ]
- ---------------------------------------------------------------
Name of ADDITIONAL TRUSTEE (if applicable)
[ ] Date of Trust
M or F
----------------------------------------
Date of Birth Soc. Sec. or Tax ID #
Marital Status (please check one)
[ ] Single [ ] Married [ ] Separated [ ] Divorced
$________________ Investment Amount (Minimum Subscription of $5,000,
$________________ Per Company (divide by 10) $500 per Company unless approved
by the Companies.)
2
<PAGE>
I. ACCOUNT REGISTRATION - (continued)
=============================================================================
HOME ADDRESS
- -----------------------------------------------------------------------------
Street Address Unit Number
- ---------------------------------------------------- -------------------
City State ZIP+4
- ----------------------------------
Home Phone Number (with Area Code)
BUSINESS ADDRESS
- -----------------------------------------------------------------------------
Name of Company
- -----------------------------------------------------------------------------
Street Address Suite Number
- ---------------------------------------------------- -------------------
City State ZIP+4
- --------------------------------------
Business Phone Number (with Area Code)
Please send all correspondence to:
__ Residence __ Business __ Other. Please specify:_______________________
II. ALTERNATIVE DISTRIBUTION INFORMATION
=============================================================================
To direct distributions to a party other than the registered owner, complete
the information below.
Name of Firm (Bank or Brokerage):
--------------------------------------------
Account Name:
----------------------------------------------------------------
Account Number:
--------------------------------------------------------------
Address:
---------------------------------------------------------------------
City, State ZIP:
-------------------------------------------------------------
III. SUBSCRIPTION AGREEMENT
=============================================================================
You as an individual or you on behalf of the subscribing entity are being
asked to complete this Subscription Agreement so a determination can be made as
to whether or not you (it) are qualified to purchase Common Stock under
applicable federal and state securities laws.
Your answers to the questions contained herein must be true and correct in
all respects, and a false representation by you may constitute a violation of
law for which a claim for damages may be made against you.
Your answers will be kept strictly confidential; however, by signing this
Subscription Agreement, you will be authorizing the Companies to present a
completed copy of this Subscription Agreement to such parties as it may deem
appropriate in order to make certain that the offer and sale of the Common Stock
will not result in a violation of the Securities Act of 1933, as amended, or of
the securities laws of any state.
This Subscription Agreement does not constitute an offer to sell or a
solicitation of an offer to buy the Common Stock, or any other security.
All questions must be answered. If the appropriate answer is "None" or "Not
Applicable", please state so. Please print or type your answers to all questions
and attach additional sheets if necessary to complete your answers to any item.
Please initial any correction.
INDIVIDUAL SUBSCRIBERS:
If the Common Stock subscribed for is to be owned by more than one person, you
and the other co-subscriber must each complete a separate Subscription Agreement
(except if the co-subscriber is your spouse and Statement B or C of Part I under
Section IV below has been checked) and sign the Signature Page annexed hereto.
If your spouse is a co-subscriber, you must indicate his or her name and social
security number.
CORPORATIONS, PARTNERSHIPS, PENSION PLANS AND TRUSTS:
The information requested herein relates to the subscribing entity and not to
you personally (unless otherwise determined in the ACCREDITED INVESTOR STATUS
section).
3
<PAGE>
IV. ACCREDITED INVESTOR STATUS
=============================================================================
IF YOU MEET ANY OF THE FOLLOWING TESTS, PLEASE CHECK THE APPROPRIATE
SPACES BELOW.
I. INDIVIDUAL ACCOUNTS
I certify that I am an "accredited investor" because:
A. _______ I had an individual income of more than $200,000 in each of the
two most recent calendar years, and I reasonably expect to have an
individual income in excess of $200,000 in the current calendar year.
B. _______ My spouse and I had joint income in excess of $300,000 in each
of the two most recent calendar years, and we reasonably expect to have
a joint income in excess of $300,000 in the current calendar year.
C. _______ I have an individual net worth, or my spouse and I have a joint
net worth, in excess of $1,000,000 (including home and personal
property).
For purposes of this Subscription Agreement, "individual income" means
"adjusted gross income" as reported for Federal income tax purposes, exclusive
of any income attributable to a spouse or to property owned by a spouse and
increased by the following amounts: (i) the amount of any interest income
received which is tax-exempt under Section 103 of the Internal Revenue Code of
1986, as amended (the "Code"), (ii) the amount of losses claimed as a limited
partner in a limited partnership (as reported on Schedule E of form 1040), (iii)
any deduction claimed for depletion under Section 611 et seq. of the Code and
(iv) any amount by which income from long-term capital gains has been reduced in
arriving at adjusted gross income pursuant to the provisions of Sections 1202 of
the Internal Revenue Code as it was in effect prior to enactment of the Tax
Reform Act of 1986.
For purposes of this Subscription Agreement, "joint income" means, "adjusted
gross income," as reported for Federal income tax purposes, including any income
attributable to a spouse or to property owned by a spouse, and increased by the
following amounts: (i) the amount of any interest income received which is
tax-exempt under Section 103 of the Code, (ii) the amount of losses claimed as a
limited partner in a limited partnership (as reported on Schedule E of Form
1040), (iii) any deduction claimed for depletion under Section 611 et seq. of
the Code and (iv) any amount by which income from long-term capital gains has
been reduced in arriving at adjusted gross income pursuant to the provisions of
Section 1202 of the Internal Revenue Code as it was in effect prior to enactment
of the Tax Reform Act of 1986.
For the purposes of this Subscription Agreement, "net worth" means (except
as otherwise specifically defined) the excess of total assets at fair market
value, including home and personal property, over total liabilities, including
mortgages and income taxes on unrealized appreciation of assets.
II. CORPORATIONS, PARTNERSHIPS, EMPLOYEE BENEFIT PLANS OR IRAS
A. Has the subscribing entity been formed for the specific purpose of
investing in the Common Stock? [ ] YES [ ] NO
If your answer to question A is "No" CHECK whichever of the following statements
(1-5) is applicable to the subscribing entity. If your answer to question A is
"Yes" the subscribing entity must be able to certify to statement (B) below in
order to qualify as an "accredited investor".
The undersigned entity certifies that it is an "accredited investor"
because it is:
1. _______ an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, provided that the
investment decision is made by a plan fiduciary, as defined in section 3(21)
of such Act, and the plan fiduciary is a bank, savings and loan association,
insurance company or registered investment adviser; or
2. _______ an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974 that has total assets in
excess of $5,000,000; or
3. _______ each of its shareholders, partners, or beneficiaries meets at
least one of the following conditions described above under INDIVIDUAL
ACCOUNTS. Please also CHECK the appropriate space in that section; or (Note:
Income Statement must be completed for each shareholder, partner or
beneficiary)
4. _______ a self directed employee benefit plan and the investment decision
is made solely by a person that meets at least one of the conditions
described above under INDIVIDUAL ACCOUNTS; or (Note: Income Statement must
be completed for each such person)
5. _______ a corporation or a Massachusetts or similar business trust or
partnership with total assets in excess of $5,000,000.
B. If the answer to Question A above is "Yes", please certify the statement
below is true and correct: _______ The undersigned entity certifies that it
is an accredited investor because each of its shareholders, partners or
beneficiaries meets at least one of the conditions described above under
INDIVIDUAL ACCOUNTS. Please also CHECK the appropriate space in that
section.
III. TRUST ACCOUNTS
A. Has the subscribing entity been formed for the specific purpose of investing
in the Common Stock? [ ] YES [ ] NO
If your answer to question A is "No" CHECK whichever of the following statements
(1-3) is applicable to the subscribing entity. If your answer to question A is
"Yes" the subscribing entity must be able to certify to statement (3) below in
order to qualify as an "accredited investor".
The undersigned trustee certifies that the trust is an "accredited
investor" because:
_______1) the trust has total assets in excess of $5,000,000 and the
investment decision has been made by a "sophisticated person" (i.e., a
person who has such knowledge and experience in financial and business
matters that he or she is capable of evaluating the merits and risks of an
investment in the Common Stock); or
_______2) the trustee making the investment decision on its behalf is a bank
(as defined in Section 3(a)(2) of the Securities Act), a savings and loan
association or other institution (as defined in Section 3(a)(5)(A) of the
Securities Act), acting in its fiduciary capacity; or
_______3) the grantor(s) of the trust may revoke the trust at any time and
regain title to the trust assets and has (have) retained sole investment
control over the assets of the trust and the (each) grantor(s) meets at
least one of the conditions described above under INDIVIDUAL ACCOUNTS.
Please also CHECK the appropriate space in that section.
(Note: For each grantor an Income Statement must be completed)
4
<PAGE>
V. INCOME STATEMENT - (Round off to the nearest $5,000)
=============================================================================
Please specify the amount of your:
[ ] Individual [ ] Joint [ ] Trust [ ] Beneficiary [ ] Shareholder [ ] Partner
income (defined in page 2: Accredited Investor Status) in calendar years 1996
and 1997 and your projected income for 1998.
1996 $
1997 $
1998 $ (projected)
------------------------
Current occupation (position or title and duties):
Name of Business:
-------------------------------------
Name of Employer: Telephone number ( ) -
---------------------------- ---------------
Former employment (if current employment is less than five years):
Name of Employer: Position or Title:
----------------------- -------------------
Nature of Duties: Period Employed: to
----------------------- --------- ----------
VI. INVESTMENT EXPERIENCE
=============================================================================
The following information is to be provided by the individual making the
investment decision or the person acting on behalf of the corporation,
partnership, individual retirement account, employee benefit plan or trust.
1. Business or professional education (school, dates of attendance, degrees):
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
2. Details of any training or experience in financial, business or tax matters
not disclosed in Item 1 immediately above:
3. Please indicate the frequency of your investment in marketable securities:
[ ] Often [ ] Occasionally [ ] Seldom [ ] Never
4. Please state the approximate number and total dollar amount of the following
types of investments in which you have participated:
a. restricted (non-traded) stock or notes:
Number ___________________ Amount Invested: $ _______________
b. private placements of securities sold in reliance upon non-public
offering exemption from registration under the Securities Act of 1933:
Number ___________________ Amount Invested: $ _______________
5. Please initial the appropriate alternative:
_______ ALTERNATIVE ONE: I have such knowledge and experience in financial and
business matters and in private placement investments in particular that I am
capable of protecting my interests in connection with the purchase of the Common
Stock and evaluating the merits and risks of an investment in the Common Stock
and do not desire to use a professional advisor in connection with protecting my
interests and evaluating such merits and risks. I understand, however, that the
Company may request that I use a professional advisor.
_______ ALTERNATIVE TWO: I intend to use the services of a professional
advisor(s) in connection with protecting my interests in connection with the
purchase of the Common Stock and evaluating the merits and risks of an
investment in Common Stock and hereby appoint such person(s) to act as my
professional advisor(s) in connection with my proposed purchase of Common Stock.
(Please contact your registered representative for further instructions.)
