SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
ORIGIN INVESTMENT GROUP, INC.
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(Exact name of registrant as specified in charter)
MARYLAND 36-4286069
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
980 NORTH MICHIGAN AVENUE, STE. 1400
CHICAGO, ILLINOIS 60611
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 988-4836
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Securities to be registered pursuant to 12(b) of the Act: None
Securities to be registered pursuant to 12(g) of the Act:
Common Stock, $.001 par value
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(Title of Class)
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. BUSINESS
(a) General Development of Business
GENERAL. Origin Investment, Inc. ("OIG", the "Company", "Origin Investment"
or "Registrant"), a Maryland corporation, is a non-diversified closed-end
management investment company which has filed a notice of its election to be
regulated as a business development company ("BDC") under the Investment Company
Act of 1940 ("1940 Act"). The Company was incorporated on April 6, 1999. The
Company has not conducted any operations to date. Its principal office is
located at 980 North Michigan Avenue, Suite 1400, Chicago, Illinois, 60611 and
its telephone number is (312)988-4836. The Company has been organized to provide
investors with the opportunity to participate with a modest amount in venture
capital investments that are generally not available to the public and that
typically require substantially larger financial commitments. In addition, the
Company will provide professional management and administration that might
otherwise be unavailable to investors if they were to engage directly in venture
capital investing. The Company has recently elected to be regulated as a
Business Development Company ("BDC") under the Investment Company Act, and will
operate as a non-diversified company as that term is defined in the Investment
Company Act.
(b) Financial Information About Industry Segments.
Not applicable; The Company has not commenced business and has no reserves.
The Registrant has not conducted any business to date other than organizational
activities including legal work associated with filing for the registration of
its securities for sale to the public. The Company intends on raising initial
working capital based on a Regulation E exempt public offering currently being
conducted. The Registrant intends to raise $200,000 via a direct public offering
of 2,000,000 of its common stock shares offered for a purchase price of $0.10
per share. The proceeds from this initial offering will be used for working
capital and to identify eligible portfolio companies in which Registrant may
invest. Registrant intends to immediately after the completion of its initial
offering, raise additional capital via Regulation E whereby such additional
funds will be utilized for purchasing investment interests in eligible portfolio
companies. At the time of filing this Registration Statement, there is no
assurance that Registrant: (a) will be successful in raising funds from this
initial offering; (b) be able to successfully identify eligible portfolio
companies which meet its established investment criteria and investment
guidelines; (c) and in the event that Registrant is able to raise sufficient
working capital to operate the business and is successful in identifying,
evaluating and approving for possible investment one or more eligible portfolio
companies, that it will be successful in raising additional capital necessary to
enter into a financing arrangement whereby Registrant is able to make an
investment in such identified elgible portfolio companies.
Registrant intends to, for the remainder of its current fiscal year, locate
and investigate businesses within the industry sectors Registrant has identified
that are in need of growth capital and that qualify for investment based on
Registrant's investment criteria.
USE OF PROCEEDS. The proceeds of its initial offering will be applied in
the estimated amounts set forth below.
Amount Percent
Gross Offering Proceeds $200,000.00 100.00%
First-year Operating Costs(1) $200,000.00 100.00%
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Amount Available for Investment,
Subsequent Years' Operating Costs
and Distribution Expenses $0.00 0.0%
(1) The following table sets forth the estimated First Year Operating Costs
(other than broker commissions and/or finders fees) which are anticipated to be
incurred by the Company during its first 12 months of operations.
NASD Filing and Listing Fees $59,440.00
Blue Sky Registration Costs
Legal/Accounting Fees for
registration of secondary offering $58,000.00
Office Rent/Telephones/Utilities $32,560.00
Working Capital $50,000.00
Total $200,000.00
The Company may also invest its funds in commercial paper (rated or unrated) and
other short-term securities. Cash, cash items, securities issued or guaranteed
by the United States Treasury or United States government agencies and high
quality debt securities (commercial paper rated in the two highest rating
categories by Moody's Investor Services, Inc. or Standard & Poor's Corporation
or, if not rated, issued by a company having an outstanding debt issue so rated
or corporate bonds rated at least AA) with maturities of less than one year at
the time of investment will qualify for determining whether the Company has 70%
of its total assets invested in types of assets specified in Section 55 of the
Investment Company Act. See "Investment Company Act Regulation."
(c) Narrative Description of Business.
GENERAL. The Company is in the business of investing in emerging companies
that are in the growth stage of development by providing investment capital and
actively providing managerial assistance and otherwise helping to build those
companies. Initially, OIG will seek to invest in companies engaged in
information technology businesses, broadly defined to include those that
acquire, warehouse, process and disseminate information and related technology
that is developed to improve business and personal productivity. The Company has
identified the following industries that have, in management's opinion, strong
growth forecasts in the upcoming several years: manufacture and distribution of
medical equipment and devices; manufacture, warehousing and distribution of
computer supplies; the manufacturing, procurement and configuration of personal
computers including network integration, imaging equipment, software
telecommunications technologies; development and manufacture of business
application software and related products and services; internet electronic
commerce development and consulting services, website development and services,
the manufacture of internet related software and products and internet marketing
and consulting services. Origin Investment will invest in those companies of
those industries described above as well as in other industries that are seeking
to expand their market position and which are at a stage of development that
would benefit from Origin Investment's business development and management
support, financing, and market knowledge. Origin Investment will only invest in
such companies after it has successfully raised additional capital in addition
to its current proposed initial offering which will be used for working capital
for its first year of operations, the payment of regulatory costs associated
with becoming a public reporting company as well as blue sky registration via
notificatio fees associated with its initial distribution of securities.
The Company has not yet commenced operations and is registering its shares
of common stock pursuant to Section 12(g) of the Securities Exchange Act of 1934
("Exchange Act"), in compliance with the requirement of Section 54(a)(2) of the
Investment Company Act of 1940 ("1940 Act"). As a business development company
that is reporting pursuant to Section 13 and 15(d) of the Securities and
Exchange Act, and has, or is about to have, a market for secondary trading of
its common shares, management of the Registrant believes that an investment in
its securities will be much more attractive to investors. However, because the
Registrant has not engaged in any operations to date or has identified any
eligible portfolio companies in which it may invest at the time of this
registration statement, an investment in the securities of the Registrant is
replete with the risks associated with any other start up stage company. See
risk factors delineated below.
DEFINITION AND NATURE OF BUSINESS DEVELOPMENT COMPANIES
The 1940 Act defines a business development company ("BDC") as a closed end
management investment company that provides small businesses that qualify as an
"eligible portfolio company" with investment capital and also significant
managerial assistance. A BDC is required under the 1940 Act to invest at least
70% of its total assets in qualifying assets ("Qualifying Assets") consisting of
(a) "eligible portfolio companies" as defined in the 1940 Act and (b) certain
other assets including cash and cash equivalents.
An eligible portfolio company generally is a United States company that is
not an investment company and that (i) does not have a class of securities
registered on an exchange or included in the Federal Reserve Board's
over-the-counter margin list; (ii) is actively controlled by a BDC and has an
affiliate of a BDC on its board of directors; or (iii) meets such other criteria
as may be established by the SEC. Control under the 1940 Act is presumed to
exist where a BDC owns more than 25% of the outstanding voting securities of the
eligible portfolio company.
An example of an eligible portfolio company is a new start up company or a
privately owned company that has not yet gone "public" by selling its shares in
the open market and has not applied for having its shares listed on a nationally
recognized exchange such as the NYSE (New York Stock Exchange), the American
Stock Exchange (AMEX), or the National Association of Securities Dealers'
Automated Quotation System (NASDAQ), National Market System. An eligible
portfolio company can also be one which is subject to filing, has filed, or has
recently emerged from reorganization protection under Chapter 11 of the
Bankruptcy Act.
As a BDC, the Company must invest at least 70% of its total assets in
qualifying assets ("Qualifying Assets") consisting of (a) "eligible portfolio
companies" as defined in the 1940 Act ("Eligible Portfolio Companies") and (b)
certain other assets including cash and cash equivalents. An eligible portfolio
company generally is a United States company that is not an investment company
and that (i) does not have a class of securities registered on an exchange or
included in the Federal Reserve Board's over-the-counter margin list; (ii) is
actively controlled by a BDC and has an affiliate of a BDC on its board of
directors; or (iii) meets such other criteria as may be established by the SEC.
A BDC may invest the remaining 30% of its total assets in non-Qualifying Assets,
including companies that are not Eligible Portfolio Companies. The foregoing
percentages will be determined, in the case of financings in which the Company
commits to provide financing prior to funding the commitment, by the amount of
the Company's total assets represented by the value of the maximum amount of
securities to be issued by the borrower or lessee to the Company pursuant to
such commitment.
INVESTMENT OBJECTIVES
CAPITAL APPRECIATION. The Company's investment objective is to obtain long
term capital appreciation from investments in emerging and established companies
that the Managers believe offer special opportunities for growth. The Company
plans on accomplishing this by: (1) investing in and providing strategic,
managerial, and operational support to emerging growth companies primarily
engaged in the information technology and in other industries and businesses
that the Company's management determines are likely to grow significantly in the
next five to seven years.
INVESTMENT OBJECTIVES MAY NOT BE CHANGED OR MODIFIED WITHOUT A SHARE HOLDER
VOTE. The following investment objectives of the Company cannot be changed
without a vote of the holders of a majority of the voting securities. However,
the manner in which the company intends to achieve its investment objectives is
within the discretion of the Company's Board of Directors and management and may
be changed at any time by Board action.
The goal of OIG is to identify and invest in prospective portfolio
companies whose equity has the potential for significant appreciation, and to
minimize portfolio losses by careful selection of such portfolio companies and
active participation with its portfolio companies.
OIG will invest in those companies that are capable of being market leaders
and which are at a stage of development that would benefit from OIG's business
development and management support, financing, and market knowledge. The
Company, however, will not be limited to investing in portfolio companies that
are exclusively in information technology industries.
The Company will realize value for its shareholders by selling the equity
securities of its Portfolio Companies for a profit, either to private investors
or by taking the Portfolio Companies public (generally through an offer to OIG's
shareholders of rights to purchase stock of the portfolio company in its initial
public offering). Value will also be realized through continued ownership in the
Portfolio Companies, consulting fees received in connection with assisting in
the continued operations of the emerging companies and through the sale of a
partial or the complete ownership interest in its Portfolio Companies. There can
be no assurance, however, that the Company will be successful in selling any
equity securities of its Portfolio Companies for a profit at any time in the
future.
INVESTMENT POLICIES OF THE REGISTRANT
For purposes of these investment policies and unless otherwise specified,
references to the percentage of the Company's total assets "invested" in
securities of a company will be deemed to refer, in the case of financings in
which the Company commits to provide financing prior to funding the commitment,
to the amount of the Company's total assets represented by the value of the
maximum amount of securities to be issued by the eligible portfolio company to
OIG pursuant to such commitment; the Company will not be required to divest
securities in its portfolio or decline to fund an existing commitment because of
a subsequent change in the value of securities the Company has previously
acquired or committed to purchase. UNLESS OTHERWISE STATED HEREIN, OR PROHIBITED
BY THE INVESTMENT COMPANY ACT OF 1940, ALL OF THE FOLLOWING INVESTMENT POLICIES
ARE SUBJECT TO CHANGE WITHOUT THE PRIOR VOTE OF THE HOLDERS OF A MAJORITY OF THE
VOTING SECURITIES OF OIG. SEE RISK FACTORS.
INVESTMENT GUIDELINES. In selecting investments for the Company's initial
portfolio, the Company will endeavor to meet the following investment
guidelines, as established by the Company's initial board of directors. The
Company may, however, make investments that do not conform to one or more of
these guidelines when deemed appropriate by the Company. Such investments might
be made if the Company believes that a failure to conform in one area is offset
by exceptional strength in another or is compensated for by a higher yield,
favorable warrant issuance or other attractive terms or features.
TYPES OF INVESTMENTS: OIG will only seek to acquire controlling interests
or the rights to acquire a controlling interest (where a "controlling interest"
is defined as greater than twenty five percent of the issued capital stock) in
each of its eligible portfolio companies in exchange for cash and/or OIG common
stock or other asset(s) held by OIG. Thus, OIG will not invest in any portfolio
company in which it cannot acquire an immediate controlling interest or secure
the rights to acquire a controlling interests in such portfolio company within a
period of twelve months from the date of the initial investment. In addition,
the Company will seek to diversify its portfolio based on the stage of
development of its eligible portfolio companies by limiting the Company's
aggregate investment in securities of companies that, in the opinion of the
Board, are in the start-up stage to a maximum of twenty five percent of the
Company's total assets. Thus, upon the successful closing of subsequent
offerings, the Company's total assets are likely to be comprised of cash and/or
marketable securities. In such case, the aggregate investment the Company will
make towards start up stage companies will be twenty five percent of said
amount. Subject to subsequent successful offerings, the Company will seek to
invest the remainder of the Company's assets in securities of companies that, in
the opinion of the Company, are in the growth or mezzanine stage. Given the
nature of the current Offering, post closing of this offering, the Company will
not make any investments in companies that are in the seed capital stage. For
purpose of these investment guidelines, the stages of development are defined as
follows:
A) Seed capital companies represent the earliest stage of development.
These companies have raised relatively modest equity capital to prove
a concept and qualify for start-up capital. Their activities generally
are limited to product development, scientific and market research,
recruiting a management team and developing a business plan. These
companies likely do not have financial support from either venture
capitalists or larger companies making strategic investments.
B) Start-up stage companies are completing or have recently completed
product development and initial marketing, but have not sold their
products commercially. Generally such firms have made market studies,
assembled key management, developed a business plan and are ready to
commence operations.
C) Emerging growth stage companies have initiated or are about to
initiate full-scale operations and sales, but may not be showing a
profit.
D) Mezzanine stage companies are approaching or have attained break even
or profitability and are continuing to expand. An acquisition or
initial public offering may be imminent.
Classification of a company by stage of development necessarily involves a
subjective judgment by the Company, and it is possible that other investors or
market analysts would classify a company differently than the classification
used by the Company.
QUALITY OF INVESTMENT GUIDELINES. The Company intends to raise initially
$200,000.00 in this Offering and thereafter, in order to provide investment
capital to purchase interests in one or more eligible portfolio companies, will
raise an additional $4,800,000.00 at a higher stock price valuation than
currently being made in this Offering. By the close of this Offering, at least
90% of the Company's total assets will be used to pay for initial start up
expenses and working capital for a period not exceeding 12 months.
The Company will have no funds at the close of this offering to invest in
securities designed to meet its business purpose in accordance with Sections
2(a)(48) and 55(a)(1)-(3) of the Investment Company Act. Pursuant to a Second
Offering, the Company will seek to invest at least 75% of the Company's total
investment capital raised pursuant to this offering and all subsequent offerings
during the next 6 months in equity of emerging companies that meet the following
criteria:
A) The eligible portfolio company has a minimum capitalization of at
least $1,000,000.00;
B) The eligible portfolio company has at least six months available cash
to fund its operations and indications from other equity investors of
additional investment;
C) The eligible portfolio company's business plan contemplates
sales/revenues of at least $25 million within 5 years;
D) The eligible portfolio company is within an industry, that is in the
opinion of OIG's management, to be rapidly expanding or will
experience significant growth over the next several years;
E) All mezzanine and growth stage Portfolio Companies in which OIG will
invest will require a careful evaluation of their financial records,
including an evaluation of the following:
1) Audited financial statements and notes to the financial
statements including: Management discussion of operations and
liquidity; details regarding all forms of actual compensation of
management and affiliates by the entity; details regarding the
contractual rights of management and affiliates to compensation
by the entity; number of shares outstanding at the beginning of
the period and the end of the period and an explanation of the
difference, if any, and a detailed discussion of the entity's
rights and obligations under any joint ventures entered into
(whether before or after the offering) along with a full
discussion of any conflicts of interest management may have in
entering into such joint ventures on behalf of the entity.
2) Equipment list and appraisal of equipment;
3) Facilities, current product descriptions;
4) Current management resumes, employment contracts;
5) All material contracts (and amendments) currently in effect,
including, without limitation, leases, sales, purchase,
financing, distribution, franchise, intellectual property,
employment, insurance, employee benefit, and joint-venture
contracts; currently outstanding contractual offers by and to the
target company;
6) Correspondence with contracting parties regarding contract
interpretation, claims, or threats of contract litigation;
7) Documents relating to the target company's internal
determinations as to whether it can, or should, fulfill a
particular contract;
8) Documents relating to material acquisitions and divestitures for
the immediately preceding five years, particularly agreements
involving covenants by or in favor of the target company;
9) Certified copies of the company's Certificate or Articles of
Incorporation and all amendments thereto to date, as well as any
proposed amendments;
10) Certified copies of the company's Bylaws, as amended to date;
11) Minute books of the company, including minutes of the meetings of
the board of directors, any committee (whether of the board or
otherwise), and shareholders for the last five years to date;
12) The company's stock transfer or stock ledger books;
13) The form(s) of the company's stock certificates and the language
of all legends or specific terms appearing thereon;
14) All stock option, bonus, incentive, or pension plans, and any
other agreements to issue shares of the company or any of its
subsidiaries in the future;
15) All agreements relating to the beneficial ownership, voting
rights, or pledge of the company's common or preferred stock;
16) All agreements under which registration or preemptive rights are
granted to shareholders of the company;
17) All agreements, offering circulars, letters of intent, written
proposals, or memoranda of any oral proposals for the
disposition, acquisition, or distribution of any of the assets or
shares of the company;
18) List of all shareholders of the company, cross-checked against
the stock books and disclosing the status of ownership of each
(e.g., joint, in trust, minor);
19) An opinion from auditors regarding the fully paid and non
assessable character of the company's shares;
20) All shareholder correspondence with the company for the last
year;
INDEPENDENT APPRAISAL. Also, in investing in later stage companies and in
other cases which warrant such an evaluation, the Company will have a detailed
appraisal made of the company to be invested in by a business appraiser who is
certified by the American Society of Appraisers.
