<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
[X] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_______________________to________________________
COMMISSION FILE NUMBER_____________________________________
OMNINET INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
OMNINET INTERNATIONAL LTD.
(Translation of Registrant's name into English)
BERMUDA
(Jurisdiction of incorporation or organization)
Richmond House,
5th Floor, 12
Par-la-Ville Road, Hamilton, Bermuda HM11
(Address of principal executive offices)
-------------------
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Name of each exchange on
Title of each class which registered
------------------- -----------------------
Common Stock, U.S. $0.001 Par Value None
Securities registered or to be registered pursuant to Section 12(g) of the
Act. None
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act. None
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.
Common Stock, U.S. $0.001 Par Value 1,123,851 Shares
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark which financial statement item the registrant has elected
to follow. Item 17 [ ] Item 18 [X]
<PAGE> 2
1. DESCRIPTION OF BUSINESS.
Omninet International Ltd. was originally organized under the laws of
Bermuda on March 24, 1998. We amended our memorandum of association on June 30,
1998, in order to increase the amount of our authorized common stock to
25,000,000 shares, par value $0.001. We are filing this Form 20-F on a voluntary
basis under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
in order to become eligible for quotation on the OTC Bulletin Board.
Omninet is a development stage company whose only operation is seeking
viable businesses to acquire. It is likely that we will need additional
financing or future profitability to continue as a going concern. We are not
presently engaged in any business. Since our formation, Omninet has explored
entering into certain businesses but commenced operations in only one business.
In particular:
- In the Spring of 1998, Omninet explored providing Internet
services to domestic and business users in the United Kingdom.
On June 23, 1998, we entered into an agreement to acquire
Colloquium Ltd., a Scotland based provider of connectivity and
value-added Internet services to the United Kingdom. On July 2,
1998, we exchanged 954,964 shares of our common stock for all of
the issued and outstanding shares of Colloquium. However, we
became dissatisfied with the management of Colloquium and on May
26, 1999, Omninet contributed $24,000 to the capital of
Colloquium and thereafter sold all of the issued and outstanding
shares of Colloquium to Brian McMillan and others in exchange
for 479,988 Omninet shares held by the purchasers.
- On September 8, 1998, Omninet entered into a Plan and Agreement
of Merger - Reorganization with E&M Management, Inc. whereby,
subject to numerous terms and conditions, E&M was to be merged
with and into Omninet, with Omninet being the surviving
corporation. E&M was a development stage company originally
incorporated in Nevada on November 2, 1992. E&M was not engaged
in any operations. However, trades in E&M's common stock were
quoted on the OTC Bulletin Board. As of October 15, 1999, E&M
had not obtained the requisite approval of the merger by its
shareholders as required by Nevada law and, on November 2, 1999,
the companies terminated the merger agreement by executing a
Mutual Termination Agreement and Release. We do not believe that
Omninet assumed any liabilities due to its termination of the
merger.
2. DESCRIPTION OF PROPERTY.
Omninet has no material assets except for cash in the amount of
$84,239. Omninet has no office facilities or real property holdings. We
currently occupy office space at Richmond House, 5th Floor, 12, Par-la-Ville
Road, Hamilton, Bermuda HM11 on a month-to-month, rent free basis. We believe
that our existing facilities are adequate to meet our current needs and do
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not anticipate any difficulty in finding other satisfactory space if existing
facilities become unavailable
3. LEGAL PROCEEDINGS.
Other than as described below, there are no pending legal proceedings
to which Omninet, our directors or officers are a party. Except as described in
this Item 3, no legal proceedings are known to us to be contemplated, or
threatened by or against Omninet, by any party including any governmental
authority.
Omninet has commenced litigation in Bermuda against Colloquium Ltd.,
Brian McMillan and Catherine Matherson (two former directors) in relation to the
withdrawal of $50,691 from Omninet's bank account and for the return of the
approximately $24,000 paid by Omninet to Colloquium as part of the May 26, 1999
agreement referred to in Item 1 above. We claimed that the withdrawal of funds
was unauthorized and that the $24,000 payment made to Colloquium under the May
26, 1999 agreement was made in error after a material default under that
agreement by Brian McMillan and Colloquium. A default judgment was obtained in
Bermuda against the defendants for $74,691, plus interest and costs and we have
initiated proceedings in Scotland seeking to enforce the default judgment.
Colloquium, Brian McMillan and/or Catherine Matherson have appealed the
judgment. There can be no assurance as to the outcome of the appeal or that the
judgment will be collectible, in whole or in part, from all or any of
Colloquium, Brian McMillan and Catherine Matherson.
4. CONTROL OF REGISTRANT.
(a) Omninet is not controlled or owned by another corporation or
foreign government.
(b) The following table sets forth certain information regarding the
ownership of Omninet's common stock as of December 1, 1999, by each shareholder
known by us to be the beneficial owner of more than 10% of Omninet's common
stock and all executive officers and directors as a group. Unless otherwise
indicated by footnote, each of the shareholders named in the table has sole
voting and investment power with respect to the shares of common stock
beneficially owned.
<TABLE>
<CAPTION>
TITLE OF CLASS NAME AND ADDRESS NO. OF SHARES OWNED % OF CLASS
-------------- ---------------- ------------------- ----------
<S> <C> <C> <C>
Common Eric Kohn 297,120 26.44
Chemin de Carabot, 10a
CH-1213 Onex
Switzerland
</TABLE>
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<TABLE>
<CAPTION>
TITLE OF CLASS NAME AND ADDRESS NO. OF SHARES OWNED % OF CLASS
-------------- ---------------- ------------------- ----------
<S> <C> <C> <C>
Common Estate of Sir Ian MacGregor(*) 134,094 11.93
21 Mount Windham Drive
Hamilton, CR 04
Bermuda
Common Christopher Tilley 134,094 11.93
15 Chemin de la Praly
Case Postale 139
CH-1222 vesenaz
Switzerland
Common Valor Invest, SA 211,774 18.84
29 Quai des Bergues
CH-1201 Geneva
Switzerland
</TABLE>
(*) Omninet has been advised that beneficial ownership of these
shares has been transferred to Value Invest Ltd. and will be
transferred on the company's books subject to receipt of approval from
the Bermuda Monetary Authority. ValueInvest's address is Letzigraben
89, Zurich CH 8040, Switzerland.
(c) No arrangements presently exist which would result in a change
in control of Omninet.
5. NATURE OF TRADING MARKET.
Omninet's common stock is not presently listed on any national or
foreign securities exchange. There is currently no established trading market
for Omninet's common stock and there is no assurance that a trading market will
develop or, if such a market develops, that it will continue. High and low sales
prices for Omninet's common stock are not available.
As of November 17, 1999, Omninet had no shareholders of record and no
shares of common stock located in the United States.
6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS.
Omninet does not believe there are any decrees or regulations under the
laws of Bermuda applicable to it restricting the import or export of capital or
affecting the remittance of dividends or other payments to nonresident holders
of our common stock.
There are no restrictions under Omninet's Bye-Laws or Memorandum of
Association or under Bermuda law as currently in effect that limit the right of
nonresident owners to hold or vote Omninet's Common Stock or to receive
dividends thereon. However, the permission of the Bermuda Monetary Authority is
required before shares of Omninet's Common Stock can be
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transferred or issued to any other person. Once Omninet is a reporting company
under the Exchange Act, we may seek a waiver of this requirement from the
Bermuda Monetary Authority.
The Company is organized under the laws of Bermuda. There is
uncertainty as to whether the Courts of Bermuda would (i) enforce judgments of
United States Courts obtained against Omninet or our directors and officers
predicated upon the civil liability provisions of the federal securities laws of
the United States or (ii) entertain original actions brought in Bermuda Courts
against Omninet or such persons predicated upon the federal securities laws of
the United States. There is no treaty in effect between the United States and
Bermuda providing for such enforcement.
7. TAXATION.
Omninet is organized under the laws of Bermuda. At present, there is no
Bermuda income on profits tax, withholding tax, capital gains tax, capital
transfer tax, estate duty or inheritance tax payable by our United States
shareholders, except shareholders ordinarily resident in Bermuda. There is
currently no reciprocal tax treaty between Bermuda and the United States
regarding withholding.
8. SELECTED FINANCIAL DATA.
The following table summarizes selected consolidated financial data and
operating information of Omninet.
The following selected consolidated financial data for the year ended
February 28, 1999 and the period from February 1, 1997 to February 28, 1998 has
been derived from Omninet's audited Consolidated Financial Statements included
elsewhere in this Registration Statement. The information should be read in
conjunction with the Consolidated Financial Statements and Notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Registration Statement.
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Omninet's Consolidated Financial Statements have been prepared in
accordance with accounting standards generally accepted in the United States.
<TABLE>
<CAPTION>
Thirteen months
Year ended ended
February 28, February 28,
1999 1998
---- ----
<S> <C> <C>
Revenues $ 466,271 $ 364,720
Cost of revenues (315,023) (280,925)
------- -------
Gross profit 151,248 83,795
Selling, general and administrative expenses (423,511) (235,176)
------- -------
Operating loss (272,263) (151,381)
Interest expense (8,339) (9,042)
Other income - 13,287
------- -------
Net loss $ (280,602) $ (147,136)
======= =======
Net loss per share $ (0.32) $ (0.40)
======= =======
BALANCE SHEET DATA:
Working capital $ (205,660) $ (366,821)
Total assets $ 193,128 $ 194,915
Total liabilities $ 307,209 $ 469,883
Total Shareholders' Equity $ (206,567) $ (377,610)
</TABLE>
<TABLE>
<CAPTION>
Six months
ended August Pro-
31, 1999 Forma
-------- -----
<S> <C> <C>
Revenues $ 104,928 -
Cost of revenues (62,209) -
------- -------
Gross profit 42,719 -
Bad debt expense (50,691) (50,691)
Selling, general and administrative expenses (156,502) (112,932)
------- -------
Operating loss (164,474) (163,623)
Interest expense (2,660) (1,566)
------- -------
Net loss $ (167,134) $ (165,189)
======= =======
BALANCE SHEET DATA:
Working capital $ 61,463 $ 61,463
Total assets $ 85,988 $ 85,988
Total liabilities $ 24,525 $ 24,525
Total Shareholders' Equity $ 61,463 $ 61,463
</TABLE>
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9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The following discussion is based on Omninet's audited consolidated
financial data for the year ended February 28, 1999 and the period from February
1, 1997 to February 28, 1998. During much of the periods covered by these
financial statements Omninet was engaged in the business of providing
connectivity and value added Internet services. We are not presently engaged in
that or any other business.
Omninet presently has no business operations. Our plan of operation is
to acquire viable operating companies. We anticipate that we can satisfy our
current cash requirements for a period of 12 months and do not anticipate that
we will have to raise additional funds in the next 12 months. If Omninet
requires additional capital in order to acquire an operating company, we plan to
raise such additional funds through a private placement of common stock. Omninet
will satisfy legal and accounting costs associated with filing reports under the
Exchange Act through our cash reserves.
Results of Operations - Year Ended February 28, 1999 As Compared to the
Period From February 1, 1997 to February 28, 1998.
REVENUES
Total revenues in the year ended February 28, 1999 were $466,271 as
compared to $364,720 in the period from February 1, 1997 to February 28, 1998.
All of Omninet's revenues from 1997 to 1999 were derived from our Internet
related business which we sold at the end of the first quarter of 1999.
COSTS
Total cost increased from $280,925 for the thirteen months ended
February 28, 1998 to $315,023 in the year ended February 28, 1999. The largest
components of these costs were technical staff salaries and telephone line costs
from our former Internet related business.
LIQUIDITY AND CAPITAL RESERVES
Total net proceeds from the sale of equity securities in the period
between our formation and August 31, 1999 amounted to approximately $375,000.
CASH FLOW
Operating activities used cash, predominately for our former Internet
related business, of $16,037 in the thirteen months ended February 28, 1998 and
$75,744 in the year ended February 28, 1999.
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Investing activities used cash of $25,886 from the period beginning
February 1, 1997 to February 28, 1998 and $44,305 in the year ended February 28,
1998. Cash used for investing activities was applied towards the purchase of
property and equipment for our former Internet related business.
Net Cash provided by financing activities was $43,108 from February 1,
1997 to February 28, 1998 and $128,488 in the year ended February 28, 1999.
WORKING CAPITAL
Omninet's working capital, defined as the excess of our current assets
over our current liabilities, was $(205,660) at February 28, 1999 compared to
($366,821) at February 28, 1998.
Omninet does not presently have any borrowing facility established with
a financial institution. We anticipate that our current cash reserves of $84,239
will be sufficient to fund our operations through December 31, 2000. If Omninet
requires additional capital to fund our operations, we anticipate raising such
additional capital through a private offering of Omninet's securities.
IMPACT OF INFLATION AND CURRENCY FLUCTUATIONS
Omninet does not believe that inflation or currency fluctuations have
had a material adverse effect on revenues and results of operations. However,
demand for Omninet's services was for the periods indicated above, and likely
will be if an operating entity is acquired in the future, influenced by general
economic conditions, including inflation and currency fluctuations. Periods of
economic recession, high inflation or the devaluation of currencies in countries
in which Omninet operates could have a material adverse effect on our results of
operations.
FACTORS THAT COULD AFFECT OPERATING RESULTS
Forward Looking Statements. This Registration Statement on Form 20-F
contains forward-looking statements. Additional written and oral forward-looking
statements may be made by Omninet from time to time in SEC filings and
otherwise. Results predicted by forward-looking statements, including, without
limitation, those relating to our future business prospects, revenues, working
capital, liquidity, capital needs, interest costs, and income are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those indicated in the forward-looking statements, due to the
following factors, among other risks and factors identified from time to time in
Omninet's filings with the SEC.
Omniet Has a History of Losses and Cannot Be Certain to Achieve
Positive Cash Flow. For the thirteen months ended February 28, 1998 and the year
ended February 28, 1999, Omninet had net losses and negative cash flows. For the
six months ended August 31, 1999, we had a net loss of $167,134. In addition, we
had an accumulated deficit of $824,474 as of August 31, 1999. Omninet presently
has no revenue producing operations and anticipates monthly operating expenses
of $1,000.00 excluding any litigation.
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Even if Omninet acquires an operating entity, we cannot be certain that
we will achieve or sustain positive cash flow or profitability from our
operations. Our net losses and negative cash flow are likely to continue even
longer than we currently anticipate if we do not acquire a viable operating
entity and if we do not attract and retain qualified personnel. Our ability to
achieve our objectives is subject to financial, competitive, regulatory, legal,
technical and other factors, many of which are beyond our control.
Omninet's Limited Operating History Makes it Difficult to Assess Past
Performance and Future Prospects. There is only limited historical operating and
financial information on which to base an evaluation of Omninet's performance
and prospects. We have acquired and disposed of one company since our inception
in March 1998. This limits the comparability of our operating and financial
information from period to period.
Omninet Is Subject to Risks As We Make Acquisitions and Engage in Strategic
Alliances. As part of Omninet's business strategy, we intend to acquire, make
investments in, or enter into strategic alliances with as yet unidentified
operating companies. Any such future acquisitions, investments or strategic
alliances would involve risks, such as:
- incorrect assessment of the value, strengths and weaknesses of
acquisition and investment opportunities;
- underestimating the difficulty of integrating the operations and
personnel of newly acquired companies;
- the potential disruption of any ongoing business, including
possible diversions of resources and management time; and
- the threat of impairing relationships with employees and customers
as a result of changes in management or ownership.
We cannot assure you that Omninet will be successful in overcoming
these risks. Moreover, we cannot be certain that any desired acquisition,
investment or strategic alliance could be made in a timely manner or on terms
and conditions acceptable to us. Neither can we assure you that Omninet will be
successful in identifying attractive acquisition candidates. Omninet expects
that competition for such acquisitions may be significant. We may compete with
others who have similar acquisition strategies, many of whom may be larger and
have greater financial and other resources than Omninet.
An additional risk associated with acquisitions is that many attractive
acquisition candidates do not have audited financial statements and have varying
degrees of internal controls. Although we may believe that the available
financial information for a particular business is reliable, we cannot guarantee
that a subsequent audit would not reveal matters of significance, including with
respect to liabilities, contingent or otherwise. We expect that, from time to
time in the future, we will enter into acquisition agreements, the pro forma
effect of which is not known and cannot be predicted.
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Omninet Does Not Expect to Pay Dividends. Omninet does not anticipate
paying cash dividends in the foreseeable future.
Risks Inherent in International Operations. A substantial portion of
Omninet's business may be conducted outside of the United States. As a result,
our operations could be subject to various risks such as the possibility of the
loss of revenue, property or equipment due to expropriation, nationalization,
war, insurrection, terrorism or civil disturbance, the instability of foreign
economies, currency fluctuations, and devaluations, adverse tax policies and
governmental activities that may limit or disrupt markets, restrict payments or
the movement of funds or result in the deprivation of contract rights.
Additionally, Omninet's ability to compete may be adversely affected by foreign
governmental regulations that encourage or mandate the hiring of local
contractors, or by regulations that require foreign contractors to employ
citizens of, or purchase supplies from vendors in, a particular jurisdiction.
Omninet may be subject to taxation in a number of jurisdictions, and the final
determination of our tax liabilities involves the interpretation of the statutes
and requirements of various domestic and foreign taxing authorities. Any of
these risks may have an adverse effect on Omninet.
Dependence on Key Employees. Omninet's growth and profitability are
dependent upon, among other things, the abilities and experience of Omninet's
management team including Mr. Eric F. Kohn, Omninet's Chairman and Director. If
the services of Mr. Kohn or Omninet's other directors or executive officers were
no longer available to the company, our business, financial condition and
results of operations could be adversely affected.
Rights of Shareholders Under Bermuda Law. Omninet is incorporated under
the laws of Bermuda. Principles of law relating to such matters as the validity
of corporate procedures, the fiduciary duties of Omninet's management and
directors and the rights of our shareholders, are governed by Bermuda law and
our Memorandum of Association and Bye-laws. Such principles of law may differ
from those that would apply if we were incorporated in a jurisdiction in the
United States. In addition, there is uncertainty as to whether the courts of
Bermuda would enforce (i) judgments of United States courts obtained against
Omninet or our officers and directors predicated upon the civil liability
provisions of the securities laws of the United States or any state or (ii) in
original actions brought in Bermuda, liabilities against Omninet or such persons
predicated upon the securities laws of the United States or any state.
9A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable. Omninet is not presently engaged in business. The
company has no notes payable and is not subject to interest rate risk.
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10. DIRECTORS AND OFFICERS OF REGISTRANT.
The following sets forth Omninet's directors, executive officers and
key employees, positions and offices held by each such person, and the period
each such person has held such position.
<TABLE>
<CAPTION>
Name Position Held and Term
- - ---- ----------------------
<S> <C>
Eric F. Kohn Chairman and Director since March 24, 1998.
Marlin J. Horst Secretary and Director since March 24, 1998.
Jeffrey Conyers Director since May 20, 1999.
Michael R. Schroter Director since May 20, 1999.
Lynda Milligan-Whyte Director Since March 24, 1999.
</TABLE>
(b) There are no family relationships among Omninet's directors and
executive officers.
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11. COMPENSATION OF DIRECTORS AND OFFICERS.
(a) During the fiscal year ended February 28, 1999, Colloquium, a
wholly-owned subsidiary of Omninet prior to its sale on May 26, 1999, paid
$43,743 to Brian McMillan and Catherine Matherson for services rendered as
directors of that company.
Except as described above, Omninet's officers and directors did not
receive compensation for services in any capacity during the fiscal year ended
February 28, 1999. Each of our directors and officers has elected to forego
further payments under this arrangement for an indefinite period of time so that
we can devote our cash resources to seeking and acquiring an operating business.
We expect that our directors and officers will begin to receive compensation for
their services in such capacities after we acquire an operating entity and are
generating revenues from operations. The directors and officers are not
presently accruing any compensation pursuant to any agreement with Omninet.
(b) We have not adopted any plan to provide pension, retirement or
similar benefits for our directors and officers.
12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES.
As of December 1, 1999, there were no outstanding warrants or options
to purchase shares of Omninet's common stock. There are no outstanding options
to purchase Omninet common stock.
13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS.
(a) On May 26, 1999, our Board of Directors voted unanimously to
divest Omninet of its wholly-owned subsidiary, Colloquium, due to concerns
regarding that company's operational performance and long-term viability. This
action was subsequently approved by Omninet's shareholders and an agreement was
struck between Omninet, Colloquium, Brian McMillan and Eric Kohn, whereby Brian
McMillan and certain other shareholders of Omninet were given the option to
exchange their shares of Omninet common stock for all of the shares of the
common stock of Colloquium. In addition, Omninet contributed $24,000 to the
capital of Colloquium. Six Omninet shareholders exchanged their shares in
Omninet for shares in Colloquium, including Brian McMillan who was a director of
Colloquium at the time of the exchange. The six shareholders participating in
the exchange tendered an aggregate of 479,988 shares of Omninet common stock,
which shares were returned to treasury.
In 1998 and 1999, Mr. Kohn, our Chairman and Director, loaned Omninet
$16,014 and $25,695, respectively. We used the proceeds of the loans from Mr.