Name of Professional Advisor If Alternative Two chosen:
Telephone number ( ) -
- --------------------------------------- -----------
5
<PAGE>
VII. COVENANTS AND CERTIFICATIONS
=============================================================================
1. I certify that the information contained herein above is complete and
accurate and may be relied on by the Companies. I will notify the Companies
promptly of any material change in any of such information.
2. Under penalties of perjury, I certify that (1) my taxpayer
identification number shown in this Subscription Agreement is correct and (2) I
am not subject to backup withholding because (a) I have not been notified that I
am subject to backup withholding as a result of a failure to report all interest
and dividends or (b) the Internal Revenue Service has notified me that I am no
longer subject to backup withholding. (If you have been notified that you are
subject to backup withholding and the Internal Revenue Service has not advised
you that backup withholding has been terminated, strike out item (2).) BY
SIGNING, I ACKNOWLEDGE THAT I HAVE CAREFULLY REVIEWED THE CONFIDENTIAL OFFERING
MEMORANDUM REFERRED TO ABOVE, ESPECIALLY THE SECTIONS ENTITLED "RISK FACTORS"
AND "AVAILABLE INFORMATION," AND THE SUBSCRIPTION SUPPLEMENT, LOCKUP AND
REGISTRATION RIGHTS AGREEMENT AND AGREE TO BOUND BY THE TERMS OF THIS
SUBSCRIPTION AGREEMENT AND THE SUBSCRIPTION SUPPLEMENT, LOCKUP AND REGISTRATION
RIGHTS AGREEMENT.
3. I certify that I am purchasing the Common Stock solely for my own
account, not as a nominee or agent, and not for the beneficial interest of any
other person or with a view to or for resale in connection with any distribution
of the Common Stock or any grant of participations therein.
4. I certify that I am able to bear the economic risk of my investment in
the Common Stock, have adequate means of providing for my current needs and
possible contingencies, and have no need for liquidity of my investment.
5. I have had a full and complete opportunity to (i) ask questions of, and
receive answers from, the Companies' executive officer concerning the terms and
conditions of this offering, (ii) inspect all material contracts and documents
relating to this offering to which the Companies have access and (iii) obtain
any additional information which the Companies possess or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of the
information contained in the Confidential Offering Memorandum.
6. I agree to indemnify the Companies, [Placement Agent?] and their
officers, directors and agents against all loss, liability, costs and expenses
(including reasonable attorneys' fees) arising as a result of any
misrepresentation made by me in this Subscription Agreement, my breach of this
Subscription Agreement or my transfer of the Securities in violation of federal
and/or state securities laws.
7. I agree that the representations, certifications and agreements set
forth in this Subscription Agreement shall survive the purchase and delivery of
the Common Stock.
8. Any disputes or controversies which may arise between the undersigned
and the Companies concerning this subscription or the Offering shall be
submitted to arbitration in accordance with the Rules of the American
Arbitration Association. Notwithstanding the foregoing, if either the Companies
or the undersigned is a party to a pending arbitration proceeding under the Code
of Arbitration Procedure of the National Association of Securities Dealers, Inc.
("NASD") arising as a result of the Offering or the Common Stock, the
undersigned agrees to consolidate his action with the pending arbitration, to
the extent that the NASD accepts jurisdiction of such action. Arbitration must
be commenced by service upon the Companies of a written demand for arbitration
or a written notice of intention to arbitrate. Judgment upon any award rendered
by the arbitrator(s) shall be final, and may be entered in any court having
jurisdiction. Any arbitration proceeding pursuant to this Agreement shall be
determined pursuant to the laws of the State of New York and the Rules of the
American Arbitration Association or the Code of Arbitration Procedure of the
NASD, as applicable. The undersigned hereby submits to the in personam
jurisdiction of the courts of the State of New York and the federal courts
located therein (and expressly waives any defense to personal jurisdiction of
the undersigned by such courts) for the purpose of confirming, vacating or
modifying any such award or judgment entered thereon. To the extent any
controversy as above described is to be resolved in a court action, the
undersigned expressly agrees that such action shall be brought only in the
Courts of the State of New York, in the City of New York, or the federal courts
located therein and service of process in such action shall be sufficient if
served upon the undersigned by certified mail, return receipt requested, at the
undersigned's last address known to the Companies. The undersigned acknowledges
that, by agreeing to arbitrate any disputes or controversies under this
Agreement, the undersigned is waiving the right to seek remedies in court,
including the right to a jury trial. In addition, the undersigned is aware that:
(i) arbitration is final and binding on the parties; (ii) pre-arbitration
discovery is generally more limited than and different from court proceedings;
(iii) the arbitrators' award is not required to include factual findings or
legal reasoning and any party's right to appear or to seek modification of
rulings by the arbitrators is strictly limited; and (iv) the panel of
arbitrators in a proceeding under the NASD Code of Arbitration will typically
include a minority of arbitrators who were or are affiliated with the securities
industry.
. . . . . . . . . . . . . . .
VIII. SIGNATURES
=============================================================================
The Subscription Agreement and the Subscription Supplement, Lockup and
Registration Rights Agreement contain various agreements, certifications and
representations by subscribers and should be carefully reviewed in their
entirety before executing this signature page.
BY SIGNING, I ACKNOWLEDGE THAT I HAVE CAREFULLY REVIEWED THE CONFIDENTIAL
OFFERING MEMORANDUM REFERRED TO ABOVE, ESPECIALLY THE SECTIONS ENTITLED "RISK
FACTORS" AND "AVAILABLE INFORMATION," AND THE SUBSCRIPTION SUPPLEMENT, LOCKUP
AND REGISTRATION RIGHTS AGREEMENT AND AGREE TO BOUND BY THE TERMS OF THIS
SUBSCRIPTION AGREEMENT AND THE SUBSCRIPTION SUPPLEMENT, LOCKUP AND REGISTRATION
RIGHTS AGREEMENT, THE TERMS OF WHICH ARE INCORPORATED HEREIN.
THE UNDERSIGNED ACKNOWLEDGES AND AGREES TO ARBITRATE ANY DISPUTE OR CONTROVERSY
ARISING AS A RESULT OF THIS SUBSCRIPTION AGREEMENT, THE OFFERING OR ANY
CONTROVERSY OR DISPUTE RELATED TO THE COMMON STOCK ISSUED IN THIS OFFERING, IN
ACCORDANCE WITH PARAGRAPH 8 OF SECTION VII HEREOF.
Dated , 1998
-------------------
Print name of individual subscriber, Signature of individual subscriber,
custodian, corporation, trustee authorized person, trustee
- ------------------------------------ -----------------------------------
Print name of co-subscriber, Signature of co-subscriber,
authorized person, co-trustee if authorized person, co-trustee if
required by trust instrument required by trust instrument
- ------------------------------------ -----------------------------------
Investment Authorization. The undersigned corporation, partnership, benefit plan
or IRA has all requisite authority to acquire the Common Stock hereby subscribed
for and to enter into the Subscription Agreement and further, the undersigned
officer, partner or fiduciary of the subscribing entity has been duly authorized
by all requisite action on the part of such entity to execute these documents on
its behalf. Such authorization has not been revoked and is still in full force
and effect.
Check Box: [ ] Yes [ ] No [ ] Not Applicable
6
<PAGE>
IX. NOTARIZATION
=============================================================================
STATE OF )
) ss.
COUNTY OF )
On , 199 , before me, , personally appeared
-------------- --- ------------
,
- -----------------------------------------------------------------------------
[ ] personally known to me [ ] proved to me on the basis of
satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
---------------------------
Signature of Notary
CAPACITY CLAIMED BY SIGNER:
[ ] Individual(s) [ ] Attorney-In-Fact
[ ] Partner(s) [ ] Subscribing Witness
[ ] Trustee(s) [ ] Guardian/Conservator
[ ] Corporate [ ] Other:
------------------------ --------------------
Officer(s)------------------------ --------------------------
Title(s)
SIGNER IS REPRESENTING:
Name of Person(s) or Entity(ies):
----------------------------------------------
- -------------------------------------------------------------------------------
Notary: Please fill in state, county, date and names of all persons signing and
affix notarial seal.
X. VERIFICATION OF ACCOUNT EXECUTIVE
=============================================================================
I state that I am familiar with the financial affairs and investment
objectives of the investor named above and reasonably believe that a purchase of
the Common Stock is a suitable investment for this investor and that the
investor, either individually or together with his or her professional advisor,
understands the terms of and is able to evaluate the merits of this offering. I
acknowledge:
(a) that I have reviewed this Subscription Agreement and the Subscription
Supplement attached as Exhibit B to the Confidential Offering
Memorandum, and attachments (if any) thereto; and
(b) that the Subscription Agreement and attachments thereto have been fully
completed and executed by the appropriate party.
Broker/Dealer Account Executive
- ------------------------------------ --------------------------------
(Name of Broker/Dealer) (Signature)
- ----------------------------------- --------------------------------
(Street Address of AE Office) (Print Name)
- ----------------------------------- --------------------------------
(City of AE Office) (State) (Zip) (Representative I.D. Number)
( ) -
--- ---- ---- --------------------------------
(Telephone Number of AE Office) (Date)
7
EXHIBIT 4.3
ALGIERS RESOURCES, INC.
BALSTRON CORPORATION
DALIPRINT, INC.
HARTSCUP CORPORATION
MAYALL PARTNERS, INC.
PSLRA, INCORPORATED
REGAL ACQUISITIONS, INC.
SPACIAL CORPORATION
VOYER ONE, INC.
VOYER TWO, INC.
and
TRADEWAY SECURITIES GROUP, INC.
--------------------
PLACEMENT AGENT'S WARRANT AGREEMENT
Dated as of April 19, 1999
<PAGE>
PLACEMENT AGENT'S WARRANT AGREEMENT
-----------------------------------
THIS PLACEMENT AGENT'S WARRANT AGREEMENT (the "Agreement"), dated as of
April 19, 1999, is made and entered into by and among ALGIERS RESOURCES, INC.,
BALSTRON CORPORATION, DALIPRINT, INC., HARTSCUP CORPORATION, MAYALL PARTNERS,
INC., PSLRA, INCORPORATED, REGAL ACQUISITIONS, INC., SPACIAL CORPORATION, VOYER
ONE, INC. and VOYER TWO, INC. (each a "Company" and collectively the
"Companies"), and TRADEWAY SECURITIES GROUP, INC. (the "Placement Agent").
Pursuant to the terms of that certain Placement Agent Agreement, dated as
of December 16, 1998, by and among the Companies and the Placement Agent (the
"Placement Agent Agreement"), the Companies hereby agree to issue and sell to
the Placement Agent, for good and valuable consideration, the receipt of which
is hereby acknowledged, warrants (the "Warrants") to purchase 51,000 shares of
the Common Stock of each Company, $.001 par value (the "Common Stock"), at an
exercise price of $0.255 per share, in connection with the offering (the
"Offering") contemplated by the Placement Agent Agreement and that certain
Confidential Offering Memorandum, dated November 1, 1998 (together with any and
all supplements and/or amendments thereto, the "Memorandum"), as may be adjusted
from time to time as set forth herein. The shares of Common Stock purchasable
upon exercise of the Warrants, as may be adjusted from time to time as set forth
herein, are hereinafter referred to as the "Warrant Stock." The Warrants shall
be issued pursuant to this Agreement on the final closing date of the Offering
(the "Closing Date").