DIVERSIFICATION. As a BDC, OIG must invest at least 70% of its total assets
in Qualifying Assets consisting of eligible portfolio companies and certain
other assets including cash and cash equivalents. In order to receive favorable
pass-through tax treatment on its distributions to its shareholders, the Company
intends to diversify its pool of investments in such a manner so as to qualify
as a diversified closed end management investment company. However, because of
the limited size of this offering, the Company will likely be classified as a
"non-diversified" closed end investment company under the 40 Act. Until the
Company qualifies as a RIC "Registered Investment Company", it will not be
subject to the diversification requirements applicable to RICs under the
Internal Revenue Code and receive favorable pass through tax treatment on
distributions made out to its shareholders. Upon successful completion of
subsequent offerings made by the Company, OIG will seek to increase the
diversification of the Company's portfolio so as to make it possible to meet the
RIC diversification requirements, as described below. There can be no assurance,
however, that the Company will be able to meet those requirements.
To qualify as a RIC, the Company must meet the Registrant diversification
standards under the Internal Revenue Code that require that, at the close of
each quarter of the Company's taxable year, (i) not more than 25% of the market
value of its total assets is invested in the securities of a single Registrant,
and (ii) at least 50% of the market value of its total assets is represented by
cash, cash items, government securities, securities of other RICs and other
securities (with each investment in such other securities limited so that not
more than 5% of the market value of the Company's total assets is invested in
the securities of a single Registrant and the Company does not own more than 10%
of the outstanding voting securities of a single Registrant). For purposes of
the diversification requirements under the Internal Revenue Code, the percentage
of the Company's total assets "invested" in securities of a company will be
deemed to refer, in the case of financing in which the Company commits to
provide financing prior to funding the commitment, to the amount of the
Company's total assets represented by the value of the securities issued by the
eligible portfolio company to the Company at the time each portion of the
commitment is funded.
WARRANTS AND EQUITY SECURITIES. OIG will acquire warrants to purchase
equity securities and/or convertible preferred stock of the eligible portfolio
companies in connection with providing venture financing. The terms of the
warrants, including the expiration date, exercise price and terms of the equity
security for which the warrant may be exercised, will be negotiated individually
with each eligible portfolio company, and will likely be affected by the price
and terms of securities issued by the eligible portfolio company to other
venture capitalists and other holders. It is anticipated that most warrants will
be for a term of five to ten years, and will have an exercise price based upon
the price at which the eligible portfolio company most recently issued equity
securities or, if a new equity offering is imminent, will next issue equity
securities. The equity securities for which the warrant will be exercised
generally will be common stock (of which there may be one or more classes) or
convertible preferred stock. Substantially all the warrants and underlying
equity securities will be restricted securities under the 1933 Act at the time
of the issuance; the Company generally negotiates registration rights with the
borrower or lessee that may provide (i) "piggyback" registration rights, which
permit the Company under certain circumstances to include some or all of the
securities owned by it in a registration statement filed by the eligible
portfolio company, or (ii) in very rare circumstances, "demand" registration
rights permitting the Company under certain circumstances to require the
eligible portfolio company to register the securities under the 1933 Act (in
some cases at the Company's expense). The Company will generally negotiate "net
issuance" provisions in the warrants, which allow the Company to receive upon
exercise of the warrant without payment of any cash a net amount of shares
determined by the increase in the value of the Registrant's stock above the
exercise price states in the warrant.
OIG will make available significant managerial assistance through its
officers to certain companies whose securities are held in the Company's
portfolio but will not be obligated to do so. Although each warrant or preferred
stock purchase will contain customary and negotiated representations,
warranties, covenants and events of default to protect the Company, typically,
the Company will retain a seat on the Board of the eligible portfolio company,
retain covenants against subordination of its dividend and liquidation
preferences associated with its preferred shares, and secure, whenever possible
and practicable, its interest against land, equipment and other tangible assets
of the eligible portfolio company.
LEVERAGE. The Company intends to borrow money from and issue debt
securities to banks, insurance companies and other lenders to obtain additional
funds. Under the 1940 Act, the Company may not incur borrowings unless,
immediately after the borrowing is incurred, such borrowings would have "Asset
Coverage" of at least 200%. "Asset Coverage" means the ratio which the value of
the Company's total assets, less all liabilities not represented by (i) the
borrowings and (ii) any other liabilities constituting senior securities under
the 1940 Act, bears to the aggregate amount of such borrowings and senior
securities. The practical effect of this limitation is to limit the Company's
borrowings and other senior securities to 50% of its total assets less its
liabilities other than the borrowings and other senior securities. The 1940 Act
also requires that, if the Company borrows money, provision be made to prohibit
the declaration of any dividends or other distribution on the shares (other than
a dividend payable in shares), or the repurchase by the Company of shares, if,
after payment of such dividend or repurchase of shares, the Asset Coverage of
such borrowings would be below 200%. If the Company is unable to pay dividends
or distributions in the amounts required under the Internal Revenue Code, it
might not be able to qualify as a RIC or, if qualified, to continue to so
qualify. The use of leverage increases investment risk. Lenders are expected to
require that the Company pledge portfolio assets as collateral for loans. If the
Company is unable to service the borrowings, the Company may risk the loss of
such pledged assets. Lenders are also expected to require that the Company agree
to loan covenants limiting the Company's ability to incur additional debt or
otherwise limiting the Company's flexibility, the loan agreements may provide
for acceleration of the maturity of the indebtedness if certain financial tests
are not met.
TEMPORARY INVESTMENTS. Pending investment in venture financing transactions
and pending distributions, the Company will invest excess cash in (i) securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities;
(ii) repurchase agreements fully collateralized by U.S. government securities;
(iii) short-term high-quality debt instruments of U.S. corporations; and (iv)
pooled investment Funds whose investments are restricted to those described
above. All such investments will mature in one year or less. The U.S. government
securities in which the Company may invest include U.S. government securities
backed by the full faith and credit of the U.S. government (such as Treasury
bills, notes and bonds) as well as securities backed only by the credit of the
issuing agency. Corporate securities in which the Company may invest include
commercial paper, bankers' acceptances and certificates of deposit of domestic
or foreign Registrants.
The Company also may enter into repurchase agreements that are fully
collateralized by U.S. government securities with banks or recognized securities
dealers in which the Company purchases a U.S. government security from the
institution and simultaneously agrees to resell it to the seller at an
agreed-upon date and price. The repurchase price is related to an agreed-upon
market rate of interest rather than the coupon of the debt security and, in that
sense, these agreements are analogous to secured loans from the Company to the
seller. Repurchase agreements carry certain risks not associated with direct
investments in securities, including possible declines in the market value of
the underlying securities and delays and costs to the Company if the other party
to the transaction defaults.
RESERVE MANAGEMENT. The Company must retain significant reserves for a
number of years after the Close Date of this Offering and any subsequent
Offerings made by the Company in order to have sufficient funds for
equity-oriented follow-on investments in Portfolio Companies. The Company
intends on registering additional common stock for subsequent sale to meet the
funding requirements for such follow on investments. As such, the Company will
likely have cash reserves from subsequent common stock sales. In order to
enhance the rate of return on these reserves and increase the amounts ultimately
available for equity-oriented investments and Company operating expenses, the
Company will engage in a reserve management strategy that may include making
secured loans to its Portfolio Companies, potential Portfolio Companies, or
similar types of corporations. The Company also expects to invest some portion
of these reserves in either publicly traded securities or in mutual funds,
subject to applicable legal limits or SEC exemptive orders.
AVERAGE INVESTMENT. The amount of funds committed to a Portfolio Company
and the ownership percentage received will vary depending on the maturity of the
company, the quality and completeness of the management team, the perceived
business opportunity, the capital required compared to existing capital, and the
potential return. Although investment amounts will vary considerably, the
Company's Management expect that the average investment (including follow-on
investments) will be between $250,000 and $5,000,000, subject to the Company
successfully raising additional capital.
OTHER INVESTMENT POLICIES. The Company will not sell securities short,
purchase securities on margin (except to the extent the Company's permitted
borrowings are deemed to constitute margin purchases), write puts or calls,
purchase or sell commodities or commodity contracts. The Company will not
underwrite the securities of other companies, except to the extent the Company
may be deemed an underwriter upon the disposition of restricted securities
acquired in the ordinary course of the Company's business.
NON-QUALIFYING ASSET INVESTMENTS. The Company intends to invest its assets
not required to be invested in Qualified Assets in acquiring commercial and
residential real estate and in purchasing securities in publicly traded
companies that cannot be classified as Eligible Portfolio Companies under the
1940 Act.
TAX INFORMATION
The following is a general summary of certain of the United States federal
income tax laws relating to the Company and investors in its units. This
discussion is based on the Internal Revenue Code, regulations, published rulings
and procedures and court decisions as of the date hereof. The tax law, as well
as the implementation thereof, is subject to change, and any such change might
interfere with the Company's ability to qualify as a RIC or, if the Company so
qualifies, to maintain such qualification. This discussion does not purport to
deal with all of the United States federal income tax consequences applicable to
the Company or to all categories of investors, some of whom may be subject to
special rules. In addition, it does not address state, local, foreign or other
taxes to which the Company or its investors may be subject, or any proposed
changes in applicable tax laws. Investors should consult their tax advisers with
respect to an investment in Company Shares.
TAXATION OF THE COMPANY AS AN ORDINARY CORPORATION. It is anticipated that,
commencing with the second year of its investment operations, the Company will
seek to meet the requirements, including diversification requirements, to
qualify for the special pass-through status available to RICs under the Internal
Revenue Code, and thus to be relieved of federal income tax on that part of its
net investment income and realized capital gains that it distributes to
shareholders. Unless and until the Company meets these requirements, it will be
taxed as an ordinary corporation on its taxable income for that year (even if
that income is distributed to shareholders) and all distributions out of its
earnings and profits will be taxable to shareholders as dividends; thus, such
income will be subject to a double layer of tax (although corporate shareholders
may be entitled to a dividends-received deduction). There is no assurance that
the Company will meet the requirements to qualify as a RIC.
TAXATION OF THE COMPANY AS A RIC. CONSEQUENCES OF CONVERTING FROM AN
ORDINARY CORPORATION TO A RIC. In order to qualify as a RIC, the Company must,
at the end of the first year in which it so qualifies, have no accumulated
earnings and profits from years in which it was not taxed as a RIC. To meet this
requirement, the Company must, before the end of the first year in which it
qualifies as a RIC, distribute as dividends all of its accumulated earnings and
profits. In addition to the foregoing, pursuant to a published notice of the
Internal Revenue Service, the Company must either (i) elect to recognize gain on
the disposition of any asset during the ten year period (the "Recognition
Period") beginning on the first day of the first taxable year for which the
Company qualifies as a RIC that is held by the Company as of the beginning of
such Recognition Period, to the extent of the excess of (a) the fair market
value of such asset as of the beginning of such Recognition Period over (b) the
Company's adjusted basis in such asset as of the beginning of such Recognition
Period (such excess, hereinafter, "built-in gain"), taxable at the highest
regular corporate rates or (ii) immediately recognize and pay tax on any such
built-in gain with respect to any of its portfolio holdings and, as described
above, distribute the earnings and profits from such deemed sales. As a RIC, the
Company would not be able to use any net operating loss carryforwards relating
to periods prior to the first year in which the Company qualifies as a RIC.
RIC QUALIFICATION REQUIREMENTS. To qualify as a RIC, the Company must
distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment income
and net short-term capital gain) ("Distribution Requirement") and must meet
several additional requirements. Among the requirements are the following: (a)
the Company must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to loans of securities and gains from
the sale or other disposition of securities or other income derived with respect
to its business of investing in securities ("Income Requirement"); (b) the
Company must derive less than 30% of its gross income each taxable year from
gains from the sale or other disposition of securities held for less than three
months; (c) the Company must diversify its assets so that, at the close of each
quarter of the Company's taxable year, (i) not more than 25% of the market value
of its total assets is invested in the securities of a single eligible portfolio
company or in the securities of two or more eligible portfolio companies that
the Company controls and that are engaged in the same or similar trades or
businesses or related trades or businesses and (ii) at least 50% of the market
value of its total assets is represented by cash, cash items, government
securities, securities of other RICs and other securities (with each investment
in such other securities limited so that not more than 5% of the market value of
the Company's total assets is invested in the securities of a single Eligible
portfolio company and the Company does not own more than 10% of the outstanding
voting securities of a single Registrant) ("Diversification Requirement"); and
(d) the Company must file an election to be treated as a RIC. If, after
initially qualifying as a RIC, the Company fails to qualify for treatment as a
RIC for a taxable year, it would be taxed as an ordinary corporation on its
taxable income for that year and all distributions out of its earnings and
profits would be taxable to shareholders as dividends (that is, ordinary
income). In such a case, there may be substantial tax and other costs associated
with re-qualifying as a RIC.
The Company would be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year at
least 98% of its ordinary income for such calendar year and 98% of its capital
gain net income for the one-year period ending on October 31 of such calendar
year, plus certain other amounts. For these purposes, any taxable income
retained by the Company, and on which it pays federal income tax, would be
treated as having been distributed.
The Company currently intends to distribute in each year for which it
qualifies as a RIC substantially all of its net investment income and capital
gain net income so as to not be subject to federal income or excise taxes.
TAXATION OF THE COMPANY'S SHAREHOLDERS IF THE COMPANY QUALIFIES AS A RIC.
Dividends paid to shareholders that are attributable to the Company's net
investment income will be taxable to shareholders as ordinary income. Capital
gain distributions are taxable as long-term capital gains regardless of how long
the shareholder has held the Shares. It is not anticipated that a significant
portion of the Company's dividends will qualify for the dividends-received
deduction for corporations.
Distributions are generally taxable to shareholders at the time the
distribution is received. However, any distribution declared by the Company in
October, November or December, made payable to shareholders of record in such a
month and paid the following January, is deemed to have been paid by the Company
and received by shareholders on December 31 of the year declared. This will
prevent the application of the Excise Tax, discussed above, to the Company as a
result of the delay in the payment of the dividends.
If, for any calendar year, the Company's total distributions exceed its net
investment income and net capital gains, the excess will generally be considered
a tax-free return of capital to a shareholder to the extent of the shareholder's
adjusted basis in its shares and then as capital gain. The amount treated as
tax-free return of capital will reduce the adjusted basis of a shareholder's
Shares, thereby increasing the potential gain or reducing the potential loss on
the sale of the Shares.
In general, upon the sale or other disposition of Shares, the selling
shareholder will recognize a gain or loss equal to the difference between the
amount realized on the sale and the seller's adjusted basis in the Shares. Any
loss realized will be disallowed to the extent the seller has acquired (or
entered into a contract to acquire) substantially identical Shares within a
period beginning 30 days before the disposition of Shares and ending 30 days
after the disposition. In such case, the basis of the Shares acquired will be
adjusted to reflect the disallowed loss. Gain or loss realized upon a sale of
Shares generally will be treated as a capital gain or loss. The gain or loss
will be a long-term capital gain or loss if the Shares were held for more than
one year. In addition, if the Shares sold were not held for more than six
months, any loss on the sale will be treated as long-term capital loss to the
extent of any capital gain dividend received by the shareholder with respect to
such Shares.
The Company is required to withhold 31% of reportable payments (which may
include dividends and capital gain distributions) to individuals and certain
other non-corporate shareholders who do not provide the Company with a correct
taxpayer identification number or who otherwise are subject to backup
withholding. The certification of a shareholder's taxpayer identification number
will be included in the Subscription Agreement to be provided with the Offering
Memorandum.
Federal withholding taxes at a rate of 30% (or a lesser treaty rate) may
apply to distributions to shareholders who are nonresident aliens or foreign
partnerships, trust or corporations. The rules governing United States federal
income taxation of foreign shareholders are complex, and prospective non-U.S.
shareholders should consult with their own tax advisors to determine the impact
of federal, state and local income tax laws with regard to an investment in
Shares, including any reporting requirements.