Kohn to fund our business operations. The loans were non-interest bearing and
payable on demand. Omninet has repaid both loans in full.
(b) None of our directors, officers or associates of any such directors
or officers was indebted to Omninet or our subsidiaries at any time during the
last three years.
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PART II
14. DESCRIPTION OF SECURITIES TO BE REGISTERED
Our Memorandum of Association authorizes the issuance of 25,000,000
shares of Omninet common stock, par value $0.001 per share. There were 1,123,851
shares of Omninet's common stock outstanding as of December 1, 1999.
Omninet may sell shares of common stock as our Board of Directors
determines, including as fully paid and non-assessable, but subject to future
payment on agreed terms, or subject to future call. The Board may from time to
time make calls upon any shareholders purchasing subject to future call, and
such shareholders are liable for any moneys unpaid on their shares. If a
shareholder fails to pay a call when made, the Board may declare forfeit those
shares as to which payment is outstanding. Joint holders of shares may be held
jointly and severally liable for calls made with respect to those shares. In
addition, our Board of Directors can prevent the transfer of any shares that are
not fully paid.
All shares of Omninet's common stock are entitled to one vote at any
shareholders meeting or other authorized vote of the shareholders. All shares of
Omninet's common stock are equal to one another with respect to dividends and
liquidation rights. Holders of Omninet's common stock are entitled to receive
such dividends as may be declared by the Board of Directors out of funds legally
available for dividends, and upon liquidation, are entitled to participate
pro-rata in a distribution of assets available for such distribution to
shareholders. There are no conversion, preemptive, option, or subscription
privileges with respect to any shares. Omninet 's common stock does not have
cumulative voting rights which means that the holder of more than 50% of the
shares voting for the election of directors may elect all of the directors if
they choose to do so.
Reference is made to our Memorandum of Association, as amended, and
Bye-laws, as well as to the applicable statutes of Bermuda, for additional
details on the rights, privileges, and liabilities of holders of Omninet's
common stock.
PART III
15. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
16. CHANGES IN SECURITIES, CHANGES IN SECURITY FOR REGISTERED SECURITIES AND
USE OF PROCEEDS.
Not Applicable.
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PART IV
17. FINANCIAL STATEMENTS.
Omninet has elected to furnish the financial statements specified by Item 18.
18. FINANCIAL STATEMENTS.
<TABLE>
<S> <C>
Financial statements which appear herein at the page indicated:
Report of Independent Auditors Public Accountants..............................F-1
Consolidated Statements of Operations for the year ended
February 28, 1999 and the period from February 1, 1997
to February 28, and 1998.......................................................F-2
Consolidated Balance Sheets as of
February 28, 1999 and 1998.....................................................F-3
Consolidated Statements of Cash Flows for the year ended
February 28, 1999 and the period from February 1, 1997
to February 28, 1998...........................................................F-4
Consolidated Statements of Stockholders' Equity................................F-5
Notes to the Consolidated Financial Statements as of and
for the year ended February 28, 1999 and the period
from February 1, 1997 to February 28, 1998.....................................F-6
Unaudited Consolidated Statements of Operations for the six months
ended August 31, 1999 and 1998................................................F-14
Unaudited Consolidated Balance Sheets as at August 31, 1999 and
February 28, 1999.............................................................F-15
Unaudited Consolidated Statements of Stockholders' equity for the
six months ended August 31, 1999..............................................F-16
Unaudited Consolidated Statements of Cash Flows for the six months
ended August 31, 1999 and 1998................................................F-17
Notes to the Unaudited Consolidated Financial Statements as at
August 31, 1999...............................................................F-18
Pro Forma Unaudited Statement of Operations for the year ended
February 28, 1999.............................................................F-20
Pro Forma Unaudited Statement of Operations for the six months
ended August 31, 1999.........................................................F-21
Pro Forma Unaudited Balance Sheet as at August 31, 1999.......................F-22
Notes to the Pro Forma Unaudited Financial Information as at
February 28, 1999 and August 31, 1999.........................................F-23
</TABLE>
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19. FINANCIAL STATEMENTS AND EXHIBITS.
The financial statements listed in Item 18 are incorporated by reference to this
Item.
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- - -------------------------------------------------------------------
<C> <S>
1.1 Memorandum of Association of Omninet
1.2 Bye-laws of Omninet
3.1 Agreement between Omninet and Nicholas
Boakes and Others dated June 23, 1998,
regarding Omninet's purchase of Colloquium
3.2 Agreement and Plan of Merger-Reorganization
dated September 8, 1998, between Omninet and
E&M Management, Inc.
3.3 Agreement dated May 26, 1999, between
Omninet and Colloquium Ltd., regarding the
sale of Colloquium.
3.4 Mutual Termination Agreement and Release
dated October 27, 1999, between Omninet and
E&M Management, Inc.
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, we certify that we meet all of the requirements for filing on Form
20-F and have duly caused this Registration Statement to be signed on Omninet's
behalf by the undersigned duly authorized officer.
OMNINET INTERNATIONAL LTD.
Dated: December 16, 1999 By: /s/ Eric F. Kohn
-------------------------------
Eric F. Kohn
Chairman and Director
15
<PAGE> 16
OMNINET INTERNATIONAL LIMITED
REPORT AND
FINANCIAL STATEMENTS
YEAR ENDED FEBRUARY 28, 1999 AND
THE PERIOD FROM FEBRUARY 1, 1997 TO FEBRUARY 28, 1998
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Omninet International Limited
We have audited the accompanying consolidated balance sheets of Omninet
International Limited and subsidiary as of February 28, 1999 and 1998, and the
related consolidated statements of operations, and cash flows for the year ended
February 28, 1999 and the period from February 1, 1997 to February 28, 1998.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Omninet
International Limited as of February 28, 1999 and 1998 and the consolidated
results of their operations and their cash flows for the periods then ended, in
conformity with accounting principles generally accepted in the United States.
Moore Stephens
Chartered Accountants
St. Paul's House
London EC4P 4BN
December 19, 1999
F-1
<PAGE> 18
OMNINET INTERNATIONAL LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 1999 AND THE
PERIOD FROM FEBRUARY 1, 1997 TO FEBRUARY 28, 1998
<TABLE>
<CAPTION>
Thirteen months
Year ended ended
February 28, February 28,
1999 1998
---- ----
<S> <C> <C>
Revenues $ 466,271 $ 364,720
Cost of revenues (315,023) (280,925)
------- -------
Gross profit 151,248 83,795
Selling, general and administrative expenses (423,511) (235,176)
------- -------
Operating loss (272,263) (151,381)
Interest expense (8,339) (9,042)
Other income - 13,287
------- -------
Net loss $ (280,602) $ (147,136)
======= =======
Earnings per share -
Basic and Diluted $ (0.32) $ (0.40)
======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
F-2
<PAGE> 19
OMNINET INTERNATIONAL LIMITED
CONSOLIDATED BALANCE SHEETS
AS OF FEBRUARY 28, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,040 $ -
Trade accounts receivable, net 49,979 35,206
Prepaids and other receivables 18,385 26,355
Inventories 10,416 10,694
------ ------
Total current assets 83,820 72,255
Property and Equipment, net 111,095 113,594
Other Assets - 7,279
------ ------
$ 194,915 $ 193,128
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 186,293 $ 102,406
Bank overdraft 32,944 28,004
Current portion of notes payable 10,828 8,311
Accrued and other liabilities 194,881 123,180
Advances from related parties 25,695 16,014
------ ------
Total current liabilities 450,641 277,915
Notes payable, net of current portion 19,242 29,294
------ ------
469,883 307,209
------ ------
Commitments and Contingencies - -
Redeemable preferred stock, 50,000 shares
issued and outstanding 102,642 92,486
------ ------
Stockholders' Equity:
Common stock, $.001 par value, 25,000,000
shares authorised; 1,003,002 and 740,592
shares issued and outstanding as of February
28, 1999 and 1998, respectively 1,003 740
Additional paid-in capital 310,270 238,061
Subscriptions receivable - (49,350)
Accumulated deficit (686,895) (396,137)
Accumulated other comprehensive income:
Cumulative translation adjustment (1,988) 119
------ ------
(377,610) (206,567)
------ ------
$ 194,915 $ 193,128
====== ======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
F-3
<PAGE> 20
OMNINET INTERNATIONAL LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED FEBRUARY 28, 1999 AND THE
PERIOD FROM FEBRUARY 1, 1997 TO FEBRUARY 28, 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash Flows from operating activities:
Net loss $ (280,602) $ (147,136)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortisation 47,164 49,672
Stock issued for consulting services - 6,499
Changes in operating assets and liabilities:
Accounts Receivable (14,773) 23,802
Prepaid and other 7,970 10,091
Inventories 278 (1,727)
Other assets 7,279 (194)
Accounts payable 83,887 (6,769)
Accrued liabilities 73,053 58,260
Other liabilities - (8,535)
------ ------
Net cash used in operating activities (75,744) (16,037)
------ ------
Cash flows from investing activities:
Purchase of property and equipment (44,305) (25,886)
------ ------
Net cash used in investing activities (44,305) (25,886)
------ ------
Cash flows from financing activities:
Proceeds from issuance of common stock, net 72,052 51,041
Proceeds from collection of subscriptions receivable 49,350 -
Advances from related parties 9,681 968
Bank overdraft 4,940 (1,097)
Net borrowings (payments) of notes payable (7,535) (7,804)
------ ------
Net cash provided by financing activities 128,488 43,108
------ ------
Effect of exchange rate changes on cash (3,399) (1,185)
Net increase (decrease) in cash and cash equivalents 5,040 -
Cash and cash equivalents, beginning of period - -
------ ------
Cash and cash equivalents, end of period $ 5,040 $ -
====== ======
Supplemental cash flow disclosures:
Cash paid for interest $ 8,339 $ 9,042
====== ======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
F-4
<PAGE> 21
OMNINET INTERNATIONAL LIMITED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional
------------ Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit
------ ------ ------ ---------- -------
<S> <C> <C> <C> <C> <C>
$ $ $ $
Balance, February 1, 1997 400,324 400 131,511 - (236,949)
Issuance of additional
common stock 120,096 120 32,680
Issuance of additional
common stock 180,144 180 49,170 (49,350)
Issuance of common
stock for consulting
services 25,016 25 6,474
Exercise of stock option 15,012 15 19,665
Stock issuance costs (1,439)
Preferred stock dividends (7,106)
Accreted mandatory
redemption premium
of preferred stock (4,946)
Net loss (147,136)
Translation adjustment
------ ----- ------ ------ ------
Balance, February 28, 1998 740,592 740 238,061 (49,350) (396,137)
Issuance of additional
common stock 52,241 53 15,052 -
Exercise of stock
option 210,169 210 57,157
Collection of subscriptions
receivable 49,350
Preferred stock dividends (6,628)
Accreted mandatory
redemption premium
of preferred stock (3,528)
Net loss (280,602)
Translation adjustment
Comprehensive income
-------- ----- ------ ------ ------
Balance, February 28, 1999 1,003,002 1,003 310,270 - (686,895)
-------- ----- ------ ------ ------
<CAPTION>
Accumulated
Other Total
Comprehensive Comprehensive Stockholders'
Income Income Equity
------ ------ ------
<S> <C> <C> <C>
$ $
Balance, February 1, 1997 2,212 (234,737) (102,826)
Issuance of additional
common stock 32,800
Issuance of additional
common stock -
Issuance of common
stock for consulting
services 6,499
Exercise of stock option 19,680
Stock issuance costs (1,439)
Preferred stock dividends (7,106)
Accreted mandatory
redemption premium
of preferred stock (4,946)
Net loss (147,136) (147,136)
Translation adjustment (2,093) (2,093) (2,093)
------ ------- ------
Balance, February 28, 1998 119 (383,966) (206,567)
Issuance of additional
common stock 15,105
Exercise of stock
option 57,367
Collection of subscriptions
receivable 49,350
Preferred stock dividends (6,628)
Accreted mandatory
redemption premium
of preferred stock (3,528)
Net loss (280,602) (280,602)
Translation adjustment (2,107) (2,107) (2,107)
-------
Comprehensive income (282,709)
------ ------- ------
Balance, February 28, 1999 (1,988) (666,675) (377,610)
------ ------- ------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
F-5
<PAGE> 22
OMNINET INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1998 AND 1999
1. ORGANISATION AND DESCRIPTION OF THE COMPANY
THE COMPANY
Omninet International Limited (the "Company") was incorporated in Bermuda on
March 24, 1998. After the initial issuance of stock, the Company acquired all of
the issued and outstanding shares of Colloquium Limited, an internet service
provider incorporated in 1995 under the laws of Scotland. The shareholders of
Colloquium Limited contributed all of the outstanding shares of Colloquium
Limited in consideration for 954,964 common shares of the Company. The
accompanying financial statements have been prepared as if the combination had
occurred at the beginning of the fiscal year ended January 31, 1997, using the
historical costs of each entity as if the business combination was a pooling of
interests. The pooling of interests method is used because the shareholders of
the combining entities have become shareholders in a combined entity.
In 1997, Colloquium Limited changed its statutory accounting reference date from
January 31 to February 28. The consolidated statement of operations is therefore
presented for the year ended February 28, 1999 and the thirteen months ended
February 28, 1998.
Subsequent to the balance sheet date, on May 26, 1999 the Company disposed of
all of the issued and outstanding shares of Colloquium Limited to, amongst
others, Brian Macmillan and Catherine Matheson, former directors of the Company.
The Company has no continuing trading activity and is seeking acquisition and
merger opportunities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the accounts of the Company and
its wholly owned subsidiary. All significant intercompany accounts and
transactions have been eliminated.
MANAGEMENT'S ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.
F-6
<PAGE> 23
OMNINET INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1998 AND 1999
FOREIGN CURRENCY TRANSLATION
The Company's functional currency was Pounds Sterling as the majority of
revenues were received in Pounds Sterling and the majority of operating
expenditures were made in Pounds Sterling. Transactions during the year are
translated into United States Dollars at the rates of exchange in effect at the
date of transaction. Foreign currency monetary assets and liabilities are
re-converted using rates of exchange prevailing at the balance sheet date.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Assets are depreciated on the
straight-line or reducing balance methods over their estimated useful lives,
which range from 3 to 5 years.
RESEARCH AND DEVELOPMENT AND SOFTWARE DEVELOPMENT COSTS
Research and development costs are expensed as incurred. The Company accounts
for its software development costs in accordance with SFAS No. 86, "Accounting
for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed".
The statement provides for capitalisation of certain software development costs
once technological feasibility is established by completion of a working model
and ending when a product is available for general release to customers. The
costs capitalised are then amortised on a straight-line basis over the estimated
product life (generally eighteen months to three years), or on the ratio of
current revenue to total projected product revenue, whichever is greater. To
date, completion of a working model of the Company's products and general
release have substantially coincided. Accordingly, the Company has not
capitalised any software development costs.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with an
initial maturity of three months or less to be cash equivalents.
REVENUE RECOGNITION
The Company recognises revenues when services are provided. Services are
generally billed one month in advance. Advance billings and collections relating
to future access services are recorded as deferred revenue and recognised when
earned.
F-7
<PAGE> 24
OMNINET INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FEBRUARY 28, 1998 AND 1999
CREDIT RISK
The Company's accounts receivable potentially subjected the Company to credit
risk, as collateral was generally not required. The Company's risk of loss was
limited due to advance billings to customers for services, the use of
pre-approved charges to customer credit cards, and the ability to terminate
access on delinquent accounts. The concentration of credit risk was mitigated by
the large number of customers comprising the customer base. The carrying amount
of the Company's receivables approximates their fair value.
INVENTORY
Inventory consists of starter kits and purchased equipment for resale and is
stated at the lower of cost or market using a specific identification method.
Starter kits consist of diskettes, manuals and other printed material.
INCOME TAXES
Deferred income taxes are recorded using enacted tax laws and rates for the
years in which the taxes are expected to be paid. Deferred income taxes are
provided for items when there is a temporary difference in recording such items
for financial reporting and income tax reporting.
ISSUANCE OF STOCK FOR SERVICES
Shares of the Company's common stock issued for services are recorded in
accordance with SFAS No. 123, "Accounting for Stock-Based Compensation" at the
fair market value of the stock issued or the fair market value of the services
provided, whichever value is more clearly evident.
SOURCES OF SUPPLIES
The Company relied on local telephone companies and other companies to provide
data communications capacity. Although alternative telecommunications facilities
could be found in a timely manner, any disruption of these services could have
had an adverse effect on operating results.
F-8
<PAGE> 25
OMNINET INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FEBRUARY 28, 1998 AND 1999
SOURCES OF SUPPLIES (CONTINUED)
Although the Company attempted to maintain multiple vendors for each required
product, its modems, terminal savers, and high-performance routers, which were
important components of its network, were each acquired from only one source. In
addition, some of the Company's suppliers had limited resources and production
capacity. If the suppliers were unable to meet the Company's needs as it builds
out its network infrastructure, then delays and increased costs in the expansion
of the Company's network infrastructure could have resulted, which would have
affected operating results adversely.
3. EARNINGS PER SHARE
<TABLE>
<CAPTION>
Thirteen
Year ended months ended
February 28, February 28,
1999 1998
---- ----
<S> <C> <C>
Net loss $ (280,602) $ (147,136)
Preferred stock dividends (6,628) (7,106)
Accreted mandatory redemption
premium of preferred stock (3,528) (4,946)
------- -------
Net income available to common
stockholders $ (290,758) $ (159,188)
------- -------
Average common shares issued
and outstanding 915,006 401,256
Earnings per share - basic and diluted $ (0.32) $(0.40)
======= =======
</TABLE>
F-9
<PAGE> 26
OMNINET INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FEBRUARY 28, 1998 AND 1999
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
February 28, February 28,
1999 1998
---- ----
<S> <C> <C>
Computer equipment 238,483 200,068
Office equipment 25,951 21,770
Vehicles 7,416 10,693
------- -------
271,850 232,531
Less - accumulated depreciation (160,755) (118,937)
------- -------
$ 111,095 $ 113,594
======= =======
</TABLE>
5. NOTES PAYABLE
Notes payable consist of the following:
<TABLE>
<CAPTION>
February 28, February 28,
1999 1998
---- ----
<S> <C> <C>
Bank term loan 18,859 25,109
Renfrewshire Investment Fund Limited 11,211 12,496
------ ------
30,070 37,605
Less - current portion notes payable (10,828) (8,311)
------ ------
$ 19,242 $ 29,294
====== ======
</TABLE>
Following are maturities of long-term debt for each of the next 4
years:
<TABLE>
<CAPTION>
Amount
<S> <C>
2000 10,828
2001 10,828
2002 6,154
2003 2,260
-----
$ 30,070
=====
</TABLE>
F-10
<PAGE> 27
OMNINET INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FEBRUARY 28, 1998 AND 1999
5. NOTES PAYABLE (CONTINUED)
The bank term loan bears interest at the bank's base rate plus 4% per annum with
a minimum of 9% and is payable in monthly instalments of approximately $675
through October 2001. The loan is secured by a pledge over the assets of
Colloquium Limited and over the personal residence of Mr. Brian Macmillan.
The note payable to Renfrewshire Investment Fund Limited bears interest at 5%
per annum and is payable in monthly instalments of $226 through December 2002.
6. RELATED PARTIES TRANSACTIONS
Amounts payable to stockholders and related parties consist of advances made by
related parties and the stockholders of the Company to finance the development
of the Company's operations. The advances are non-interest bearing and are due
on demand.
Selling, general and administrative services costs in the year ended February
28, 1999 includes $26,723 paid to Eric Kohn, a director, in respect of
travelling costs and $4,835 in respect of disbursements paid to Barons Financial
Services (UK) Limited, a company connected with Mr. Kohn. Emoluments paid by
Colloquium Limited to Brian MacMillan and Catherine Matheson (formerly directors
of the Company) amounted to $43,743.
7. PREFERRED STOCK
On September 30, 1996, Colloquium Limited issued 50,000 shares of its Pound
Sterling 1 par value cumulative redeemable participating preferred stock to the
Renfrewshire Business Growth Fund Limited (the "Preferred Shareholder") in
exchange for total consideration of Pound Sterling 50,000 ($78,250 at date of
issuance).
The Preferred Shareholder is entitled to a cumulative dividend of 8% per annum
payable on January 31 and July 31. To date, no preferred stock dividends have
been declared by Colloquium Limited. The Preferred Shareholder is also entitled
to a participating dividend of up to 7.5% per annum of Colloquium's net income.
The Preferred Shareholder has been granted an option to be exercised at any time
on or before December 31, 2002 to purchase 10% of the share capital of
Colloquium Limited for Pound Sterling 1 per share.
The preferred shares are redeemable at Pound Sterling 1.20 per share, together
with all arrears and accruals of dividends on the following dates:
25,000 preferred shares on December 31, 2000
25,000 preferred shares on December 31, 2001
F-11
<PAGE> 28
OMNINET INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FEBRUARY 28, 1998 AND 1999
7. PREFERRED STOCK (CONTINUED)
Colloquium Limited is obligated to redeem immediately all of the preferred
shares at a price of Pound Sterling 1.20 per share on the date upon which either
1) its common stock is listed on a public exchange, or 2) a purchase of 50% or
more of its common stock is completed.