In consideration of the foregoing and for the purpose of defining the terms
and provisions of the Warrants, the Warrant Stock and the respective rights and
obligations thereunder, the Companies and the Placement Agent, for value
received, hereby agree as follows:
Section 1. Transferability and Form of Warrants.
1.1 Registration. All Warrants shall be numbered and shall be registered on
the books of the Companies when issued.
1.2 Transfer. The Warrants shall be transferable only on the books of a
Company maintained at its principal office, wherever its principal office may
then be located, upon delivery thereof duly endorsed by the registered holder of
a Warrant (a "Warrantholder") or by its duly authorized attorney or
representative and with the signatures properly guaranteed, accompanied by
proper evidence of succession, assignment or authority to transfer. Upon any
registration of transfer, a Company shall execute and deliver new certificates
evidencing each such Warrant to each person entitled thereto.
1.3 Limitations on Transfer of the Warrants. Warrants shall not be sold,
transferred, assigned or hypothecated by the Placement Agent for a period of one
year
-2-
<PAGE>
following the date of issuance other than (i) to one or more officers or
partners of any Warrantholder, and the officers or partners of any such partner;
(ii) to any other member of the National Association of Securities Dealers, Inc.
which participated in the Offering and the officers or partners of any such
member; (iii) to successors to a Warrantholder or the officers or partners of
any such successor; (iv) to a purchaser of all or substantially all of the
assets of a Warrantholder; or (v) by will, pursuant to the laws of descent or
distribution or by operation of law. The Warrants may be divided or combined,
upon request to the Companies by a Warrantholder, into a certificate or
certificates representing the right to purchase the same aggregate number of
shares of Warrant Stock. Unless the context indicates otherwise, the term
"Warrantholder" shall include the Placement Agent and any transferee or
transferees of the Warrants pursuant to this subsection 1.3 and as otherwise
permitted by this Agreement, and the term "Warrants" shall include any and all
Warrants outstanding pursuant to this Agreement, including those evidenced by a
certificate or certificates issued upon division, exchange, substitution or
transfer pursuant to this Agreement.
1.4 Form of Warrants. The text of the Warrants and of the form of election
to purchase Warrant Stock shall be substantially as set forth in Exhibit A
attached hereto. The aggregate number of shares of Common Stock issuable upon
exercise of the Warrants is subject to adjustment upon the occurrence of certain
events, all as hereinafter provided. The Warrants shall be executed on behalf of
a Company by its President and attested to by its Treasurer, Chief Financial
Officer or Secretary. A Warrant bearing the signature of an individual who was
at any time the proper officer of a Company shall bind a Company,
notwithstanding that such individual shall have ceased to hold such office prior
to the delivery of such Warrant or did not hold such office on the date of this
Agreement or at any time thereafter.
The Warrants shall be dated as of the date of signature thereof by the
Companies either upon initial issuance or upon division, exchange, substitution
or transfer.
1.5 Legend on Warrants and Warrant Stock. Each certificate evidencing a
Warrant (or Warrant Stock issued upon exercise of a Warrant) initially issued
upon exercise of a Warrant shall bear the following legend, unless, at the time
of exercise, such Warrant Stock is subject to a currently effective Registration
Statement under the Securities Act of 1933, as amended (the "Act"):
"THIS WARRANT AND THE SECURITIES PURCHASABLE
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH WARRANTS AND SECURITIES
MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
-3-
<PAGE>
TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to an effective registration statement under
the Act, of the securities represented thereby) shall also bear the above legend
unless, in the opinion of a Company's counsel, the securities represented
thereby need no longer be subject to such restrictions.
Section 2. Exchange of Warrant Certificate. Any Warrant certificate may be
exchanged for another certificate or certificates entitling the Warrantholder to
purchase a like aggregate number of shares of Warrant Stock as the certificate
or certificates surrendered then entitled such Warrantholder to purchase. Any
Warrantholder desiring to exchange a Warrant certificate shall make such request
in writing delivered to a Company, and shall surrender, properly endorsed, the
certificate evidencing the Warrant to be so exchanged. Thereupon, a Company
shall execute and deliver to the person entitled thereto a new Warrant
certificate or certificates as so requested.
Section 3. Term of Warrants; Exercise of Warrants.
(a) Subject to the terms of this Agreement, the Warrantholder shall have
the right, at any time during the period commencing as of the date hereof and
ending at 5:00 p.m., Pacific Time, on the seventh anniversary of the completion
of the Offering (the "Termination Date"), to purchase from a Company up to the
number of fully paid and nonassessable shares of Warrant Stock to which the
Warrantholder may at the time be entitled to purchase pursuant to this
Agreement, upon surrender to a Company, at its principal office, of the
certificate evidencing the Warrants to be exercised, together with the purchase
form on the reverse thereof duly completed and executed, and upon payment to a
Company of the Warrant Price (as defined in and determined in accordance with
the provisions of this Section 3 and Sections 7 and 8 hereof) for the number of
shares of Warrant Stock in respect of which such Warrants are then exercised,
but in no event for less than 100 shares of Warrant Stock (unless less than an
aggregate of 100 shares of Warrant Stock are then purchasable under all
outstanding Warrants held by such Warrantholder). This Warrant, when
exercisable, may be exercised from time to time in whole or in part.
(b) Payment of the Warrant Price shall be made in cash, by certified or
official bank check in Los Angeles Clearing House funds (next day funds), or any
combination thereof.
(c) In addition to the method of payment set forth in Section 3(b) above
and in lieu of any cash payment required thereunder, unless otherwise prohibited
by law, the Warrantholders shall have the right at any time, when exercisable,
and from time to time to exercise the Warrants in full or in part (i) by
receiving from the Company the number of shares of Warrant Stock equal to the
number of shares of Warrant Stock otherwise issuable upon such exercise less the
number of shares of Warrant Stock having an aggregate value on
-4-
<PAGE>
the date of exercise equal to the Warrant Price multiplied by the number of
shares of Warrant Stock for which this Warrant is being exercised and/or (ii) by
delivering to the Company the number of shares of Common Stock having an
aggregate value on the date of exercise equal to the Warrant Price multiplied by
the number of shares of Warrant Stock for which this Warrant is being exercised.
For purposes hereof, the "value" of a share of Preferred Stock on a given date
shall equal to the Current Market Price on such date as defined in Section 9 of
this Agreement.
(d) Upon surrender of the Warrants and payment of the Warrant Price as
aforesaid, a Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the Warrantholder, and (subject to any
applicable restrictions on transfer) in such name or names as the Warrantholder
may designate, a certificate or certificates for the number of full shares of
Warrant Stock so purchased upon such exercise of the Warrant, together with
cash, as provided in Section 9 hereof, in respect of any fractional shares
otherwise issuable upon such surrender. Such certificate or certificates, to the
extent permitted by law, shall be deemed to have been issued and any person so
designated to be named therein shall be defined to have become a holder of
record of such securities as of the date of surrender of the Warrants and
payment of the Warrant Price, as aforesaid, notwithstanding that the certificate
or certificates representing such securities shall not actually have been
delivered or that the stock transfer books of a Company shall then be closed.
The Warrants shall be exercisable, at the election of the Warrantholder, either
in full or from time to time in part and, in the event that a Warrant is
exercised in respect of less than all of the shares of Warrant Stock specified
therein at any time prior to the Termination Date, a new Warrant evidencing the
remaining shares of the Warrant Stock purchasable by such Warrantholders
hereunder shall be issued by a Company to such Warrantholders.
Section 4. Validity; Payment of Taxes. All securities delivered upon
exercise of a Warrant shall be duly and validly issued and non-assessable. A
Company shall pay all documentary stamp taxes, if any, attributable to the
initial issuance of the Warrants and the shares of Warrant Stock issuable upon
the exercise of the Warrants; provided, however, a Company shall not be required
to pay any tax which may be payable in respect of any secondary transfer of the
Warrants or the Warrant Stock.
Section 5. Mutilated or Missing Warrants. In case the certificate or
certificates evidencing the Warrants shall be mutilated, lost, stolen or
destroyed, a Company shall, at the request of the Warrantholder, issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
certificate or certificates, or in lieu of and substitution for the certificate
or certificates lost, stolen or destroyed, a new Warrant certificate or
certificates of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence reasonably satisfactory to a Company of such loss,
theft or destruction of such Warrant which may include an indemnity of lost
certificate or such other documentation as is required by applicable law.
-5-
<PAGE>
Section 6. Reservation of Shares. Each Company represents and warrants to
the Warrantholder that there has been reserved, and each Company shall at all
times keep reserved so long as the Warrants remain outstanding, out of its
authorized Common Stock, such number of shares of Common Stock as shall be
subject to purchase under the Warrants. Every transfer agent for the Common
Stock of each Company issuable upon the exercise of the Warrants shall be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be requisite for such purpose. Each Company shall
keep a copy of this Agreement on file with every transfer agent for the Common
Stock of each Company issuable upon the exercise of the Warrants. Each Company
shall supply every such transfer agent with duly executed stock and other
certificates, as appropriate, for such purpose and shall provide or otherwise
make available any cash which may be payable in lieu of the issuance of
fractional shares, as provided in Section 9 hereof.
Section 7. Warrant Price. The price per share at which shares of Warrant
Stock shall be purchasable upon the exercise of the Warrants shall be $0.255
subject to adjustment pursuant to Section 8 hereof (as so adjusted from time to
time, the "Warrant Price").
Section 8. Adjustments of Number of Shares of Warrant Stock and Warrant
Price. The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
8.1 Adjustments. The number of shares of Warrant Stock purchasable upon the
exercise of each Warrant and the Warrant Price shall be subject to adjustment as
follows:
(a) In case a Company shall (i) pay a dividend or make a distribution on
its Common Stock in shares of its capital stock or other securities, (ii)
subdivide its outstanding shares of Common Stock into a greater number of
shares, (iii) combine its outstanding Common Stock into a smaller number of
shares or (iv) issue, by reclassification of its Common Stock, shares of its
capital stock or other securities of the Company (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), the number of shares of Warrant Stock
purchasable upon exercise of a Warrant immediately prior thereto shall be
adjusted so that the Warrantholder shall be entitled to receive the kind and
number of shares of Warrant Stock, shares of its capital stock and other
securities of the Company which such holder would have owned or would have been
entitled to receive immediately after the happening of any of the events
described above, had the Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. Any adjustment
made pursuant to this subsection 8.1(a) shall become effective immediately after
the effective date of such event.