Individuals and certain other shareholders will be required to include in
their gross income an amount of certain Company expenses relating to the
production of gross income that are allocable to the shareholder. These
shareholders, therefore, will therefore be deemed to receive gross income from
the Company in excess of the distributions they actually receive. Such allocated
expenses may be deductible by an individual shareholder as a miscellaneous
itemized deduction, subject to the limitation on miscellaneous itemized
deductions not exceeding 2% of adjusted gross income. The Company will notify
shareholders following the end of each calendar year of the amounts of dividends
and capital gain distributions paid or deemed paid during the year.
Tax-Exempt Investors. Qualified plans, Individual Retirement Accounts and
investors exempt from taxation under the Internal Revenue Code Section 501(c)(3)
(collectively, "Tax-Exempt Entities") are generally exempt from taxation except
to the extent that they have unrelated business taxable income ("UBTI")
(determined in accordance with Internal Revenue Code Sections 511-514). If the
Company qualifies as a RIC, it is likely that distributions to a Tax-Exempt
Entity shareholder that are treated as dividends will not be considered UBTI and
will therefore be exempt from federal income tax even if the Company borrows to
acquire its investment assets. Under Section 512(b) of the Internal Revenue
Code, UBTI does not include dividends received by a Tax-Exempt Entity. As a
general rule, the income tax provisions relating to corporation apply to RICs,
unless Subchapter M of the Internal Revenue Code provides otherwise, and thus
Section 512(b) should apply to exclude from UBTI dividends paid by a RIC to a
Tax-Exempt Entity. This conclusion is also supported by Revenue Ruling 66-106,
which applies Section 512(b) to exclude from UBTI dividends paid to the
tax-exempt shareholders of a real estate investment trust ("REIT"), a conduit
entity that invests in real estate and is substantially similar to a RIC for tax
purposes, on the same theory. However, if a Tax-Exempt Entity borrows money to
purchase its Shares, a portion of its income from the Company will constitute
UBTI pursuant to the "debt-financed property rules."
Social clubs, voluntary employee benefit associates, supplemental
unemployment benefit trusts, and qualified group legal service organizations
that are exempt from taxation under Internal Revenue Code Sections 501(c)(7),
(9), (17) and (20), respectively, are subject to different UBTI rules, which
generally will require them to characterize distributions from the Company as
UBTI. Dividends distributions by the Company to a charitable organization that
is a private foundation should constitute investment income for purposes of the
excise tax on net investment income of private foundations imposed by Section
4940 of the Internal Revenue Code.
RISK FACTORS
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK, INCLUDING, BUT
NOT NECESSARILY LIMITED TO, THE SEVERAL FACTORS DESCRIBED BELOW. EACH
PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS
INHERENT IN AND AFFECTING THE BUSINESS OF THE COMPANY AND THIS OFFERING BEFORE
MAKING AN INVESTMENT DECISION.
RECENTLY ORGANIZED "DEVELOPMENT STAGE" COMPANY; LIMITED RESOURCES; NO
PRESENT SOURCE OF REVENUES; NO OPERATING HISTORY; RELIANCE ON MANAGEMENT. The
Company is newly organized and has not yet entered into any definitive financing
transactions with any Portfolio Companies it will finance. Although the
Company's Chairman, President and Advisory Director have had prior experience
relating to the identification, evaluation and acquisition of target businesses,
the Company has no such experience and, accordingly, there is only a limited
basis upon which to evaluate the Company's prospects for achieving its intended
business objectives. To date, the Company's efforts have been limited primarily
to organizational activities and this offering. The Company has limited
resources and has had no revenues to date. In addition, the Company will not
achieve any revenues (other than interest income upon the proceeds of this
offering) until, at the earliest it is able to sell its position of securities
in an underlying portfolio company for a profit. The Company could require
substantial time to become fully invested. Pending investment, all cash that the
Company has received pursuant to this offering will be immediately used for
working capital expenses including general office, administrative and accounting
costs, travel expenses associated with identifiying potential eligible portfolio
companies and other day to day operating expenses. The Company will be wholly
dependent for the selection, structuring, closing and monitoring of all of its
investments on the diligence and skill of its management, acting under the
supervision of the Company's board of directors. There can be no assurance that
the Company will attain its investment objective. Omar A. Rizvi and Gregory H.
Laborde, the senior officers of the Company, have some experience in acquiring
and investing in growth stage companies and will have primary responsibility for
the selection of the companies in which the Company will invest, the negotiation
of the terms of such investments and the monitoring of such investments after
they are made. Although Messrs. Rizvi and Laborde intend to devote such time as
is necessary to the affairs of the Company, they are not required to devote full
time to the management of the Company. Furthermore, there can be no assurance
that either officer will remain associated with OIG or that, if either officer
ceased to be associated with OIG, OIG would be able to find a qualified person
or persons to fill their positions.
DILUTION. The present shareholders of the Company have acquired an interest
in the Company at a total cost substantially less than the total cost the public
investors will pay for their shares. Therefore, the public investors will bear
most of the risk of loss. As of August 6, 1999, the Company had a total of
2,000,000 shares of common stock outstanding, which equals to a net tangible
book value of $2,000.00 or approximately $.001 per share.
As of May 5, 1999, the officers, directors and other present shareholders
own 2,0000,000 shares of common stock for which which is nominally capitalized
in the amount of $2,000.00 or an average of $.001 per share. If the maximum
number of shares being offered are sold, the present shareholders will own
100,000 shares or 10.00% of the Company's common stock to be outstanding, and
the public purchasers will own 1,900,000 shares or 90.00% of the Company's
common stock to be outstanding, for which the public purchasers will have paid
to the Company a total of $200,000.00(or $.10 per share.) The following table
illustrates the per share dilution:
Maximum Sold
Public offering price per share of common (1) $0.10
Net Asset Value per share before offering (2) $0.001
Increase per share attributable to new Investors $0.057
Net Asset Value per share after offering (3) $0.051
Dilution of Net Asset Value per share to new Investors $0.05
(1) Average offering price before deduction of offering expenses once the
entire offering has been sold. (2) Determined by dividing the number of shares
of common stock outstanding into the net asset value of the company. (3) Before
deduction of offering expenses and First Year Operating Costs as described
herein. See USE OF PROCEEDS.
The following table summarizes the comparative ownership and capital
contributions of present shareholders and public investors assuming the maximum
number of shares are sold:
<TABLE>
<CAPTION>
Percent
Total of total Average
Percent consid- consid- price
Shares of total eration eration per
Owned Shares paid paid share
----- ------ ---- ---- -----
<S> <C> <C> <C> <C> <C>
Present Shareholders 2,000,000 50.00 $2,000,000 0.99% $.001
Public Investors 2,000,000 50.00 $2,000,000 99.1% $.10
</TABLE>
RECENT NOTICE OF INTENT TO ELECT BDC STATUS. The Company has, on August 6,
1999, filed with the Securities and Exchange Commission its intent to elect in
good faith, within ninety days from the date of such filing, to be regulated as
a Business Development Company under the 1940 Act and be subject to Sections 54
through 65 of said Act (BDC Provisions). Upon making this election, the Company
is required to file a notice of its election and thus will be subject to the
provisions of 1940 Act as it applies to Business Development Companies as of the
date of such election.
INVESTMENT RISKS
Substantial appreciation of the equity securities of Portfolio Companies is
essential to achieving the Company's return objectives with respect to its
investments.
NATURE OF RISKS IN INVESTING IN GROWTH STAGE COMPANIES. Although
investments in growth stage companies offer the opportunity for significant
gains, each investment involves a high degree of business and financial risk
that can result in substantial losses. Among these are the risks associated with
investing in companies in an early-stage of development or with little or no
operating history, companies operating at a loss or with substantial variations
in operating results from period to period, and companies with the need for
substantial additional capital to support expansion or to achieve or maintain a
competitive position. Such companies may face intense competition, including
competition from companies with greater financial resources, more extensive
development, manufacturing, marketing, and service capabilities, and a larger
number of qualified managerial and technical personnel. Although the Company
intends on mitigating its risk exposure by limiting its investments in early
stage companies, there is no assurance that the portfolio companies in which it
chooses to place a majority of its investment capital received from subsequent
offerings are not facing the same risks of companies that are inherent in start
up companies. In addition, growth stage companies are likely to have a very
limited operating history and thus evaluating their worthiness for investment
will be more subjective on their future potential for growth and cannot be
predicated on operating successes. The Company anticipates that it may make
significant equity investments in companies in rapidly growing industries and
changing high-technology fields; such companies may face special risks of
product obsolescence and may encounter intense competition from other companies.
These risks are explained in more detail below.
TECHNOLOGY. Particularly in early-stage companies, a major risk is the
potential inability of a Portfolio Company to commercialize its technology or
product concept with the resources it has available. Although many of the
Portfolio Companies may be later-stage companies that have developed products,
the ultimate success of such companies will depend to a large extent on their
ability to continue to create new products and improve existing ones. There can
be no assurance that the development efforts of any Portfolio Company will be
successful or, if successful, will be completed within the budget or time period
originally estimated. Additional funds may be necessary to complete such
development, and there is no assurance that such funds will be available from
any source.
MARKETING. The markets for new products and services may be highly
competitive, rapidly changing, or both. Commercial success is frequently
dependent on marketing and support resources, the effectiveness and sufficiency
of which are very difficult to predict accurately. While this is a significant
risk for all Portfolio Companies, it is one of the principal economic risks of
second- and third-stage Portfolio Companies, which are anticipated to receive a
large portion of the Company's equity investments. There can be no assurance
that the marketing efforts of any particular Portfolio Company will be
successful or that any such company's products or services can be sold at a
price and volume that will allow it to be profitable. High technology products
and services often have a limited market or life-span. No assurance can be given
that the products or services of a particular Portfolio Company will not become
obsolete or require significantly more capital to obtain or maintain an adequate
market share for the success of the business.
PERSONNEL. The success of any venture is dependent upon the availability of
qualified personnel. The day-to-day operations crucial to success will be in the
hands of the management of each Portfolio Company. Each company's management
must have a philosophy and personality appropriate for that company's particular
stage of development. Early-stage companies typically need entrepreneurial
talents, while more mature companies require a higher level of infrastructure
and managerial coordination. Competition for qualified personnel is intense at
any stage of development. High turnover of personnel has become endemic in many
rapidly growing industries and could severely disrupt a Portfolio Company's
implementation of its business plan. Similarly, the ability of a Portfolio
Company's personnel, particularly its founders, to accept and make the difficult
transitions that occur as the company matures is hard to predict or manage. No
assurance can be given that the Portfolio Companies will be able to attract and
retain the qualified personnel necessary for success, or that the Company's
Management can select Portfolio Companies that have, or can obtain, the
necessary management resources.
MANAGEMENT. The success of the Company will depend upon the success of the
Portfolio Companies and, in great part, upon the abilities of their management.
Although the Company's Management, in conjunction with other venture capital
investors, expect to provide Portfolio Companies with a great deal of assistance
(particularly with regard to capital formation, major personnel decisions, and
strategic planning), the day-to-day operations will be in the hands of the
management of the Portfolio Companies. As the Portfolio Companies have yet to be
identified, Investors must rely upon the Company's Management to select
Portfolio Companies that have, or can obtain, the necessary management
resources. There can be no assurance that such selection will be successful.
COMPETITION. Most emerging markets are highly competitive. The Company
anticipates that nearly all Portfolio Companies will compete against firms with
more experience and greater financial resources than such companies.
ADDITIONAL CAPITAL. The Company's Management expect that most Portfolio
Companies will require additional equity financing to satisfy their working
capital requirements. The amount of additional equity financing needed will
depend upon the maturity and objectives of the particular company. Each round of
venture financing (whether from the Company or other investors) is typically
intended to provide a Portfolio Company with enough capital to reach the next
major valuation milestone. If the funds provided are not sufficient, a company
may have to raise additional capital at a price unfavorable to the existing
investors, including the Company. The availability of capital is generally a
function of capital market conditions that are beyond the control of the Company
or any Portfolio Company. There can be no assurance that the Company's
Management or the Portfolio Companies will be able to predict accurately the
future capital requirements necessary for success or that additional funds will
be available from any source.
TIME REQUIRED TO MATURITY OF INVESTMENT. The Company's Management intend to
invest funds available for equity investments as rapidly as is consistent with
the investment objectives of the Company. However, it is anticipated that there
will be a significant period of time (up to one to three years) before the
Company has completed the initial selection of Portfolio Companies for its first
round of equity investments. Venture capital investments typically take from
four to eight years from the date of initial investment to reach a state of
maturity at which liquidation can be considered. In light of the foregoing, it
is unlikely that any significant distributions of the proceeds from the
liquidation of equity investments will be made until the later years of the
Company.
ILLIQUIDITY OF VENTURE CAPITAL INVESTMENTS. It is anticipated that most of
the holdings in Portfolio Companies will be securities that are subject to
restrictions on resale. Generally, unless the securities are subsequently
registered under the Securities Act of 1933 (the "Securities Act"), the Company
will not be able to sell these securities unless it meets all of the conditions
of Rule 144 or another rule under the Securities Act that permits limited sales
under specified conditions. When restricted securities are sold to the public,
the Company may be deemed an "underwriter," or possibly a controlling person,
with respect thereto for the purpose of the Securities Act and may be subject to
liability as such under the Securities Act.
Other practical limitations may inhibit the Company's ability to sell or
distribute the securities of Portfolio Companies. For example, the Company may
own a relatively large percentage of a Portfolio Company's outstanding
securities, or customers, other investors, financial institutions, or management
may be relying on the Company's continued investment. Sales of securities of
Portfolio Companies may also be limited by the overall condition of the
securities market. In the past few years, the market for equity securities has
been volatile, especially for securities of high-technology companies.
Accordingly, the market price for public portfolio securities may be adversely
affected by factors unrelated to the operating performance of the Portfolio
Companies. The above limitations on liquidity of the Company's equity
investments could prevent a successful sale thereof, result in delay of any
sale, or reduce the amount of proceeds that might otherwise be realized.
NEED FOR FOLLOW-ON INVESTMENTS. Following its initial investment in
Portfolio Companies, the Company anticipates that it will be called upon to
provide additional funds to Portfolio Companies or have the opportunity to
increase its investment in a successful situation. See "Business of the
Company." Although the Company intends to maintain reasonable reserves and may
borrow to make follow-on equity investments, there is no assurance that the
Company will make follow-on investments or that the Company will have sufficient
funds to make all such investments. If the Company is unwilling or unable to
make a follow-on equity investment, the negative impact on a Portfolio Company
in need of such investment may be substantial. The Company's failure to make a
follow-on investment may also result in a significant reduction in the Company's
ownership percentage in a Portfolio Company or a missed opportunity for the
Company to increase its participation in a successful situation.
RISKS OF THE COMPANY
PORTFOLIO COMPANIES UNIDENTIFIED. As of the date of this Prospectus, the
Company has not made any equity commitments to any Portfolio Company. Therefore
prospective investors will not have an opportunity to carefully evaluate any of
the Portfolio Companies that the Company may eventually invest in and such
evaluation will be entirely dependent upon the Company's Management for
selecting and negotiating with these Portfolio Companies. If the Company makes
material financing commitments to Portfolio Companies before the Offering Close
Date, the Offering Memorandum will be supplemented and any and all future
amendments will be posted on the Company's website which will include any
additional information about such companies.
POTENTIAL LOSS OF ENTIRE INVESTMENT; FUNDING AND PORTFOLIO BALANCE. The
Company will begin investment operations pursuant to a potential second
offering. There is currently no assurance that the Company will be successful in
raising the maximum of $200,000.00 will be raised by the Offering Close Date,
nor is there any assurance that the Company will be successful with any
subsequent offerings. The Company will disburse $200,000.00 raised pursuant to
this offering to pay for expenses associated with preparing this offering and in
registering this offering in each of the fifty States. SEE USE OF PROCEEDS.
Therefore, should the company be unsuccessful in raising any of this amount
prior to the Offering Close Date, there is substantial risk of loss of the
entire investment made by the initial investors of the Company. The number of
investments, portfolio balance, and potential profitability of the Company could
be affected by the amount of funds at its disposal and, if it were to continue
investment operations with only a minimum amount of capitalization, the
Company's investment return might be adversely affected by a single investment
decision. At a lower funding level the number and di versity of investments will
be smaller.
SUBSTANTIAL INITIAL LOSSES. It is anticipated that most of the
capitalization of the Company, except for operating cash reserves and funds set
aside for follow-on investments in then-existing Portfolio Companies, will be
expended or committed by the end of the year 2002, which is expected to be prior
to the receipt of any substantial realized gains by the Company. The Company's
Management anticipate that the Company and a number of the Portfolio Companies
will sustain substantial losses in the initial three or four years of operation.
It is possible that these losses may never be recovered. There can be no
assurance that the Company will ever be profitable.
RELIANCE ON MANAGEMENT. All decisions with respect to the management of the
Company will be made exclusively by the Directors. Investors, except for the
Company's Management, will have no right or power to take part in the management
of the Company and will not receive any of the detailed financial information
issued by Portfolio Companies that is available to the Directors and the
Company's Management.