In the event of the liquidation of Colloquium Limited, whether voluntary or
involuntary, the Preferred Shareholder is entitled to receive a preferential
distribution of Pound Sterling 1.20 per share, plus any arrears or accruals of
dividends.
8. TAXATION
Under Bermuda law the company is not required to pay any taxes in Bermuda on
either income or capital gains. The company has received an undertaking from the
Minister of Finance in Bermuda that in the event of any such taxes being imposed
the company will be exempted from taxation until the year 2016.
Colloquium Limited is subject to United Kingdom corporation tax at rates of up
to 30 per cent. Colloquium Limited has net operating loss carry forwards, which
may be used to offset future taxable income.
9. OFFICE LEASE
Colloquium Limited leases office space in Paisley, Scotland under a lease
agreement which may not be cancelled, and which expires on March 31, 2001. The
commitment under this lease approximates $29,200 per year.
10. SUBSEQUENT EVENTS
Subsequent to the balance sheet date, on May 26, 1999 the Company disposed of
all of the issued and outstanding shares of Colloquium Limited to, amongst
others, Brian Macmillan and Catherine Matheson, former directors of the Company.
The Company has booked a net gain of $215,000 as a credit to paid in capital in
the subsequent period. The Company is seeking acquisition and merger
opportunities.
F-12
<PAGE> 29
OMNINET INTERNATIONAL LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FEBRUARY 28, 1998 AND 1999
10. SUBSEQUENT EVENTS (CONTINUED)
The Company has commenced litigation against Colloquium Limited, Brian Macmillan
and Catherine Matheson (two former directors) in relation to the withdrawal of
$50,691 from the Company's bank account. Management have booked an expense of
$50,691 in the six months ended August 31, 1999. A default judgement has been
obtained in Bermuda against Colloquium Limited, Brian Macmillan and Catherine
Matheson for the recovery of $50,691 and $24,000 paid to Colloquium Limited as
part of the divestiture settlement, plus interest and legal costs. Litigation is
continuing in Scotland.
Subsequent to the balance sheet date, Barons Financial Services (UK) Limited
were granted warrants for the issue of 14,938 common shares at $0.01 per share.
These warrants were exercised on November 3, 1999.
F-13
<PAGE> 30
OMNINET INTERNATIONAL LIMITED
AUGUST 31, 1999
<PAGE> 31
OMNINET INTERNATIONAL LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED AUGUST 31, 1999 AND 1998
<TABLE>
<CAPTION>
Six months
ended
August 31, 1999
----------------
<S> <C>
Revenues $ 104,928
Cost of revenues (62,209)
------
Gross profit 42,719
Bad Debt (50,691)
Selling, general and administrative expenses (156,502)
------
Operating loss (164,474)
Interest expense (2,660)
------
Net loss $ (167,134)
======
Earnings per share -
Basic and Diluted $(0.20)
======
</TABLE>
The accompanying notes are an integral part of these
unaudited consolidated financial statements
F-14
<PAGE> 32
OMNINET INTERNATIONAL LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS AT AUGUST 31, 1999
<TABLE>
<CAPTION>
August 31,
1999
----
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 84,239
Trade accounts receivable, net 1,749
Prepaids and other accounts receivables -
Inventories -
------
Total current assets 85,988
Property and Equipment, net -
------
$ 85,988
======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 24,525
Bank overdraft -
Current portion of notes payable -
Accrued and other liabilities -
Advances from related parties -
------
Total current liabilities 24,525
Notes payable, net of current portion -
Other long-term liabilities -
------
24,525
------
Commitments and Contingencies -
Stockholders' Equity:
Common stock, $.001 par value, 25,000,000
shares authorised; 628,926 and 1,003,002
shares issued and outstanding as of May 31
1999 and February 28,1999 respectively 629
Additional paid-in capital 885,308
Accumulated deficit (824,474)
Cumulative translation adjustment -
------
61,463
------
$ 85,988
======
</TABLE>
The accompanying notes are an integral part of these
unaudited consolidated financial statements
F-15
<PAGE> 33
OMNINET INTERNATIONAL LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Other Total
------------ Paid-In Accumulated Comprehensive Comprehensive Stockholders'
Shares Amount Capital Deficit Income Income Equity
<S> <C> <C> <C> <C> <C> <C> <C>
$ $ $ $ $ $
Balance, February 28, 1999 1,003,002 1,003 310,270 (654,935) (3,739) (636,466) (347,401)
Issuance of additional common
stock 105,912 106 359,995 - - - 360,101
Cancellation of 479,988 shares (479,988) (480) - - - - (480)
Net loss - - - (167,134) - (167,134) (167,134)
Preferred stock dividends - - - (1,657) - - (1,657)
Accreted mandatory redemption
premium of preferred stock - - - (748) - - (748)
Translation adjustment - - - - 3,739 3,739 3,739
Gain on disposition of subsidiary - - 215,043 - - - 215,043
------ ----- ------ ------- ------ ------- ------
Balance, August 31, 1999 628,926 629 885,308 (824,474) - (799,861) 61,463
------ ----- ------ ------- ------ ------- ------
</TABLE>
The accompanying notes are an integral part of these
unaudited consolidated financial statements
F-16
<PAGE> 34
OMNINET INTERNATIONAL LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
Six months
ended August 31,
1999
----
<S> <C>
Cash flows from operating activities:
Net loss $ (167,134)
Adjustments to reconcile net profit/(loss)
to net cash used in operating activities:
Depreciation and amortisation 9,409
Changes in operating assets and liabilities:
Trade accounts receivable, net (2,551)
Prepaid and other accounts receivable 7,119
Inventories (5)
Accounts payable (57,243)
Accrued liabilities (910)
-------
Net cash used in operating activities (211,315)
-------
Cash flows from investing activities:
Disposal of subsidiary (24,115)
Purchase of property and equipment (7,212)
_
-------
Net cash used in investing activities (31,327)
-------
Cash flows from financing activities:
Proceeds from issuance of common stock, net 359,621
Proceeds from collection of subscriptions receivable -
Advances from related parties (25,695)
Bank overdraft 2,458
Net borrowings (payments) of notes payable (19,532)
-------
Net cash provided by financing activities 316,852
-------
Effect of exchange rate changes on cash 4,989
-------
Net increase (decrease) in cash and cash equivalents 79,199
Cash and cash equivalents, beginning of period 5,040
-------
Cash and cash equivalents, end of period $ 84,239
=======
Supplemental cash flow disclosures:
Cash paid for interest 2,660
=======
</TABLE>
The accompanying notes are an integral part of these
unaudited consolidated financial statements
F-17
<PAGE> 35
OMNINET INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1999
1. INTERIM ACCOUNTING POLICY
In the opinion of management of Omninet International Limited (the "Company"),
the accompanying unaudited consolidated financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly in accordance with accounting principles generally accepted in
the US the financial position of the Company and the results of operations and
cash flows for the six months ended August 31, 1999. Although the Company
believes that the disclosure in these financial statements is adequate to make
the information presented not misleading, certain information and footnote
information normally included in interim financial statements prepared in
accordance with generally accepted accounting principles has been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. Results of operations for the six months ended August 31, 1999 are
not necessarily indicative of what operating results may be for the full year.
In addition, these unaudited consolidated financial statements and notes thereto
should be read in conjunction with the audited consolidated financial statements
presented herein.
2. COMMITMENTS AND CONTINGENCIES
The Company has commenced litigation against Colloquium Limited, Brian Macmillan
and Catherine Matheson (two former directors) in relation to the withdrawal of
$50,691 from the Company's bank account. Management have booked an expense of
$50,691 in the six months ended August 31, 1999.
A Default Judgement has been obtained in Bermuda against Colloquium Limited,
Brian MacMillan and Catherine Matheson for the $50,691 and the $24,000 paid to
Colloquium Limited as part of the divestiture settlement, plus interest and
legal costs. Litigation is continuing in Scotland.
3. DISPOSITION OF SUBSIDIARY
On May 26, 1999 the Company agreed to transfer the issued shares of Colloquium
Limited to Brian Macmillan, Catherine Matheson and others in exchange for the
cancellation of their 478,988 shares in Omninet International Limited and a cash
payment by the Company of $24,000.
The assets and liabilities of Colloquium Limited at the date of disposition
were:
<TABLE>
<CAPTION>
pound sterling $
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents 72 115
Trade accounts receivable, net 31,679 50,781
Prepaids and other receivables 7,028 11,266
Inventories 6,501 10,421
------ ------
Total current assets 45,280 72,583
Property and equipment, net 67,934 108,898
------ ------
pound sterling 113,214 $ 181,481
====== ======
</TABLE>
F-18
<PAGE> 36
OMNINET INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1999
3. DISPOSITION OF SUBSIDIARY (CONTINUED)
<TABLE>
<S> <C> <C>
LIABILITIES
Current liabilities:
Accounts payable 65,206 104,525
Bank overdraft 22,085 35,402
Current portion of notes payable 1,695 2,717
Accrued and other liabilities 102,160 163,762
Advances from related parties - -
------ ------
Total current liabilities 191,146 306,406
Notes payable, net of current portion 4,879 7,821
------ ------
196,025 314,227
------ ------
Redeemable preferred stock, 50,000
shares issued and outstanding 66,311 106,297
------ ------
Equity stockholders' deficit pound sterling (149,122) $ 239,043)
====== ======
The gain on disposition of the subsidiary was:-
Equity Stockholders' deficit 239,043
Less: Cash payment 24,000
------
$ 215,043
------
The impact on cash flows was:-
Cash and cash equivalents on disposal 115
Add: Cash payment 24,000
------
Net cash outflow $ 24,115
------
</TABLE>
4. SUBSEQUENT EVENTS
Subsequent to the balance sheet date, Barons Financial Services (UK) Limited
were granted warrants for the issue of 14,938 common shares at $0.01 per share.
These warrants were exercised on November 3, 1999.
F-19
<PAGE> 37
OMNINET INTERNATIONAL LIMITED
PRO-FORMA FINANCIAL INFORMATION
YEAR ENDED FEBRUARY 28, 1999
AND
SIX MONTHS ENDED AUGUST 31, 1999
<PAGE> 38
OMNINET INTERNATIONAL LIMITED
PRO-FORMA UNAUDITED STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1999
<TABLE>
<CAPTION>
Year ended
February 28, Adjustments Pro-
1999 (Note 2) Forma
---- -------- -----
<S> <C> <C> <C>
Revenues 466,271 (466,271) -
Cost of revenues 315,023 (315,023) -
------- ------- ------
Gross profit 151,248 (151,248) -
Selling, general and
administrative expenses (423,511) (310,694) (112,817)
------- ------- ------
Operating loss (272,263) 159,446 (112,817)
Interest expense (8,339) 8,339 -
------- ------- ------
Net loss $ (280,602) $ 167,785 $ (112,817)
======= ======= =======
</TABLE>
See accompanying notes to pro-forma unaudited financial statements
F-20
<PAGE> 39
OMNINET INTERNATIONAL LIMITED
PRO-FORMA UNAUDITED STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
Six months
ended August Adjustments Pro-
31, 1999 (Note 3) Forma
-------- -------- -----
<S> <C> <C> <C>
Revenues $ 104,928 (104,928) -
Cost of revenues (62,209) (62,209) -
------- ------- -------
Gross profit 42,719 (42,719) -
Bad debt expense (50,691) - (50,691)
Selling, general and administrative expenses (156,502) (43,570) (112,932)
------- ------- -------
Operating loss (164,474) (851) (163,623)
Interest expense (2,660) (1,094) (1,566)
------- ------- -------
Net loss $ (167,134) $ 1,945 $ (165,189)
======= ======= =======
</TABLE>
See accompanying notes to pro-forma unaudited financial statements
F-21
<PAGE> 40
OMNINET INTERNATIONAL LIMITED
PRO-FORMA UNAUDITED BALANCE SHEET
AS AT AUGUST 31, 1999
<TABLE>
<CAPTION>
August 31, Pro-
1999 Adjustments Forma
---- ----------- -----
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 84,239 - $ 84,239
Accounts receivable, net 1,749 - 1,749
------- ------- -------
Total current assets $ 85,988 $ - $ 85,988
------- ------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 24,525 - $ 24,525
------- ------- -------
$ 24,525 $ - $ 24,525
------- ------- -------
Commitments and contingencies - - -
Stockholders' equity:
Common stock, $.001 par value, 25,000,000
shares authorised; 628,926 shares issued
and outstanding 629 - 629
Additional paid-in capital 885,308 - 885,308
Accumulated deficit (824,474) - (824,474)
------- ------- -------
61,463 $ - 61,463
======= ======= =======
</TABLE>
See accompanying notes to pro-forma unaudited financial statements
F-22
<PAGE> 41
OMNINET INTERNATIONAL LIMITED
NOTES TO PRO-FORMA UNAUDITED FINANCIAL INFORMATION
FEBRUARY 28, 1999 AND AUGUST 31, 1999
1. BASIS OF PREPARATION
The unaudited pro-forma financial information has been prepared in
accordance with generally accepted accounting principles in United
States and gives effect to the disposition of Colloquium Limited.
On May 26, 1999 the Company agreed to transfer the issued shares of
Colloquium Limited to Brian MacMillan, Catherine Matheson and others in
exchange for the cancellation of their 479,988 shares in Omninet
International Limited.
The pro-forma statements of operations give effect to the disposition
as if it had occurred on March 1, 1998.
The pro-forma financial information does not purport to represent what
the Company's results of operations would have been had the disposition
been consummated at the beginning of fiscal 1999 nor do they project
the Company's results for any future period.
2. PRO-FORMA UNAUDITED STATEMENT OF OPERATIONS FOR THE YEAR ENDED FEBRUARY
28, 1999
The pro-forma unaudited statement of operations for the year ended
February 28, 1999 gives effect to the elimination of losses amounting
to $167,785 reported by Colloquium Limited.
3. PRO-FORMA UNAUDITED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED
AUGUST 31, 1999
The pro-forma unaudited statement of operations for the six months
ended August 31, 1999 gives effect to the elimination of operating
losses amounting to $851 and interest expense amounting to $1,094
reported by Colloquium Limited.
4. CONTINGENT LIABILITIES
The Company has commenced litigation against Colloquium Limited, Brian
MacMillan and Catherine Matheson (two former directors) in relation to
the withdrawal of $50,691 from the Company's bank account. Management
have booked an expense of $50,691 in the six months ended August 31,
1999. A Default Judgement has been obtained in Bermuda against
Colloquium Limited, Brian MacMillan and Catherine Matheson for the
$50,691 and the $24,000 paid for the Colloquium Limited shares plus
interest and costs. Litigation is continuing in Scotland.
F-23
<PAGE> 1
Exhibit 1.1
BERMUDA
THE COMPANIES ACT 1981
MEMORANDUM OF ASSOCIATION OF
COMPANY LIMITED BY SHARES
(SECTION 7(1) AND (2))
MEMORANDUM OF ASSOCIATION
OF
OMNINET INTERNATIONAL LTD.
(hereinafter referred to as "the Company"
1. The liability of the members of the Company is limited to the amount (if
any) for the time being unpaid on the shares respectively held by them.
2. We, the undersigned, namely,
NAME/ADDRESS BERMUDIAN STATUS NATIONALITY NUMBER OF SHARES
SUBSCRIBED
(YES/NO)
Please see attached.
1
<PAGE> 2
3. We, the undersigned, namely.
<TABLE>
<CAPTION>
NAME/ADDRESS BERMUDIAN NATIONALITY NUMBER OF
(YES/NO) STATUS SHARES
SUBSCRIBED
<S> <C> <C> <C>
International Finance Ltd.
Bermuda Commercial Bank Bldg.
First Floor A Local Company 11,997
44 Church Street
Hamilton HM 12
Bermuda
Orlando A. Smith
Bermuda Commercial Bank Bldg.
First Floor Yes British 1
44 Church Street
Hamilton HM 12
Bermuda
John Milligan-Whyte
Bermuda Commercial Bank Bldg.
First Floor Yes British 1
44 Church Street
Hamilton HM 12
Bermuda
Lynda Milligan-Whyte
Bermuda Commercial Bank Bldg.
First Floor Yes British 1
44 Church Street
Hamilton HM 12
Bermuda
</TABLE>
do hereby respectively agree to take such number of shares as may be allotted to
us respectively by the provisional directors of the Company, not exceeding the
number of shares for which we have respectively subscribed, and to satisfy such
calls as may be made by the directors, provisional directors or promoters of the
Company in respect of the shares allotted to us respectively.
2
<PAGE> 3
3. The Company is to be an exempted Company as defined by the Companies Act
1981.
4. The Company has power to hold land situated in Bermuda not exceeding in
all, including the following parcels-
N/A
5. The authorised share capital of the Company is US$12,000.00 divided into
12,000 shares of par value US$1.00 each. The minimum subscribed share
capital of the Company is $12,000.00
6. The objects for which the Company is formed and incorporated are -
(i) to carry on the business if developing, designing, marketing,
selling, researching and dealing in information technology, office
automation, electronic equipment, computers and computer programmes,
data transmission products and systems and related equipment and
supplies of all kinds;
(ii) to provide management services by the accomation, maintenance,
supervision and management of computer installations, computer
hardware and software and all appurtenances thereof, as agent for the
buyer or hirer of such installations and equipment;
(iii) to act as consultants, managers and advisors in connection with the
business described in objects (i) and (ii); and
(iv) as set forth in paragraphs (b) to (n) and (p) to (u) inclusive of the
Second Schedule to the Companies Act, 1981.
7. The Company shall have the additional powers as set out in the Schedule
annexed hereto.
Signed by each subscriber in the presence of at least one witness attesting the
signature thereof -
/s/ L. MILLIGAN-WHYTE /s/ (ILLEGIBLE SIGNATURE)
- - ---------------------------------------- ------------------------------------
On behalf of International Finance, Ltd.
/s/ ORLANDO A. SMITH /s/ (ILLEGIBLE SIGNATURE)
- - ---------------------------------------- ------------------------------------
Orlando A. Smith
3
<PAGE> 4
/s/ JOHN MILLIGAN-WHYTE /s/ (ILLEGIBLE SIGNATURE)
- - ---------------------------------------- ------------------------------------
John Milligan-Whyte
/s/ L. MILLIGAN-WHYTE /s/ (ILLEGIBLE SIGNATURE)
- - ---------------------------------------- ------------------------------------
Lynda Milligan-Whyte
(Subscribers) (Witnesses)
SUBSCRIBED THIS 16TH DAY OF MARCH, 1998.
4
<PAGE> 5
THE SCHEDULE
(REFERRED TO IN CLAUSE NO. 7 OF THE MEMORANDUM OF ASSOCIATION)
(a) To borrow and raise money in any currency or currencies and to secure or
discharge any debt or obligation in any manner and in particular (without
prejudice to the generality of the foregoing) by mortgages of or charges
upon all or any part of the undertaking, the Company or by the creation and
issue of securities.
(b) To enter into any guarantee, contract of indemnity or suretyship and in
particular (without prejudice to the generality of the foregoing) to
guarantee, support or secure, with or without consideration, whether by
personal obligation or by mortgaging or charging all or any part of the
undertaking, property and assets (present and future) and uncalled capital
of the Company or both such methods or in any other manner, the performance
of any obligations or commitments, of, and the repayment or payment of the
principal amounts of and premiums, interest, dividends and other moneys
payable on or in respect or any securities or liabilities of, any person
including (without prejudice to the generality of the foregoing) any
company which is for the time being a subsidiary or a holding company of
the Company or another subsidiary or a holding company of the Company or
otherwise associated with the Company.
(c) To accept, draw, make, create, issue, execute, discount, endorse, negotiate
bills of exchange, promissory notes, and other instruments and securities,
whether negotiable or otherwise.
(d) To sell, exchange, mortgage, charge, let or rent, share of profit, royalty
or otherwise, grant licenses, easements, options, servitudes and other
rights over, and in any other manner deal with or dispose of, all or any
part of the undertaking, property and assets (present and future) of the
Company for any consideration and in particular (without prejudice to the
generality of the foregoing) for any securities.
(e) To issue and allot securities of the Company for cash or in payment or part
payment for any real or personal property purchased or otherwise acquired
by the Company or any services rendered to the Company or as security for
any obligation or amount (even if less than the nominal amount of such
securities) or for any other purpose.
(f) To grant pensions, annuities, or other allowances, including allowances on
death, to any directors, officers or employees or former directors,
officers or employees of the Company or any company which at any time is or
was a subsidiary or a holding company or another subsidiary of a holding
company of the Company or otherwise associated with the Company or of any
predecessor in business of any of them, and to the relations, connections
or dependants of any such persons, and
5
<PAGE> 6
to other persons whose service or services have directly or indirectly
been of benefit to the Company or whom the Company considers have any moral
claim on the Company or to their relations, connections or dependants, and
to establish or support any associations, institutions, clubs, schools,
building and housing schemes, funds and trusts, and to make payments toward
insurance or other arrangements likely to benefit any such persons or
otherwise advance the interests of the Company or of its Members, and to
subscribe, guarantee or pay money for any purpose likely, directly or
indirectly to further the Interests of the Company or of its Members for
any national, charitable, benevolent, educational, educational, social,
public, general or useful object.