(b) In case a Company shall issue rights, options, warrants or convertible
securities to holders of its Common Stock, without any charge to such holders,
containing the right to subscribe for or purchase Common Stock, the number of
shares of Warrant Stock thereafter purchasable upon the exercise of each Warrant
shall be determined by
-6-
<PAGE>
multiplying the number of shares of Warrant Stock theretofore purchasable upon
exercise of a Warrant by a fraction, of which the numerator shall be the number
of shares of Common Stock outstanding immediately prior to the issuance of such
rights, options, warrants or convertible securities plus the number of
additional shares of Common Stock offered for subscription or purchase, and of
which the denominator shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such rights, options, warrants or
convertible securities. Such adjustment shall be made whenever such rights,
options, warrants or convertible securities are issued, and shall become
effective immediately upon issuance of such rights, options, warrants or
convertible securities. In the event of such adjustment, corresponding
adjustments shall be made to the Warrant Price.
(c) In case a Company shall distribute to holders of its Common Stock
evidences of its indebtedness or assets (excluding cash dividends or
distributions out of current earnings made in the ordinary course of business
consistent with past practices), then in each case the number of shares of
Warrant Stock thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of shares of Warrant Stock theretofore
purchasable upon exercise of such Warrant by a fraction, of which the numerator
shall be the then Current Market Price (as defined below) on the date of such
distribution, and of which the denominator shall be such Current Market Price on
such date minus the then fair value (determined as provided in subsection 8(f)
below) of the portion of the assets or evidences of indebtedness so distributed
applicable to one share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective on the date of
distribution.
(d) No adjustment in the number of shares of Warrant Stock purchasable
pursuant to subsections 8.1(b) or (c) hereof shall be required unless such
adjustment would require an increase or decrease of at least one percent in the
number of shares of Warrant Stock then purchasable upon the exercise of the
Warrants; provided, however, that any adjustments which by reason of this
subsection 8.1(d) are not required to be made immediately shall be carried
forward and taken into account in any subsequent adjustment.
(e) Whenever the number of shares of Warrant Stock purchasable upon the
exercise of a Warrant is adjusted as herein provided, the Warrant Price payable
upon exercise of the Warrant shall be adjusted by multiplying such Warrant Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares of Warrant Stock purchasable upon the exercise of such
Warrant immediately prior to such adjustment, and of which the denominator shall
be the number of shares of Warrant Stock purchasable immediately thereafter.
(f) Whenever the number of shares of Warrant Stock purchasable upon the
exercise of a Warrant or the Warrant Price is adjusted pursuant to this Section
8, a Company shall cause to be promptly mailed to each Warrantholder by first
class mail, postage prepaid, notice of such adjustment or adjustments and a
certificate of the chief financial officer
-7-
<PAGE>
of the Company setting forth the number of shares of Preferred Stock, capital
stock and other securities purchasable upon the exercise of such Warrantholder's
Warrant and the applicable Warrant Price after such adjustment, a brief
statement of the facts requiring such adjustment and the computation by which
such adjustment was made.
8.2 No Adjustment for Dividends. Except as specifically provided in
subsection 8.1, no adjustment in respect of any cash dividends or distributions
on a Company's Common Stock out of current earnings made in the ordinary course
of business consistent with past practices shall be made during the term of the
Warrants or upon the exercise of the Warrants.
8.3 Preservation of Purchase Rights upon Reclassification, Consolidation,
etc. In case of any consolidation of a Company with or merger of a Company into
another corporation or other entity or in case of any sale, lease, conveyance or
other transfer to another corporation, person or other entity of the property,
assets or business of a Company as an entirety or substantially as an entirety,
the Company or such successor or purchasing corporation, person or other entity,
as the case may be, shall execute with the Warrantholder, and the agreements
governing such consolidation, merger, sale, lease, conveyance or other transfer
shall require such execution of, an agreement that the Warrantholder shall have
the right thereafter upon payment of the Warrant Price in effect immediately
prior to such event, upon exercise of the Warrants, to receive the kind and
amount of shares and other securities and property which it would have owned or
have been entitled to receive after the happening of such consolidation, merger,
sale, lease, conveyance or other transfer had the Warrants (and each underlying
security) been exercised immediately prior to such action. A Company shall
promptly mail to each Warrantholder by first class mail, postage prepaid, notice
of the execution of any such agreement. In the event of a merger described in
Section 368(a)(2)(E) of the Internal Revenue Code of 1986, in which a Company is
the surviving corporation, the right to purchase shares of Warrant Stock under
the Warrants shall terminate on the date of such merger and thereupon the
Warrants shall become null and void, but only if the controlling corporation
shall agree to substitute for the Warrants its warrant which entitles the holder
thereof to purchase upon its exercise the kind and amount of shares and other
securities and property which it would have owned or been entitled to receive
had the Warrants been exercised immediately prior to such merger. Any such
agreements referred to in this subsection 8.3 shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in Section 8 hereof, and shall provide for terms and provisions at
least as favorable to the Warrantholder as those contained in this Agreement.
The provisions of this subsection 8.3 shall similarly apply to successive
consolidations, mergers, sales, leases, conveyances or other transfers.
8.4 Statement on Warrant Certificates. Irrespective of any adjustments in
the number of securities issuable upon exercise of Warrants, Warrant
certificates theretofore or thereafter issued may continue to express the same
number of securities as are stated in the similar Warrant certificates initially
issuable pursuant to this Agreement, provided that such
-8-
<PAGE>
expression shall in no way affect the number of shares of Warrant Stock actually
purchasable upon the exercise of such Warrants.
Section 9. Fractional Shares; Current Market Price. A Company shall not be
required to issue fractional shares of Common Stock on the exercise of a
Warrant. If any fraction of a share of Common Stock would, except for the
provisions of this Section 9, be issuable upon the exercise of a Warrant (or
specified portion thereof), a Company shall in lieu thereof pay an amount in
cash equal to the then Current Market Price multiplied by such fraction. For
purposes of this Agreement, the term "Current Market Price" shall mean (a) if
the Shares are traded on the Nasdaq National Market ("NNM") or on a national
securities exchange, the per share closing price of the Shares on the date of
exercise of the Placement Agent Warrants or (b) if the Shares are traded in the
over-the-counter market and not in the NNM or a national securities exchange,
the average of the per share closing bid prices of the Shares during the thirty
(30) consecutive trading days immediately preceding the date in question, as
reported by the Nasdaq SmallCap Market (or an equivalent generally accepted
reporting service if quotations are not reported on the Nasdaq SmallCap Market).
The closing price referred to in clause (a) above shall be the last reported
sale price or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices, in either case in the NNM
or on the principal stock exchange on which the Shares are then listed. For
purposes of clause (b) above, if trading in the Shares is not reported by the
Nasdaq SmallCap Market, the bid price referred to in said clause shall be the
lowest bid price as reported in the Nasdaq Electronic Bulletin Board or, if not
reported thereon, as reported in the "pink sheets" published by National
Quotation Bureau, Incorporated, and if the Shares are not so reported, shall be
determined by the price of a Share determined by the Company's Board of
Directors in good faith.
Section 10. No Rights as Stockholder; Notices to Warrantholder. Except as
expressly provided herein, nothing contained in this Agreement or in the
Warrants shall be construed as conferring upon the Warrantholder or its
transferees any rights as a stockholder of a Company, including the right to
vote, receive dividends, consent or receive notices as a stockholder in respect
of any meeting of stockholders for the election of directors of a Company or any
other matter. If, however, at any time prior to the expiration of the Warrants
and prior to their exercise, any one or more of the following events shall
occur:
(a) any action which would require an adjustment pursuant to Section 8
hereof;
(b) an issuance by a Company of rights, options, warrants or convertible
securities to all or substantially all holders of its Common Stock, without any
charge to such holders, containing the right to subscribe for or purchase Common
Stock; or
(c) a dissolution, liquidation or winding up of a Company (other than in
connection with a consolidation, merger or sale of its property, assets and
business as an entirety or substantially as an entirety) shall be proposed;
-9-
<PAGE>
then a Company shall give notice in writing of such event to the Warrantholder,
as provided in Section 12 hereof, at least 20 days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the stockholders entitled to any relevant dividend, distribution or other rights
or for the determination of stockholders entitled to vote on such proposed
dissolution, liquidation or winding up; provided that the failure to give such
notice shall not affect the validity of such action. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Section 11. Registration Rights; Lock-up. The Warrantholders shall have
registration rights identical to those granted to the purchasers of Common Stock
in the Offering, and shall be subject to the same lock-up restrictions
applicable to the purchasers of Common Stock in the Offering.
Section 12. Notices. All notices and communications hereunder, except as
herein otherwise specifically provided, shall be in writing and shall be deemed
to have been duly given if mailed, delivered by hand or transmitted by any
standard form of telecommunication. Notices to the Warrantholders or a holder of
Warrant Stock shall be directed to the record address of such Warrantholder.
Notices to a Company shall be directed to the Company, attention President, at
its principal executive office as set forth in the Memorandum. Any address for
purposes of notice may be changed by giving notice of such change to the other
parties hereto in the same manner as provided herein.
Section 13. Parties. This Agreement shall inure solely to the benefit of
and shall be binding upon, the Placement Agent, the Companies and the
Warrantholders and the holders of Warrant Stock, and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein contained.
Section 14. Survival of Representations and Warranties. All statements
contained in the Placement Agent Agreement, any schedule, exhibit, certificate
or other instrument delivered by or on behalf of the parties hereto, or in
connection with the transactions contemplated by this Agreement, shall be deemed
to be representations and warranties hereunder. Notwithstanding any
investigations made by or on behalf of the parties to this Agreement, all
representations, warranties and agreements made by the parties to this Agreement
or pursuant hereto shall survive the termination of this Agreement and the
issuance, sale and delivery of the Warrant and the Warrant Stock.
Section 15. Construction. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California, without
giving effect to conflict of laws principles thereof.
Section 16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
-10-
<PAGE>
Section 17. Entire Agreement, Amendments. This Agreement and the Placement
Agent Agreement constitute the entire agreement of the parties hereto concerning
the subject matter hereof and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof. To
the extent that the terms or provisions of this Agreement are inconsistent with
the terms or provisions of the Placement Agent Agreement, the terms of this
Agreement shall govern. This Agreement may not be amended, modified or altered
except in a writing signed by the Placement Agent and the Company.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the day and year first above written.
"Companies":
ALGIERS RESOURCES, INC.
By: /s/ James A. Prestiano
-------------------------------
James A. Prestiano, President
BALSTRON CORPORATION DALIPRINT, INC.
By: /s/ James A. Prestiano By: /s/ James A. Prestiano
----------------------------------- -------------------------------
James A. Prestiano, President James A. Prestiano, President
HARTSCUP CORPORATION MAYALL PARTNERS, INC.
By: /s/ James A. Prestiano By: /s/ James A. Prestiano
----------------------------------- -------------------------------
James A. Prestiano, President James A. Prestiano, President
PSLRA, INCORPORATED REGAL ACQUISITIONS, INC.