ERISA CONSIDERATIONS. In considering an investment in the Company by a
tax-exempt entity such as an employee benefit plan or individual retirement
account subject to the requirements of the Employee Retirement Income Security
Act of 1974 ("ERISA"), the fiduciary acting on behalf of such entity should be
satisfied that such an investment is consistent with Sections 404 and 406 of
ERISA and that the investment is prudent in light of the entity's cash flow and
other objectives. To this end the Department of Labor has issued regulations
that would characterize the assets of certain entities in which tax-exempt
entities invest as "plan assets." Because the Company is expected to qualify as
a "venture capital operating company" and the shares are "publicly offered
securities" within the meaning of the regulations, the Company assets should not
be considered plan assets. However, fiduciaries of tax-exempt entities are urged
to consult their own advisors prior to investing in the Company.
COMPETITION FOR INVESTMENTS. The Company expects to encounter competition
from other entities having similar investment objectives (including others that
are affiliated with the Company's Management). Historically, the primary
competition for venture capital investments has been from venture capital funds
and corporations, venture capital affiliates of large industrial and financial
companies, small business investment companies, and wealthy individuals.
Additional competition is anticipated from foreign investors and from large
industrial and financial companies investing directly rather than through
venture capital affiliates. Many of the Company's competitors are subject to
regulatory requirements substantially different from those to which the Company
is subject, and, as a consequence, they may have a competitive advantage to the
extent that the regulations under which the Company operates restrict its
abilities to take certain actions. The Company will frequently be a co-investor
with other professional venture capital groups, and these relationships with
other groups may expand the Company's access to investment opportunities.
COMPETITION. Other entities and individuals compete for investments similar
to those proposed to be made by the Company, some of whom may have greater
resources than the Company. Furthermore, the Company's need to comply with
provisions of the 1940 Act pertaining to BDCs and, if the Company qualifies as a
RIC, provisions of the Internal Revenue Code pertaining to RICs might restrict
the Company's flexibility as compared with its competitors. The need to compete
for investment opportunities may make it necessary for the Company to offer
Portfolio Companies more attractive transaction terms than otherwise might be
the case.
DISTRIBUTIONS. There can be no assurance that any distributions to the
Investors will be made by the Company or that aggregate distributions, if any,
will equal or exceed the Investors' investment in the Company. Sales of
Portfolio Company securities will be the principal source of distributable cash
to the Investors. The Directors have absolute discretion in the timing of
distributions to the Investors, but the income tax liability of the Investors
depends on the profits of the Company, regardless of whether distributions are
made. Securities acquired by the Company through equity investments will be held
by the Company and will be sold or distributed at the sole discretion of the
Directors.
PORTFOLIO COMPANY LIABILITIES. The Company will participate actively in the
management of many Portfolio Companies, often having representatives serve as a
member of a Portfolio Company's Board of Directors. Consequently, the Company
may be subject to liability from lawsuits against its representatives as
directors. Because director liability insurance is typically not available at a
reasonable price, the Company's assets, including assets not related to those
Portfolio Companies, may be exposed to the claims of creditors of such Portfolio
Companies. The Company's Management will try to limit Company exposure to such
claims and liabilities where practical; however, such efforts may not be
successful. Although Investors generally will be liable only for the respective
amounts of their Capital Contributions, liability for Portfolio Company claims
or liabilities would adversely affect the amount of cash available for
distribution to the Investors.
DISCRETIONARY USE OF PROCEEDS. The Company's Management has broad
discretion with respect to the specific application of the net proceeds of this
offering. The Company intends that, upon the completion of a second or any
subsequent offerings, substantially all of the net proceeds held in the Escrow
Account from any such offering will be applied for investments in eligible
portfolio companies which satisfy the Company's Investment Criteria.
ILLIQUIDITY OF INVESTMENTS. The Company anticipates that substantially all
of its portfolio investments (other than short-term investments) will consist of
securities that at the time of acquisition are subject to restrictions on sale
and for which no ready market will exist. Restricted securities cannot be sold
publicly without prior agreement with the Registrant to register the securities
under the 1933 Act, or by selling such securities under Rule 144 or other
provisions of the 1933 Act which permit only limited sales under specified
conditions. Venture capital investments in the securities of portfolio companies
are privately negotiated transactions, and there is no established trading
market in which securities can be sold. In the case of warrants or equity
securities, the Company generally will realize the value of such securities only
if the Registrant is able to make an initial public offering of its shares, or
enters into a business combination with another company which purchases the
Company's warrants or equity securities or exchanges them for publicly traded
securities of the acquirer. The feasibility of such transactions depends upon
the portfolio company's financial results as well as general economic and equity
market conditions. Furthermore, even if the restricted warrants or equity
securities owned become publicly-traded, the Company's ability to sell such
securities may be limited by the lack of or limited nature of a trading market
for such securities. When restricted securities are sold to the public, the
Company, under certain circumstances, may be deemed an "underwriter" or a
controlling person with respect thereto for the purposes of the 1933 Act, and be
subject to liabilities as such under that Act.
Because of the illiquidity of the Company's investments, a substantial
portion of the Company's assets will be carried at fair value as determined by
the board of directors. This value will not necessarily reflect the value of the
assets which may be realized upon a sale.
NON-DIVERSIFIED STATUS. The Company will be classified as a
"non-diversified" investment company under the 1940 Act. At such time as the
Company meets certain asset diversification requirements, the Company intends to
qualify as a RIC under the Internal Revenue Code and will thereafter seek to
meet the diversification standards thereunder. Nevertheless, the Company's
assets may be subject to a greater risk of loss than if its investments were
more widely diversified.
Indemnification and Exculpation. The Company's Articles of Incorporation
provide for indemnification of directors, officers, employees and agents of the
Company to the full extent permitted by Maryland law and the 1940 Act. The
Articles of Incorporation also contain a provision eliminating personal
liability of a Company director or officer to the Company or its shareholders
for monetary damages for certain breaches of their duty of care.
Selection of Disinterested Directors. OIG intends that, prior to the
closing of its Regulation E offering, a majority of the Company's directors will
be disinterested directors.
(d) Financial Information About Foreign and Domestic Operations and Export
Sales
The Company has not commenced business and has no revenues or assets.
ITEM 2. FINANCIAL INFORMATION
The Company has not commenced business and has no revenues or assets.
ITEM 3. PROPERTIES
The Company has not commenced business and has no assets. It is anticipated
that the Company's principal assets following commencement of operations will be
securities.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
The Registrant has 2,000,000 shares of Common Stock issued and outstanding
as of the date of this Registration Statement. It is anticipated that, at the
closing of its exempt public offering pursuant to Regulation E, the Registrant
will have approximately, 4,000,000 shares of Common Stock issued and
outstanding, of which 2,000,000 shares of common stock will be owned by
officers, interested directors and affiliates to the Registrant.
The following persons, as of May 5, 1999, either control the Registrant as
specified in section 2(a)(9) of the Investment Company Act of 1940 and/or are
owners of more than five percent of any class of securities of the Registrant.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name Title/Class Amount % Class Owned(1)
- ---- ----------- ------ ----------------
Omar A. Rizvi Common 1,000,000 25.00
Gregory H. Laborde Common 1,000,000 25.00
</TABLE>
The above named individuals based on their percent holdings of the
Company's Common Stock, are deemed to have controlling interests in the
Registrant as specified in section 2(a)(9) of the 1940 Act.
- -----------------
(1) Percent issued and outstanding based on completion of initial exempt
public offering of 2,000,000 shares of common stock pursuant to
Regulation E.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are:
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Omar A. Rizvi, J.D., LL.M.* Chairman and President
175 North Harbor Drive, Apt. 4502
Chicago, Illinois 60601
Gregory H. Laborde Chief Executive Officer and Director
110 Wall Street, Suite 15C
New York City, New York 10005
David W. Sear, Ph. D. Advisory Director
14810 Clara Street
Los Gatos, California 95030
</TABLE>
- ----------------------------------------
* Interested person of the Company within the meaning of the 1940 Act.
The Board of Directors of the Company anticipates electing two
additional disinterested directors. The Company's disinterested directors will
not receive any remuneration for their services from this Offering but each will
receive an annual fee from the Company between $3,000.00 to $10,000.00 per annum
upon successfully raising additional capital pursuant to a secondary offering
and having assisted in locating one or more probable eligible portfolio
companies in which the Company may invest. At such time, such directors will
also be reimbursed by the Company for their expenses in attending meetings of
the Board of Directors or any Committee thereof and will receive a fee for
attendance in person at any meeting at a per diem rate of $500.00.
The business backgrounds of the Company's directors and officers are as follows:
OMAR A. RIZVI is the founder, Chairman of the Board of Directors and
President of the Company. Mr. Rizvi has been actively involved in the financial
and investment community as a securities lawyer for the past seven years. Mr.
Rizvi is also currently the Chief Executive officer and Chairman of Diamond Star
Ventures, Inc., a business development company in the initial capitalization
phase and which also shares the express goal and purpose of locating profitable
investments within Internet and Internet related technologies. Mr. Rizvi is
committed to devoting an equal amount of time and energy to his role as the
Chief Officer in OIG as in his role as Chief Officer of Diamond Star. Mr. Rizvi
also is the managing partner of Rizvi & Associates, LLP, a boutique law firm
specializing in corporate and securities law in Chicago which was established in
1993. Mr. Rizvi has recently held the position of Executive Vice President and
General Counsel for Griffin Industries, Inc., a Seattle based business
development company that specializes in investing in equipment rental and
distribution companies, where he was responsible for managing all aspects of
Griffin's corporate, transactional and securities related legal work from
incorporation to successfully raising several million dollars in equity capital
and in organizing an effective and cost efficient in house due diligence review
program for assessing investment opportunities with potential eligible portfolio
companies. Mr. Rizvi has also held the position of General Counsel for Hughes
Resources, Inc. in 1994-1995, an Oil & Gas holding and distribution company
located in Houston, Texas, and has acted as Registrants counsel for several
other publicly traded companies. Mr. Rizvi holds a Masters of Law (LL.M.) degree
in Securities Regulation from the Georgetown University Law Center. Mr. Rizvi
attended the University of Illinois at Urbana-Champaign and completed three
years of course work in Chemical Engineering and finished his B.A. in Philosophy
and Economics from the University's Chicago campus. Mr. Rizvi received his J.D.
degree from the University of San Francisco School of Law. Mr. Rizvi is a member
of the State Bar of California, the United States District Courts for the
Eastern, Central, Northern and Southern Districts of California, the American
Bar Association and the Bar Association of San Francisco. Mr. Rizvi currently
resides in downtown Chicago.
GREGORY H. LABORDE is Chief Executive Officer and Director of the Company.
Mr. Laborde has worked from 1986 to 1997 as a producing stockbroker and
investment banker at a number of investment banks and brokerage firms in New
York City. During that time Mr. Laborde was involved in over 20 public and
private financing transactions, including Dove Entertainment in which he helped
that company structure and raise approximately $7.5 million. In January of 1998,
Mr. Laborde founded GHL Group, Ltd., a New York City-based corporate finance
consulting firm that specializes in assisting private companies go public, raise
capital, and increase shareholder awareness. Mr. Laborde holds a Bachelor of
Science degree in Engineering from Lafayette College. Mr. Laborde currently
resides in New Jersey.
SCOTT K. LINDENBERGER is Corporate Secretary for the Company. Mr.
Lindenberger most recently worked as Client Services Associate for
InterOffice/Advantis, a large nationwide executive suite company, in one of
three downtown Chicago centers. His responsibilities included the development
and implementation of several new marketing initiatives, client relations, and
development of center services. Mr. Lindenberger brought several new business
accounts to InterOffice/Advantis. Mr. Lindenberger handled existing client needs
relating to ongoing services, promotions, and public relations and served as
liaison with other executive centers in the coordination of corporate
promotional initiatives. Mr. Lindenberger previously worked as a Marketing
Assistant for a large international manufacturing company, where his
responsibilities included the development of marketing materials, coordination
of corporate marketing projects, and assistance to the Regional Marketing
Manager. He was key to the roll-out of a new series of marketing materials
targeting the company's approximately 600 North American sales associates and
corporate managers. Mr. Lindenberger is a graduate of Drake University and holds
a Bachelors of Arts Degree in English and Cultural Studies. Mr. Lindenberger
currently resides in Chicago, Illinois.
ADVISORY BOARD MEMBERS
DR. DAVID W. SEAR received his Ph.D. in solid state physics from the
University of London in 1971. Between 1994 and 1996, Dr. Sear worked for and in
1995 through 1996 held the position of President and Chief Operating Officer for
Integrated Circuit Systems of San Jose, California where he was responsible for
marketing and engineering. Dr. Sear focused his efforts on restructuring the
company to develop a CMOS single chip 100Mbs Ethernet transceiver. Between 1991
and 1994, Dr. Sear was the President and Chief Operating Officer of Catalyst
Semiconductor where he was responsible for executing an effective turn around
plan which brought the company from a two million dollar loss in the March 1992
quarter to a four hundred thousand dollar profit one year after. The turnaround
made it possible to consider a public offering in which the company successfully
raised thirty three million dollars in May, 1993. Dr. Sear was employed with
Fujitsu Microelectronics between 1987 through 1991 as Vice President of
Marketing for all of Fujitsu's integrated circuit products marketed in North and
South America. In addition, Dr. Sear joined the small founding team of ICI Array
Technology from 1984 to 1987 as the Vice President of Marketing and Sales.
During his tenure with ICI, the Company increased sales from $1 million in 1983
to $5.5 million in 1984 and $14.5 million in 1985. Dr. Sear also founded Perex,
Inc., a U.S. based subsidiary of a UK peripherals company. Dr. Sear has also
worked for Advanced Micro Devices between 1978 and 1980 as Manager of Worldwide
Computer Marketing.
The Company anticipates nominating an additional two outside advisory
directors within the next several weeks. It is anticipated that such nominations
will be in place prior to entering into any definitive financing agreements with
any eligible portfolio companies.
ITEM 6. EXECUTIVE COMPENSATION.
The Company has not had any operations nor has it paid any remuneration to
any of its officers or directors to date. None of the Officers and Directors
will receive any salary compensation until the Company has raised additional
funding pursuant to a second offering and has entered into a binding letter of
intent to acquire an equity investment interest within an eligible portfolio
company.
Name & Position Salary($)
Omar A. Rizvi -0-
Chairman and President
Gregory H. Laborde -0-
CEO and Director
All officers & directors -0-
as a group
The Board of Directors of the Company anticipates electing two
additional disinterested directors. The Company's disinterested directors will
not receive any remuneration for their services from this Offering but each will
receive an annual fee from the Company between $3,000.00 to $10,000.00 per annum
upon successfully raising additional capital pursuant to a secondary offering
and having assisted in locating one or more probable eligible portfolio
companies in which the Company may invest. At such time, such directors will
also be reimbursed by the Company for their expenses in attending meetings of
the Board of Directors or any Committee thereof and will receive a fee for
attendance in person at any meeting at a per diem rate of $500.00
The Company's advisory directors will not receive any remuneration for
their services from this Offering but each will receive an annual fee from the
Company between $3,000.00 to $10,000.00 per annum upon successfully raising
additional capital pursuant to a secondary offering and having assisted in
locating one or more probable eligible portfolio companies in which the Company
may invest. At such time, such directors will also be reimbursed by the Company
for their expenses in attending meetings of the Board of Directors or any
Committee thereof and will receive a fee for attendance in person at any meeting
at a per diem rate of $500.00.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(a) Transactions With Management and Others
Notwithstanding the foregoing, the Company has not entered into any
transaction, or series of similar transactions, since the beginning of the
registrant's last fiscal year, or any currently proposed transaction, or series
of similar transactions, to which the registrant or any of its subsidiaries was
or is to be a party, in which the amount involved exceeds $60,000 and in which
any of the following persons had, or will have, a direct or indirect material
interest.
(b) Certain Business Relationships
The Company principal
The Chairman and President of the Registrant, Mr. Omar A. Rizvi, is also
the Managing Partner of Rizvi and Associates, L.L.P., a California Limited
Liability Partnership which maintains offices in Chicago and San Francisco.
Although there is no present legal contract for services between Rizvi and
Associates, L.L.P. and the Registrant, it is anticipated that during the
upcoming fiscal year Rizvi and Associates will provide all or substantially all
of the corporate transactional and securities regulatory legal services
(together "Legal Services") required by the Registrant from its Chicago and San
Francisco offices. Because Mr. Rizvi is a member of management and the Board of
Directors this transaction cannot be construed as occurring at arms length
between the Company and Rizvi and Associates, L.L.P., due to the involvement and
interests shared by Mr. Rizvi both as an officer and director of the Company as
well as a managing partner of Rizvi and Associates, L.L.P. Mr. Rizvi is likely
to receive an indirect pecuniary benefit as a managing partner of Rizvi and
Associates, L.L.P. from this agreement for services to be performed on behalf of
Origin Investment Group, Inc.
(c) Indebtedness of Management
None.
(d) Transactions With Promoters.
None.