(g) To purchase its own shares in accordance with the provisions of Section 42A
of The Companies Act 1981.
(h) To issue preference shares redeemable at the option of the holder, in
accordance with the provisions of Section 42 of the Companies Act 1981.
6
<PAGE> 7
THE COMPANIES ACT 1981
AS AMENDED
SECOND SCHEDULE (SECTION 11(2))
A company may by reference include in its memorandum any of the following
objects that is to say the business of:
(a) [Intentionally Stricken]
(b) packaging of goods of all kinds;
(c) buying, selling and dealing in goods of all kinds;
(d) designing and manufacturing of goods of all kinds;
(e) mining and quarrying and exploration for metals, minerals, fossil
fuels and precious stones of all kinds and their preparation for sale
or use;
(f) exploring for, the drilling for, the moving, transporting and refining
petroleum and hydro carbon products including oil and oil products;
(g) scientific research including the improvement, discovery and
development of processes, inventions, patents and designs and the
construction, maintenance and operation of laboratories and research
centres;
(h) land, sea and air undertakings including the land, ship and air
carriage of passengers, mails and goods of all kinds;
(i) ships and aircraft owners, managers, operators, agents, builders and
repairers;
(j) acquiring, owning, selling, chartering, repairing or dealing in ships
and aircraft;
(k) travel agents, freight contractors and forwarding agents;
(l) dock owners, wharfingers, warehousemen;
(m) ship chandlers and dealing in rope, canvas oil and ship stores of all
kinds;
(n) all forms of engineering;
(o) [Intentionally Stricken]
7
<PAGE> 8
(p) farmers, livestock breeders and keepers, graziers, butchers, tanners
and processors of and dealers in all kinds of live and dead stock,
wool, hides, tallow, grain, vegetables and other produce;
(q) acquiring by purchase or otherwise and holding as an investment
inventions, patents, trade marks, trade names, trade secrets, designs
and the like;
(r) buying, selling, hiring, letting and dealing in conveyances of any
sort;
(s) employing, providing, hiring out and acting as agent for artists,
actors, entertainers of all sorts, authors, composers, producers,
directors, engineers and experts or specialists of any kind;
(t) to acquire by purchase or otherwise and hold, sell, dispose of and
deal in real property situated outside Bermuda and in personal
property of all kinds wheresoever situated; and
(u) to enter into any guarantee, contract of indemnity or suretyship and
to assure, support or secure with or without consideration or benefit
the performance of any obligation of any person or persons and to
guarantee the fidelity of individuals filling or about to fill
situations or trust or confidence.
8
<PAGE> 1
Exhibit 1.2
B Y E - L A W S
OF
OMNINET INTERNATIONAL LTD.
CERTIFIED that the within-written Bye-Laws are a true copy of the Bye-Laws of
OMNINET INTERNATIONAL LTD.
as subscribed by the subscribers to the Memorandum of Association and
subsequently approved at the Statutory Meeting of the above Company held on the
8th day of June, 1998, which Bye-Laws are now in full force and effect.
INTERPRETATION
1. (A) Definitions - In the Bye-Laws of the Company, unless the context
otherwise requires:
"appoint" includes "elect" and vice versa;
"Bermuda" means the Islands of Bermuda;
"Board" means the Board of Directors of the Company or the Directors
present at a meeting of the Directors at which there is a quorum;
"Bye-Laws" means these Bye-Laws in their present form and all other
Bye-Laws of the Company from time to time in force and effect;
"Company" means the company incorporated in Bermuda under the name of
OMNINET INTERNATIONAL LTD.on the 24th day of March, 1998;
"the Companies Acts" means every Bermuda statute from time to time
in force concerning companies insofar as the same applies to the
Company;
"Meeting of the Members" includes an annual general meeting of the
Company and a special general meeting of the Company;
"Member" means member of the Company;
"Memorandum" means the Memorandum of Association of the Company as
from time to time amended;
"Paid Up" means paid up or credited as paid up;
"Register" means the Register of Members of the Company;
"Seal" means the common seal of the Company or any facsimile thereof;
9
<PAGE> 2
"SECRETARY" includes a temporary or assistant Secretary and any person
appointed by the Board to perform any of the duties of the Secretary;
(B) INTERPRETATION
For the purposes of these Bye-Laws a corporation shall be deemed to be
present in person if its representative duly authorised pursuant to
the Companies Acts is present;
words importing the singular number only include the plural number
and vice versa;
words importing the masculine gender only include the feminine and
neuter genders respectively;
words importing a person include an individual, partnership, company
or association or body of persons, whether corporate or
un-incorporate, trustee, executor, administrator and legal
representative;
reference to writing shall include typewriting, printing,
lithography, photography and other modes of representing or
reproducing words in a legible and non-transitory form;
save as aforesaid, any words or expressions defined in the Companies
Acts in force at the date when these Bye-Laws or any part hereof are
adopted shall bear the same meaning in these Bye-Laws or such part
(as the case may be).
REGISTERED OFFICE
2. The Registered Office of the Company shall be at such place in Bermuda as
the Board shall from time to time determine.
SHARE RIGHTS
3. Subject to any special rights conferred on the holders of any share or
class of shares, any share in the Company may be issued with or have attached
thereto such preferred, deferred, qualified or other special rights or such
restrictions, whether in regard to dividend, voting, return of capital or
otherwise, as the Company may in general meeting determine, or if there has not
been any such determination or so far as the same shall not make specific
provision, as the Board may determine.
4. Subject to the Companies Acts, any preference shares may, with the sanction
of a resolution of the Members, be issued on terms:
(a) that they are to be redeemed on the happening of a specified event or
on a given date; and/or
(b) that they are liable to be redeemed at the option of the Company;
and/or
(c) if authorised by the Memorandum/Incorporating Act of the Company, that
they are liable to be redeemed at the option of the holder.
10
<PAGE> 3
The terms and manner of redemption shall be provided for by way of amendment of
these Bye-Laws.
11
<PAGE> 4
MODIFICATION OF RIGHTS
5. Subject to the Companies Acts, all or any of the special rights for the
time being attached to any class of shares for the time being issued may from
time to time (whether or not the Company is being wound up) be altered or
abrogated with the consent in writing of the holders of not less than
seventy-five percent of the issued shares of that class or with the sanction of
a resolution passed at a separate general meeting of the holders of such shares
voting in person or by proxy. To any such separate general meeting, all the
provisions of these Bye-Laws as to general meetings of the Company shall mutatis
mutandis apply, but so that the necessary quorum shall be two or more persons
holding or representing by proxy any of the shares of the relevant class, that
every holder of shares of the relevant class shall be entitled on a poll to one
vote for every such share held by him and that any holder of shares of the
relevant class present in person or by proxy may demand a poll.
6. The special rights conferred upon the holders of any shares or class of
shares shall not, unless otherwise expressly provided in the rights attaching to
or the terms of issue of such shares, be deemed to be altered by the creation or
issue of further shares ranking pari passu therewith.
SHARES
7. Subject to the provisions of these Bye-Laws, the unissued shares of the
Company (whether forming part of the original capital or any increased capital)
shall be at the disposal of the Board, which may offer, allot, grant options
over or otherwise dispose of them to such persons, at such times and for such
consideration and upon such terms and conditions as the Board may determine.
8. The Board may in connection with the issue of any shares exercise all
powers of paying reasonable commission and brokerage fees conferred or permitted
by law.
9. Except as ordered by a court of competent jurisdiction or as required by
law, no person shall be recognised by the Company as holding any share upon
trust and the Company shall not be bound by or required in any way to recognise
(even when having notice thereof) any equitable, contingent, future or partial
interest in any share or any interest in any fractional part of a share or
(except only as otherwise provided in these Bye-Laws or by law) any other right
in respect of any share except an absolute right to the entirety thereof in the
registered holder.
CERTIFICATES
10. Every holder of one or more shares of the Company shall be entitled, at his
option, to a share certificate stating the number and class of shares held by
him as shown on the Register. Such certificates shall be in such form as the
Board may from time to time approve. The preparation, issue and delivery of
certificates shall be governed by the Companies Acts. In the case of a share
held jointly by several persons, delivery of a certificate to one of the several
joint holders shall be sufficient delivery to all.
12
<PAGE> 5
11. If a share certificate is defaced, lost or destroyed it may be replaced
without fee but on such terms (if any) as to evidence and indemnity and to
payment of the costs and out of pocket expenses of the Company in investigating
such evidence and preparing such indemnity as the Board may think fit and, in
case of defacement, on delivery of the old certificate to the Company.
12. All certificates for share or loan capital, or other securities of the
Company (other than letters of allotment, scrip certificates and other like
documents) shall, except to the extent that the terms and conditions for the
time being relating thereto otherwise provide, be issued under the Seal. The
Board may by resolution determine, either generally or in any particular case,
that any signatures on any such certificates need not be autographic but may be
affixed to such certificates by some mechanical means or may be printed thereon
or that such certificates need not be signed by any persons.
LIEN
13. The Company shall have a first and paramount lien on every share (not being
a fully paid share) for all moneys, whether presently payable or not, called or
payable, at a date fixed by or in accordance with the terms of issue of such
share in respect of such share, and the Company shall also have a first and
paramount lien on every share (other than a fully paid share) standing
registered in the name of a Member, whether singly or jointly with any other
person, for all the debts and liabilities of such Member or his estate to the
Company, whether the same shall have been incurred before or after such notice
to the Company of any interest of any person other than such Member, and whether
the time for the payment or discharge of the same shall have actually arrived or
not, and notwithstanding that the same are joint debts or liabilities of such
Member or his estate and any other person, whether a Member or not. The
Company's lien on a share shall extend to all dividends payable thereof. The
Board may at any time, either generally or in any particular case, waive any
lien that has arisen or declare any share to be wholly or in part exempt from
the provisions of this Bye-Law.
14. The Company may sell, in such manner as the Board may think fit, any share
on which the Company has a lien but no sale shall be made unless some sum in
respect of which the lien exists is presently payable and not until the
expiration of fourteen days after a notice in writing, stating and demanding
payment of the sum presently payable and giving notice of the intention to sell
in default of such payment, has been served on the holder for the time being of
the share.
15. The net proceeds of sale by the Company of any shares on which it has a
lien shall be applied in or towards payment or discharge of the debt or
liability in respect of which the lien exists so far as the same is presently
payable, and any residue shall (subject to a like lien for debts or liabilities
not presently payable as existed upon the share prior to the sale) be paid to
the holder of the share immediately before such sale. For giving effect to any
such sale the Board may authorise some person to transfer the share sold to the
purchaser thereof. The purchaser shall be registered as the holder of the share
and he shall not be bound to see
13
<PAGE> 6
to the application of the purchase money, nor shall his title to the share be
affected by any irregularity or invalidity in the proceedings relating to the
sale.
CALL ON SHARES
16. The Board may from time to time make calls upon the Members in respect of
any moneys unpaid on their shares (whether on account of the par value of the
share or by way of premium) and not by the terms of issue thereof made payable
at a date fixed by or in accordance with such terms of issue, and each Member
shall (subject to the Company serving upon him at least fourteen days notice
specifying the time or times and place of payment) pay to the Company at the
time or times and place of payment specified the amount called on his shares. A
call may be revoked or postponed as the Board may determine.
17. A call may be made payable by instalments and shall be deemed to have been
made at the time when the resolution of the Board authorizing the call was
passed.
18. The joint holders of any share shall be jointly and severally liable to pay
all calls in respect thereof.
19. If a sum called in respect of the share shall not be paid before or on the
day appointed for payment thereof the person from whom the sum is due shall pay
interest on the sum from the day appointed for the payment thereof to the time
of actual payment at such rate as the Board may determine, but the Board shall
be at liberty to waive payment of such interest wholly or in part.
20. Any sum which, by the terms of issue of a share, becomes payable on
allotment or at any date fixed by or in accordance with such terms of issue,
whether on account of the nominal amount of the share or by way of premium,
shall for all the purposes of these Bye-Laws be deemed to be a call duly made,
notified and payable on the date on which, by the terms of issue, the same
becomes payable and, in the case of non-payment, all the relevant provisions of
these Bye-Laws as to payment of interest, forfeiture or otherwise shall apply as
if the sum had become payable by virtue of a call duly made and notified.
21. The Board may on the issue of shares differentiate between the allottees or
holders as to the amount of calls to be paid and the times of payment.
FORFEITURE OF SHARES
22. If a Member fails to pay any call or instalment of a call on the day
appointed for payment thereof, the Board may at any time thereafter during such
time as any part of such call or installment remains unpaid serve a notice on
him requiring payment of so much of the call or instalment as is unpaid,
together with any interest which may have accrued.
23. The notice shall name a further day (not being less than 14 days from the
date of the notice) on or before which, and the place where, the payment
required by the notice is to be
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made and shall state that, in the event of non-payment on or before the day and
at the place appointed, the shares in respect of which such call is made or
instalment is payable will be liable to be forfeited. The Board may accept the
surrender of any share liable to be forfeited hereunder and, in such case,
references in these Bye-Laws to forfeiture shall include surrender.
24. If the requirements of any such notice as aforesaid are not complied with,
any share in respect of which such notice has been given may, at any time
thereafter before payment of all calls or instalments and interest due in
respect thereof has been made, be forfeited by a resolution of the Board to that
effect. Such forfeiture shall include all dividends declared in respect of the
forfeited shares and not actually paid before the forfeiture.
25. When any share has been forfeited, notice of the forfeiture shall be served
upon the person who was before forfeiture the holder of the share; but no
forfeiture shall be in any manner invalidated by any omission or neglect to give
such notice as aforesaid.
26. A forfeited share shall be deemed to be the property of the Company and may
be sold, re-offered or otherwise disposed of either to the person who was,
before forfeiture, the holder thereof or entitled thereto or to any other person
upon such terms and in such manner as the Board shall think fit, and at any time
before a sale, re-allotment or disposition the forfeiture may be cancelled on
such terms as the Board may think fit.
27. A person whose shares have been forfeited shall thereupon cease to be a
Member in respect of the forfeited shares but shall, notwithstanding the
forfeiture, remain liable to pay to the Company all moneys which at the date of
forfeiture were presently payable by him to the Company in respect of the shares
with interest thereon at such rate as the Board may determine from the date of
forfeiture until payment, and the Company may enforce payment without being
under any obligation to make any allowance for the value of the shares
forfeited.
28. An affidavit in writing that the deponent is a Director or the Secretary of
the Company and that a share has been duly forfeited on the date stated in the
affidavit shall be conclusive evidence of the facts therein stated as against
all persons claiming to be entitled to the share. The Company may receive the
consideration (if any) given of the share on the sale, re-allotment or
disposition thereof and the Board may authorise some person to transfer the
share to the person to whom the same is sold, re-allotted or disposed of, and he
shall thereupon be registered as the holder of the share and shall not be bound
to see to the application of the purchase money (if any) nor shall his title to
the share be affected by any irregularity or invalidity in the proceedings
relating to the forfeiture, sale, re-allotment or disposal of the share.
REGISTER OF MEMBERS AND DIRECTORS
29. The Secretary shall establish and maintain the Register of Members and the
Register of Directors and Officers at the Registered Office in the manner
prescribed by the Companies Acts. Unless the Board otherwise determines, the
Register of Members shall be
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open to inspection in the manner prescribed by the Companies Acts between 10.00
a.m. and 12.00 noon on every business day. Unless the Board so determines, no
Member or intending Member shall be entitled to have entered in the Register any
indication of any trust or equitable, contingent, future or partial interest in
any share or any interest in any fractional part of a share and if any such
entry exists or is permitted by the Board it shall not be deemed to abrogate any
of the provisions of Bye-Law 9.
TRANSFER OF SHARES
30. Subject to the Companies Acts and to such of the restrictions contained in
these Bye-Laws as may be applicable, any Member may transfer all or any of his
shares by an instrument of transfer in the usual common form or in any other
form which the Board may approve.
31. The instrument of transfer of a share shall be signed by or on behalf of
the transferor and where any share is not fully paid, the transferee and the
transferor shall be deemed to remain the holder of the share until the name of
the transferee is entered in the Register in respect thereof. All instruments of
transfer when registered may be retained by the Company. The Board may, in its
absolute discretion and without assigning any reason therefor, decline to
register any transfer of any share which is not a fully-paid share. The Board
may also decline to register any transfer unless:-
(a) the instrument of transfer is duly stamped and lodged with the
Company, accompanied by the certificate for the shares to which it
relates, and such other evidence as the Board may reasonably require
to show the right of the transferor to make the transfer,
(b) the instrument of transfer is in respect of only one class of share,
(c) where applicable, the permission of the Bermuda Monetary Authority
with respect thereto has been obtained.
Subject to any directions of the Board from time to time in force, the Secretary
may exercise the powers and discretions of the Board under this Bye-Law and
Bye-Laws 30 and 32.
32. If the Board declines to register a transfer it shall, within three months
after the date on which the instrument of transfer was lodged, send to the
transferee notice of such refusal.
33. No fee shall be charged by the Company for registering any transfer,
probate, letters of administration, certificate of death or marriage, power of
attorney, distringas or stop notice, order of court or other instrument relating
to or affecting the title to any share, or otherwise making an entry in the
Register relating to any share.
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TRANSMISSION OF SHARES
34. In the case of the death of a Member, the survivor or survivors, where the
deceased was a joint holder, and the estate representative, where he was sole
holder, shall be the only person recognised by the Company as having any title
to his shares; but nothing herein contained shall release the estate of a
deceased holder (whether the sole or joint) from any liability in respect of any
share held by him solely or jointly with other persons. For the purpose of this
Bye-Law, estate representative means the person to whom probate or letters of
administration has or have been granted in Bermuda or, failing any such person,
such other person as the Board may in its absolute discretion determine to be
the person recognised by the Company for the purpose of this Bye-Law.
35. Any person becoming entitled to a share in consequence of the death of a
Member or otherwise by operation of applicable law may, subject as hereafter
provided and upon such evidence being produced as may from time to time be
required by the Board as to his entitlement, either be registered himself as the
holder of the share or elect to have some person nominated by him registered as
the transferee thereof. If the person so becoming entitled elects to be
registered himself, he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects. If he shall elect to have his nominee
registered, he shall signify his election by signing an instrument of transfer
of such share in favour of his nominee. All the limitations, restrictions and
provisions of these Bye-Laws relating to the right to transfer and the
registration of transfer of shares shall be applicable to any such notice of
instrument of transfer as aforesaid as if the death of the Member or other event
giving rise to the transmission had not occurred and the notice or instrument of
transfer was an instrument of transfer signed by such Member.
36. A person becoming entitled to a share in consequence of the death of a
Member or otherwise by operation of applicable law shall (upon such evidence
being produced as may from time to time be required by the Board as to his
entitlement) be entitled to receive and may give a discharge for any dividends
or other moneys payable in respect of the share, but he shall not be entitled in
respect of the share to receive notices of or to attend or vote at general
meetings of the Company or, save as aforesaid, to exercise in respect of the
share any of the rights or privileges of a Member until he shall have become
registered as the holder thereof. The Board may at any time give notice
requiring such person to elect either to be registered himself or to transfer
the share and if the notice is not complied with within sixty days the Board may
thereafter withhold payment of all dividends and other moneys payable in respect
of the shares until the requirements of the notice have been complied with.
37. Subject to any directions of the Board from time to time in force, the
Secretary may exercise the powers and discretions of the Board under Bye-Laws
34, 35 and 36.
INCREASE OF SHARE CAPITAL
38. The Company may from time to time increase its authorised share capital by
such sum to be divided into shares of such par value as the Company in general
meeting shall prescribe.
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39. The Company may, by the resolution increasing the capital, direct that the
new shares or any of them shall be offered in the first instance either at par
or at premium or (subject to the provisions of the Companies Acts) at a discount
to all the holders for the time being of shares of any class or classes in
proportion to the number of such shares held by them respectively or make any
other provisions as to the issue of the new shares.
40. The new shares shall be subject to all the provisions of these Bye-Laws
with reference to lien, the payment of calls, forfeiture, transfer, transmission
and otherwise.
ALTERATION OF SHARE CAPITAL
41. The Company may from time to time in general meeting:-
(a) divide its shares into several classes and attach thereto respectively
any preferential, deferred, qualified or special rights, privileges or
conditions;
(b) consolidate and divide all or any of its share capital into shares of
larger par value than its existing shares;
(c) sub-divide its shares or any of them into shares of smaller par value
than is fixed by its Memorandum, so, however, that in the sub-division
the proportion between the amount paid and the amount, if any, unpaid
on each reduced share shall be the same as it was in the case of the
share from which the reduced share is derived;
(d) make provision for the issue and allotment of shares which do not
carry any voting rights; and
(e) cancel shares which, at the date of the passing of the resolution in
that behalf, have not been taken or agreed to be taken by any person,
and diminish the amount of its share capital by the amount of the
shares so cancelled.
Where any difficulty arises in regard to any division, consolidation, or
sub-division under this Bye-Law, the Board may settle the same as it thinks
expedient and, in particular, may arrange for the sale of the shares
representing fractions and the distribution of the net proceeds of sale in due
proportion amongst the Members who would have been entitled to the fractions,
and for this purpose the Board may authorise some person to transfer the shares
representing fractions to the purchaser thereof, who shall not be bound to see
to the application of the purchase money nor shall his title to the shares be
affected by any irregularity or invalidity in the proceedings relating to the
sale.