By: /s/ James A. Prestiano By: /s/ James A. Prestiano
----------------------------------- -------------------------------
James A. Prestiano, President James A. Prestiano, President
SPACIAL CORPORATION VOYER ONE, INC.
By: /s/ James A. Prestiano By: /s/ James A. Prestiano
----------------------------------- -------------------------------
James A. Prestiano, President James A. Prestiano, President
-12-
<PAGE>
VOYER TWO, INC.
By: /s/ James A. Prestiano
-----------------------------------
James A. Prestiano, President
"Placement Agent":
TRADEWAY SECURITIES GROUP, INC.
By: /s/ Robert. M. Guiltinar
-------------------------------------------
Robert M. Guiltinar, C.F.O. and Secretary
-13-
<PAGE>
THIS WARRANT AND THE SECURITIES PURCHASABLE HEREUNDER HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH WARRANTS
AND SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH
SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
WARRANT CERTIFICATE NO. ___
WARRANT TO PURCHASE
_____ SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.
PACIFIC TIME, ON __________________
[COMPANY NAME]
INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE
This certifies that, for value received, ___________________________, the
registered holder hereof or assigns (the "Warrantholder"), is entitled to
purchase from [COMPANY NAME] (the "Company"), at any time during the period
commencing at 6:30 am., Pacific time, on ____________, and before 5:00 p.m.,
Pacific time, on ______________, at the purchase price per share of Common
Stock, $0.001 par value (the "Common Stock") of $0.255 (the "Warrant Price"),
__________ shares of Common Stock of the Company (the "Warrant Stock "). The
number of shares of Common Stock of the Company purchasable upon exercise of
each Warrant evidenced hereby shall be subject to adjustment from time to time
as set forth in the Placement Agent's Warrant Agreement, dated as of
___________, by and between the Company, among others, and __________________
(the "Placement Agent's Warrant Agreement").
The Warrants evidenced hereby represent the right to purchase an aggregate
of up to ___________ shares of Warrant Stock (subject to adjustment as provided
in the Placement Agent's Warrant Agreement) and are issued under and in
accordance with the Placement Agent's Warrant Agreement, and are subject to the
terms and provisions contained in the Placement Agent's Warrant Agreement, to
all of which the Warrantholder by acceptance hereof consents.
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form attached hereto
duly executed (with a signature guarantee as provided hereon) and simultaneous
payment of the Warrant Price at the
-1-
<PAGE>
principal office of the Company. Payment of such price shall be made at the
option of the Warrantholder in any manner allowed in the Placement Agent's
Warrant Agreement.
Upon any partial exercise of the Warrants evidenced hereby, there shall be
signed and issued to the Warrantholder a new Warrant Certificate in respect of
the shares of Warrant Stock as to which the Warrants evidenced hereby shall not
have been exercised. These Warrants may be exchanged at the office of the
Company by surrender of this Warrant Certificate properly endorsed for one or
more new Warrants of the same aggregate number of shares of Warrant Stock as
evidenced by the Warrant or Warrants exchanged. No fractional securities shall
be issued upon the exercise of rights to purchase hereunder, but the Company
shall pay the cash value of any fraction upon the exercise of one or more
Warrants. These Warrants are transferable at the office of the Company in the
manner and subject to the limitations set forth in the Warrant Agreement.
This Warrant Certificate does not entitle any Warrantholder to any of the
rights of a stockholder of the Company.
[COMPANY NAME]
By:
-------------------------------
James A. Prestiano, President
Dated ____________ __, 1998
ATTEST:
- ---------------------------------
-2-
<PAGE>
[COMPANY NAME]
PURCHASE FORM
[COMPANY NAME] (the "Company")
- ---------------------------------
- ---------------------------------
Attention: President
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
_____ shares of Common Stock of the Company (the "Warrant Stock") provided for
therein, and requests that certificates for the Warrant Stock be issued in the
name of:
---------------------------------------------------------------
(Please print or Type Name, Address and Social Security Number)
---------------------------------------------------------------
---------------------------------------------------------------
and, if said number of shares of Warrant Stock shall not be all the Warrant
Stock purchasable hereunder, that a new Warrant Certificate for the balance of
the Warrant Stock purchasable under the within Warrant Certificate be registered
in the name of the undersigned Warrantholder or his Assignee as below indicated
and delivered to the address stated below.
Dated:_________________
Name of Warrantholder
or Assignee:
-------------------------
(Please Print)
Address:
-------------------------
-------------------------
Signature:
-------------------------
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, unless these Warrants have been assigned.
Signature Guaranteed:_____________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange of the National Association of Securities Dealers, Inc.)
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers the
right to purchase _____ shares of Warrant Stock represented by the within
Warrant Certificate unto, and requests that a certificate for such Warrant be
issued in the name of:
---------------------------------------------------------------
(Name and Address of Assignee Must be Printed or Typewritten)
---------------------------------------------------------------
---------------------------------------------------------------
hereby irrevocably constituting and appointing _______________ Attorney to
transfer said Warrants on the books of the Company, with full power of
substitution in the premises and, if said number of shares of Warrant Stock
shall not be all of the Warrant Stock purchasable under the within Warrant
Certificate, that a new Warrant Certificate for the balance of the Warrant Stock
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Warrantholder and delivered to such Warrantholder's address as
then set forth on the Company's books.
Dated:_______________ ______________________________
Signature of Registered Holder
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
Signature Guaranteed:_____________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
EXHIBIT 10
Algiers Resources, Inc.
Balstron Corporation
Daliprint, Inc.
Hartscup Corporation
Mayall Partners, Inc.
PSLRA, Incorporated
Regal Acquisitions, Inc.
Spacial Corporation
Voyer One, Inc.
Voyer Two, Inc.
each a Delaware corporation
Offering of a Maximum of 2,250,000 Shares
of Common Stock, par value $0.001, at $0.25 per Share
PLACEMENT AGENT AGREEMENT
Dated as of December 16, 1998
Tradeway Securities Group, Inc.
19100 Von Karman Avenue
Suite 1000
Irvine, California 92612
Ladies and Gentlemen:
Algiers Resources, Inc., Balstron Corporation, Daliprint, Inc., Hartscup
Corporation, Mayall Partners, Inc., PSLRA, Incorporated, Regal Acquisitions,
Inc., Spacial Corporation, Voyer One, Inc., Voyer Two, Inc. (each a "Company"
and collectively the "Companies") were each formed as shell corporations in
early 1998 for purposes of merging with a company with an operating business (a
"Merger"), all as more fully described in that certain Confidential Memorandum
dated November 1, 1998 (references to which shall be deemed to include any and
all supplements and amendments thereto and all financial statements and exhibits
that are included therein, referred collectively to herein as the "Memorandum").
Each Company desires to raise $56,250, through the offer and sale of up to
225,000 shares of Common Stock, par value $0.001 (the "Shares") of the Company,
as more fully described in the Memorandum, in a private offering (the
"Offering"). A maximum of 225,000 Shares of each Company (2,250,000 in the
aggregate) may be sold in the Offering ("Maximum Offering"). In addition, the
Companies, at the request of a Placement Agent may agree to allow the Placement
Agents, as defined below, to sell up to 225,000 additional Shares of each
Company to cover over-allotments. There is a minimum investment of 2,000 Shares
in each Company (20,000 in the aggregate). An equal investment must be made in
each Company.
The offer and sale of the Shares is being made in accordance with the
Memorandum. The Shares will not be registered under the Securities Act of 1933,
as amended (the "Securities Act") or any state securities or "blue sky" laws and
will be offered and sold in reliance upon the exemptions afforded by Section
4(2) and of the Securities Act and Rule 506 of Regulation D promulgated
thereunder and by similar exemptions afforded by or preempted from the state
securities or "blue sky" laws. The subscribers for the Shares each of whom will
be required to execute and deliver the Subscription Agreement and the
Subscription Supplement, Lock-up and Registration Rights Agreement that
accompanies the Memorandum (the "Subscription Documents") will be issued the
Shares (the "Investors").
-1-
<PAGE>
Subsequent to the Offering, each Company anticipates that it will file a
Form 10 in an attempt to register each Company as public company with the
Securities and Exchange Commission, under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Companies may file
one at a time or some or all at the same time. Some of the Companies may attempt
to file soon after the closing of the Offering, and some at a later date, even
possibly after a Merger. No assurance can be given that the registration will be
allowed by the regulatory authorities.
Subsequent to a Merger, each Company will use its best efforts to file a
Registration Statement ("Registration Statement") to register the Common Stock
of the Company under the Securities Act and to include all shares of Common
Stock of such Company sold in this offering in the Registration Statement.
However, holders of Common Stock purchased in the Offering should not depend on
such registration rights and may have to rely on Rule 144 of the Securities Act
to trade in the Common Stock (assuming a Merger has occurred and the Company is
a reporting Company in compliance under the Exchange Act, which cannot be
assured). Any liquidity at all is still subject to the risks related to
achievement of registration and a Merger as described in detail in this
Memorandum, especially the section entitled "Risk Factors." Any registration
rights of a holder of Common Stock purchased in the Offering will expire at such
time as all such holders' Common Stock (other than affiliates of the Company)
purchased in the Offering is saleable pursuant to Rule 144 without volume
limitations. Any and all shares of Common Stock registered in a Registration
Statement or otherwise eligible for sale under Rule 144 will still be subject to
the lock-up provisions set forth below.
Prior to (i) the registration of a Company (ii) consummation of a Merger
and (iii) either the expiration of the relevant holding period under Rule 144
promulgated pursuant to the Securities Act or registration of the Common Stock,
purchasers of the Common Stock in this Offering may not sell, pledge, assign or
otherwise transfer or hypothecate any shares of Common Stock of the Company sold
in this Offering. After such registration and Merger, subject to restrictions
under federal and state securities laws, fifty percent (50%) of all Common Stock
of the merged-Company purchased in this Offering by each holder may not be sold
pledged, assigned or otherwise transferred or hypothecated for a period of six
(6) months from the closing of a Merger, and the remaining fifty percent (50%)
of the Common Stock of the merged-Company purchased in this Offering by such
holder will be similarly restricted for a period of twelve (12) months from the
Closing of a Merger unless otherwise agreed to by the Company (the "Lock-up").
Mr. Prestiano, the sole stockholder of each Company has agreed to restrict his
shares of Common Stock in each Company pursuant to the same provisions as the
Lock-up subject to pro-rate release. All shares underlying the Placement Agent
Warrants, as defined below, are also subject to the Lock-up on the same terms.
In order to release any stockholder from the terms of the Lock-up, all other
stockholders must be proportionately released.
All capitalized terms not defined in this Agreement shall have the meanings
ascribed to them in the Memorandum.
Section 1. Appointment of Placement Agent and Terms of Offering.