ITEM 8. LEGAL PROCEEDINGS
None.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
(a) Market Information
The offer and sale of the Shares will not be registered under the 1933 Act
on the ground that their issuance and sale is exempt from such registration
requirements pursuant to Regulation E of the 1933 Act.
Because the second round of financing raised will be from shares that will
be acquired by investors in transactions involving an exempt public offering
pursuant to Regulation E, they will be unrestricted or "free-trading" securities
and may be freely traded, transferred, assigned, pledged or otherwise disposed
of at the time of issuance.
(b) Holders
The Company has 2,000,000 shares of common stock outstanding at the time of
this filing, held by approximately 2 shareholders as of May 5, 1999.
(c) Dividends
The Company intends to distribute to shareholders substantially all of its
net investment income and net realized capital gains, if any, as determined for
income tax purposes. Applicable law, including provisions of the 1940 Act, may
limit the amount of dividends and other distributions payable by the Company.
Income dividends will generally be paid quarterly to shareholders of record on
the last day of each preceding calendar quarter end. Substantially all of the
Company's net capital gain (the excess of net long-term capital gain over net
short-term capital loss) and net short-term capital gain, if any, will be
distributed at least annually with the Company's final quarterly dividend
distribution for the year.
The Company will seek to reinvest the proceeds of matured, repaid or resold
investments, net of required distributions to shareholders, principal payments
on borrowings and expenses or other obligations of the Company, in new loans or
leases. The Company will also distribute to investors all proceeds received from
principal payments and sales of investments, net of reserves and expenses,
principal repayments on the Company's borrowings, amounts required to fund
financing commitments entered into before such fourth anniversary, and any
amounts paid on exercise of warrants. Distributions of such amounts are likely
to cause annual distributions to exceed the earnings and profits of the Company
available for distribution, in which case such excess will be considered a tax
free return of capital to a shareholder to the extent of the shareholder's
adjusted basis in his shares and then as capital gain.
ITEM 10. RECENT SALES OF UNREGULATED SECURITIES
The present shareholders of the Company have acquired an interest in the
Company at a total cost substantially less than the total cost the public
investors will pay for their shares. Therefore, the public investors will bear
most of the risk of loss. As of August 6, 1999, the Company had a total of
2,000,000 shares of common stock outstanding which equals to a net tangible book
value of $2,000.00 or approximately $.001 per share.
If the maximum number of shares currently being offered are sold, the
present shareholders will own 2,000,000 shares or 50.0% of the Company's common
stock to be outstanding, and the public purchasers will own 2,000,000 shares or
50.00% of the Company's common stock to be outstanding, for which the public
purchasers will have paid to the Company a total of $200,000 (or $0.10 per
share.) The following table illustrates the per share dilution:
Maximum Sold
Public offering price per share of common (1) $0.10
Net Asset Value per share before offering (2) $0.001
Increase per share attributable to new Investors $0.057
Net Asset Value per share after offering (3) $0.051
Dilution of Net Asset Value per share to new Investors $0.05
(1) Average offering price before deduction of offering expenses once the
entire offering has been sold. (2) Determined by dividing the number of shares
of common stock outstanding into the net asset value of the company. (3) Before
deduction of offering expenses and First Year Operating Costs as described
herein. See USE OF PROCEEDS.
The following table summarizes the comparative ownership and capital
contributions of present shareholders and public investors assuming the maximum
number of shares are sold:
<TABLE>
<CAPTION>
Percent
Total of total Average
Percent consid- consid- price
Shares of total eration eration per
Owned Shares paid paid share
----- ------ ---- ---- -----
<S> <C> <C> <C> <C> <C>
Present Shareholders 2,000,000 50.00 $2,000,000 0.99% $.001
Public Investors 2,000,000 50.00 $2,000,000 99.1% $.10
</TABLE>
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
GENERAL. The Company is authorized to issue two classes of capital stock,
50,000,000 shares of "Common Stock", $.001 par value and 5,000,000 shares of
"Preferred Stock", $.001 par value, respectively. The holders of the Company's
outstanding shares of common stock will elect all of the directors and are
entitled to one vote per share of Common Stock on all matters submitted to
shareholder vote. Holders of Common Stock do not have preemptive or preferential
rights to acquire any shares of the capital stock of the Corporation, and any or
all of such shares, wherever authorized, may be issued, or may be reissued and
transferred if such shares have been reacquired and have treasury status, to any
person, firm, corporation, trust, partnership, association or other entity for
consideration and on such terms as the Board of Directors determine of the
Corporation determine in their discretion without first offering the shares to
any shareholder of record.
All of the shares of the Corporation's authorized capital stock, when
issued for such consideration as the Board may determine shall be fully paid and
nonassessable. The Board of Directors have the discretion and may, by adoption
of a resolution of Bylaw, designate one or more Series of Preferred Stock and
have the power to determine the conversion and/or redemption rights, preferences
and privileges of each such Series of Preferred Stock provided that such
conversion and/or redemption rights, preferences and privileges of any Series of
Preferred Stock does not subordinate or otherwise limit the conversion and/or
redemption rights, preferences and/or privileges of any previously issued Series
of Preferred Stock.
Except as otherwise required under the 1940 Act, voting power for the
election of directors and for all other purposes shall be exclusively vested in
the holders of Common Stock. Each holder of a full or fractional share of Common
Stock shall be entitled, in the case of full shares, to one vote for each such
share and in the case of fractional shares, to a fraction of one vote
corresponding to the fractional amount of each such fractional share, in each
case based upon the number of shares registered in such holder's name on the
books of the Corporation.
In the event of a liquidation or dissolution of the Company, the holders of
the Common Stock shall be entitled to receive all of the net assets of the
Company. The assets so distributed to the stockholders shall be distributed
among such stockholders, in case or in kind at the option of the directors, in
proportion to the number of full and fractional shares of the class held by them
and recorded on the books of the Company.
TRANSFERABILITY OF SHARES. The offer and sale of the shares of Common Stock
and together as, will be exempt from registration under the 1933 Act on the
ground that their issuance and sale is exempt from such registration
requirements pursuant to Regulation E of said Act. The Company intends to
register its units and underlying securities therein pursuant to Regulation S-B
and will file an appropriate registration statement under the Securities
Exchange Act of 1934.
Annual meetings of shareholders will be held beginning in 1999 and special
meetings may be called by the Chairman of the board of directors or President, a
majority of the board of directors or shareholders holding at least 25% of the
outstanding Shares entitled to be voted at a meeting. The Company anticipates
soliciting proxies from shareholders for each annual meeting. The Company's
Articles of Incorporation can be amended by the affirmative vote of at least a
majority of the Company's Shares outstanding and entitled to vote.
The Company currently intends to issue share certificates. The ownership of
uncertificated shares will be recorded on a stock ledger maintained by the
Company's transfer agent. Share ownership may only be transferred in compliance
with the provisions set forth herein under "Transferability of Shares". The
transfer agent for the Shares shall notify the proposed purchaser of the Shares
that the Shares are subject to certain rights and restrictions including,
without limitation, the Company's right, to the extent permitted by law, to
repurchase the Shares at a price equal to the lesser of: (i) 60% of the Shares'
then current net asset value or (ii) the price at which the original subscriber
purchased the Shares if the original owner of such Shares should default upon
its obligation to make future required capital contributions. At the time of
issue or registration of transfer of any uncertificated Shares, the Company or
its transfer agent will deliver to the person designated by the registered
holder of such Shares an account statement specifying the number and class of
Shares being issued or transferred and certain other information. Share
certificates, if any, will bear legends reflecting restrictions on their
transferability, the existence of Registrant's repurchase rights, and certain
other matters.
The Company's Articles of Incorporation provide that each holder of Shares
will be required, upon demand, to disclose to the Company such information with
respect to direct or indirect holdings of Shares as is deemed necessary to
comply with provisions of the Internal Revenue Code applicable to the Company,
to comply with requirements of any other appropriate taxing authority, or to
comply with the provisions of the 1940 Act or ERISA.
To purchase Shares, a prospective investor must deliver to the Company a
completed, executed copy of the Subscription Agreement, such agreement and the
signature page to be in the form provided with the Offering Memorandum. The
Company may in its discretion require any prospective investor to complete an
investor questionnaire in form acceptable to the Company before accepting such
prospective investor's subscription.
Subscriptions may be made only by executing and delivering a Subscription
Agreement in the form specified by the Company. The rights and obligations under
the Subscription Agreements may not be transferred or assigned by a subscriber
without the consent of the Company.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation law of the State of Maryland, under which the Company is
incorporated, permits the articles of incorporation of a Maryland corporation to
include a provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages, subject to specified
restrictions. The law does not, however, allow the liability of directors and
officers to the corporation or its stockholders to be limited to the extent that
(1) it is proved that the person actually received an improper benefit or profit
or (2) a judgment or other final adjudication is entered in a proceeding based
on a finding that the person's action, or failure to act, was the result of
active and deliberate dishonesty and was material to the cause of action
adjudicated in the proceeding. The Articles of Incorporation of the Company
contain a provision limiting the liability of its directors and officers to the
Company and its shareholders to the fullest extent permitted from time to time
by the laws of Maryland (but not in violation of the 1940 Act). The Maryland
corporation law also permits a corporation to indemnify its directors, officers
and agents, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities unless it is established that the act or omissions of the party
seeking to be indemnified was material to the matter giving rise to the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty, or the party actually received an improper personal
benefit, or, in the case of any criminal proceeding, the party had reasonable
cause to believe that the act or omission was unlawful. The Company's Articles
of Incorporation and Bylaws require the Company to indemnify its directors,
officers and agents (including the Manager and Adviser to the Manager) to the
fullest extent permitted from time to time by the laws of Maryland, subject to
the limitations on indemnification under the 1940 Act.
The Company's Bylaws provide that the Company may purchase and maintain
insurance on behalf of any person who is or was a director, officer or agent of
the Company against any liability asserted against that person and incurred by
that person in or arising out of his or her position, whether or not the Company
would have the power to indemnify him or her against such liability provided no
such insurance so purchased will protect or purport to protect any officer or
director against liabilities for willful misfeasance, bad faith, gross
negligence or reckless disregard of duty.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company has not commenced business and has prepared no financial
statements.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not commenced business and has prepared no financial
statements.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements - None
(b) Exhibits - See Exhibit Index following signature page in this
Registration Statement, which Exhibit Index is incorporated herein by
reference.
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
ORIGIN INVESTMENT GROUP, INC.
Date: 8/13/1999 By: /s/ Omar A. Rizvi
------------------- --------------------------------
Omar A. Rizvi,
Chairman and President
ORIGIN INVESTMENT GROUP, INC.
(the "Company" or "Registrant")
EXHIBIT INDEX
FORM 10
EXHIBIT DESCRIPTION
3(i) Articles of Incorporation of the Company filed with the Maryland Secretary
of State on April 6, 1999.
3(ii)Bylaws of the Company.
4.1 Form of Subscription Agreement between the Company and Individual
Investors, previously filed.
10.2 Form of Stock Transfer Agent Fee Services Agreement between the Company and
Securities Transfer Agent.
ARTICLES OF INCORPORATION
OF
ORIGIN INVESTMENT GROUP, INC.
FIRST: Incorporation: The undersigned Omar A. Rizvi, whose address is 980
North Michigan Avenue, Suite 1400, Chicago, Illinois, being at least eighteen
years of age, does hereby form a corporation under the general laws of the State
of Maryland.
SECOND: Name of Corporation: The name of the Corporation is Origin
Investment Group, Inc.
THIRD: Corporate Purposes: The Corporation is formed for the following
purpose or purposes:
A. To transact all lawful business for which a corporation may be
incorporated pursuant to the Maryland Corporation Code.
B. To manufacture, purchase or otherwise acquire and to hold, own, mortgage
or otherwise lien, pledge, lease, sell, assign, exchange, transfer or in any
manner dispose of, and to invest, deal and trade in and with good, wares,
merchandise and personal property of any and every class and description, within
or without the State of Maryland.
C. To acquire the goodwill, rights and property and to undertake the whole
or any part of the assets and liabilities of any person, firm, association or
corporation; to pay for the same in cash, the stock of the corporation, bonds or
otherwise; to hold or in any manner dispose of the whole or any part of the
property so purchased; to conduct in any lawful manner the whole or any part of
any business so acquired and to exercise all the powers necessary or convenient
in and about the conduct and management of such business.
D. To guarantee, purchase or otherwise acquire, hold, sell, assign,
transfer, mortgage, pledge or otherwise dispose of shares of the capital stock,
bonds or other evidences of indebtedness created by other corporations and,
while the holder of such stock , to exercise all the rights and privileges of
ownership, including the right to vote thereon, to the same extent as a natural
person might or could do.
E. To purchase or otherwise acquire, apply for, register, hold, use sell,
or in any manner deal with patents, inventions, improvements, processes,
formulas, trademarks, trade names, rights and licenses secured under letters
patent, copyright or otherwise.
F. To enter into make and perform contracts of every kind for any lawful
purpose, with any person, firm, association, or corporation, town, city, county,
body politic, state, territory, government, colony or dependency thereof.
G. To borrow money for any of the purposes of the corporation and to draw,
make, accept, endorse, discount, execute, issue, sell, pledge or otherwise
dispose of promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable or nonnegotiable, transferable or
nontransferable instruments and evidences of indebtedness, and to secure the
payment thereof and the interest thereon by mortgage or pledge, conveyance or
assignment in trust of the whole or any par of the property of the corporation
at the time owned or thereafter acquired.
H. To lend money to, or guarantee the obligations of, or to otherwise
assist the directors of the corporation or any other corporation the majority of
whose voting capital stock is owned by the corporation, upon the affirmative
vote of at least a majority of the outstanding shares entitled to vote for
directors.
I. To purchase, take, own, hold, deal in, mortgage or otherwise pledge, and
to lease, sell, exchange, convey, transfer or in any manner whatever dispose of
real property, within or without the State of Maryland.
J. To purchase, hold, sell and transfer the shares of its capital stock.
K. To have one or more offices and to conduct any or all operations and
business and to promote its objects, within or without the State of Maryland,
without restrictions as to place or amount.
L. To do any or all of the things herein set forth as principal, agent,
contractor, trustee, partner or otherwise, alone or in company with others.
M. To conduct, operate, and carry on the business of a close-end,
management investment company that has elected to be treated as a business
development company, pursuant to the Investment Company Act of 1940, as amended
("1940 Act"); provided, however, that the Corporation may cease to be treated as
a business development company upon compliance with the requirements of the 1940
Act with respect thereto; and
N. To exercise and enjoy all powers, rights and privileges granted to and
conferred upon corporations by the Maryland General Corporation Law now or
hereafter in force.
FOURTH: Address of Principal Office. The post office address of the
principal office of the Corporation in the State of Maryland is 201 East
Baltimore Street, Suite 630, Baltimore, Maryland, 21202.
FIFTH: Name and Address of Resident Agent. The name and address of the
resident agent of the Corporation in the State of Maryland is Harbor City
Research, 201 E. Baltimore Street, Suite 630, Baltimore, Maryland, 21202.
SIXTH: Shares of Stock.
A. The Corporation shall be authorized to issue two classes of capital
stock, designated as "Common Stock" and "Preferred Stock" respectively. The
Corporation shall be authorized to issue 50,000,000 shares of Common Stock,
$.001 par value, and 5,000,000 shares of Preferred Stock, $.001 par value.
B. Holders of Common Stock shall not have preemptive or preferential rights
to acquire any shares of the capital stock of the Corporation, and any or all of
such shares, whenever authorized, may be issued, or may be reissued and
transferred if such shares have been reacquired and have treasury status, to any
person, firm, corporation, trust, partnership, association or other entity for
such lawful consideration and on such terms as the Board of Directors determines
in its discretion without first offering the shares to any such holder.
C. All shares of the Corporation's authorized capital stock, when issued
for such consideration as the Board of Directors may determine, shall be fully
paid and nonassessable.
D. The Board of Directors of the Corporation may, by adoption of a
resolution or Bylaw, impose restrictions upon the transferability by
shareholders of shares of the Corporation's Capital Stock.
E. The Board of Directors of the Corporation may, by adoption of a
resolution or Bylaw, designate one or more Series of Preferred Stock and shall
have the power to determine the conversion and/or redemption rights, preferences
and privileges of each such Series of Preferred Stock provided that such
conversion and/or redemption rights, preferences and privileges of any Series of
Preferred Stock does not subordinate or otherwise limit the conversion and/or
redemption rights, preferences and/or privileges of any previously issued Series
of Preferred Stock.
F. Except as otherwise required under the 1940 Act, voting power for the
election of directors and for all other purposes shall be exclusively vested in
the holders of Common Stock. Each holder of a full or fractional share of Common
Stock shall be entitled, in the case of full shares, to one vote for each such
share and, in the case of fractional shares, to a fraction of one vote
corresponding to the fractional amount of each such fractional share, in each
case based upon the number of shares registered in such holder's name on the
books of the Corporation.