42. Subject to the Companies Acts, and to any confirmation or consent required
by law or these Bye-Laws, the Company may by resolution in general meeting from
time to time convert any preference shares into redeemable preference shares.
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REDUCTION OF CAPITAL
43. Subject to the Companies Acts, its Memorandum and any confirmation or
consent required by law or these Bye-Laws, the Company may from time to time in
general meeting authorise the reduction of its issued share capital or any
capital redemption reserve fund or any share premium or contributed surplus
account in any manner.
44. In relation to any such reduction, the Company may in general meeting
determine the terms upon which such reduction is to be effected including in the
case of a reduction of part only of a class of shares, those shares to be
affected.
REPURCHASE OF SHARES BY COMPANY
44A. Subject to the Companies Acts and these Bye-Laws the Company may purchase
its own Shares provided however that:
(a) as a result of the purchase of the Shares in question, the issued
share capital of the Company would not be reduced below the minimum
capital specified for the Company in its Memorandum;
(b) the purchase by the Company has been authorised by the Directors in
accordance with the provisions set forth in these Bye-Laws; and
(c) on the date from which the purchase is to be effective an affidavit
shall be sworn by at least two Directors of the Company declaring
either that on the date, and taking into account the purchase, the
Company is solvent or that all the creditors of the Company on that
date have expressed in writing their concurrence to the purchase.
Shares purchased under this section shall be treated as cancelled and the amount
of the Company's issued capital shall be diminished by the nominal value of
those shares accordingly; but the purchase of shares under this Bye-Law shall
not be taken as reducing the amount of the Company's authorised share capital.
GENERAL MEETING
45. The Board shall convene and the Company shall hold general meetings as
Annual General Meetings in accordance with the requirements of the Companies
Acts at such times and places as the Board shall appoint. The Board may,
whenever it thinks fit, and shall, when required by the Companies Acts, convene
general meetings other than Annual General Meetings which shall be called
Special General Meetings.
NOTICE OF GENERAL MEETINGS
46. An Annual General Meeting shall be called by not less than five days'
notice in writing and a Special General Meeting shall be called by not less than
five days' notice in
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writing. The notice shall be exclusive of the day on which it is served or
deemed to be served and of the day for which it is given, and shall specify the
place, day and time of the meeting, and, in the case of a Special General
Meeting, the general nature of the business to be considered. Notice of every
general meeting shall be given in any manner permitted by Bye-Laws 119 and 120
to all Members other than such as, under the provisions of these Bye-Laws or the
terms of issue of the shares they hold, are not entitled to receive such notice
from the Company.
Notwithstanding that a meeting of the Company is called by shorter notice than
that specified in this Bye-Law, it shall be deemed to have been duly called if
it is so agreed:-
(a) in the case of a meeting called as an Annual General Meeting, by all
Members entitled to attend and vote thereat;
(b) in the case of any other meeting, by a majority in number of the
Members having the right to attend and vote at the meeting, being a
majority together holding not less than 95 percent in nominal value of
the shares given that right.
47. The accidental omission to give notice of a meeting or (in cases where
instruments of proxy are sent out with the notice) the accidental omission to
send such instrument of proxy to, or the non-receipt of notice of a meeting or
such instrument of proxy by, any person entitled to receive such notice shall
not invalidate the proceedings at that meeting.
PROCEEDINGS AT GENERAL MEETINGS
48. No business shall be transacted at any general meeting unless a quorum is
present when the meeting proceeds to business, but the absence of a quorum shall
not preclude the appointment, choice or election of a Chairman which shall not
be treated as part of the business of the meeting. Save as otherwise provided by
these Bye-Laws, at least two Members present in person or by proxy (or one
Member if the Company only has one Shareholder) and entitled to vote shall be a
quorum for all purposes.
49. If within five minutes (or such longer time as the Chairman of the meeting
may determine to wait) after the time appointed for the meeting, a quorum is not
present, the meeting, if convened on the requisition of Members, shall be
dissolved. In any other case, it shall stand adjourned to such other day and
such other time and place as the Chairman of the meeting may determine and at
such adjourned meeting two Members present in person (whatever the number of
shares held by them) shall be a quorum. The Company shall give not less than
five days' notice of any meeting adjourned through want of a quorum and such
notice shall state that two Members present in person or by proxy (whatever the
number of shares held by them) (or one Member if the Company only has one
Shareholder) shall be a quorum.
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50. Each Director shall, upon written request deposited at the registered
office of the Company, be entitled to receive notice of, to attend and speak at
and to inspect the minutes of any general meeting of the Company.
51. The Chairman (if any) of the Board or, in his absence, the President shall
preside as Chairman at every general meeting. If there is no such Chairman or
President, or if at any meeting neither of the Chairman nor the President is
present within five minutes after the time appointed for holding the meeting, or
if neither of them is willing to act as Chairman the Directors present shall
choose one of their number to act or if one Director only is present he shall
preside as Chairman if willing to act. If no Director is present or, if each of
the Directors present declines to take the chair, the persons present and
entitled to vote on a poll shall elect one of their number to be Chairman.
52. The Chairman may, with the consent of any meeting at which a quorum is
present (and shall if so directed by the meeting) adjourn the meeting from time
to time and from place to place but no business shall be transacted at the
meeting from which the adjournment took place. When a meeting is adjourned for
three months or more, notice of the adjourned meeting shall be given as in the
case of an original meeting.
53. Save as expressly provided by these Bye-Laws, it shall not be necessary to
give any notice of any adjournment or of the business to be transacted at an
adjourned meeting.
53A. Subject to subparagraph (e) of this Bye-Law anything which may be done by
resolution of the Company in general meetings or by resolution of a meeting of
any class of the Members of the Company, may, without a meeting and without any
previous notice being required, be done by resolution in writing signed by, or
in the case of a Member that is a corporation whether or not a company within
the meaning of the Act, on behalf of, all the Members who at the date of the
resolution would be entitled to attend the meeting and vote on the resolution.
(a) A resolution in writing may be signed by, or in the case of a Member
that is a corporation whether or not a company within the meaning of
the Act, on behalf of, all the Members, or any class thereof, in as
many counterparts as may be necessary.
(b) For the purposes of this Bye-Law, the date of the resolution is the
date when the resolution is signed by, or, in the case of a Member
that is a corporation whether or not a company within the meaning of
the Act, on behalf of, the last Member to sign and any reference in
any Bye-Law to the date of passing of a resolution, is, in relation to
a resolution made in accordance with this Bye-Law, a reference to such
date.
(c) A resolution in writing made in accordance with this Bye-Law is as
valid as if it had been passed by the Company in general meeting or by
a meeting of the relevant class of Members, as the case may be, and
any reference in any
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Bye-Law to a meeting at which a resolution is passed or to Members
voting in favour of a resolution shall be construed accordingly.
(d) A resolution in writing made in accordance with this Bye-Law shall
constitute minutes for the purposes of sections 81 and 82 of the Act.
(e) This Bye-Law shall not apply to:
(i) a resolution passed pursuant to section 89(5) of the Act; and
(ii) a resolution passed for the purpose of removing a Director before
the expiration of his term of office under these Bye-Laws.
VOTING
54. Save where a greater majority is required by the Companies Acts or these
Bye-Laws, any question proposed for consideration at any general meeting shall
be decided on by a simple majority of votes cast.
55. At any general meeting, a resolution put to the vote of the meeting shall
be decided on a show of hands unless (before or on the declaration of the result
of the show of hands or on the withdrawal of any other demand for a poll) a poll
is demanded by:-
(a) the Chairman of the meeting; or
(b) at least three Members present in person or represented by proxy; or
(c) any Member or Members present in person or represented by proxy and
holding between them not less than one-tenth of the total voting
rights of all the Members having the right to vote at such meeting; or
(d) a Member or Members present in person or represented by proxy holding
shares conferring the right to vote at such meeting, being shares on
which an aggregate sum has been paid up equal to not less than one
tenth of the total sum paid up on all such shares conferring such
right.
Unless a poll is so demanded and the demand is not withdrawn, a declaration by
the Chairman that a resolution has, on a show of hands, been carried or carried
unanimously or by a particular majority or not carried by a particular majority
or lost shall be final and conclusive, and an entry to that effect in the Minute
Book of the Company shall be conclusive evidence of the fact without proof of
the number of votes recorded for or against such resolution.
56. If a poll is duly demanded, the result of the poll shall be deemed to be
the resolution of the meeting at which the poll is demanded.
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57. A poll demanded on the election of a Chairman, or on a question of
adjournment, shall be taken forthwith. A poll demanded on any other question
shall be taken in such manner and at such time (being not later than three
months after the date of the demand) and place as the Chairman shall direct. It
shall not be necessary (unless the Chairman otherwise directs) for notice to be
given of a poll.
58. The demand for a poll shall not prevent the continuance of a meeting for
the transaction of any business other than the question on which the poll has
been demanded and it may be withdrawn at any time before the close of the
meeting or the taking of at the poll, whichever is the earlier.
59. On a poll, votes may be cast either personally or by proxy.
60. A person entitled to more than one vote on a poll need not use all his
votes or cast all the votes he uses in the same way.
61. In the case of an equality of votes at a general meeting, whether on a show
of hands or on a poll, the Chairman of such meeting shall not be entitled to a
second or casting vote.
62. In the case of joint holders of a share, the vote of the senior who tenders
a vote, whether in person or by proxy, shall be accepted to the exclusion of the
votes of the other joint holders, and for this purpose seniority shall be
determined by the order in which the names stand in the Register in respect of
the joint holding.
63. A Member who is a patient for any purpose of any statute or applicable law
relating to mental health or in respect of whom an order has been made by any
Court having jurisdiction for the protection or management of the affairs of
persons incapable of managing their own affairs may vote, whether on a show of
hands or on a poll, by his receiver, committee, curator bonis or other person in
the nature of a receiver, committee or curator bonis appointed by such Court and
such receiver, committee, curator bonis or other person may vote on a poll by
proxy, and may otherwise act and be treated as such Member for the purpose of
general meetings.
64. No Member shall, unless the Board otherwise determines, be entitled to vote
at any general meeting unless all calls or other sums presently payable by him
in respect of shares in the Company have been paid.
65. If (i) any objection shall be raised to the qualification of any voter or
(ii) any votes have been counted which ought not to have been counted or which
might have been rejected or (iii) any votes are not counted which ought to have
been counted, the objection or error shall not vitiate the decision of the
meeting or adjourned meeting on any resolution unless the same is raised or
pointed out at the Meeting or, as the case may be, the adjourned meeting at
which the vote objected to is given or tendered or at which the error occurs.
Any objection or error shall be referred to the Chairman of the meeting and
shall only vitiate the decision of the meeting on any resolution if the Chairman
decides that the same may have
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affected the decision of the meeting. The decision of the Chairman on such
matters shall be final and conclusive.
PROXIES AND CORPORATE REPRESENTATIVES
66. The instrument appointing a proxy shall be in writing under the hand of the
appointor or of his attorney authorised by him in writing or, if the appointor
is a corporation, either under its seal or under the hand of an officer,
attorney or other person authorised to sign the same.
67. Unless the Company in General Meeting so determines, a proxy need not hold
any shares in the Company.
68. Any Member may appoint a standing proxy or (if a corporation)
representative by depositing at the Registered Office a proxy or (if a
corporation) an authorisation and such proxy or authorisation shall be valid for
all general meetings and adjournments thereof until notice of revocation is
received at the Registered Office. Where a standing proxy or authorisation
exists, its operation shall be deemed to have been suspended at any general
meeting or adjournment thereof at which the Member is present or in respect to
which the Member has specially appointed a proxy or representative. The Board
may from time to time require such evidence as it shall deem necessary as to the
due execution and continuing validity of any such standing proxy or
authorisation and the operation of any such standing proxy or authorisation
shall be deemed to be suspended until such time as the Board determines that it
has received the requested evidence or other evidence satisfactory to it.
69. Subject to Bye-Law 68, the instrument appointing a proxy together with such
other evidence as to its due execution as the Board may from time to time
require, shall be delivered at the Registered Office (or at such place as may be
specified in the notice convening the meeting or in any notice of any
adjournment or, in either case, in any document sent therewith) prior to the
holding of the meeting or adjourned meeting at which the person named in the
instrument proposes to vote or, in the case of a poll taken subsequently to the
date of a meeting or adjourned meeting, before the time appointed for the taking
of a poll and in default the instrument of proxy shall not be treated as valid.
70. Instruments of proxy shall be in any common form or in such other form as
the Board may approve and the Board may, if it thinks fit, send out with the
notice of any meeting forms of instrument of proxy for use at that meeting. The
instrument of proxy shall be deemed to confer authority to demand or join in
demanding a poll and to vote on any amendment of a resolution put to the meeting
for which it is given as the proxy thinks fit. The instrument of proxy shall
unless the contrary is stated therein be valid as well for any adjournment of
the meeting as for the meeting to which it relates.
71. A vote given in accordance with the terms of an instrument of proxy shall
be valid notwithstanding the previous death or insanity of the principal, or
revocation of the instrument of proxy or of the authority under which it was
executed, provided that no intimation in writing of such death, insanity or
revocation shall have been received by the
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Company at the Registered Office (or such other place as may be specified for
the delivery of instruments of proxy in the notice convening the meeting or
other documents sent therewith) one hour at least before the commencement of the
meeting or adjourned meeting, or the taking of the poll, at which the instrument
of proxy is used.
72. Subject to the Companies Acts, the Board may at its discretion waive any of
the provisions of these Bye-Laws related to proxies or authorisations and, in
particular, may accept such verbal or other assurances as it thinks fit as to
the right of any person to attend and vote on behalf of any Member at general
meetings.
ELECTION, VACANCIES AND REMOVAL OF DIRECTORS
73. The number of Directors shall be such number not less than two as the
Company in general meeting may from time to time determine, and subject to the
Companies Acts and these Bye-Laws, shall serve until re-elected or their
successors are appointed at the next Annual General Meeting.
74. No person shall be eligible for election or to serve as a Director:-
(i) if he is less than twenty-one years of age;
(ii) if he is of unsound mind and has been so found by a Court in
Bermuda or elsewhere;
(iii) if he is not an individual; or
(iv) if he has the status of bankrupt.
75. Unless as otherwise provided by these Bye-Laws, the Company shall at the
Annual General Meeting and may in general meeting determine the minimum and the
maximum number of Directors and may in general meeting determine that one or
more vacancies in the Board shall be deemed casual vacancies for the purpose of
these Bye-Laws. Subject to the provisions of these Bye-Laws and the Companies
Acts, the election of Directors for terms exceeding one year may be fixed by a
Resolution of the Members at any General Meeting. The Company may in General
Meeting fix a shareholding qualification for directors but unless and until so
fixed no qualification shall be required. Without prejudice to the power of the
Company in general meeting in pursuance of any of the provisions of these
Bye-Laws to appoint any person to be a Director, the Board so long as a quorum
of Directors remains in office, shall have power at any time and from time to
time to appoint any individual to be a Director so as to fill a casual vacancy.
76. The Company may in a Special General Meeting called for that purpose remove
a Director provided notice of any such meeting shall be served upon the Director
concerned not less than 14 days before the meeting and he shall be entitled to
be heard at that meeting. Any vacancy created by the removal of a Director at a
Special General Meeting may be
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filled at the Meeting by the election of another Director in his place, or, in
the absence of any such election, by the Board.
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VACATION OF OFFICE
77. The office of a Director shall be vacated upon the happening of any of the
following events:-
(a) if he dies;
(b) if he resigns his office by notice in writing delivered to the
Registered Office or tendered at a meeting of the Board;
(c) if he becomes of unsound mind or a patient for any purpose of any
statute or applicable law relating to mental health and the Board
resolves that his office is vacated;
(d) if he becomes bankrupt or compounds with his creditors;
(e) if he is prohibited by law from being a Director;
(f) if he ceases to be a Director by virtue of the Companies Acts or is
removed from office pursuant to these Bye-Laws.
ALTERNATE DIRECTORS
78. The Company may in general meeting elect a person or persons qualified to
be Directors to act as Directors in the alternative to any of the Directors of
the Company or may authorise the Board to appoint such Alternate Directors.
Subject to the provisions of these Bye-Laws any Director may at any time, by
writing appoint any person (including another Director) to be his Alternate
Director and may in like manner at any time terminate such appointment. The
appointment of an Alternate Director by a Director shall terminate on the
happening of any event which if he were a Director would cause him to vacate
such office or if his Appointor ceases to be a Director. Any appointment or
removal of an Alternate Director by a Director shall be effected by depositing a
notice of the appointment or removal, as the case may be, with the Secretary at
the Registered Office. Such notice shall be signed by the Director and said
appointment or removal shall become effective on the date of receipt thereof by
the Secretary. Any Alternate Director may be removed by the Company in general
meeting and, if appointed by the Board, may be removed by the Board and, subject
thereto, the office of Alternate Director shall continue until the next annual
election of Directors or, if earlier, the date on which the relevant Director
ceases to be a Director. An Alternate Director may also be a Director in his own
right and may act as alternate to more than one Director.
79. An Alternate Director shall be entitled to receive notices of all meetings
of Directors, to attend, be counted in the quorum and vote at any such meeting
at which any Director to whom he is alternate is not personally present, and
generally to perform all the functions of any Director to whom he is alternate
in his absence.
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80. Every person acting as an Alternate Director shall (except as regards
powers to appoint an alternate and remuneration) be subject in all respects to
the provisions of these Bye-Laws relating to Directors and shall alone be
responsible to the Company for his acts and defaults and shall not be deemed to
be the agent of or for any Director for whom he is alternate. An Alternate
Director may be paid expenses and shall be entitled to be indemnified by the
Company to the same extent mutatis mutandis as if he were a Director. Every
person acting as an Alternate Director shall have one vote for each Director for
whom he acts as alternate (in addition to his own vote if he is also a
Director). The signature of an Alternate Director to any resolution in writing
of the Board or a committee of the Board shall, unless the terms of his
appointment provides to the contrary, be as effective as the signature of the
Director or Directors to whom he is alternate.
DIRECTORS' FEES AND ADDITIONAL REMUNERATION AND EXPENSES
81. The amount, if any, of Directors' fees shall from time to time be
determined by the Company in general meeting and in the absence of a
determination to the contrary in general meeting, such fees shall be deemed to
accrue from day to day. Each Director may be paid his reasonable travelling,
hotel and incidental expenses in attending and returning from meetings of the
Board or committees constituted pursuant to these Bye-Laws or general meetings
and shall be paid all expenses properly and reasonably incurred by him in the
conduct of the Company's business or in the discharge of his duties as a
Director. Any Director who, by request, goes or resides abroad for any purposes
of the Company or who performs services which in the opinion of the Board go
beyond the ordinary duties of a Director may be paid such extra remuneration
(whether by way of salary, commission, participation in profits or otherwise) as
the Board may determine, and such extra remuneration shall be in addition to any
remuneration provided for by or pursuant to any other Bye-Law.
DIRECTORS' INTERESTS
82. (a) A Director may hold any other office or place of profit with the
Company (except that of auditor) in conjunction with his office of Director for
such period and upon such terms as the Board may determine, and may be paid such
extra remuneration therefor (whether by way of salary, commission, participation
in profits or otherwise) as the Board may determine, and such extra remuneration
shall be in addition to any remuneration provided for by or pursuant to any
other Bye-Law.
(b) A Director may act by himself or his firm in a professional capacity
for the Company (otherwise than as auditor) and he or his firm shall be entitled
to remuneration for professional services as if he were not a Director.
(c) Subject to the provisions of the Companies Acts, a Director may
notwithstanding his office be a party to, or otherwise interested in, any
transaction or arrangement with the Company or in which the Company is otherwise
interested, and be a Director or other officer of, or employed by, or a party to
any transaction or arrangement with, or otherwise interested in, any body
corporate promoted by the Company or in which
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the Company is interested. The Board may also cause the voting power conferred
by the shares in any other company held or owned by the Company to be exercised
in such manner in all respects as it thinks fit, including the exercise thereof
in favour of any resolution appointing the Directors or any of them to be
directors or officers of such other company, or voting or providing for the
payment of remuneration to the director or officers of such other company.
(d) So long as, where it is necessary, he declares the nature of his
interest at the first opportunity at a meeting of the Board or by writing to the
Directors as required by the Companies Acts, a Director shall not by reason of
his office be accountable to the Company for any benefit which he derives from
any office or employment to which these Bye-Laws allow him to be appointed or
from any transaction or arrangement in which these Bye-Laws allow him to be
interested, and no such transaction or arrangement shall be liable to be avoided
on the ground of any interest or benefit.
(e) Subject to the Companies Acts and any further disclosure required
thereby, a general notice to the Directors by a Director or officer declaring
that he is a director or officer or has an interest in a person and is to be
regarded as interested in any transaction or arrangement made with that person,
shall be a sufficient declaration of interest in relation to any transaction or
arrangement so made.