1.1 Appointment of Placement Agent. You are hereby invited to become a
Placement Agent ("Placement Agent") and by your confirmation of this Agreement
you agree to act in such capacity for the Offering during the term of the
Offering Period (as defined in Section 1.5 below) and to use your best efforts
to find purchasers for the Shares in accordance with the terms and conditions
set forth in this Agreement.
1.2 Co-Placement Agents. The Company may appoint one or more registered
broker- dealers who are members in good standing of the National Association of
Securities Dealers, Inc., ("NASD") or banks exempt from broker-dealer
registration to serve as co-Placement Agents with you.
1.3 Solicitation of Subscriptions. You hereby agree to solicit, as an
independent contractor and not as an agent of the Company, Investors acceptable
to the Company in accordance with the terms of the Memorandum and this
Agreement.
-2-
<PAGE>
1.4 Subscriptions.
1.4.1 Solicitation Procedures. Each person desiring to purchase Shares
in the Offering shall be required to execute and deliver to each Company
the applicable Subscription Documents and a check in the amount of $0.25
per Share for the amount purchased of each Company's Shares made payable to
each of "Algiers Resources, Inc.", "Balstron Corporation", "Daliprint,
Inc.", "Hartscup Corporation", "Mayall Partners, Inc.", "PSLRA,
Incorporated", "Regal Acquisitions, Inc.", "Spacial Corporation", "Voyer
One, Inc.", "Voyer Two, Inc." By way of example, if an Investor purchased
the minimum subscription of 2,000 Shares of each Company, the Investor must
make a check in the amount of $500 payable to each Company. You shall
transmit each investor's check and original Subscription Documents received
by you to the Companies care of the address listed on the Subscription
Documents, retaining a copy of each for your files. Each Company shall
deposit the checks directly in their respective corporate accounts.
1.4.2 Acceptance Standards and Procedures. The Companies will not
consider any proposed subscription until all Subscription Documents have
been completed, signed and delivered. After receipt of all required
Subscription Documents with respect to an Investor, the Companies will
determine whether they wish to accept the offered subscription. No
subscriptions shall be effective unless and until accepted by the
Companies. Subscriptions for Shares will be accepted only from subscribers
who meet the investor suitability standards set forth in the Memorandum.
The minimum required purchase by any Investor shall be 2,000 Shares per
Company (20,000 in the aggregate), subject to the right of the Companies in
their sole discretion to allow investment in a lesser amount. The Companies
reserve the right to reject any subscriptions and to allocate subscriptions
received in the event the Shares are oversubscribed.
1.4.3 Rejection. Subscriptions may be rejected in whole or in part by
the Companies, provided the Companies must notify the Placement Agent of
the rejection of any subscription and return the to the Placement Agent the
funds previously received from the person whose subscription was paid and
the original Subscription Documents, within ten (10) business days of the
receipt of completed Subscription Documents. Should the Companies determine
to reject a subscription, you will promptly return the Subscription
Documents directly to the prospective purchaser and as well as the funds
previously received upon receipt of such documents from the Companies.
1.5 Offering Period. The "Offering Period" shall mean that period during
which any Shares are offered for sale, commencing on the date upon which the
Memorandum is initially delivered to the Companies for distribution to Investors
and continuing until the earlier of (a) the date on which subscriptions for the
maximum number of Shares are accepted or (b) March 31, 1999, unless earlier
terminated by the Companies, or unless further extended for 120 days by mutual
agreement of the Companies and any of the Placement Agents, to time which the
Company may extend the Offering without further notice to the Investors (the
"Termination Date").
1.6 Closings.
1.6.1 Initial Closing. If at any time during the Offering Period, the
Companies have accepted any subscriptions, the subscribers may be admitted
as Investors in an initial closing (the "Initial Closing"). Upon the
Initial Closing, the Companies shall remit to the Placement Agent the
commissions then due to the Placement Agent and deliver to each Investor
the certificates representing the Shares purchased by each Investor.
1.6.2 Additional Closings. After the Initial Closing, the Offering
will continue, and the issuance of additional Shares to subscribers in one
or more additional closings ("Additional Closings") may occur upon
acceptance of subscriptions for additional Shares.
1.6.3 Final Closing. If at any time before the Termination Date,
subscriptions for the maximum number of Shares provided for herein have
been accepted (including subscriptions by the Companies, the Placement
Agent(s) or their affiliates), the subscribers shall be admitted to the
Company as Investors in a final closing (the "Final Closing"). The
Companies shall fix a date no later than ten days after the
-3-
<PAGE>
Termination Date on which the Final Closing will take place (or, if the
tenth day is not a business day, the next business day) (the "Final Closing
Date").
1.6.4 Closing Certificate. The Initial, Additional and Final Closings
will take place at the Companies' offices, or at such other place as shall
be mutually agreed upon by the Companies and you. At each of the Initial
Closing, any Additional Closing and the Final Closing, you agree to deliver
to the Companies if so requested by the Companies, a certificate stating
(i) the number of offerees in each of the jurisdictions designated on the
blue sky memorandum (the "Blue Sky Memorandum") delivered to you by the
Companies, and (ii) that your representations and warranties contained in
Section 4 are true and correct with the same effect as though expressly
then made and that you have complied with the covenants contained in
Section 5.
1.7 Due Diligence. You agree to conduct your own investigation to determine
that all material facts upon which each person who purchases the Shares might
rely in making this investment decision have been accurately and adequately
disclosed in the Memorandum to the extent you deem necessary.
1.8 Compensation to the Placement Agent. As compensation for your services
hereunder the Company agrees to cause the Company to pay to you, as a selling
commission, an amount equal to ten percent (10%) of the gross offering proceeds
for each Share sold through you, and reimbursement of certain of your out of
pocket expenses. All such compensation under this Agreement shall be payable not
later than ten (10) days following the closing in which the Investor purchases
the Shares. Also as compensation for your services hereunder the Company agrees
to cause the Company to pay to you, as a selling commission, Placement Agent
Warrants (the "Placement Agent Warrants") to purchase the number of shares of
Common Stock of each Company equal to 30% of the number of Shares of each
Company sold by you in the Offering at an exercise price of $0.255 per share,
not later than ten (10) days following the closing in which the Investor
purchasing the Shares is admitted to the Companies. The Placement Agent Warrants
shall be exercisable for seven years following the completion of the Offering.
The Placement Agent Warrants shall provide for cashless exercise pursuant to
which the holder of the Placement Agent Warrants will receive upon exercise the
number of Shares otherwise issuable upon such exercise, less the number of
Shares having an aggregate Current Market Price on the date of exercise equal to
the exercise price per share multiplied by the number of Shares for which the
Placement Agent Warrants are being exercised and/or by delivery to the Company
by the holder of the Placement Agent Warrants the number of Shares having an
aggregate Current Market Price on the date of exercise equal to the exercise
price multiplied by the number of Shares for which the Placement Agent Warrants
are being exercised. For purposes of the Placement Agent Warrants, the term
"Current Market Price" shall mean (a) if the Shares are traded on the Nasdaq
National Market ("NNM") or on a national securities exchange, the per share
closing price of the Shares on the date of exercise of the Placement Agent
Warrants or (b) if the Shares are traded in the over-the-counter market and not
in the NNM or a national securities exchange, the average of the per share
closing bid prices of the Shares during the thirty (30) consecutive trading days
immediately preceding the date in question, as reported by the Nasdaq SmallCap
Market (or an equivalent generally accepted reporting service if quotations are
not reported on the Nasdaq SmallCap Market). The closing price referred to in
clause (a) above shall be the last reported sale price or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices, in either case in the NNM or on the principal stock exchange
on which the Shares are then listed. For purposes of clause (b) above, if
trading in the Shares is not reported by the Nasdaq SmallCap Market, the bid
price referred to in said clause shall be the lowest bid price as reported in
the Nasdaq Electronic Bulletin Board or, if not reported thereon, as reported in
the "pink sheets" published by National Quotation Bureau, Incorporated, and if
the Shares are not so reported, shall be determined by the price of a Share
determined by the Company's Board of Directors in good faith. In the event that
the Placement Agent Warrants have been exercised or remain outstanding on the
effective date of any initial public offering by the Company, the Dealer Manager
shall not be eligible to receive underwriter warrants as compensation in
connection with such initial public offering.
Each Company shall use its best efforts to register the shares of Common
Stock underlying the Placement Agent Warrants of such Company in the
Registration Statement filed by such Company subsequent to a Merger; provided
however, the shares of Common Stock of each Company underlying the Placement
Agent Warrants will be subject to the terms of the Lock-up.
Payment of these commissions is subject to the following conditions:
-4-
<PAGE>
No commission will be payable with respect to any subscriptions for the
Shares which are rejected by the Companies; and
No commissions will be payable to you with respect to any sale of Shares
sold by you until such time as the Companies has received the total proceeds of
any such sale.
No commissions will be payable with respect to transactions in
jurisdictions where such payments may not legally be made. You may waive all
your compensation in connection with any sales of Shares to you, the Companies
and certain officers, directors, employees or affiliates of you or the
Companies, and you in your discretion may waive all or a portion of your
compensation in connection with any sales of Shares to other purchasers with
whom the Companies or their affiliates have a business relationship.
In no event will the value of the total compensation exceed the amount
allowable in connection with the Companies' obtaining the benefits of the
exemptions from the qualification requirements of state securities laws.
Section 2. Representations and Warranties of the Company.
The Company represents, warrants and agrees with you for your benefit that:
2.1 Power and Authority of the Company. Each Company has been duly
organized and is validly existing and in good standing under the laws of the
State of Delaware, with full power and authority to conduct business as
described in the Memorandum. Complete and correct copies of the Certificate of
Incorporation and the Bylaws of each Company and all amendments thereto have
been delivered to you, and no changes therein will be made subsequent to the
date hereof and prior to the Final Closing Date.
2.2 Validity of Issuance of Securities. The outstanding common stock of
each Company has been, and the Shares to be issued and sold by the Companies
pursuant to the Offering upon such issuance will be, when paid thereto for as
provided in the Memorandum and the Subscription Documents, and the execution of
all necessary or appropriate amendments or supplements to, or certificates in
connection with, duly authorized, validly issued, fully paid and non-assessable,
and will not be subject to any preemptive or similar rights. Subscribers for the
Shares shall have no liability in excess of their respective capital
contributions.
2.3 Adequacy of the Memorandum. The Companies will have prepared and
delivered to you the Memorandum. The Memorandum does not, and on any Closing
Date will not, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. Every contract or other document required by
the Securities Act or any regulations promulgated thereunder (the "Regulations")
to be described in or attached as an exhibit to the Memorandum or otherwise made
available to Investors has been so described, attached or made available.
2.4 Due Authorization and Enforceability of This Agreement. This Agreement
has been duly and validly authorized, executed and delivered by or on behalf of
each Company and constitutes the valid, binding and enforceable agreement of
such Company, except to the extent that (i) the enforceability of this Agreement
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally or by general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law), and (ii) the indemnification provisions of this Agreement may
be held to violate public policy (under either state or federal law) in the
context of the offer or sale of securities.