G. In the event of the liquidation or dissolution of the Corporation, the
holders of the Common Stock shall be entitled to receive all of the net assets
of the Corporation. The assets so distributed to the stockholders shall be
distributed among such stockholders, in cash or in kind at the option of the
directors, in proportion to the number of full and fractional shares of the
class held by them and recorded on the books of the Corporation.
H. Each holder of shares of capital stock shall, upon demand, disclose to
the Corporation such information with respect to direct or indirect holdings of
such shares as the directors or any officer or agent of the Corporation
designated by the directors deems necessary to comply with provisions of the
Internal Revenue Code of 1986 applicable to the Corporation, to comply with the
provisions of the appropriate taxing authority, or to comply with the provisions
of the 1940 Act or the Employee Retirement Income Security Act of 1974, as any
said laws may be amended from time to time.
SEVENTH: Board of Directors: The Corporation shall have at least three
directors; provided that if there is no stock outstanding, the number of
directors may be less than three but not less than one. Omar A. Rizvi shall act
as sole director of the Corporation until his successor has been duly chosen and
qualified.
EIGHTH: Management of the Affairs of the Corporation.
A. All corporate powers and authority of the Corporation shall be vested in
and exercised by the Board of Directors except as otherwise provided by statute,
these Articles, or the Bylaws of the Corporation.
B. The Board of Directors shall have the power to adopt, alter, or repeal
the Bylaws of the Corporation, unless the Bylaws otherwise provide.
C. The Board of Directors shall have the power to determine whether and to
what extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Corporation (other than the stock
ledger) shall be open to inspection by stockholders. No stockholder shall have
any right to inspect any account, book, or document of the Corporation except to
the extent permitted by statute or the Bylaws.
D. The Board of Directors shall have the power to determine, in accordance
with generally accepted accounting principles, the Corporation's net income, its
total assets and liabilities, and the net asset value of the shares of capital
stock of the Corporation. The Board of Directors may delegate such power to any
one or more of the directors or officers of the Corporation, its investment
adviser, administrator, custodian, or depositary of the Corporation's assets, or
another agent of the Corporation appointed for such purposes.
E. Except as otherwise required under the 1940 Act, the Board of Directors
shall have the power to make distributions, including dividends, from any
legally available funds in such amounts, and in a manner and to the stockholders
of record as of such a date, as the Board of Directors may determine.
NINTH: Stockholder Liability. The stockholders shall not be liable to any
extent for the payment of any debt of the Corporation.
TENTH: Majority of Votes. Except as otherwise provided in these Articles,
under the 1940 Act, or under any provision of Maryland law requiring approval by
a greater proportion than a majority of the votes entitled to be cast in order
to take or authorize any action, any action may be taken or authorized by the
Corporation upon the affirmative vote of a majority of the votes entitled to be
cast thereon.
ELEVENTH: Special Voting Requirements: Control Shares.
A. The Corporation shall not be governed by the provisions of Section 3-602
of the Maryland General Corporation Law.
B. Any acquisition of shares of the stock of the Corporation, by any person
and at any time, shall be generally exempted from the requirements of subtitle 7
of Title 3 of the Maryland General Corporation Law.
TWELFTH: Limitation on Liability.
A. To the maximum extent permitted by the laws of Maryland law (but not in
violation of any applicable requirement or limitation of the 1940 Act), in each
case as currently in effect or as may hereafter be amended:
1. No director or officer of the Corporation shall be liable to the
Corporation or its stockholders for money damages; and
2. The Corporation shall indemnify and advance expenses as provided in the
Bylaws of the Corporation to its present and past directors, officers, employees
and agents (including any person or firm appointed by the Corporation to serve
as investment adviser or any similar function), and persons who are serving or
have served at the request of the Corporation in similar capacities for other
entities.
B. No amendment, alteration, or repeal of this Article or the adoption,
alteration, or amendment of any other provision of these Articles or the Bylaws
of the Corporation inconsistent with this Article, shall adversely affect any
limitation on liability or indemnification of any person under this Article with
respect to any act or failure to act which occurred prior to such amendment,
alteration, repeal, or adoption.
THIRTEENTH: Right of Amendment. Any provision of these Articles may be
amended, altered, or repealed upon the affirmative vote of two-thirds of all the
votes entitled to be cast on the matter.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation and
acknowledge the same to be my act on this 5 day of April, 1999.
/s/ Omar A. Rizvi
----------------------------------
Omar A. Rizvi
00021.BYL.97
BYLAWS
OF
ORIGIN INVESTMENT GROUP, INC.
(A MARYLAND CORPORATION)
ARTICLE I
NAME OF CORPORATION, LOCATION OF
OFFICES AND SEAL
Section 1. Name. The name of the corporation is Origin Investment Group, Inc.
Section 2. Principal Offices. The principal office of the Corporation is in the
City of Chicago. The company also maintains offices in West Vancouver, British
Colmbia, Canada. The Corporation may, in addition, establish and maintain such
other offices and places of business as the Board of Directors may, from time to
time, determine.
Section 3. Seal. The corporate seal of the Corporation shall be circular in form
and shall bear the name of the Corporation, the year of its incorporation, and
the word "Maryland". The form of the seal shall be subject to alteration by the
Board of Directors and the seal may be used by causing it or a facsimile to be
impressed or affixed or printed or otherwise reproduced. Any officer or director
of the Corporation shall have authority to affix the corporate seal of the
Corporation to any document requiring the same.
ARTICLE II
SHAREHOLDERS
Section 1. Annual Meetings. An annual meeting of shareholders to elect directors
and transact any other business within the Corporation's powers will be held at
such time as is set by the Board of Directors during the month of May of each
calendar year.
Section 2. Special Meetings. Special meetings of shareholders may be called at
any time by the Chairman of the Board, or President, or by a majority of the
Board of Directors, and shall be held at such time and place as may be stated in
the notice of the meeting.
Special meetings of the shareholders may be called by the Secretary upon the
written request of the holders of shares entitled to vote not less than
twenty-five percent of all the votes entitled to be cast at such meeting,
provided that (1) such request shall state the purposes of such meeting and the
matters proposed to be acted on, and (2) the shareholders requesting such
meeting shall have paid to the Corporation the reasonably estimated cost of
preparing and mailing the notice thereof, which the Secretary shall determine
and specify to such shareholders. No special meeting shall be called upon the
request of shareholders to consider any matter which is substantially the same
as a matter voted upon at any special meeting of the shareholders held during
the preceding twelve months, unless requested by the holders of a majority of
all shares entitled to be voted at such meeting.
Section 3. Notice of Meetings. The Secretary shall cause notice of the place,
date, and hour, and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, to be mailed, postage prepaid, not less than
ten nor more than ninety days before the date of the meeting, to each
shareholder entitled to vote at such meeting at his or her address as it appears
on the records of the Corporation at the time of such mailing. Notice shall be
deemed to be given when deposited in the United States mail addressed to the
shareholders as aforesaid. Notice of any shareholders' meeting need not be given
to any shareholder who shall sign a written waiver of such notice whether before
or after the time of such meeting, or to any shareholder who is present at such
meeting in person or by proxy. Notice of adjournment of a shareholders' meeting
to another time or place need not be given if such time and place are announced
at the meeting. Irregularities in the notice of any meeting to, or the
nonreceipt of any such notice by, any of the shareholders shall not invalidate
any action otherwise properly taken by or at any such meeting.
Section 4. Quorum and Adjournment of Meetings. The presence at any shareholders'
meeting, in person, by telephone conference, or by proxy, of shareholders
entitled to cast a majority of the votes shall be necessary and sufficient to
constitute a quorum for the transaction of business. In the absence of a quorum,
the holders of a majority of shares entitled to vote at the meeting and present
in person or by proxy, or, if no shareholder entitled to vote is present in
person or by proxy, any officer present entitled to preside or act as secretary
of such meeting may adjourn the meeting without determining the date of the new
meeting or from time to time without further notice to a date not more than 120
days after the original record date. Any business that might have been
transacted at the meeting originally called may be transacted at any such
adjourned meeting at which a quorum is present.
Section 5. Voting. Except as otherwise provided in the Articles of Incorporation
or by applicable law, at each shareholders' meeting each shareholder shall be
entitled to one vote for each share of stock of the Corporation validly issued
and outstanding and registered in his or her name on the books of the
Corporation on the record date fixed in accordance with Section 5 of Article VI
hereof, either in person or by proxy appointed by instrument in writing
subscribed by such shareholder or his or her duly authorized attorney, except
that no shares held by the Corporation shall be entitled to a vote.
Except as otherwise provided in the Articles of Incorporation, these Bylaws, as
required by provisions of the Investment Company Act of 1940, as amended ("1940
Act") or as required under Maryland law, all matters shall be decided by a vote
of the majority of the votes validly cast. The vote upon any question shall be
by ballot whenever requested by any person entitled to vote, but, unless such a
request is made, voting may be conducted in any way approved at the meeting.
At any meeting at which there is an election of Directors, the chairman of the
meeting may, and upon the request of the holders of ten percent of the stock
entitled to vote at such election shall, appoint two inspectors of election who
shall first subscribe an oath or affirmation to execute faithfully the duties of
inspectors at such election with strict impartiality and according to the best
of their ability, and shall, after the election, make a certificate of the
result of the vote taken. No candidate for the office of Director shall be
appointed as an inspector.
Section 6. Validity of Proxies. The right to vote by proxy shall exist only if
the instrument authorizing such proxy to act shall have been signed by the
shareholder or by his or her duly authorized attorney. Unless a proxy provides
otherwise, it shall not be valid more than eleven months after its date. All
proxies shall be delivered to the Secretary of the Corporation or to the person
acting as Secretary of the meeting before being voted, who shall decide all
questions concerning qualification of voters, the validity of proxies, and the
acceptance or rejection of votes. If inspectors of election have been appointed
by the chairman of the meeting, such inspectors shall decide all such questions.
A proxy with respect of stock held in the name of two or more persons shall be
valid if executed by one of them unless at or prior to exercise of such proxy
the Corporation receives a specific written notice to the contrary from any one
of them. A proxy purporting to be executed by or on behalf of a shareholder
shall be deemed valid unless challenged at or prior to its exercise.
Section 7. Stock Ledger and List of Shareholders. It shall be the duty of the
Secretary or Assistant Secretary of the Corporation to cause an original or
duplicate stock ledger to be maintained at the office of the Corporation's
transfer agent. Such stock ledger may be in written form or any other form
capable of being converted into written form within a reasonable time for visual
inspection. Any one or more persons, each of whom has been a shareholder of
record of the Corporation for more than six months next preceding such request,
who owns in the aggregate five percent or more of the outstanding capital stock
of the Corporation, may submit (unless the Corporation at the time of the
request maintains a duplicate stock ledger at its principal office in Illinois)
a written request to any officer of the Corporation or its resident agent in
Illinois for a list of the shareholders of the Corporation. Within twenty days
after such a request, there shall be prepared and filed at the Corporation's
principal office in Illinois a list containing the names and addresses of all
shareholders of the Corporation and the number of shares of each class held by
each shareholder, certified as correct by an officer of the Corporation, by its
stock transfer agent, or by its registrar.
Section 8. Action Without Meeting. Any action required or permitted to be taken
by shareholders at a meeting of shareholders may be taken without a meeting if
(1) all shareholders entitled to vote on the matter sign a written consent to
the action, (2) all shareholders entitled to notice of the meeting but not
entitled to vote at it sign a written waiver of any right to dissent, and (3)
the consents and waivers are filed with the records of the meetings of
shareholders. Such consent shall be treated for all purposes as a vote at the
meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers. Except as otherwise provided by operation of law, by the
Articles of Incorporation, or by these Bylaws, the business and affairs of the
Corporation shall be managed under the direction of and all the powers of the
Corporation shall be exercised by or under authority of its Board of Directors.
Section 2. Number and Term of Directors. Except for the initial Board of
Directors, the Board of Directors shall consist of not fewer than three nor more
than five Directors, as specified by a resolution of a majority of the entire
Board of Directors. Directors need not be shareholders of the Corporation. All
acts done at any meeting of the Directors or by any person acting as a Director,
so long as his or her successor shall not have been duly elected or appointed,
shall, notwithstanding that it be afterwards discovered that there was some
defect in the election of the Directors or of such person acting as a Director
or that they or any of them were disqualified, be as valid as if the Directors
or such other person, as the case may be, had been duly elected and were or was
qualified to be Directors or a Director of the Corporation. Each Director shall
hold office until his or her successor is elected and qualified or until his or
her earlier death, resignation, or removal.
Section 3. Election. Unless otherwise required by the 1940 Act, at each annual
meeting of shareholders, Directors shall be elected by vote of the holders of a
majority of the shares present in person or by proxy and entitled to vote
thereon. A plurality of all the votes cast at a meeting at which a quorum is
present is sufficient to elect a Director.
Section 4. Vacancies and Newly Created Directorships. If any vacancies shall
occur in the Board of Directors by reason of death, resignation, removal, or
otherwise, or if the authorized number of Directors shall be increased, the
Directors then in office shall continue to act, and such vacancies (if not
previously filled by the shareholders) may be filled by a majority of the
Directors then in office, although less than a quorum, except that a newly
created Directorship may be filled only by a majority vote of the entire Board
of Directors; provided, however, that if, at any time that there are
shareholders of the Corporation, immediately after filling such vacancy at least
two-thirds (2/3) of the Directors then holding office shall have been elected to
such office by the shareholders of the Corporation. In the event that at any
time, other than the time preceding the first annual shareholders' meeting, less
than a majority of the Directors of the Corporation holding office at that time
were elected by the shareholders, a meeting of the shareholders shall be held
promptly and in any event within sixty days for the purpose of electing
Directors to fill any existing vacancies in the Board of Directors, unless the
Securities and Exchange Commission shall by order extend such period.
Section 5. Removal. At any shareholders' meeting duly called, provided a quorum
is present, the shareholders may remove any director from office (either with or
without cause) and may elect a successor or successors to fill any resulting
vacancies for the unexpired terms of the removed director or directors. A
majority of all the votes entitled to be cast for the election of directors is
sufficient to remove a Director.
Section 6. Annual and Regular Meetings. The annual meeting of the Board of
Directors for choosing officers and transacting other proper business shall be
held at such other time and place as the Board may determine. The Board of
Directors from time to time may provide by resolution for the holding of regular
meetings and fix their time and place within or outside the State of Illinois.
Except as otherwise provided in the 1940 Act, notice of such annual and regular
meetings need not be given, provided that notice of any change in the time or
place of such meetings shall be sent promptly to each Director not present at
the meeting at which such change was made, in the manner provided for notice of
special meetings. Except as otherwise provided under the 1940 Act, members of
the Board of Directors or any committee designated thereby may participate in a
meeting of such Board or committee by means of a conference telephone or similar
communications equipment that allows all persons participating in the meeting to
hear each other at the same time.
Section 7. Special Meetings. Special meetings of the Board of Directors shall be
held whenever called by the Chairman of the Board, the Vice Chairman, or by two
or more Directors, at the time and place (within or without the State of
Illinois) specified in the respective notice or waivers of notice of such
meetings. Notice of special meetings, stating the time and place, shall be (1)
mailed to each Director at his or her residence or regular place of business at
least three days before the day on which a special meeting is to be held or (2)
delivered to him or her personally or transmitted to him or her by telegraph,
telecopy, telex, cable, email or wireless at least one day before the meeting.
Section 8. Waiver of Notice. No notice of any meeting need be given to any
Director who is present at the meeting or who waives notice of such meeting in
writing (which waiver shall be filed with the records of such meeting) either
before or after the time of the meeting. Receipt by the Secretary of the
Corporation of an email acknowledgment that notice has been transmitted to any
Director together with a telephone message alerting said Director of such email
notice, shall constitute waiver of notice.
Section 9. Quorum and Voting. At all meetings of the Board of Directors, the
presence of one half or more of the number of Directors then in office shall
constitute a quorum for the transaction of business, provided that, at any time
that there shall be more than one director, there shall be present at least two
directors. In the absence of a quorum, a majority of the Directors present may
adjourn the meeting, from time to time, until a quorum shall be present. The
action of a majority of the Directors present at a meeting at which a quorum is
present shall be the action of the Board of Directors, unless concurrence of a
greater proportion is required for such action by law, by the Articles of
Incorporation, or by these Bylaws.
Section 10. Action Without a Meeting. Except as otherwise provided under the
1940 Act, any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting if
a written consent to such action is signed by all members of the Board or of
such committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board or committee.
Section 11. Compensation of Directors. Directors shall be entitled to receive
such compensation from the Corporation for their services as may from time to
time be determined by resolution of the Board of Directors.
ARTICLE IIIA
ADVISORY DIRECTORS
Section 1. Advisory Directors. The Board of Directors may elect one or more
persons (who may or may not be officers of the Corporation) to serve as Advisory
Directors of the Corporation. Advisory Directors shall attend meetings of the
Board of Directors, and provide advice and assistance to the Board of Directors
as requested. Advisory Directors will not be deemed members of the Board of
Directors and will vote only on matters which require passage by a disinterested
majority vote of Directors. Such matters that require a vote by a majority of
disinterested Directors will be classified as such by the Board of Directors.