POWER AND DUTIES OF THE BOARD
83. Subject to the provisions of the Companies Acts and these Bye-Laws and to
any directions given by the Company in General Meeting, the Board shall manage
the business of the Company and may pay all expenses incurred in promoting and
incorporating the Company and may exercise all the powers of the Company. No
alteration of these Bye-Laws and no such direction shall invalidate any prior
act of the Board which would have been valid if that alteration had not been
made or that direction had not been given. The power given by this Bye-Law shall
not be limited by any special power given to the Board by these Bye-Laws and a
meeting of the Board at which a quorum is present shall be competent to exercise
all the powers, authorities and discretions for the time being vested in or
exercisable by the Board.
84. The Board may exercise all the powers of the Company to borrow money upon
the credit of the Company and to mortgage or charge all or any part of the
undertaking, property and assets (present and future) and uncalled capital of
the Company and to issue, re-issue, sell or pledge debentures and other
securities whether outright or as collateral security for any debt, liability or
obligation of the Company or of any other person.
85. All cheques, promissory notes, drafts, bills of exchange and other
instruments, whether negotiable or transferable or not, and all receipts for
money paid to the Company shall be signed, drawn, accepted, endorsed or
otherwise executed, as the case may be, in such manner as the Board shall from
time to time by resolution determine.
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86. The Board on behalf of the Company may provide benefits, whether by the
payment of gratuities or pensions or otherwise, for any person including any
Director or former Director who has held any executive office or employment with
the Company or with any body corporate which is or has been a subsidiary or
affiliate of the Company or a predecessor in the business of the Company or of
any such subsidiary or affiliate, and to any member of his family or any person
who is dependent on him, and may contribute to any fund and pay premiums for the
purchase or provision of any such gratuity, pension or other benefit, or for the
insurance of any such person.
87. The Board may from time to time appoint one or more of its body to be a
managing director, joint managing director or an assistant managing director or
to hold any other employment or executive office with the Company for such
period and upon such terms as the Board may determine and may revoke or
terminate any such appointments. Any such revocation or termination as aforesaid
shall be without prejudice to any claim for damages that such Director may have
against the Company or the Company may have against such Director for any breach
of any contract of service between him and the Company which may be involved in
such revocation or termination. Any person so appointed shall receive such
remuneration (if any) (whether by way of salary, commission, participation in
profits or otherwise) as the Board may determine, and either in addition to or
in lieu of his remuneration as a Director.
DELEGATION OF THE BOARD'S POWER
88. The Board may by power of attorney appoint any company, firm or person or
any fluctuating body of persons, whether nominated directly or indirectly by the
Board, to be the attorney or attorneys of the Company for such purposes and with
such powers, authorities and discretions (not exceeding those vested in or
exercisable by the Board under these Bye-Laws) and for such period and subject
to such conditions as it may think fit, and any such power of attorney may
contain such provisions for the protection and convenience of persons dealing
with any such attorney and of such attorney as the Board may think fit, and may
also authorise any such attorney to sub-delegate all or any of the powers,
authorities and discretions vested in him.
89. The Board may from time to time entrust to and confer upon any Director or
officer any of the powers exercisable by it upon such terms and conditions with
such restrictions as it thinks fit, and either collaterally with, or to the
exclusion of, its own powers, and may from time to time revoke or vary all or
any of such powers but no person dealing in good faith and without notice of
such revocation or variation shall be affected thereby.
90. The Board may from time to time delegate any of its powers, authorities and
discretions to committees, consisting of such person or persons (whether a
member or members of its body or not) as it thinks fit. Any committee so formed
shall, in the exercise of the powers, authorities and discretions so delegated,
conform to any regulations which may be imposed upon it by the Board.
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PROCEEDINGS OF THE BOARD
91. The Board may meet for the despatch of business, adjourn and otherwise
regulate its meetings as it thinks fit. Questions arising at any meeting shall
be determined by a majority of votes. In the case of an equality of votes the
motion shall be deemed to have been lost. A Director may, and the Secretary on
the requisition of a Director shall, at any time summon a Board meeting. If all
the Directors of the Company consent, a Director may participate in a meeting of
the Board or of a Committee of the Board by means of such telephone or other
communication facility as permits all persons participating in the meeting to
hear each other, and a Director participating in such a meeting by such means is
deemed to be present at the meeting, provided that a quorum of Directors is
present at the same place.
92. Notice of a Board meeting shall be deemed to be duly given to a Director if
it is given to him personally, or by telephone or by word of mouth or sent to
him by post, cable, facsimile, telex, telecopier or other mode of representing
or reproducing words in a legible and non-transitory form at his last known
address or any other address given by him to the Company for this purpose. A
Director may waive notice of any meeting either prospectively or
retrospectively.
93. (a) The quorum necessary for the transaction of the business of the Board
may be fixed by the Board and, unless so fixed at any other number shall be two
individuals. Any Director who ceases to be a Director at a Board meeting may
continue to be present and to act as a Director and be counted in the quorum
until the termination of the Board meeting if no other Director objects and if
otherwise a quorum of Directors would not be present.
(b) A Director who to his knowledge is in any way, whether directly or
indirectly, interested in a contract or proposed contract, transaction or
arrangement with the Company and has complied with the provisions of the
Companies Acts and these Bye-Laws with regard to disclosure of his interest
shall be entitled to vote in respect of any contract, transaction or arrangement
in which he is so interested and if he shall do so his vote shall be counted,
and he shall be taken into account in ascertaining whether a quorum is present.
94. So long as a quorum of Directors remains in office, the continuing
Directors may act notwithstanding any vacancy in the Board but, if no quorum of
Directors remains, the continuing Directors or a sole continuing Director may
act only for the purpose of calling a general meeting.
95. The Board may elect a Chairman of the Board from amongst its members. If no
Chairman of the Board is elected or he is absent, the President shall be
Chairman. If at any meeting neither the Chairman of the Board nor the President
is present within five minutes after the time appointed for holding the same,
the Directors present may choose one of their number to be Chairman of the
meeting.
96. The meetings and proceedings of any committee consisting of two or more
members shall be governed by the provisions contained in these Bye-Laws for
regulating the meetings
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and proceedings of the Board so far as the same are applicable and are not
superseded by any regulations imposed by the Board.
97. A resolution in writing signed by all the Directors for the time being
entitled to receive notice of a meeting of the Board or by all the Members of a
committee for the time being shall be as valid and effectual as a resolution
passed at a meeting of the Board or, as the case may be, of such committee duly
called and constituted. Such resolution may be contained in one document or in
several documents in like form each signed by one or more of the Directors or
members of the committee concerned.
98. All acts done by the Board or by any Committee or by any person acting as a
Director or member of a committee or any person duly authorised by the Board or
any committee, shall, notwithstanding that it is afterwards discovered that
there was some defect in the appointment of any member of the Board or such
committee or person acting as aforesaid or that they or any of them were
disqualified or had vacated their office, be as valid as if every such person
had been duly appointed and was qualified and had continued to be a Director,
member of such committee or person as authorised.
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OFFICERS
99. The officers of the Company shall include a President, Vice-President or
Chairman and Deputy Chairman, as the case may be who shall be Directors and
shall be appointed by the Board as soon as possible after the statutory meeting
and each annual general meeting. In addition, the Board may appoint any person
whether or not he is a Director to hold such other office (including any
additional Vice-Presidencies) as the Board may from time to time determine. Any
person elected or appointed pursuant to this Bye-Law shall hold office for such
period and upon such terms as the Board may determine and the Board may revoke
or terminate any such election or appointment. Any such revocation or
termination shall be without prejudice to any claim for damages that such
officer may have against the Company or the Company may have against such
officer for any breach of any contract of service between him and the Company
which may be involved in such revocation or termination. Save as provided in the
Companies Acts or these Bye-Laws, the powers and duties of the officers of the
Company shall be such (if any) as are determined from time to time by the Board.
MINUTES
100. The Directors shall cause minutes to be made and books kept for the purpose
of recording -
(a) all appointments of officers made by the Directors;
(b) the names of the Directors and other persons (if any) present at each
meeting of Directors and of any committee;
(c) all proceedings at meetings of the Company, of the holders of any
class of shares in the Company, and of committees;
(d) all proceedings of managers (if any).
SECRETARY
101. The Secretary shall be appointed by the Board at such remuneration (if any)
and upon such terms as it may think fit and any Secretary so appointed may be
removed by the Board. The duties of the Secretary shall be those prescribed by
the Companies Acts together with such other duties as shall from time to time be
prescribed by the Board.
102. A provision of the Companies Acts or these Bye-Laws requiring or
authorising a thing to be done by or to a Director and the Secretary shall not
be satisfied by its being done by or to the same person acting both as Director
and as, or in the place of, the Secretary.
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THE COMMON SEAL
103. (a) The Seal shall consist of a circular metal device with the name of the
Company around the outer margin thereof and the country and year of
incorporation across the centre thereof. Should the seal not have been
received at the registered office in such form at the date of adoption
of this Bye-Law then, pending such receipt, any document requiring to
be sealed with the Seal shall be sealed by affixing a red wafer seal
to the document with the name of the Company, and the country and year
of incorporation type-written across the centre thereof.
(b) The Board shall provide for the custody of the Seal, which Seal shall
only be used by authority of the Board or of a committee authorised by
the Board in that behalf. Subject to these Bye-Laws, any instrument to
which the Seal is affixed shall be signed by a Director and by the
Secretary or by a second Director; provided that the Secretary or a
Director may affix the Seal over his signature only to authenticate
copies of these Bye-Laws, the minutes of any meeting or any other
documents requiring authentication.
(c) The Company may have for use in any place or places outside Bermuda a
duplicate set of Seals each of which shall be a facsimile of the
Common Seal of the Company and, if the Directors so determine, with
the addition on its face of the name of every place where it is to be
used.
DIVIDENDS AND OTHER PAYMENTS
104. The Board may from time to time declare dividends to be paid to the Members
according to their respective rights and interests in the profits of the Company
including such interim dividends as appear to the Board to be justified by the
position of the Company. Dividends may be paid in money or property or by
issuing fully paid shares of the Company. The Board may also pay any fixed cash
dividend which is payable on any shares of the Company half-yearly or on such
other dates, whenever the position of the Company, in the opinion of the Board,
justifies such payment. For the purpose of this Bye-Law, contributed surplus
shall be deemed not to be a profit of the Company and shall not be taken account
of in calculating the amount of the profits available for distribution to the
Members and shall not be available for distribution other than in the manner
provided for in Bye-Law 110.
105. Except insofar as the rights attaching to, or the terms of issue of, any
share otherwise provide:-
(a) all dividends may be declared and paid according to the amounts paid
up on the shares in respect of which the dividend is paid, and an
amount paid up on a share in advance of calls may be treated for the
purpose of this Bye-Law as paid-up on the share;
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(b) dividends may be apportioned and paid pro rata according to the
amounts paid up on the shares during any portion of the period in
respect of which the dividend is paid.
106. The Board may deduct from any dividend or other moneys payable to a Member
by the Company on or in respect of any shares all sums of money (if any)
presently payable by him to the Company on account of calls or otherwise in
respect of shares of the Company.
107. Any dividend or other moneys payable by the Company on or in respect of any
share shall bear interest against the Company.
108. Any dividend, interest or other sum payable in cash to the holder of shares
may be paid by cheque or warrant sent through the post addressed to the holder
at his address in the Register, or in the case of joint holders, addressed to
the holder whose name stands first in the Register in respect of the shares at
his registered address as appearing in the Register or addressed to such person
at such address as the holder or joint holders may in writing direct. Every such
cheque or warrant shall, unless the holder or joint holders otherwise direct, be
made payable to the order of the holder or, in the case of joint holders, to the
order of the holder whose name stands first in the Register in respect of such
shares, and shall be sent at his or their risk and payment of the cheque or
warrant by the bank on which it is drawn shall constitute a good discharge to
the Company. Any one of two or more joint holders may give effectual receipts
for any dividends or other moneys payable or property distributable in respect
of the shares held by such joint holders.
109. Any dividend unclaimed for a period of six years from the date of
declaration of such dividend shall be forfeited and shall revert to the Company
and the payment by the Board of any unclaimed dividend, interest or other sum
payable on or in respect of the share into a separate account shall not
constitute the Company a trustee in respect thereof.
110. With the sanction of the Company in general meeting, the Board may (a)
declare a distribution to any Member out of contributed surplus and (b) direct
payment or satisfaction of such distribution or any dividend wholly or in part
by the distribution of specific assets, and in particular of paid-up shares or
debentures of any other company, and where any difficulty arises in regard to
such distribution or dividend the Board may settle as it thinks expedient, and
in particular, may authorise any person to sell and transfer any fractions or
may ignore fractions altogether, and may fix the value for distribution or
dividend purposes of any such specific assets and may determine that cash
payments shall be made to any members upon the footing of the values so fixed in
order to secure equality of distribution and may vest any such specific assets
in trustees as may seem expedient to the Board.
RESERVES
111. The Board may, before recommending or declaring any dividend, set aside out
of the profits of the Company, such sums as it thinks proper as reserves which
shall, at the discretion of the Board, be applicable for any purpose to which
the profits of the Company may be properly applied and pending such application
may, also at such discretion, either be
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employed in the business of the Company or be invested in such investments as
the Board may from time to time think fit. The Board may also without placing
the same to reserve carry forward any profits which it may think it prudent not
to distribute.
CAPITALIZATION OF PROFITS
112. The Company may, upon the recommendation of the Board, at any time and from
time to time resolve in general meeting to the effect that it is desirable to
capitalize all or any part of any amount for the time being standing to the
credit of any reserve or fund which is available for distribution or to the
credit of any share premium account or any capital redemption reserve fund and
accordingly that such amount be set free for distribution amongst the Members or
any class of Members who would be entitled thereto if distributed by way of
dividend and in the same proportions on the footing that the same be not paid in
cash but be applied either in or towards paying up amounts for the time being
unpaid on any share in the Company held by such Members respectively or in
payment up in full of unissued shares, debentures or other obligations of the
Company, to be allotted and distributed credited as fully paid amongst such
Members or partly in one way and partly in the other, and the Board shall give
effect to such resolution, provided that for the purpose of this Bye-Law, a
share premium account and a capital redemption reserve fund may be applied only
in paying up of unissued shares to be issued to such Members credited as fully
paid.
113. Where any difficulty arises in regard to any distribution under the last
preceding Bye-Law the Board may settle the same as it thinks expedient and, in
particular, may authorise any person to sell and transfer any fractions or may
resolve that the distribution should be as nearly as may be practicable in the
correct proportion but not exactly so or may ignore fractions altogether and may
determine that cash payments should be made to any Members in order to adjust
the rights of all parties, as may seem expedient to the Board. The Board may
appoint any person to sign on behalf of the persons entitled to participate in
the distribution any contract necessary or desirable for giving effect thereto
and such appointment shall be effective and binding upon the Members.
RECORD DATES
114. Notwithstanding any other provisions of these Bye-Laws the Company in
general meeting or the Board may fix any date as the record date for any
dividend, distribution, allotment or issue and for the purpose of identifying
the persons entitled to receive notices of general meetings. Any such record
date may be on or at any time before or after any date on which such dividend,
distribution, allotment or issue is declared, paid or made or such notice is
despatched. If no record date is fixed, the record date for the aforesaid
purposes shall be at the close of business on the day on which the resolution
relating to such dividend or right is passed by the Board.
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ACCOUNTING RECORDS
115. The Board shall cause to be kept accounting records sufficient to give a
true and fair view of the state of the Company's affairs and to show and explain
its transactions, in accordance with the Companies Acts.
116. The records of account shall be kept at the Registered Office or at such
other place or places as the Board think fit, and shall at all times be open to
inspection by the Directors: PROVIDED that if the records of account are kept at
some place outside Bermuda, there shall be kept at an office of the Company in
Bermuda such records as will enable the Directors to ascertain with reasonable
accuracy the financial position of the Company at the end of each three month
period. No Member (other than an officer of the Company) shall have any right to
inspect any accounting record or book or document of the Company except as
conferred by law or authorised by the Board or the Company in general meeting.
117. A copy of every balance sheet and statement of income and expenditure,
including every document required by law to be annexed thereto, which is to be
laid before the Company in general meeting, together with a copy of the
auditor's report, shall be sent to each person entitled thereto in accordance
with the requirements of the Companies Acts.
AUDIT
118. Save and to the extent that an audit is waived in the manner permitted by
the Companies Acts, auditors shall be appointed and their duties regulated in
accordance with the Companies Acts, and other applicable law and such
requirements not inconsistent with the Companies Acts as the Board may from time
to time determine.
SERVICE OF NOTICES AND OTHER DOCUMENTS
119. Any notice or other communication or document (including a share
certificate) may be served on or delivered to any Member by the Company either
personally or by sending it through the post (by airmail where applicable) in a
pre-paid letter addressed to such Member at his address as appearing in the
Register or by delivering it to or leaving it at such registered address or, if
sent to him at his registered address, by any means of prepaid transmitted or
recorded communication. In the case of joint holders of a share, service or
delivery of any notice or other document on or to one of the joint holders shall
for all purposes be deemed as sufficient service on or delivery to all the joint
holders. Any notice or other document if sent by post shall be deemed to have
been served or delivered seven days after it was put in the post, and in proving
such service or delivery, it shall be sufficient to prove that the notice or
document was properly addressed, stamped and put in the post.
120. Any notice of a general meeting of the Company shall be deemed to be duly
given to a Member if it is sent to him by cable, telex, telecopier or other mode
of representing or reproducing words in a legible and non-transitory form at his
address as appearing in the Register or any other address given by him to the
Company for this purpose. Any such notice shall be deemed to have been served
twenty-four hours after its despatch.
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121. Any notice or other document delivered, sent or given to Members in any
manner permitted by these Bye-Laws, shall notwithstanding that such Member is
then dead or bankrupt or that any other event has occurred, and whether or not
the Company has notice of the death or bankruptcy or other event, be deemed to
have been duly served or delivered in respect of any share registered in the
name of such Member as sole or joint holder unless his name shall, at the time
of the service or delivery of the notice or document, have been removed from the
Register as the holder of the share, and such service or delivery shall for all
purposes be deemed as sufficient service or delivery of such notice or document
on all persons interested (whether jointly with or as claiming through or under
him) in the share.
WINDING UP
122. If the Company shall be wound up, the liquidator may, with the sanction of
a resolution of the Company and any other sanction required by the Companies
Acts, divide amongst the Members in specie or kind the whole or any part of the
assets of the Company (whether they shall consist of property of the same kind
or not) and may for such purposes set such values as he deems fair upon any
property to be divided as aforesaid and may determine how such division shall be
carried out as between the Members or different classes of Members. The
liquidator may, with the like sanction, vest the whole or any part of such
assets in trustees upon such trust, for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other assets upon which there is any
liability.
INDEMNITY
123. Subject to the Companies Acts, every Director, officer of the Company and
member of a committee constituted under Bye-Law 90 (and his heirs and legal
representatives) shall be indemnified out of the funds of the Company against
all civil liabilities loss damage charge or expenses (including but not limited
to an amount paid to settle an action, satisfy a judgment, liabilities under
contract, tort and statute or any applicable foreign law or regulations and all
reasonable legal and other costs and expenses properly payable) incurred or
suffered by him as such Director, officer or committee member while exercising
his powers and discharging his duties under the Companies Acts and these
Bye-Laws and the indemnity contained in this Bye-Law shall extend to any person
acting as a Director, officer or committee member in the reasonable belief that
he has been so appointed or elected notwithstanding any defect in such
appointment or election PROVIDED ALWAYS that the indemnity contained in this
Bye-Law shall not extend to any matter which would render it void pursuant to
the Companies Acts.
124. Every Director, officer and member of a committee duly constituted under
Bye-Law 90 of the Company (including his heirs and legal representatives) shall
be indemnified out of the funds of the Company against all liabilities incurred
by him as such Director, officer or committee member in defending any
proceedings, whether civil or criminal, in which judgment is given in his favour
or in which he is acquitted, or in connection with any
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application under the Companies Acts in which relief from liability is granted
to him by the court.
125. To the extent that any Director, officer or member of a committee duly
constituted under Bye-Law 90 is entitled to claim an indemnity pursuant to these
Bye-Laws in respect of amount paid or discharged by him, the relative indemnity
shall take effect as an obligation of the Company to reimburse the person making
such payment or effecting such discharge.
TRANSFER BY WAY OF CONTINUATION
126. If the Company is permitted in accordance with the provisions of the
Companies Acts it shall, subject to the provisions thereof, have the power to
register by way of continuation as a body corporate under the laws of any
jurisdiction outside Bermuda and to be discontinued in Bermuda.
ALTERATION OF BYE-LAWS
127. These Bye-Laws may be amended from time to time in the manner provided for
in the Companies Acts.
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B Y E - L A W S
of
OMNINET INTERNATIONAL LTD.
We, being the subscribers to the Memorandum of Association of the above Company
hereby subscribe to the above written Bye-Laws pursuant to Section 13(4) of the
Companies Act, 1981.