2.5 No Material Adverse Change. Since the respective dates as of which
information is given in the Memorandum, there has not been any material adverse
change in the condition, financial or otherwise, of each Company or in the
earnings, affairs or business prospects of each Company.
2.6 Absence of Legal or Contractual Conflicts. The execution and delivery
of this Agreement by each Company, and the consummation of the transactions
contemplated in the Memorandum, will not, or with the passage of time or the
giving of notice would not, constitute a breach of, default under or
-5-
<PAGE>
violation of (i) any statute, indenture, mortgage, deed of trust, voting trust,
note, lease or other agreement or any instrument to which each Company is or
will be a party or by which any of them or their property is or will be bound,
or (ii) any order, rule or regulation applicable to each Company of any court or
any governmental body or administrative agency having jurisdiction over its
properties or businesses.
2.7 Governmental Consents. No consent, approval, authorization or order of
any court or governmental agency or body has been or is required for the
performance of this Agreement and the consummation of the transactions
contemplated in this Agreement or in the Memorandum by each Company, except such
as have been or are to be obtained under the state securities or "blue sky"
laws.
2.8 Adverse Claims. There is not pending, threatened or contemplated any
action, suit or proceeding before or by any court or other governmental body
against each Company and no default exists in the due performance and observance
of any material obligation, term, covenant or condition of any agreement or
instrument to which each Company is or may be a party, or by which it is bound
that is not referred to in the Memorandum and that might result in any material
adverse change in the condition (financial or otherwise), earnings, affairs or
business or prospects of each Company or might materially and adversely affect
any of the assets of each Company.
2.9 Legal Actions. There are no actions, suites or proceedings pending, or
to the Companies' knowledge, threatened against or affecting the Companies or
any of its respective officers in their capacity as such, before or by any
Federal or state court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, wherein an unfavorable ruling,
decision or finding might materially and adversely affect the Companies or its
respective business, properties, business prospects, condition (financial or
otherwise) or results of operations taken as a whole.
2.10 Investment Company. On the date hereof and, each Closing Date, each
Company is not and will not be an investment company as that term is defined in
the Investment Company Act of 1940.
2.11 No Offers. No offer, offer to sell, offer for sale, sale or attempt to
dispose of any Shares to any person has been made prior to the Offering Period
upon the authority of each Company.
2.12 Accuracy of Representations. No statement, representation, warranty or
covenant made by the Companies in this Agreement or made in any certificate or
document required by this Agreement to be delivered to you was or will be, when
made, inaccurate, untrue or incorrect in any material respect.
Section 3. Covenants of the Companies.
The Companies covenant with you as follows:
3.1 Amendment of Memorandum. Promptly upon the occurrence of any event
which would cause the Memorandum to include during the Offering Period an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading, the Companies will promptly notify
you of the event. The Companies will within a reasonable period of time prepare
and furnish to you such number of copies as you may request of an amendment or
amendments of, or a supplement or supplements to, the Memorandum (in form and
substance satisfactory to you) which will amend or supplement the Memorandum so
that as amended or supplemented it shall not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading.
3.2 Compliance with Securities Laws. The Companies will use their best
efforts to cause the sale of the Shares to take place in a manner that will
permit reliance upon Regulation D promulgated under the Securities Act and will
file the required Form D in a timely fashion. The Companies will use its best
efforts to secure exemptions from qualification or registration of the Shares or
preemption under the securities or "blue sky" laws of such states in which it
advises you in writing that the Shares may be offered, and will make such
applications, file such documents, and furnish such information as may
reasonably be required for that purpose.
-6-
<PAGE>
3.3 Due Diligence Inquiry. Upon request by you, the Companies will make
reasonable effort to furnish you information necessary in your judgment, or in
the judgment of your counsel, to confirm the continued fairness, accuracy and
completeness of the Memorandum in all material respects during the Offering
Period.
3.4 Reports and Other Information. The Companies will, as long as any
Shares may remain outstanding, furnish directly to you one (1) copy of each
report furnished to Investors at the time such report is furnished to the
Investors.
3.5 Delivery of Sales Material. The Companies will deliver to you, from
time to time, all sales material (whether designated solely for broker-dealer
use or otherwise) proposed to be used or delivered in connection with the
offering of the Shares.
3.6 Limited Liability and Company Status. The Companies will take all steps
necessary to preserve, to the extent possible, the limited liability of the
Investors and their status as corporations.
3.7 Notification of Changes. The Companies will notify you promptly of any
change having or which is likely to have a material adverse change in the
condition (financial or otherwise), earnings, affairs or business or prospects
of each Company or might materially and adversely affect any of the assets of
each Company relating to any of the Companies' representations, warranties,
covenants or agreements contained herein that occurs at any time prior to the
Final Closing.
Section 4. Representations and Warranties of the Placement Agent.
You hereby represent, warrant and agree with the Companies for their
benefit that:
4.1 Corporate Power and Authority. You have been duly incorporated and are
validly existing as a corporation in good standing under the laws of the State
of your incorporation, with all requisite corporate power and authority to
conduct your business and to perform the obligations contemplated herein.
4.2 Due Authorization and Enforceability of this Agreement. This Agreement
has been duly and validly authorized, executed and delivered by you or on your
behalf and constitutes your valid, binding and enforceable agreement, except to
the extent that (i) the enforceability of this Agreement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally or by general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law), and
(ii) the indemnification provisions of this Agreement may be held to violate
public policy (under either state or federal law) in the context of the offer or
sale of securities.
4.3 Absence of Legal or Contractual Conflicts. Your execution and delivery
of this Agreement, and the performance of your obligations thereunder, will not
result in a violation of, be in conflict with or constitute a default under any
agreement or instrument to which you are a party or by which you or your
properties are bound, or any judgment, decree, order or, to your knowledge, any
statute, rule or regulation applicable to you.
4.4 Adequacy of the Memorandum. The information contained in the Memorandum
relating to you, if any, is complete and correct and does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading.
4.5 Broker-Dealer Qualifications. You are (and will continue to be during
the term of this Agreement) a member in good standing of the NASD and agree to
abide by the Rules of Fair Practice of such association. You are properly
registered or licensed as a broker or dealer under applicable federal and state
securities laws and regulations. You, your affiliates, and your or their
officers and directors (or any other person serving in a similar capacity) have
not taken or failed to take any act, and are not subject to any order or
proceedings, that would make unavailable any limited offering exemption from
registration or qualification requirements of state securities laws.
-7-
<PAGE>
4.6 No Disqualifications. Neither you nor any of your directors, officers,
predecessors or agents nor any beneficial owner of 10% or more of any class of
your equity securities, nor any of their respective affiliates (nor any other
person serving in a similar capacity):
Has been convicted within ten years prior to the date hereof of any crime
or offense involving the purchase or sale of any security, involving the making
of a false statement with the Securities and Exchange Commission (the "SEC"), or
arising out of such person's conduct as an underwriter, broker, dealer,
municipal securities dealer or investment adviser;
Is subject to any order, judgment or decree of any court of competent
jurisdiction temporarily or preliminarily enjoining or restraining, or is
subject to any order, judgment, or decree of any court of competent
jurisdiction, entered within five years prior to the date hereof, permanently
enjoining or restraining such person from engaging in or continuing any conduct
or practice in connection with the purchase or sale of any security, involving
the making of a false filing with the SEC, or arising out of the conduct of the
business of an underwriter, broker, dealer, municipal securities dealer or
investment adviser;
Is subject to an order of the SEC entered pursuant to section 15(b),
15B(a), or 15B(c) of the Exchange Act; or is subject to an order of the SEC
entered pursuant to section 203(e) or (f) of the Investment Advisers Act of
1940;
Is suspended or expelled from membership in, or suspended or barred from
association with a member of, an exchange registered as a national securities
exchange pursuant to section 6 of the Exchange Act, an association registered as
a national securities association under section 15A of the Exchange Act, or a
Canadian securities exchange or association for any act or omission constituting
conduct inconsistent with just and equitable principles of trade;
Is subject to a United States Postal Service false representation order
entered within five years prior to the date hereof; or is subject to a
restraining order or preliminary injunction entered under section 3007 of title
39, United States Code, with respect to any conduct alleged to constitute postal
fraud;
Has been or has been named as an underwriter of any securities covered by
any registration statement which is the subject of any pending proceeding or
examination under section 8 of the Securities Act, or is the subject of any
refusal order or stop order entered thereunder within five years prior to the
date hereof;
Has been or has been named as an underwriter of any securities covered by
any filing which is subject to any pending proceeding under Rule 261 or any
similar Rule adopted under section 3(b) of the Securities Act, or to an order
entered thereunder within five years prior to the date hereof;
Has taken or failed to take any other act, or are subject to any other
order or proceedings, that would make unavailable any limited offering exemption
from registration or qualification requirements of federal or state securities
laws;
Has filed a registration statement that is the subject of a currently
effective stop order entered pursuant to any state's securities law within five
years prior to the date hereof;
Has been convicted within five years prior to the date hereof of any felony
or misdemeanor in connection with the offer, purchase or sale of any security or
any felony involving fraud or deceit, including but not limited to forgery,
embezzlement, obtaining money under false pretenses, larceny or conspiracy to
defraud;
Is currently subject to any state administrative enforcement order or
judgment entered by that state's securities administrator within five years
prior to the date hereof or is subject to any state's administrative enforcement
order or judgment in which fraud or deceit, including but not limited to making
untrue statements of material facts and omitting to state material facts, was
found and the order or judgment was entered within five years prior to the date
hereof;
-8-
<PAGE>
Is subject to any state's administrative enforcement order or judgment that
prohibits, denies or revokes the use of any exemption from registration in
connection with the offer, purchase or sale of securities; or
Is currently subject to any order, judgment or decree of any court of
competent jurisdiction temporarily or preliminarily restraining or enjoining, or
is subject to any order, judgment or decree of any court of competent
jurisdiction permanently restraining or enjoining, such party from engaging in
or continuing any conduct or practice in connection with the purchase or sale of
any security or involving the making of any false filing with the state entered
within five years prior to the date hereof.
Section 5. Covenants of the Placement Agent.
You covenant with the Companies as follows:
5.1 Delivery of Offering Materials. You or a person acting on your behalf
shall furnish to each offeree, concurrently with making an offer to such offeree
(and its purchaser representative, if such a representative has been selected),
a numbered copy of the Memorandum, as it may have been amended or supplemented
by the Companies, and shall maintain adequate records of each person to whom a
Memorandum has been delivered. Neither you nor any of your agents will give any
information or make any representation with respect to the Companies or its
business or affairs other than the information or representations contained in
the Memorandum or any sales literature authorized for use in connection with the
Offering, or such other information as is specifically authorized by the
Companies.