Section 2. Election, Removal, etc. The election, tenure, qualifications, removal
and resignation of Advisory Directors shall be governed by the provisions of
Article V of these By-Laws dealing with the election, tenure, qualifications,
removal and resignation of officers.
Section 3. Indemnification and Insurance. An Advisory Director shall be entitled
to the same Indemnification and Insurance provided under Article IX of these
By-Laws as that which would apply to an officer or director of the Corporation.
ARTICLE IV
COMMITTEES
Section 1. Organization. By resolution adopted by the Board of Directors, the
Board may designate one or more committees of the Board of Directors, including
an Executive Committee. The Chairmen of such committees shall be elected by the
Board of Directors. Each committee must be comprised of one or more members,
each of whom must be a Director and shall hold committee membership at the
pleasure of the Board. The Board of Directors shall have the power at any time
to change the members of such committees and to fill vacancies in the
committees. The Board may delegate to these committees any of its powers, except
the power to authorize dividends on stock, authorize the issuance of stock,
recommend to shareholders any action requiring shareholders' approval, amend
these Bylaws, approve any merger or share exchange which does not require
shareholder approval, approve or terminate any contract with an "investment
adviser" or "principal underwriter," as those terms are defined in the 1940 Act,
or to take any other action required by the 1940 Act to be taken by the Board of
Directors.
Section 2. Executive Committee. Unless otherwise provided by resolution of the
Board of Directors, when the Board of Directors is not in session, the Executive
Committee, if one is designated by the Board, shall have and may exercise all
powers of the Board of Directors in the management of the business and affairs
of the Corporation that may lawfully be exercised by an Executive Committee. The
President and Chairman shall automatically be members of the Executive
Committee.
Section 3. Proceedings and Quorum. In the absence of an appropriate resolution
of the Board of Directors, each committee may adopt such rules and regulations
governing its proceedings, quorum, and manner of acting as it shall deem proper
and desirable. In the event any member of any committee is absent from any
meeting, the members thereof present at the meeting, whether or not they
constitute a quorum, may appoint a member of the Board of Directors to act in
the place of such absent member.
Section 4. Other Committees. The Board of Directors may appoint other
committees, each consisting of one or more persons, who need not be Directors.
Each such committee shall have such powers and perform such duties as may be
assigned to it from time to time by the Board of Directors, but shall not
exercise any power which may lawfully be exercised only by the Board of
Directors or a committee thereof.
ARTICLE V
OFFICERS
Section 1. General. The officers of the Corporation shall be a Chairman; Chief
Executive Officer; Vice President; Treasurer; and Secretary and may include one
or more Vice Presidents, Assistant Secretaries, or Assistant Treasurers, and
such other officers as may be appointed in accordance with the provisions of
Section 11 of this Article.
Section 2. Election, Tenure and Qualifications. The officers of the Corporation,
except those appointed as provided in Section 11 of this Article V, shall be
elected by the Board of Directors at its first meeting or such subsequent
meetings as shall be held prior to its first annual meeting, and thereafter
annually at its annual meeting. If any officers are not elected at any annual
meeting, such officers may be elected at any subsequent regular or special
meeting of the Board. Except as otherwise provided in this Article V, each
officer elected by the Board of Directors shall hold office until the next
annual meeting of the Board of Directors and until his or her successor shall
have been elected and qualified. Any person may hold one or more offices of the
Corporation except that no one person may serve concurrently as both President
and Vice President. A person who holds more than one office in the Corporation
may not act in more than one capacity to execute, acknowledge, or verify an
instrument required by law to be executed, acknowledged, or verified by more
than one officer. No officer, other than the Chairman or [Vice Chairman], need
be a Director.
Section 3. Vacancies and Newly Created Officers. If any vacancy shall occur in
any office by reason of death, resignation, removal, disqualification, or other
cause, or if any new office shall be created, such vacancies or newly created
offices may be filled by the Board of Directors at any regular or special
meeting or, in the case of any office created pursuant to Section 11 hereof, by
any officer upon whom such power shall have been conferred by the Board of
Directors.
Section 4. Removal and Resignation. Any officer may be removed from office by
the vote of a majority of the members of the Board of Directors given at a
regular meeting or any special meeting called for such purpose. Any officer may
resign from office at any time by delivering a written resignation to the Board
of Directors, the President, the Chairman, the Secretary, or any Assistant
Secretary. Unless otherwise specified therein, such resignation shall take
effect upon delivery.
Section 5. President. The President shall be an executive officer of the
Corporation and, in the absence of the Chairman, shall preside at all
shareholders' meetings and at all meetings of the Board of Directors. Subject to
the supervision of the Chairman and the Board of Directors, the President shall
have general charge of the business, affairs, and property of the Corporation
and general supervision over its officers, employees, and agents. Except as the
Board of Directors may otherwise order, the President may sign in the name and
on behalf of the Corporation all deeds, bonds, contracts, or agreements. The
President shall exercise such other powers and perform such other duties as from
time to time may be assigned by the Board of Directors.
Section 6. Chairman. The Chairman shall be the chief executive officer of the
Corporation and shall preside at all shareholders' meetings and at all meetings
of the Board of Directors, and may be ex officio a member of all committees of
the Board of Directors. Except as the Board of Directors may otherwise order,
the Chairman may sign in the name and on behalf of the Corporation all deeds,
bonds, contracts, or agreements. The Chairman shall exercise such other powers
and perform such other duties as from time to time may be assigned by the Board
of Directors.
Section 7. The Vice Chairman shall be the chief operating officer of the
Corporation and, in the absence of the Chairman, shall preside at the all
shareholders' meetings and at all meetings of the Board of Directors. Except as
the Board of Directors may otherwise order, the Vice Chairman may sign in the
name and on behalf of the Corporation all deeds, bonds, contracts, or
agreements. The Vice Chairman shall exercise such other powers and perform such
other duties as from time to time may be assigned by the Board of Directors.
Section 8. Vice President. The Board of Directors may from time to time elect
one or more Vice Presidents who shall have such powers and perform such duties
as from time to time may be assigned to them by the Board of Directors or the
President. The Board of Directors may establish titles among the Vice Presidents
denoting their relative seniority. At the request of, or in the absence or in
the event of the disability of, the President, the Vice President (or, if there
are two or more Vice Presidents, then the senior of the Vice Presidents present
and able to act) may perform all the duties of the President and, when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President.
Section 9. Treasurer and Assistant Treasurers. The Treasurer shall be the
principal financial and accounting officer of the Corporation and shall have
general charge of the finances and books of account of the Corporation. Except
as otherwise provided by the Board of Directors, the Treasurer shall have
general supervision of the funds and property of the Corporation and of the
performance by the Custodian of its duties with respect thereto. The Treasurer
shall render to the Board of Directors, whenever directed by the Board, an
account of the financial condition of the Corporation and of all transactions as
Treasurer; and as soon as possible after the close of each financial year the
Treasurer shall make and submit to the Board of Directors a like report for such
financial year. The Treasurer shall perform all acts incidental to the office of
Treasurer, subject of the control of the Board of Directors.
Any Assistant Treasurer may perform such duties of the Treasurer as the
Treasurer or the Board of Directors may assign, and, in the absence of the
Treasurer, may perform all the duties of the Treasurer.
Section 10. Secretary and Assistant Secretaries. The Secretary shall attend to
the giving and serving of all notices of the Corporation and shall record all
proceedings of the meetings of the shareholders and Directors in books to be
kept for that purpose. The Secretary shall keep in safe custody the seal of the
Corporation, and shall have responsibility for the records of the Corporation,
including the stock books and such other books and papers as the Board of
Directors may direct and such books, reports, certificates, and other documents
required by law to be kept, all of which shall at all reasonable times be open
to inspection by any Director. The Secretary shall perform such other duties
which appertain to this office or as may be required by the Board of Directors.
Any Assistant Secretary may perform such duties of the Secretary as the
Secretary or the Board of Directors may assign, and, in the absence of the
Secretary, may perform all the duties of the Secretary.
Section 11. Subordinate Officers. The Board of Directors from time to time may
appoint such other officers and agents as it may deem advisable, each of whom
shall have such title, hold office, for such period, have such authority, and
perform such duties as the Board of Directors may determine. The Board of
Directors from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities, and duties. Any officer or
agent appointed in accordance with the provisions of this Section 11 may be
removed, either with or without cause, by any officer upon whom such power of
removal shall have been conferred by the Board of Directors.
Section 12. Remuneration. The salaries or other compensation, if any, of the
officers of the Corporation shall be fixed from time to time by resolution of
the Board of Directors in the manner provided by Section 9 of Article III,
except that the Board of Directors may by resolution delegate to any person or
group of persons the power to fix the salaries or other compensation of any
subordinate officers or agents appointed in accordance with the provisions of
Section 11 of this Article V.
Section 13. Surety Bond. The Board of Directors may require any officer or agent
of the Corporation to execute a bond (including, without limitation, any bond
required by the 1940 Act and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder) to the Corporation in such sum and
with such surety or sureties as the Board of Directors may determine,
conditioned upon the faithful performance of his or her duties to the
Corporation, including responsibility for negligence and for the accounting of
any of the Corporation's property, funds or securities that may come into his or
her hands.
ARTICLE VI
CAPITAL STOCK
Section 1. Certificates of Stock. The interest of each shareholder of the
Corporation may be evidenced by certificates for shares of stock in such form as
the Board of Directors may from time to time authorize; provided, however, the
Board of Directors may, in its discretion, authorize the issuance of
noncertificated shares. No certificate shall be valid unless it is signed by the
Chairman, President, or a Vice President and countersigned by the Secretary or
an Assistant Secretary or the Treasurer or an Assistant Treasurer of the
Corporation and sealed with the seal of the Corporation, or bears the facsimile
signatures of such officers and a facsimile of such seal. In case any officer
who shall have signed any such certificate, or whose facsimile signature has
been placed thereon, shall cease to be such an officer (because of death,
resignation, or otherwise) before such certificate is issued, such certificate
may be issued and delivered by the Corporation with the same effect as if he or
she were such officer at the date of issue.
In the event that the Board of Directors authorizes the issuance of
non-certificated shares of stock, the Board of Directors may, in its discretion
and at any time, discontinue the issuance of share certificates and may, by
written notice to the registered owners of each certificated share, require the
surrender of share certificates to the Corporation for cancellation. Such
surrender and cancellation shall not affect the ownership of shares of the
Corporation.
Section 2. Transfer of Shares. Subject to the provisions of the next sentence of
this Section 2 of Article VI, Shares of the Corporation shall be transferable on
the books of the Corporation by the holder of record thereof in person or by his
or her duly authorized attorney or legal representative (i) upon surrender and
cancellation of any certificate or certificates for the same number of shares of
the same class, duly endorsed or accompanied by proper instruments of assignment
and transfer, with such proof of the authenticity of the signature as the
Corporation or its agents may reasonably require, or (ii) as otherwise
prescribed by the Board of Directors. the Board of Directors may, from time to
time, adopt limitations and rules and regulations with reference to the transfer
of the shares of stock of the Corporation to comply with the requirements of the
Securities Act of 1933, as amended, or other applicable laws. The Corporation
shall be entitled to treat the holder of record of any share of stock as the
absolute owner thereof for all purposes, and accordingly shall not be bound to
recognize any legal, equitable, or other claim or interest in such share on the
part of any other person, whether or not it shall have express or other notice
thereof, except as otherwise expressly provided by law or the statutes of the
State of Illinois.
Section 3. Stock Ledgers. The stock ledgers of the Corporation, containing the
names and addresses of the shareholders and the number of shares held by them
respectively, shall be kept at the principal offices of the Corporation or, if
the Corporation employs a transfer agent, at the offices of the transfer agent
of the Corporation.
Section 4. Transfer Agents and Registrars. The Board of Directors may from time
to time appoint or remove transfer agents and registrars of transfers for shares
of stock of the Corporation, and it may appoint the same person as both transfer
agent and registrar. Upon any such appointment being made, all certificates
representing shares of capital stock thereafter issued shall be countersigned by
one of such transfer agents or by one of such registrars or by both and shall
not be valid unless so countersigned. If the same person shall be both transfer
agent and registrar, only one countersignature by such person shall be required.
Section 5. Fixing of Record Date. The Board of Directors may fix in advance a
date as a record date for the determination of the shareholders entitled to
notice of or to vote at any shareholders' meeting or any adjournment thereof, or
to express consent to corporate action in writing without a meeting, or to
receive payment of any dividend or other distribution or allotment of any
rights, or to exercise any rights in respect of any change, conversion, or
exchange of stock, or for the purpose of any other lawful action, provided that
(1) such record date shall be within ninety days prior to the date on which the
particular action requiring such determination will be taken; (2) the transfer
books shall not be closed for a period longer than twenty days; and (3) in the
case of a meeting of shareholders, the record date shall be at least ten days
before the date of the meeting.
Section 6. Lost, Stolen or Destroyed Certificates. Before issuing a new
certificate for stock of the Corporation alleged to have been lost, stolen, or
destroyed, the Board of Directors or any officer authorized by the Board may, in
its discretion, require the owner of the lost, stolen, or destroyed certificate
(or his or her legal representative) to give the Corporation a bond or other
indemnity, in such form and in such amount as the Board or any such officer may
direct and with such surety or sureties as may be satisfactory to the Board or
any such officer, sufficient to indemnify the Corporation against any claim that
may be made against it on account of the alleged loss, theft, or destruction of
any such certificate or the issuance of such new certificate.
ARTICLE VII
FISCAL YEAR AND ACCOUNTANT
Section 1. Fiscal Year. The fiscal year of the Corporation shall, unless
otherwise ordered by the Board of Directors, be twelve calendar months ending on
the 31st day of December.
Section 2. Accountant.
A. The Corporation shall employ an independent public accountant or a firm of
independent public accountants as its Accountant to examine the accounts of the
Corporation and to sign and certify financial statements filed by the
Corporation. The Accountant's certificates and reports shall be addressed both
to the Board of Directors and to the shareholders. The employment of the
Accountant shall be conditioned upon the right of the Corporation to terminate
the employment forthwith without any penalty by vote of a majority of the
outstanding voting securities at any shareholders' meeting called for that
purpose.
B. A majority of the members of the Board of Directors who are not "interested
persons" (as defined in the 1940 Act) of the Corporation shall select the
Accountant at any meeting held within thirty days before or after the beginning
of the fiscal year of the Corporation or before the annual shareholders' meeting
in that year. The selection shall be submitted for ratification or rejection at
the next succeeding annual shareholders' meeting. If the selection is rejected
at that meeting, the Accountant shall be selected by majority vote of the
Corporation's outstanding voting securities, either at the meeting at which the
rejection occurred or at a subsequent meeting of shareholders called for the
purpose of selecting an Accountant.
C. Any vacancy occurring between annual meetings due to the resignation of the
Accountant may be filled by the vote of a majority of the members of the Board
of Directors who are not interested persons.
ARTICLE VIII
CUSTODY OF SECURITIES
Section 1. Employment of a Custodian. The Corporation shall place and at all
times maintain in the custody of a Custodian (including any sub-custodian for
the Custodian) all funds, securities and similar investments owned by the
Corporation. The Custodian (and any sub-custodian) shall be a bank or trust
company of good standing having an aggregate capital, surplus, and undivided
profits not less than fifty million dollars ($50,000,000) or such other
financial institution or other entity as shall be permitted by rule or order of
the Securities and Exchange Commission. The Custodian shall be appointed from
time to time by the Board of Directors, which shall fix its remuneration.
Section 2. Termination of Custodian Agreement. Upon termination of the agreement
for services with the Custodian or inability of the Custodian to continue to
serve, the Board of Directors shall promptly appoint a successor Custodian, but
in the event that no successor Custodian can be found who has the required
qualifications and is willing to serve, the Board of Directors shall call as
promptly as possible a special meeting of the shareholders to determine whether
the Corporation shall function without a Custodian or shall be liquidated. If so
directed by resolution of the Board of Directors or by vote of the holders of a
majority of the outstanding shares of stock of the Corporation, the Custodian
shall deliver and pay over all property of the Corporation held by it as
specified in such vote.
Section 3. Other Arrangements. The Corporation may make such other
arrangements for the custody of its assets (including deposit arrangements) as
may be required by any applicable law, rule, or regulation.
ARTICLE IX
INDEMNIFICATION AND INSURANCE
Section 1. Indemnification of Officers, Directors, Employees and Agents. The
Corporation shall indemnify its present and past directors, officers, employees,
and agents (including any "investment adviser" or "principal underwriter," as
those terms are defined in the 1940 Act), and any persons who are serving or
have served at the request of the Corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or
enterprise, to the full extent provided and allowed by Illinois Code concerning
corporations, as amended from time to time or any other applicable provisions of
law. Notwithstanding anything herein to the contrary, no director, officer,
investment adviser, or principal underwriter of the Corporation shall be
indemnified in violation of Sections 17(h) and (i) of the 1940 Act. Expenses
incurred by any such person in defending any proceeding to which he or she is a
party by reason of service in the above-referenced capacities shall be paid in
advance or reimbursed by the Corporation to the full extent permitted by law,
including Sections 17(h) and (i) of the 1940 Act.