NAME SIGNATURE
- - ---- ---------
FOR AND ON BEHALF OF
INTERNATIONAL FINANCE LTD. /s/ Orlando A. Smith
- - -------------------------
ORLANDO A. SMITH /s/ Orlando A. Smith
- - -------------------------
JOHN MILLIGAN-WHYTE /s/ John Milligan-Whyte
- - -------------------------
BALA NADARAJAH /s/ Bala Nadarajah
- - -------------------------
Dated this 8th day of June 1998
40
<PAGE> 1
Exhibit 3.1
AGREEMENT
between
(1) OMNINET INTERNATIONAL LIMITED
and
(2) NICHOLAS BOAKES AND OTHERS
1998
Re. Ordinary Shares in Colloquium Limited
Holmes Mackillop
Solicitors
GLASGOW
FAS - 2844
41
<PAGE> 2
MINUTE OF AGREEMENT
between
OMNINET INTERNATIONAL LIMITED, a
Company incorporated under the
laws of Bermuda and having its
Registered Office at Bermuda
Commercial Bank Building, 44
Church Street, Hamilton, HM12,
Bermuda, P. O. Box HM 1223,
Hamilton HM FX, Bermuda
(hereinafter referred to as "the
Company")
and
NICHOLAS BOAKES AND OTHERS whose
names and addresses are set out
in the Schedule hereto, who
together hold the total issued
Ordinary share capital of
COLLOQUIUM LIMITED, incorporated
under the Companies Act 1985 in
Scotland (Company Number 142248)
and having its Registered Office
at 101 Abercorn Street, Paisley,
PA3 4AT, Scotland (who together
are referred to as "the
Shareholders of Colloquium
Limited")
WHEREAS the Company and the Shareholders of Colloquium Limited have reached
agreement for the purchase by the Company of the entire issued Ordinary share
capital of Colloquium Limited on a share for share exchange as hereinafter set
forth AND WHEREAS the Directors and Shareholders of the Company have complied in
full with all laws, statutes or regulations under the laws of Bermuda and in
accordance with the terms and provisions of the Articles of Association of the
Company (including without prejudice to the foregoing generality, any laws or
regulations regarding the declaration of interest by Directors of the Company
and the necessary approval of all shareholders of
42
<PAGE> 3
the Company to the purchase of the entire Ordinary issued share capital of
Colloquium Limited on the basis hereinafter set forth and the approval by the
Directors and the shareholders of the Company of the allotment or issue of
shares in the Company to the Shareholders of Colloquium Limited)
NOW THEREFORE the Company and the Shareholders of Colloquium Limited HAVE AGREED
and DO HEREBY AGREE as follows:-
(One) The Company shall with effect from the Twenty seventh day of May 1998
notwithstanding the date or dates hereof purchase the entire Ordinary
issued share capital of Colloquium Limited from the Shareholders of
Colloquium Limited by the issue of 1,000,000 new shares of $0.001 each
in the share capital of the Company to be issued pro rata to the
Shareholders in Colloquium Limited on the basis of 3.7530127 shares of
par value $0.001 in the share capital of the Company for each Ordinary
Share of Pound Sterling 1 each fully paid in the capital of
Colloquium Limited.
(Two) The purchase of the entire Ordinary issued share capital of Colloquium
Limited from the Shareholders of Colloquium Limited shall be completed
on June 1998 at the Registered Office of Colloquium Limited at which
time duly completed and executed Share Certificates in the Company
shall be delivered to the Shareholders of Colloquium Limited in
exchange for duly executed Stock Transfer Forms and the relevant Share
Certificates in Colloquium Limited.
(Three) The Shareholders in Colloquium Limited warrant that the Ordinary
Shares in the share capital of Colloquium Limited held by them are
held
43
<PAGE> 4
free from all liens, charges, encumbrances, equities and claims
whatsoever and together with all rights now or hereafter attaching to
them.
(Four) The Company shall not be obliged to complete the purchase of any of
the Ordinary Shares of Pound Sterling each in the share capital of
Colloquium Limited unless the purchase of all of the Ordinary Shares
is completed simultaneously.
(Five) The Company warrants that the Company has not traded in Bermuda or
elsewhere and that its shares are not the subject of any security or
any charge, lien or incumbrance.
(Six) This Agreement shall be governed and construed in all respects by the
Law of Scotland and the parties hereto irrevocably submit themselves
to the nonexclusive jurisdiction of the Scottish courts.
IN WITNESS WHEREOF
Witness June 23, 1998
/s/ Ruth Turley /s/ Eric F. Kohn
- - ------------------------ ---------------------------
Ruth Turley Eric F. Kohn
for Omninet International Limited
/s/ C. D. Ford /s/ Brian McMillan
- - ------------------------ ---------------------------
C. D. Ford Brian McMillan
for Colloquium Limited
44
<PAGE> 5
SCHEDULE
Mr. Nicholas Boakes Mr. Brian McMillan
42a Warlock Avenue 7 Steeple Square
London Kilbarchan
W9 2PT Renfrewshire
PA1O 2JD
Coastline Inv SA Pyman Bell (Holdings) Limited
Case Postale 6-1014 Fifth Floor, Hays Gate House
Calle 53 Estetorre 27/33 Uxbridge Road
Swiss Bank Building Uxbridge
2 Piso UB4 OJN
El Dorado
Panama City
Mr. Michael Coggins Mr. Nigel Reese
Interne Prolink S.A. 48 Dalkeith Grove
ICC Building Stanmore
Case Postale 1863 Middlesex
CH-1215 Geneva 15 HA7 4SF
Switzerland
Mr. Eric F Kohn TD Mr. Christopher Tilley
Carabot CH-1213 15 Chemin de la Praly
Onex/Geneva Case Postale 139
Switzerland CH-1222 Vesenaz
Switzerland
London & Edinburgh Publishing Plc Mr. Mark Tolner
Suffolk House Manor Heights
Whitfield Place Manor Close, Penn
London Bucks
W1P 5SF HP10 8HZ
Sir Ian MacGregor (Deceased) Mr. Andrew Dunlop
21 Mt Windham Drive 166 Garscadden Road
Hamilton CRO4 Glasgow G15 8SY
Bermuda
Valor Invest SA
29 Quai des Bergues
Ch-1201 Geneva
Switzerland
45
<PAGE> 1
Exhibit 3.2
PLAN AND AGREEMENT OF MERGER-REORGANIZATION
E & M MANAGEMENT INC.
Into and under the name
OMNINET INTERNATIONAL LTD.
OMNINET INTERNATIONAL LTD. (hereinafter sometimes called "OIL") and E & M
MANAGEMENT INC. (hereinafter sometimes called "E&M") agree as follows:
ARTICLE 1
PLAN OF REORGANIZATION
Section 1.01. Plan Adopted. A plan of merger-reorganization of E&M and OIL
is adopted as follows:
(a) E&M shall be merged with and into OIL to exist and be governed by the
laws of Bermuda.
(b) The name of the surviving corporation shall be "OMNINET INTERNATIONAL
LTD."
(c) The separate existence of the constituent corporations shall cease and
the surviving corporation shall succeed, without other transfer, to all the
rights and property of each of the constituent corporations, and shall be
subject to all the debts and liabilities of each, in the same manner as if the
surviving corporation has itself incurred them. All rights of creditors and all
liens upon the property of each constituent corporation shall be preserved
unimpaired, limited in lien to the property affected by such liens immediately
prior to the merger.
(d) The surviving corporation will carry on business with the assets of
E&M as well as with the assets of OIL.
(e) The shareholders of E&M will surrender all of their shares in the
manner hereinafter set forth.
(f) In exchange for the shares of OIL surrendered by its shareholders, the
surviving corporation will issue and transfer to such shareholders on the basis
hereinafter set forth, shares of its common stock.
46
<PAGE> 2
(g) The shareholders of E&M, in the aggregate, will acquire stock of the
surviving corporation equal to not to exceed five percent (5%) of all of the
outstanding stock of the surviving corporation.
(h) The shareholders of OIL will retain their shares as shares of the
surviving corporation.
(i) The Board of Directors of E&M, pending the effective date of the
merger, as described in Section 1.02 below, if it deems it in the best interest
of its shareholders, may change the name of the corporation to OMNINET, or a
similar name that may be available under the laws of the State of Nevada
(together with adopting a new symbol for its trading on the OTC Bulletin Board
System) and may effectuate a reverse split on the basis of not to exceed one (1)
share for each 35.233946 shares of common stock of E&M currently outstanding.
Section 1.02. Effective Date. The effective date of the merger shall be the
date on which this Agreement of merger with required officers' certificates
attached is filed with the Nevada Secretary of State and the government of
Bermuda, subject to OIL's compliance with any and all conditions precedent
imposed under Bermuda law.
ARTICLE 2
RECITALS OF CONSTITUENT CORPORATIONS
Section 2.01. Disappearing Corporation. E&M is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Nevada, is qualified to transact business as a foreign corporation and is not
required to be qualified as a foreign corporation to transact business in any
other jurisdiction.
Section 2.02. Survivor. OIL is a corporation duly organized, validly
existing, and in good standing under the laws of Bermuda and is in good standing
in all jurisdictions in which its principal properties are located.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF E&M
E&M and its majority Shareholders, and each of them, represent and warrant
to OIL as follows:
Section 3.01. Capitalization. The authorized capital stock of E&M consists
of one class of shares of stock, the total number of shares which E&M is
authorized to issue is 25,000,000 shares, of which 1,860,000 shares are
presently issued and outstanding.
Section 3.02. Authority. E&M and Shareholders have the full power and
authority to enter into this Plan and to carry out its obligations hereunder.
Other than
47
<PAGE> 3
approval by the Board of Directors and/or is shareholders, no proceedings on the
part of its shareholders are necessary to authorize this Plan or the
transactions completed hereby. This Plan constitutes the legal, valid and
binding obligation of E&M and its shareholders enforceable in accordance with
its terms.
Section 3.03. Financial Statements. E&M has furnished to OIL audited
financial statements as of July 31, 1998. All of said financial statements, (i)
are in accordance with E&M's books and records, (ii) present fairly and
financial position of E&M as of such dates, and its results of operations and
changes in financial position for the respective periods indicated, (iii) have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis, and (iv) consistent with prior business practice,
contain adequate reserves for all known or contingent liabilities, losses and
refunds with respect to services or products already rendered or sold.
Section 3.04. All Patent/License Rights. E&M does not own or possess any
licenses, patents, trademarks, service marks, service names and trade names
presently used.
Section 3.05. Contracts/Other Rights. Prior to the closing, E&M will
furnish E&M with a true and complete list and description of all material
contracts and licenses, if any, relating to its products and services. Each of
the agreements, contract, commitments, leases, plans and other instruments,
documents and undertakings to be supplied is valid and enforceable in accordance
with its terms. E&M is not in default of the performance, observance or
fulfillment of any material obligations, covenant or condition contained
therein; and no event has occurred which with or without the giving of notice or
lapse of time, or both, would constitute a default thereunder; furthermore,
except as may be disclosed in writing at the time of delivery, no such
agreement, contract, commitment, lease, plan or other instrument, document or
undertaking, in the reasonable opinion of E&M, contains any contractual
requirement with which there is a likelihood E&M will be unable to comply.
Section 3.06. Competition. E&M, nor any officer or director or Shareholder
of E&M has any material direct or indirect financial or economic interest in any
related industry entity or in any competition or customer of E&M.
Section 3.07. Effect of Agreement. The execution and delivery by E&M and
Shareholder of this Plan and the consummation of the transactions herein
contemplated, (i) will not conflict with, or result in a breach of the terms of,
or constitute a default under or violation of, any law or regulation of any
governmental authority, or the Articles of Incorporation or By-Laws of E&M, or
any material agreement or instrument to which E&M or Shareholders are a party or
by which it is bound or is subject; (ii) nor will it give to rise to any
interests or rights, including rights of termination, acceleration or
cancellation, in or with respect to any of the properties, assets, agreements,
leases, or business or E&M.
48
<PAGE> 4
Section 3.08. Personal Property. All of the property, assets and equipment
owned by or used by E&M is in good repair, well maintained, and in good and
satisfactory operating condition consistent with their age, free from any known
defects, except such minor defects as do not substantially interfere with the
continued use thereof in the conduct of normal operations and such property,
assets, and equipment which is owned by E&M is valued on the Balance Sheet at
original purchase price less reasonable depreciation consistently applied in
accordance with generally accepted accounting principles.
Section 3.09. Leases. E&M has no leases of real property or equipment.
Section 3.10. Minutes Book. The records of meetings and other corporate
actions of Shareholder and the Board of Directors (including any committees of
the Board) of Shareholder and E&M which are contained in the Minute books of
Shareholder and E&M contain complete and accurate records of the matters
reflected in such minutes.
Section 3.11. Litigation; Claims. E&M is not a party to, and there are not
any claims, actions, suits, investigations or proceedings pending or threatened
against E&M or its business, at law or in equity, or before or by any
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, which if determined adversely would have a material effect
on the business or financial condition of E&M or the ability of E&M to carry on
its business. The consummation of the transactions herein contemplated will not
conflict with or result in the breach or violation of any judgement, order,
writ, injunction or decree of any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.
Section 3.12. Taxes and Reports. Prior to the Closing Date, E&M (i) will
have filed all tax returns required to be filed by any jurisdiction, domestic or
foreign, to which it is or has been subject, (ii) has either paid in full all
taxes due and taxes claimed to be due by each jurisdiction, and any interest and
penalties with respect thereto, and (iii) has adequately reflected as
liabilities on its books, all taxes that have accrued for any period to and
including the Closing Date.
Section 3.13. Compliance with Laws and Regulations. To the best of their
knowledge, E&M and Shareholder have complied with, and are not in violation of
any federal, state, local or foreign statute, law, rule or regulation with
respect to the conduct of E&M's businesses, which violation might have a
material adverse effect on the business, financial condition or earnings of E&M.
Section 3.14. Finders. E&M and Shareholders, and each of them, are not
obligated, absolutely or contingently, to any person for financial advice, a
finder's fee, brokerage commission, or other similar payment in connection with
the transactions contemplated by this Agreement.
Section 3.15. Nature of Representations. E&M and Shareholders have taken
reasonable care to ensure that all disclosures and facts are true and accurate
and that there
49
<PAGE> 5
are no other material facts, the omission of which would make misleading any
statement herein. Further, no representation, warranty or agreement made by E&M
and Shareholder in this Agreement or any of the Schedules or any other Exhibits
hereto and no statement made in the Schedules or any such Exhibit, list,
certificate or schedule or other instrument or disclosure furnished by them in
connection with the transactions herein contemplated contains, or will contain,
any untrue statement of a material fact necessary to make any statement,
representation, warranty or agreement not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OR OIL
Oil represents and warrants to E&M as follows:
Section 4.01. Capitalization. The authorized capital stock of OIL consists
of one class of shares of stock, the total number of shares which OIL is
authorized to issue is 25,000,000 shares of which 1,033,026 shares are presently
issued and outstanding.
Section 4.02. Authority. OIL has the full power and authority to enter into
this Plan and to carry out its obligations hereunder. Other than approval by the
Board of Directors and/or shareholders, and/or the approval of the Minister of
Finance of the Government of Bermuda, no proceedings on the part of its
shareholders are necessary to authorize this Plan or the transactions completed
hereby. This Plan constitutes the legal, valid and binding obligation of OIL and
its shareholders enforceable in accordance with its terms.
Section 4.03. Financial Statements. OIL has furnished to E&M pro forma
financial statements as of July 31, 1998. All of said financial statements, (i)
are in accordance with OIL's books and records, (ii) present fairly and
financial position of OIL as of such dates, and its results of operations and
changes in financial position for the respective periods indicated, (iii) have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis, and (iv) consistent with prior business practice,
contain adequate reserves for all known or contingent liabilities, losses and
refunds with respect to services or products already rendered or sold.
Section 4.04. All Patent/License Rights. To the best of its knowledge, OIL
owns or possesses the requisite licenses or other rights to use all licenses,
patents, trademarks, service marks, service names and trade names presently
used. There is no claim or action by any person, or proceeding pending, or
threatened which challenges the exclusive rights of OIL with respect to said
rights used, or contemplated to be used, in OIL's business. Nothing herein
contained have or shall be deemed to constitute a representation or warranty
that such licenses, patents, trademarks, or trade names may not be utilized or
challenged in the future, and that they will be upheld if challenged.
Section 4.05. Contracts/Other Rights. Prior to the closing, OIL will
furnish E&M with a true and complete list and description of all material
contracts and licenses relating
50
<PAGE> 6
to its products and services. Each of the agreements, contract, commitments,
leases, plans and other instruments, documents and undertakings to be supplied
is valid and enforceable in accordance with the terms. OIL is not in default of
the performance, observance or fulfillment of any material obligations, covenant
or condition contained therein; and no event has occurred which with or without
the giving of notice or lapse of time, or both, would constitute a default
thereunder; furthermore, except as may be disclosed in writing at the time of
delivery, no such agreement, contract, commitment, lease, plan or other
instrument, document or undertaking, in the reasonable opinion of OIL, contains
any contractual requirement with which there is a likelihood OIL will be unable
to comply.
Section 4.06. Competition. Except as set forth in the contracts described
in 4.05 above, neither OIL, nor any officer or director or Shareholder of OIL
has any material direct or indirect financial or economic interest in any
related industry entity or in any competition or customer of OIL.
Section 4.07. Effect of Agreement. The execution and delivery by OIL and
Shareholder of this Plan and the consummation of the transactions herein
contemplated, (i) will not conflict with, or result in a breach of the terms of,
or constitute a default under or violation of, any law or regulation of any
governmental authority, or the Articles of Incorporation or By-Laws of OIL, or
any material agreement or instrument to which OIL is a party or by which it is
bound or is subject; (ii) nor will it give to rise to any interests or rights,
including rights of termination, acceleration or cancellation, in or with
respect to any of the properties, assets, agreements, leases, or business of
OIL.
Section 4.08. Personal Property. All of the property, assets and equipment
owned by or used by OIL is in good repair, well maintained, and in good and
satisfactory operating condition consistent with their age, free from any known
defects, except such minor defects as do not substantially interfere with the
continued use thereof in the conduct of normal operations and such property,
assets, and equipment which is owned by OIL is valued on the Balance Sheet at
original purchase price less reasonable depreciation consistently applied in
accordance with generally accepted accounting principles.
Section 4.09. Leases. Prior to the closing, OIL will furnish E&M with true
and complete list and description of all leases of real property and equipment
by and between OIL and the lessees. Each of said leases are valid and
enforceable in accordance with its terms.
Section 4.10. Minutes Book. The records of meetings and other corporate
actions of Shareholder and the Board of Directors (including any committees of
the Board) of Shareholder and OIL which are contained in the Minute books of
Shareholder and OIL contain complete and accurate records of the matters
reflected in such minutes.
Section 4.11. Litigation; Claims. OIL is not a party, and there are not any
claims, actions, suits, investigations or proceedings ending or threatened
against OIL or its
51
<PAGE> 7
business, at law or in equity, or before or by any governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign,
which if determined adversely would have a material effect on the business or
financial condition of OIL or the ability of OIL to carry on its business. The
consummation of the transactions herein contemplated will not conflict with or
result in the breach or violation of any judgment, order, writ, injunction or
decree of any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign.
Section 4.12. Taxes and Reports. Prior to the Closing Date, OIL (i) will
have fixed all tax returns required to be filed by any jurisdiction, domestic or
foreign, to which it is or has been subject, (ii) has either paid in full all
taxes due and taxes claimed to be due by each jurisdiction, and any interest and
penalties with respect thereto, and (iii) has adequately reflected as
liabilities on its books, all taxes that have accrued for any period to and
including the Closing Date.
Section 4.13. Compliance with Laws and Regulations. To the best of their
knowledge, OIL and Shareholder have complied with, and are not in violation of
any federal, state, local or foreign statute, law, rule or regulation with
respect to the conduct of OIL's businesses, which violation might have a
material adverse effect on the business, financial condition or earnings of OIL.
Section 4.14. Finders. OIL is not obligated, absolutely or contingently, to
any person for financial advice, a finder's fee, brokerage commission, or other
similar payment in connection with the transactions contemplated by this
Agreement.
Section 4.15. Nature of Representations. OIL has taken reasonable care to
ensure that disclosures and facts are true and accurate and that there are no
other material facts, the omission of which would make misleading any statement
herein. Further, no representation, warranty or agreement made by OIL and
Shareholder in this Agreement or any of the Schedules or any other Exhibits
hereto and no statement made in the Schedules or any such Exhibit, list,
certificate or schedule or other instrument or disclosure furnished by them in
connection with the transactions herein contemplated contains, or will contain,
any untrue statement of a material fact necessary to make any statement,
representation, warranty or agreement not misleading.
ARTICLE 5
TERMS AND CONDITIONS AND MODE OF CARRYING INTO EFFECT
Section 5.01. Capital Structure. The surviving corporation shall have one
class of shares, namely, 25,000,000 shares of common stock with a par value of
$.001 each. The Memorandum of Association and By-Laws of OIL, and each of them,
shall be the governing documents for the surviving corporation.
Section 5.02. Interim Conduct of Business; Limitations.
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<PAGE> 8
(a) Except as limited herein, pending consummation of the merger, each of
the constituent corporations will carry on its business in substantially the
same manner as heretofore and will use its best efforts to maintain its business
organization intact, to retain its present employees, and to maintain its
relationships with suppliers and other having business relationships with it.
(b) Except with the prior consent in writing of OIL, pending consummation
of the merger, E&M shall not:
(i) Declare or pay any dividend or make any other distribution
on its shares.