5.2 Conduct of Solicitation. You or a person acting on your behalf will
cause each person interested in acquiring Shares to complete and execute the
Subscription Documents (copies of which is included in the Memorandum) in order
to enable the Companies to determine whether such person is qualified to acquire
Shares. You will not execute any Subscription Documents for any person and will
not invest in the Shares through any person's discretionary trading account
without the written approval of such person. You will abide by, and take
reasonable precautions to insure compliance with, all provisions contained in
the Memorandum and the Selling Agreement regulating the terms and manner of
conducting the Offering.
5.3 Compliance with Federal Securities Laws. You will comply with all
applicable requirements of the Securities Act and the rules and regulations
promulgated thereunder, including Regulation D. Specifically, but without
limitation, neither you nor any person acting on your behalf will offer the
Shares by means of any form of general solicitation or general advertising nor
to any person or entity unless you or your licensed personnel have a substantial
pre-existing business relationship with such person or entity. No advertisement,
article, notice or other communication regarding the Offering will be published
by you in any newspaper, magazine or similar medium or broadcast over television
or radio. Neither you nor any of your agents will sponsor, hold or participate
in any seminar or meeting regarding the Offering at which the persons attending
have been invited by any general solicitation or general advertising. You and
any person acting on your behalf will make offers of the Shares only to persons
whom you and your agents have reasonable grounds to believe and do believe: (a)
have such knowledge and experience in business and financial matters (either
alone or together with a purchaser representative) that they are capable of
evaluating the merits and risks of the prospective investment and of protecting
their own interests in connection with the transaction and (b) meet the investor
suitability requirements contained in the Memorandum. You and any person acting
on your behalf will cooperate with the Companies so that the Shares are sold
only to "accredited investors" as such term is defined in Rule 501 of Regulation
D and you and your agents will exercise reasonable care to ensure that a
purchaser is not an underwriter within the meaning of Section 2(11) of the
Securities Act.
5.4 Compliance with Blue Sky Laws. You will comply with all applicable
requirements of any state securities or "blue sky" law or rule or regulation
promulgated thereunder. You will not offer or sell any of the Shares in any
jurisdiction (i) prior to receiving written instructions from the Companies that
offers may be made in such jurisdiction and (ii) except in compliance with all
applicable securities or "blue sky" laws and in accordance with the Blue Sky
Memorandum. With respect to any state which limits the number of offers and
sales which may be made, you shall offer for sale no more than such number of
Shares as we may advise you may be offered and/or sold.
-9-
<PAGE>
5.5 Maintenance of Records. You will retain in your records and make
available to the Companies, for a period of at least five years, information
establishing that each person who purchases the Shares pursuant to a
Subscription Documents solicited by you is within the permitted class of
investors under the requirements, if any, of the jurisdiction in which such
purchaser is a resident and the suitability standards set forth in the
Memorandum and the Subscription Documents.
Section 6. Company's Certificates.
At the Final Closing Date and any Initial or Additional Closing Date, you
shall have received a certificate signed by an officer of each Company on behalf
of such Company to the effect that (i) the signer has carefully examined the
Memorandum and, in the signer's opinion, at all times from the time the
Memorandum was initially delivered to you for distribution to investors the
Memorandum did not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; (ii) since the
date the Memorandum was initially delivered to you for distribution to
investors, no event has occurred which should have been set forth in an
amendment of or supplement to the Memorandum but which has not been so set
forth; (iii) no proceedings have been instituted or threatened by the Commission
or any blue sky agency with respect to the Offering; and (iv) the
representations and warranties contained in Section 2 are true and correct with
the same effect as though expressly then made and the Company has complied with
the covenants contained in Section 3.
Section 7. Indemnification.
7.1 By the Company. The Companies will indemnify and hold harmless you and
each person, if any, who controls you within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
you or such controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Memorandum, or in any
related sales material (whether designated solely for broker-dealer use or
otherwise) which the Companies or any respective officer thereof authorizes in
writing for use by you or any Placement Agent, or arise out of or are based upon
the omission or alleged omission to state therein any material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that none of such persons will be liable to indemnify you or
such a controlling person thereof pursuant to this Section 7.1 to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
any of them by you specifically for use in the Memorandum or sales material; and
will reimburse you and each such controlling person for any legal or other
expenses reasonably incurred in connection with investigating or defending any
such loss, claim, damage, liability or action. Notwithstanding the foregoing
provisions of this Section 7.1, the Companies shall not indemnify you or any
person, if any, who controls you within the meaning of the Securities Act, for
losses, liabilities or expenses arising from or out of an alleged violation of
federal or state securities laws unless (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations by the particular indemnitee not caused by materials supplied by the
Companies or (ii) such claims have been dismissed with prejudice on the merits
by a court of competent jurisdiction as to the particular indemnitee or (iii) a
court of competent jurisdiction approves the settlement of the claims against
the particular indemnitee. In any claim against a Company for indemnification
for federal or state securities law violations, the party seeking
indemnification shall place before the court the position of the SEC, the
Massachusetts Securities Division, the Tennessee Securities Division and any
other states that may require it with respect to the issue of indemnification
for securities law violations.
7.2 By the Placement Agent. You will indemnify and hold harmless each
Company and each other person who controls each Company within the meaning of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which the Company may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Memorandum, or
any related sales material which the Companies authorize in writing for use by
you, or arise out of or are based upon the omission or the alleged omission to
state therein any material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent that such
untrue statement or
-10-
<PAGE>
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Companies by
you specifically for use therein and (ii) any breach by you or any Placement
Agent of any representation, warranty or covenant contained in this Agreement,
provided that you or any Placement Agent shall be liable under this Section 7.2
only to the extent that such losses, claims, damages or liabilities result from
any action or inaction by you. You will reimburse any legal or other expenses
reasonably incurred by the Companies or any controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action, provided that you shall reimburse any such legal or other expenses in
connection with investigating or defending any such loss, claim, damage,
liability or action only to the extent that such loss, claim, damage or
liability results from any action or inaction caused by you.
7.3 Notification. Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 7, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 7. In case any such action is brought against any indemnified party
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party under this Section 7 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Section 8. Termination of this Agreement.
8.1 Right of Termination. You or the Companies shall have the right to
terminate this Agreement at any time.
8.2 Notice. If you elect to terminate this Agreement as provided in this
Section 8, the Companies shall be notified promptly by you pursuant to Section 9
of this Agreement. If the Companies elect to terminate this Agreement as
provided in this Section 8, you shall be notified promptly by the Companies or
pursuant to Section 9 of this Agreement.
8.3 Liability of Parties. All representations, warranties and
indemnification agreements contained in this Agreement shall remain operative
and in full force and effect, regardless of any termination pursuant to Section
8.1, and shall survive the Final Closing Date.
Section 9. Miscellaneous Provisions.
9.1 Notices. All notices provided for by this Agreement shall be made in
writing either (i) by actual delivery of the notice to the parties thereunto
entitled or (ii) by the mailing of the notice in the United States mails to the
address, as stated below (or at such other address as may have been designated
by written notice), of the party entitled thereto, by certified or registered
mail, return receipt requested. The notice shall be deemed to have been received
in case (i) on the date of its actual receipt by the party entitled thereto and
in case (ii) on the date of deposit in the United States mail.
All communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, if sent to you, shall be mailed or delivered
to:
c/o James A. Prestiano
The Law Office of James A. Prestiano, Esq.
317 Madison Avenue, Suite 2310
New York, NY 10017
-11-
<PAGE>
9.2 Parties. This Agreement shall inure to the benefit of and be binding
upon you, the Companies and each of your and the Companies' respective
successors and legal representatives. Except as otherwise set forth in this
Section, nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provision herein contained.
No purchaser of Shares will be deemed a successor because of such purchase.
9.3 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
9.4 Arbitration. You and the Companies agree that any controversy arising
out of or relating to this Agreement of the Offering contemplated hereby shall
be settled by arbitration in New York, New York, in accordance with the rules
then in effect for the NASD.
9.5 Multiple Counterparts. This Agreement may be executed in a number of
identical counterparts, each of which shall be deemed to be an original, but all
of which constitute, collectively, one and the same Agreement; but in making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart.
9.6 Modification or Amendment. This Agreement may not be modified or
amended except by written agreement executed by the parties hereto.
9.7 Other Instruments. The parties hereto covenant and agree that they will
execute such other and further instruments and documents as are or may become
necessary or convenient to effectuate and carry out this Agreement.
9.8 Validity. Should any portion of this Agreement be declared invalid and
unenforceable, then such portion shall be deemed to be severable from this
Agreement and shall not affect the remainder of this Agreement.
9.9 Captions. The captions used in this Agreement are for convenience only
and shall not be construed in interpreting this Agreement.
9.10 Entire Agreement. This Agreement contains the entire understanding
between the parties and supersedes any prior understandings or written or oral
agreements between them respecting the subject matter hereof.
-12-
<PAGE>
If the foregoing is in accordance with our agreement, please sign and
return to us a counterpart hereof, whereupon this instrument along with all
counterparts will become a binding agreement among you and the Company in
accordance with its terms.
Very truly yours,
ALGIERS RESOURCES, INC.
By:\s\ James A. Prestiano
-------------------------------
James A. Prestiano, President
BALSTRON CORPORATION DALIPRINT, INC.
By:\s\ James A. Prestiano By:\s\ James A. Prestiano
----------------------------------- -------------------------------
James A. Prestiano, President James A. Prestiano, President
HARTSCUP CORPORATION MAYALL PARTNERS, INC.
By:\s\ James A. Prestiano By:\s\ James A. Prestiano
----------------------------------- -------------------------------
James A. Prestiano, President James A. Prestiano, President
PSLRA, INCORPORATED REGAL ACQUISITIONS, INC.
By:\s\ James A. Prestiano By:\s\ James A. Prestiano
----------------------------------- -------------------------------
James A. Prestiano, President James A. Prestiano, President
SPACIAL CORPORATION VOYER ONE, INC.
By:\s\ James A. Prestiano By:\s\ James A. Prestiano
----------------------------------- -------------------------------
James A. Prestiano, President James A. Prestiano, President
VOYER TWO, INC.
By:\s\ James A. Prestiano
------------------------------------
James A. Prestiano, President
-13-
<PAGE>
Confirmed and Accepted as of the date first above written:
Tradeway Securities Group, Inc.
- -----------------------------------------
Print Firm Name
By:\s\ Robert M. Guiltinar
- -----------------------------------------
Robert M. Guiltinar
- -----------------------------------------
Print Name
C.F.O./Secretary
- -----------------------------------------
Print Title
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 30,395
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 30,395
<CURRENT-LIABILITIES> 2,790
<BONDS> 0
0
0
<COMMON> 2,170
<OTHER-SE> 25,435<F1>
<TOTAL-LIABILITY-AND-EQUITY> 30,395
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,230
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,230)
<EPS-BASIC> (0.01)
<EPS-DILUTED> 0
<FN>
<F1>Other Stockholder's equity includes: Additional paid in capital
$36,180; Stock warrant $2,913 and Accumulated Deficit ($13,558)
</FN>
</TABLE>