(ii) Create or issue any indebtedness for borrowed money.
(iii) Enter into any transaction other than those involved in carrying
on its business in the usual manner.
Section 5.03. Submission to Shareholders and Filings.
(a) This Agreement shall be submitted separately to the shareholders of
the constituent corporations in any manner provided by the laws of the State of
Nevada and the laws of Bermuda for approval.
(b) Upon approval of this Agreement by the shareholders of the respective
constituent corporations, provided (i) all required governmental approvals,
permissions, authorizations shall have been obtained; (ii) no governmental
action affecting the merger shall have been taken or shall be threatened, and
(iii) all conditions precedent to such filing shall have been satisfied, OIL
shall promptly file this Agreement in the office of the Secretary of State of
Nevada and as required under the laws of Bermuda.
Section 5.04. Expenses.
(a) If the merger is consummated, the surviving corporation shall pay all
costs and expenses of the merger.
(b) If the merger is not consummated, each party thereto shall pay its own
costs and expenses incident to the proposed merger.
Section 5.05. Further Assignments and Assurances. If at any time the
surviving corporation shall consider or be advised that any further assignments
or assurances in law are necessary to vest or to perfect or to confirm of record
in the surviving corporation the title to any property or rights of E&M, or
otherwise carry out the provisions hereof, the proper officers and directors of
E&M, as of the effective date of the merger, shall execute and deliver all
proper deeds, assignments, confirmations, and assurances in law, and do
53
<PAGE> 9
all acts proper to vest, perfect, and confirm title to such property or rights
in the surviving corporation, and otherwise carry out the provisions hereof.
ARTICLE 6
MANNER AND BASIS OF CONVERTING SHARES
Section 6.01. Manner. The holders of shares of E&M shall surrender their
shares to the Secretary of the surviving corporation promptly after this
Agreement shall become effective, in exchange for shares of the surviving
corporation to which they are entitled.
Section 6.02. Basis. The shareholders of E&M shall be entitled to receive
not to exceed 52,790 shares of common stock of the surviving corporation, each
of $.001 par value, being five (5%) percent of the total outstanding of the
surviving corporation, to be distributed on the basis of one (1) share, each of
$.001 par value, for each 35.233946 shares of common stock of E&M, each of $.001
par value, now held by them. Subject to Section 1.01(i) and notwithstanding
anything contained herein to the contrary, the number of shares to be
distributed shall not exceed said five (5%) percent referred to herein.
Section 6.03. Shares of Survivor. The presently outstanding 1,003,002
shares of common stock of OIL, each of $.001 par value, shall remain outstanding
as common shares, each of $.001 par value, of the surviving corporation.
ARTICLE 7
DIRECTORS AND OFFICERS
Section 7.01. Directors and Officers of Survivor
(a) The present Board of Directors of OIL shall continue to serve as the
Board of Directors of the surviving corporation until the next annual meeting or
until such time as their successors have been elected and qualified.
(b) If a vacancy shall exist on the Board of Directors of the surviving
corporation on the effective date of the merger, such vacancy may be filled by
the Board of Directors as provided in the By-laws of the surviving corporation.
(c) All persons who at the effective date of the merger shall be executive
or administrative officers of OIL, shall remain as officers of the surviving
corporation until the Board of Directors of the surviving corporation shall
otherwise determine. The Board of Directors of the surviving corporation may
elect or appoint such additional officers as it may determine.
54
<PAGE> 10
ARTICLE 8
TERMINATION
Section 8.01. Circumstances. This Agreement may be terminated and the
merger herein provided or may be abandoned at any time prior to the effective
date of the merger, whether before or after shareholder approval:
(a) By mutual consent of the Board of Directors of the constituent
corporations.
(b) At the election of the Board of Directors of either constituent
corporation if:
(i) The number of shareholders of either constituent
corporation, or of both, dissenting from the merger shall be so large
as to make the merger, in the opinion of either Board of Directors,
inadvisable or undesirable.
(ii) Any material litigation or proceeding shall be instituted or
threatened against either of the constituent corporations, or any of its
assets, which, in the opinion of either Board of Directors, renders the
merger inadvisable or undesirable.
(iii) Any legislation shall be enacted which, in the opinion of either
Board of Directors, renders the merger inadvisable or undesirable.
(iv) Between the date of this Agreement and the effective date of the
merger, there shall have been, in the opinion of either Board of Directors,
any materially adverse change in the business or condition, financial or
otherwise, of either constituent corporation.
(v) The NASD Regulation, Inc. shall have disapproved the continued
trading of the stock of the survivor corporation in the OTC Bulletin Board
System.
(b) At the election of the Board of Directors of OIL, if, without the
prior consent in writing of OIL, E&M shall have:
(i) Created or issued any indebtedness for borrowed money.
55
<PAGE> 11
(ii) Entered into any transaction other than those involved in
carrying on its business in the usual manner.
Section 8.02. Notice of the Liability on Termination. In the event an
election is made to terminate this Agreement and abandon the merger provided for
herein:
(a) The President of any Vice-President of the constituent corporation
whose Board of Directors has made such election shall give written notice
thereof to the other constituent corporation.
(b) Upon the giving of notice as provided in subsection (a), this
Agreement shall terminate and the proposed merger be abandoned and, except for
payment of its own costs and expenses incident to this Agreement, there shall be
no liability on the part of either constituent corporation as a result of such
termination and abandonment.
ARTICLE 9
INTERPRETATION AND ENFORCEMENT
Section 9.01. Notices. Any notice or other communication required or
permitted hereunder shall be properly given when deposited in the United States
mail for transmittal by certified or registered mail, postage prepaid, or when
deposited with a public telegraph company for transmittal, charged prepaid,
addressed:
(a) In the case of E&M, to Kelly Ryan, or to such other person or address
as E&M may from time to time furnish to OIL.
(b) In the case of OIL, to Eric F. Kohn, or to such other person or
address as OIL may from time to time furnish to E&M.
Section 9.02. Entire Agreement; Counterparts. The instrument and the
exhibits hereto contain the entire Agreement between the parties with respect to
the transaction contemplated hereby. It may be executed in any number of
counterparts, each of which shall be deemed an original, but such counterparts
together constitute only one and the same instrument.
Section 9.03. Controlling Law. The validity, interpretation, and
performance of this Agreement shall be controlled by and construed under the
laws of Bermuda which this Agreement is being executed.
Executed on 8 September 1998, at Hamilton, Bermuda.
E & M MANAGEMENT INC.
By: /s/ Kelly J. Ryan
--------------------------
Kelly J. Ryan
Secretary
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OMNINET INTERNATIONAL LTD.
By: /s/ (illegible signature)
--------------------------
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Exhibit 3.3
AGREEMENT
THIS AGREEMENT DATED AS OF MAY 26 , 1999 BY AND AMONG:
OMNINET INTERNATIONAL LIMITED, a
corporation incorporated
pursuant to the laws of Bermuda
and having its Registered Office
at Richmond House, 5th Floor, 12
Par-la-Ville Road, Hamilton, HM
11, Bermuda.
(hereinafter referred to as
"Omninet")
OF THE FIRST PART
-and-
COLLOQUIUM LIMITED, incorporated
under the Companies Act 1985 in
Scotland (Company Number 142248)
and having its registered office
at 101 Abercorn Street, Paisley
PA3 4AT, Scotland.
(hereinafter referred to as
"Colloquium")
OF THE SECOND PART
-and-
MR. BRIAN MCMILLAN, an
individual who is resident at 7
Steeple Square, Kilbarchan, PA10
2JD, Scotland.
(hereinafter referred to as
"McMillan")
OF THE THIRD PART
-and-
MR. ERIC KOHN, an individual who
is resident at Carabot CH-1213,
Onex/Geneva, Switzerland
(hereinafter referred to as
"Kohn")
OF THE FOURTH PART
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WHEREAS McMillan is a shareholder of Omninet and a Director of Colloquium a
wholly owned subsidiary of Omninet;
AND WHEREAS Omninet and Colloquium, and Omninet and McMillan wish to severe
their relationship through a share exchange as set out in more detail herein;
AND WHEREAS Kohn is a shareholder of Omninet and a director of Omninet ;
AND WHEREAS the parties hereto wish to provide for the mutual release of
each other on the terms set out herein;
NOW THEREFORE in consideration of the mutual covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I - DEFINITIONS
1.1 As used in this agreement capitalized words shall have the meaning given
thereto herein.
1.2 Words importing the masculine gender herein include the feminine and vice
versa.
1.3 Words importing a person include an individual, partnership, company or
association or body of such persons whether corporate or unincorporate, trustee,
executor, administrator and legal representative.
ARTICLE II - SHARE EXCHANGE
2.1 Each of McMillan and Omninet hereby agree to the following share exchange:
(a) Each shareholder of Omninet will be offered a choice by the board of
directors of Omninet, they will either retain their shares in Omninet
(without Colloquium) or they will be able to exchange their shares in
Omninet for shares in Colloquium.
(b) Those shareholders who choose to exchange their Omninet shares will
receive a pro rata number of the total ordinary shares in Colloquium
held by Omninet equal to their pro rata share of the total number of
Omninet shares to be exchanged.
(c) For each Omninet share that is exchanged the sum of U.S.$0.05 will be
transferred by Omninet to Colloquium.
(d) Each shareholder of Omninet must either retain all of their shares in
Omninet or they must exchange all of their shares for shares in
Colloquium. Shareholders of Omninet will not be given the option of
exchanging only a portion of their shares.
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(e) After the share exchange Omninet will retain no shares in Colloquium
and those shareholders of Omninet who agreed to exchange shares will
retain no shares in Omninet
(f) McMillan irrevocably agrees to exchange all of his shares in Omninet
for his pro rata share of shares in Colloquium.
(g) Kohn irrevocably agrees not to exchange all of his shares in Omninet
for his pro rata share of shares in Colloquium.
2.2 Each of Omninet, its officers and directors, and Colloquium, its officers
and directors agree to use their reasonable efforts to obtain the consent
of the shareholders of Omninet to this agreement.
2.3 The share exchange will be presented to the Shareholders of Omninet by the
Board of Directors of Omninet within 7 days of completion of this
agreement.
2.4 The Board of Directors of Omninet will submit to the shareholdersa written
resolution in lieu of meeting to resolve the share exchange within 14 days
of completion of this agreement.
ARTICLE III - AUDIT OF COLLOQUIUM
3.1 Colloquium will be pay the audit costs of Colloquium for the year ended
February 28, 1999. The parties hereto agree that the audit will be
performed by Moore Stephens, Chartered Accountants of London, England. Each
of Colloquium, its officers and directors and Omninet its officers and
directors agree to cooperate with the auditors to ensure that the audit is
completed in a timely manner and at the best cost available to Colloquium.
3.2 Omninet hereby agrees to pay the outstanding invoice to Omninet for Pound
Sterling 18,000 from by Moore Stephens, Chartered Accountants of London,
England relating to the work carried out prior to the Omninet regulation D
offering.
ARTICLE IV - MUTUAL RELEASE
4.1 McMillan hereby releases each of Omninet, its officers, directors and
shareholders (in their personal capacity as well) from any claim, action,
liability or proceeding now or in the future in respect of anything done, said
or not done or said prior to the date hereof. In addition Mr. McMillan agrees
that he will take no actions in respect of any objection he has made to any
meeting of the members of Omninet or any proceedings of the board of Omninet.
4.2 Kohn hereby releases each of Colloquium, its officers, directors and
shareholders (in their personal capacity as well) from any claim, action,
liability or proceeding now or in the future in respect of anything done, said
or not done or said prior to the date hereof.
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4.3 Omninet, its officers and directors hereby releases McMillan and Colloquium
its officers, directors and shareholders (in their personal capacities as well)
from any claim, action, liability or proceeding now or in the future in respect
of anything done, said or not done or said prior to the date hereof.
4.3 Colloquium, its officers and directors hereby release Omninet, its
officers, directors and shareholders (in their personal capacities as well) from
any claim, action, liability or proceeding now or in the future in respect of
anything done, said or not done or said prior to the date hereof.
4.4 Each of Kohn, McMillan, Colloquium and Omninet and their respective
officers and directors agrees to refrain from making any allegations in the
future regarding the conduct of any other prior to the date hereof.
4.5 Each of McMillan, Kohn, Colloquium and Omninet and their respective
officers and directors hereby withdraws any previous statements made in regard
to the improporiety of any actions taken by the others in the past.
ARTICLE V - LIABILITIES
5.1 Omninet and its officers and directors hereby confirm that it has not
committed Colloquium to any liabilities which are not known to McMillan or the
directors of Colloquium.
5.2 McMillan hereby confirms that he has not committed Omninet to any
liabilities which are not known to Omninet's officers and directors.
5.3 Kohn hereby confirms that he has not committed Colloquium to any
liabilities which are not known to Colloquium's officers and directors.
5.3 Colloquium and its directors and officers hereby confirm that they have not
committed Omninet to any liabilities which are not known to Omninet's officers
and directors.
ARTICLE VI - MISCELLANEOUS
6.1 This Agreement is subject to approval by the shareholders of Omninet. This
Agreement shall be binding upon the parties from the date hereof. If this
Agreement is approved by the shareholders of Omninet this Agreement shall remain
binding upon the parties hereto. If this agreement is not approved by the
shareholders of Omninet this agreement shall become null and void.
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6.2 This agreement shall be governed by and construed in accordance with the
laws of the Islands of Bermuda. The Courts of Bermuda shall have exclusive
jurisdiction over any dispute pursuant to this agreement.
6.3 To the extent any provision of this agreement shall be determined to be
invalid or unenforceable such provision shall be deleted from this agreement and
the validity or enforceability of the remainder of this agreement shall be
unaffected.
6.4 This agreement evidences the entire agreement between the parties hereto.
This agreement may only be amended by a written document executed by all parties
hereto.
6.5 This agreement shall be binding upon and shall enure to the benefit of the
parties hereto and their respective successors and permitted assigns.
6.6 Each party hereto shall be responsible for their own legal costs in respect
of this agreement and the completion of the transactions contemplated hereby.
6.7 This agreement may be signed in any number of counterparts and all such
counterparts taken together shall be one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this agreement as of the day
and year first written above.
OMNINET INTERNATIONAL LIMITED
PER: /s/ (illegible signature)
---------------------------
COLLOQUIUM LIMITED
PER: /s/ (illegible signature)
---------------------------
/s/ (illegible signature) /s/ Brian McMillan
- - ------------------------- --------------------------------
WITNESS MR. BRIAN MCMILLAN
/s/ (illegible signature) /s/ Eric Kohn
- - ------------------------- --------------------------------
WITNESS MR. ERIC KOHN
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Exhibit 3.4
MUTUAL TERMINATION AGREEMENT AND RELEASE
This Mutual Termination Agreement and Release (this "Agreement") is made
and entered into as of October 27th, 1999, by and between OMNINET INTERNATIONAL
LTD. ("OMNINET"), OMNINET INTERNATIONAL, INC. (formerly known as E & M
MANAGEMENT, INC.) ("E&M"), Eric Kohn and Ronald J. Stauber.
WHEREAS, OMNINET and E&M entered into a certain Plan and Agreement of
Merger - Reorganization ("Merger Agreement") dated September 8, 1999 whereby,
subject to numerous terms and conditions, OMNINET and E&M were to be merged; and
WHEREAS, OMNINET and E&M now desire to terminate the Merger Agreement.
NOW, THEREFORE, in consideration of the above and the mutual covenants and
agreements hereafter set forth, the Parties agree as follows:
1. The Merger Agreement is hereby terminated by mutual consent of OMNINET
and E&M as provided in Section 8.01(a) of the Merger Agreement with the effect
set forth in Section 8.02(b) thereof.
2. Subject to the conditions precedent listed in Section 4 below, OMNINET
and Eric Kohn, for themselves, their successors and assigns, do hereby release
and forever discharge E&M for itself, its successors and assigns, from any and
all causes of action, claims, demands, suits, damages, sums of money and/or
judgments arising at any time which might have been or may be asserted against
E&M relating in any manner to the Merger Agreement other than in connection with
this Agreement.
3. Subject to the conditions precedent listed in Section 4 below, OMNINET
and Eric Kohn, for themselves, their successors and assigns, do hereby release
and forever discharge Ronald J. Stauber for himself, his successors and assigns,
from any and all causes of action, claims, demands, suits, damages, sums of
money and/or judgments arising at any time which might have been or may be
asserted against Mr. Stauber relating in any manner to the Merger Agreement
other than in connection with this Agreement.
4. The following are conditions precedent to the release set forth in
Sections 2 and 3 above:
(a) OMNINET understands that E&M changed its corporate name to
Omninet International, Inc. in anticipation of closing the transactions
contemplated by the
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Merger Agreement. E&M shall change its corporate name back to "E & M MANAGEMENT,
INC.," or to some other name not including the word "omninet," and shall refrain
hereinafter from using any corporate name or alias including the word "omninet"
in any form without OMNINET's prior written consent.
(b) Mr. Stauber shall return to OMNINET $15,000 in funds advanced to
Mr. Stauber and shall deliver a check in that amount to OMNINET'S counsel at the
address provided below.
5. Mr. Stauber and E&M, for themselves, their successors and assigns,
shall hereby release and forever discharge OMNINET and Mr. Kohn for themselves,
their successors and assigns, from any and all causes of action, claims,
demands, suits, damages, sums of money and/or judgments arising at any time
which might have been or may be asserted against OMNINET or Mr. Kohn relating in
any manner to the Merger Agreement other than in connection with this Agreement.
6. Notice. All notices, requests, demands and other communications
required or permitted hereunder must be in writing and shall be effective two
(2) business days after being delivered to an established over-night delivery
service, with costs for earliest delivery prepaid, or sent by facsimile
addressed or faxed in either case to the following addresses or fax numbers (or
at such other addresses as will be given in writing by the parties to one
another pursuant hereto):
To OMNINET: Omninet International Ltd.
c/o Marlin Horst Milligan-Whyte & Smith
Richmond House - 5th Floor
12 Par-la-Ville Road
Hamilton HM 11, Bermuda
Telephone: (441) 295-4294
Fax" (441) 295-1348
with copy to: Michael H. Chanin, Esquire
Powell, Goldstein, Frazer & Murphy LLP
1001 Pennsylvania Avenue, N.W., Suite 600
Washington, D.C. 20004
Telephone: (202) 624-7235
Fax: (202) 624-7222
or if to E&M: E & M Management, Inc.
Attention: Emily Tzortzatos
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8033 Sunset Boulevard, Suite 396
Los Angeles, CA 90046
Telephone:
Fax:
or if to Eric Kohn: Eric Kohn
Chemin de Carabot, 10a
CH-1213 Onex, Geneva
Switzerland
Telephone: (011)41-22-798-4660
Fax: (011) 41-22-798-9448
or if to Ronald J. Stauber: Ronald J. Stauber
1840 Century Park East
Eighth Floor
Los Angeles, CA 90067
Telephone: (310) 556-0080
Fax: (310) 556-3687
7. Miscellaneous.
(a) Entire Agreement/Amendment. This Agreement embodies the entire
agreement of the parties relating to the subject matter hereof and supersedes
all oral agreements, and to the extent inconsistent with the terms hereof, all
other written agreements. This Agreement may not be modified, amended,
supplemented, or terminated except by a written instrument executed by all
parties hereto.
(b) Severability. Each of the covenants and agreements herein above
contained will be deemed separate, severable and independent covenants, and in
the event that any covenant will be declared invalid by any court of competent
jurisdiction, such invalidity will not in any manner affect or impair the
validity or enforceability of any other part or provision of such covenant or of
any other covenant contained herein.
(c) Captions and Section Headings. Captions and section headings used
herein are for convenience only and are not a part of this Agreement and will
not be used in construing it.
(d) Further Assurances. Each of the parties to this Agreement agrees
to execute such other and further documents, as may from time to time be
reasonably necessary, to carry out the purposes and intentions of this
Agreement.
(e) Choice of Law. The laws of the State of Nevada (excluding,
however, conflict of law principles) will govern and be applied to determine all
issues relating to this Agreement and the rights and obligations of the parties
hereto, including
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the validity, construction, interpretation, and enforceability of this
Agreement and its various provisions and the consequences and legal effect of
all transactions and events which resulted in the execution of this Agreement
or which occurred or were to occur as a direct or indirect result of this
Agreement having been executed.
(f) Expenses. Except as expressly set forth to the contrary in this
Agreement, each party will bear its respective expenses incurred in connection
with the preparation, execution and performance of this Agreement, including all
fees and expenses of agents, representatives, counsel and accountants.
(g) Fax Execution/Counterparts. This Agreement may be executed by
facsimile signature and by counterpart, which shall be deemed an original and,
when taken together, shall be deemed one and the same Agreement.
IN WITNESS WHEREOF, the Parties have executed this Mutual Termination
Agreement and Release:
OMNINET INTERNATIONAL LTD.
By: /s/ Eric Kohn
-----------------------------------
Name:
Title:
E & M MANAGEMENT, INC.
By: /s/ (illegible signature)
------------------------------------
Name:
Title:
/s/ Ron Stauber
------------------------------------
Ronald J. Stauber
/s/ Eric Kohn
------------------------------------
Eric Kohn
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