Section 2. Insurance of Officers, Directors, Employees and Agents. The
Corporation may purchase and maintain insurance on behalf of any person who is
or was serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise, against any liability asserted against that person and
incurred by that person in or arising out of his or her position, whether or not
the Corporation would have the power to indemnify him or her against such
liability. Notwithstanding the foregoing, any insurance so purchased will not
protect or purport to protect any officer or director against liabilities for
willful misfeasance, bad faith, gross negligence, or reckless disregard of duty.
Section 3. Amendment. No amendment, alternation, or repeal of this Article or
the adoption, alteration, or amendment of any other provision of the Articles of
Incorporation or Bylaws inconsistent with this Article shall adversely affect
any right or protection of any person under this Article with respect to any act
or failure to act which occurred prior to such amendment, alteration, repeal, or
adoption.
ARTICLE X
AMENDMENTS
Section 1. General. Except as provided in Section 2 of this Article X, all
Bylaws of the Corporation, whether adopted by the Board of Directors or the
shareholders, shall be subject to amendment, alteration, or repeal, and new
Bylaws may be made by the affirmative vote of a majority of either: (1) the
holders of record of the outstanding shares of stock of the Corporation entitled
to vote, at any annual or special meeting, the notice or waiver of notice of
which shall have specified or summarized the proposed amendment, alteration,
repeal, or new Bylaw; or (2) the Directors, at any regular or special meeting
the notice or waiver of notice of which shall have specified or summarized the
proposed amendment, alteration, repeal, or new Bylaw.
Section 2. By Shareholders Only. No amendment of any section of these Bylaws
shall be made except by the shareholders of the Corporation if the Bylaws
provide that such section may not be amended, altered, or repealed except by the
shareholders. From and after the issue of any shares of the capital stock of the
Corporation, no amendment, alteration, or repeal of this Article X shall be made
except by the affirmative vote of the holders of either: (a) more than
two-thirds of the Corporation's outstanding shares present at a meeting at which
the holders of more than fifty percent of the outstanding shares are present in
person or by proxy, or (b) more than fifty percent of the Corporation's
outstanding shares.
I certify that the bylaws are the official bylaws of Origin Investment Group,
Inc., as adopted by the Board of Directors on April 7, 1999, signed this day of
April, 1999.
/s/ Adnan Rizvi
- ---------------------------------
Adnan Rizvi
Corporate Secretary
ORIGIN INVESTMENT GROUP, INC.
SUBSCRIPTION AGREEMENT
The undersigned (the "Subscriber"), hereby subscribes to purchase
shares of Common Stock, $.001 par value ("Shares"), issued by Origin Investment
Group, Inc., a Maryland corporation (the "Company"), in the amount set forth on
the signature page below ("Commitment"), on the terms and conditions set forth
herein. (Capitalized terms used and not defined in this Agreement have the
meanings assigned to them in the Offering Circular dated August 5, 1999 referred
to below.)
1. SALE AND PURCHASE OF SHARES. Subject to the terms and conditions set
forth in this Agreement, and in reliance upon the representations and warranties
of the respective parties set forth in this Agreement, the Company hereby agrees
to sell to the Subscriber, and the Subscriber irrevocably subscribes for and
agrees to purchase from the Company, Shares in the amount of its Commitment.
2. MANNER OF PAYMENT. Payments made to purchase Shares shall be made on
or before the payment date (the "Payment Date"). which shall occur no later than
five business days from the date of this Agreement. Payments shall be made by
wire transfer or by personal check.
3. PAYMENT DEFAULT. If payment for the purchase of Shares is received by
the Company from the Subscriber later than 14 days after the Payment Date,
interest will be charged on the overdue amount, calculated at a daily rate equal
on an annualized basis to four percentage points over the highest rate of
interest reported from time to time as a "prime rate" by The Wall Street Journal
(provided that, if such rate is in excess of the maximum rate of interest
permitted by law, interest will be charged at such maximum rate). If a default
in a payment under this Subscription Agreement (including interest charges)
remains uncured for 30 days following a payment date, the Company may, at its
option, pursue any or all of the following remedies: (i) cancel the balance of
the Subscriber's subscription (including the installment as to which the
Subscriber had defaulted), (ii) assign the remaining balance of the Subscriber's
subscription (including the installment as to which the Subscriber has
defaulted) to another investor selected by the Company and/or (iii) repurchase
the Shares previously purchased by the Subscriber at a purchase price per Share
equal to the lesser of 60% of the Shares' then-current Net Asset Value or the
prices at which the Subscriber purchased the Shares. The election by the Company
to pursue one or more of these remedies will not preclude the Company from
pursuing any rights it may have to seek judicial enforcement of the Subscriber's
subscription obligation.
4. RESTRICTION ON ASSIGNMENT OF SUBSCRIPTION AGREEMENT. Neither this
Agreement nor any rights or interests herein may be assigned by the Subscriber
nor may the obligations of the Subscriber be assumed or performed by another,
other than a successor to the entire business and affairs of the Subscriber,
without the express prior written consent of the Company. The Company may
withhold consent to the assignment of this Agreement in its sole discretion.
Except as provided in Section 3 hereof, neither this Agreement nor any rights or
interests herein may be assigned by the Company.
5. RESTRICTION ON TRANSFER OR ASSIGNMENT OF SHARES. Neither the Shares
to be issued hereunder nor any right or interest therein may be sold, assigned,
pledged or otherwise transferred by the Subscriber without the consent of the
Company. Without limiting the foregoing, the Company may withhold consent to a
proposed transfer if the Company reasonably determines that any of the following
requirements are not met:
(i) The transfer is made to an institutional or individual accredited
investor who the Company determines would have been eligible to participate in
the initial offering of the Shares, in a transaction that, in the opinion of
counsel for the Subscriber and counsel for the Company, complies with the
requirements of the Securities Act of 1933 (the "1933 Act") and any applicable
state securities laws;
(ii) The transfer is made in a transaction that the Company
determines, after consideration of an opinion of counsel for the proposed
transferee and such additional counsel as the Company may wish to consult on the
matter, will not make it more difficult for the Company to comply with the
requirements of the 1933 Act applicable to the Company and its operations,
applicable state securities laws, the 1940 Act, the Internal Revenue Code of
1986, as amended (the "Code") or the Employee Retirement Income Security Act of
1974 ("ERISA"); and
(iii) The transfer is made to a transferee who agrees to be bound by
all the provisions of this Agreement that pertain to an owner of Shares,
including provisions relating to the repurchase of the Shares being transferred
in the event of a payment default by the party liable to meet additional capital
calls hereunder.
To facilitate compliance with Section 4 and this Section 5 and with the
pertinent provisions of the Articles of Incorporation of the Company, the
Subscriber will not effect a transaction restricted by either such Section
without advance notice to the Company and prior written approval by the Company.
A transfer of all or some of the Shares owned by a shareholder will not relieve
the shareholder of any unfulfilled subscription obligation, unless the Company
expressly consents in writing to the assumption of the transferor's Subscription
Agreement by another party.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants that:
(i) The Company is duly organized, validly existing and in good
standing under the laws of the State of Maryland and has the power and authority
to carry on its business as now conducted and as proposed to be conducted in the
Company's Offering Circular ("Offering Circular") and to issue the Shares
subscribed for hereby. This Agreement and any other documents executed and
delivered by the Company in connection herewith have been duly authorized,
executed and delivered by the Company, and are the legal, valid and binding
obligations of the Company enforceable in accordance with their respective
terms.
(ii) The execution and delivery of this Agreement and any other
documents executed and delivered by the Company in connection herewith do not,
and the performance and consummation of the transactions set forth or
contemplated herein will not, contravene or result in a default under any
provision of existing law or regulations to which the Company is subject, the
provisions of the charter, by-laws or other governing documents of the Company
or any indenture, mortgage or other instrument or agreement to which the Company
is a party or by which it is bound and does not require on the part of the
Company any approval, authorization, license or filing from or with any federal,
state, municipal or foreign board or agency (except such approvals,
authorizations, licenses or filings as have been obtained or made).
(iii) The Company has filed a notice of intent with the
Securities and Exchange Commission, pursuant to Section 54(a) of the 1940 Act,
to in good faith elect to be subject to the provisions of Sections 55 through 65
of the 1940 Act.
7. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER. The Subscriber represents
and warrants that:
(i) This Agreement and any other documents executed and
delivered by the Subscriber in connection herewith have been duly executed and
delivered by the Subscriber, and are the legal, valid and binding obligations of
the Subscriber enforceable in accordance with their respective terms.
(ii) If the Subscriber is an Individual Retirement Account
("IRA"), (a) the Subscriber has the power and authority to purchase the Shares
subscribed for hereby, (b) the execution and delivery of this Agreement and any
other documents executed and delivered by the Subscriber in connection herewith
do not, and the performance and consummation of the transactions set forth or
contemplated herein will not, contravene or result in a default under any
provision of existing law or regulations to which the Subscriber is subject or
the provisions of any custodial agreement, trust instrument or other governing
documents of the Subscriber, and (c) the Subscriber has caused this Agreement to
be executed by one or more of its custodians or trustees thereunto duly
authorized.
(iii) If the Subscriber is an employee benefit plan as defined
in ERISA (an "ERISA Plan"), (a) the execution and delivery of this Agreement and
any other documents executed and delivered by the Subscriber in connection
herewith do not, and the performance and consummation of the transactions set
forth or contemplated herein will not, contravene or result in a default under
any provision of existing law or regulations to which the Subscriber is subject
or the provisions of any trust instrument or other governing documents of the
Subscriber; (b) the Subscriber has caused this Agreement to be executed by one
or more of its fiduciaries thereunto duly authorized; and (c) such fiduciaries,
by executing and delivering this Agreement on behalf of such ERISA Plan,
represent and warrant that (w) they and their co-fiduciaries, if any, have been
informed of the Company's investment objectives, policies and strategies, (x)
the decision to invest plan assets in the Company was made with appropriate
consideration of relevant investment factors with regard to such ERISA Plan; (y)
such decision was made by such fiduciaries without reliance on any investment
advice or recommendation provided by the Company, and is consistent with the
duties and responsibilities imposed upon fiduciaries with regard to their
investment decisions under ERISA; and (z) if the Company's underlying assets are
deemed to be "plan assets" of ERISA Plan investors, such fiduciaries shall be
deemed to have appointed the Company as investment managers of the ERISA Plan
Subscribers with respect to the assets managed in the Company.
(iv) The Subscriber acknowledges that the Shares have not been
registered under the 1933 Act or any state securities laws but are exempt from
such registration pursuant to Regulation E of 1933 Act and the National
Securities Markets Improvements Act of 1996, and can be disposed of at the
discretion of the Subscriber, however, there may not be a public market for the
sale of the Shares at any future time.
(v) The Subscriber acknowledges that the Company will accept
this subscription, and issue the Shares as contemplated hereunder, in a
transaction intended to be exempt from registration under the 1933 Act under
Regulation E thereunder.
(vi) The Subscriber has received and carefully reviewed the
Offering Circular and understands that any information provided other than in
the Offering Circular has been furnished on the understanding that the
Subscriber will refer to the Offering Circular for an authoritative statement on
all matters covered therein with respect to the Company and other information
concerning the Offering. The Subscriber has had reasonable time and opportunity
to ask questions and receive answers concerning the terms and conditions of the
offering and the proposed operations of the Company, and has received responses
to such questions that it has chosen to ask. Subscriber acknowledges that any
information is not intended to predict actual performance of the Company and
that Subscriber has not relied on such information or that purpose. Subscriber
understands that past performance does not guarantee future results
(vii) The Subscriber recognizes that an investment in the
Company involves certain risks and it has taken full cognizance of and
understands the risk factors relating to a purchase of Shares, including those
set forth under the headings "Risk Factors" in the Offering Circular. The
Subscriber is capable of bearing a high degree of risk, including the
possibility of a loss of its investment and the lack of a public market such
that it will not be possible to readily liquidate the investment. The Subscriber
has such knowledge and experience in business and financial matters as to be
capable of evaluating the merits and risks of an investment in the Shares and
protecting its own interest in connection with the investment in the Shares.
(viii) The Subscriber acknowledges that it has not relied upon the
Company or any of its employees, directors, officers or
agents for any investment, tax, legal or ERISA advice in
connection with its purchase of Shares and that the
Subscriber has consulted, to the extent necessary, its own
advisers with respect to the investment, tax, legal or
ERISA considerations of a purchase of Shares.
(ix) The Subscriber acknowledges that there have been no
guarantees or warranties made to it by the Company or any
of its employees, directors, officers or agents, expressly
or by implication, other than as contained in the Offering
Circular, with respect to (i) the approximate length of
time that it will be required to remain an owner of its
Shares; or (ii) the percentage of profit and/or the amount
or type of consideration, profit or loss to be realized as
a result of its investment.
(x) The Subscriber acknowledges that he/she meets the minimum
suitability requirements set forth by the Company with
respect to this offering. Specifically, Subscriber warrants
that:
1) his or her net worth is in excess of SIXTY THOUSAND DOLLARS
($60,000.00) which is exclusive of home, furnishings and automobiles
and any liabilities secured by those assets and his or her expected
income (for the upcoming fiscal year) is at least TWENTY FIVE THOUSAND
DOLLARS ($25,000.00); or
2) his or her net worth is in excess of ONE HUNDRED THOUSAND DOLLARS
($100,000.00), which is exclusive of home, furnishings and automobiles
and any liabilities secured by those assets;
8. COVENANTS OF THE SUBSCRIBER. The Subscriber agrees with the Company
that:
(i) For so long as the Subscriber owns Shares, the Subscriber
shall, upon request, disclose to the Company such information with respect to
direct or indirect holdings of such Shares as the Company deems necessary to
comply with provisions of the Internal Revenue Code of 1986 applicable to the
Company, to comply with requirements of any other appropriate taxing authority,
or to comply with the provisions of the 1940 Act, as any of said laws may be
amended from time to time.
(ii) The Subscriber, if an IRA or an ERISA Plan, will furnish
to the Company promptly upon its request the information called for by
applicable "prohibited transaction" regulations of the Department of Labor and
any other information with respect to Subscriber's parties in interest as the
Company may reasonably require.
(iii) The Subscriber will indemnify and hold the Company
harmless from and against any and all loss, damage or liability due to or
arising out of a breach of any representation or warranty of the Subscriber in
this Agreement or any other document furnished by it to the Company.
(iv) The Subscriber acknowledges that the Company has the exclusive
right and unilateral discretion and authority to accept the subscription
agreement from Subscriber and may refuse to do so if: (a) it deems Subscriber
does not meet the minimum suitability requirements for this Offering; (b) the
Offering has been closed and there are no Shares to fulfill Subscriber's
subscription purchase; and (c) any other reasonable and justifiable basis to
withhold the subscription agreement from being fulfilled on the part of the
Company in issuing Shares to Subscriber. In the event of any of the foregoing
instances, subscriber will be promptly notified in writing by the Company of the
reasons for why it cannot accept the submitted subscription agreement from
Subscriber and will promptly refund any funds submitted by Subscriber via
company check to the Subscriber's address as provided in the subscription
agreement within 5 business days of such notification.
9. NOTICES. The address of the Subscriber for all purposes shall be the
address set forth on the signature page to this Agreement, or such other address
of which the Company has received notice in accordance with the provisions
hereof. The address of the Company for all purposes shall be 980 North Michigan
Avenue, Suite 1400, Chicago, Illinois 60611 or such other address of which the
Subscriber has received notice in accordance with the provisions hereof. Any
notice or communication to be given under this Agreement shall be made in
writing and, unless otherwise herein provided, shall be deemed to have been
given when sent by first class to such party at such address.
10. APPLICABLE LAW. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed by the
laws of the State of Illinois.
11. COUNTERPARTS; OTHER AGREEMENTS. This Agreement may be executed in
any number of counterparts, and each of such counterparts shall, for all
purposes, constitute one agreement binding on all the parties, notwithstanding
that all parties are not signatories to the same counterpart.
12. MISCELLANEOUS. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties and their heirs,
executors, administrators, successors, legal representatives and assigns. This
Agreement constitutes the entire agreement among the parties pertaining to the
subject matter contained in this Agreement and supersedes all prior
understandings of the parties. The invalidity or unenforceability of any one
provision of this Agreement shall in no way affect the validity of any other
provision, and all other provisions shall remain in full force and effect. No
waiver by any party of any breach of any term hereof shall be construed as a
waiver of any subsequent breach of that term or any other term of the same or of
a different nature.
13. TAX CERTIFICATION. The Subscriber certifies that (1) the taxpayer
identification provided above the Subscriber signature is correct and (2) the
Subscriber is not subject to backup withholding because (i) the Subscriber has
not been notified that the Subscriber is subject to backup withholding as a
result of failure to report interest and dividends or (ii) the Internal Revenue
Service has not notified the Subscriber that the Subscriber is subject to backup
withholding. [Strike out clause (2) if incorrect.]
IN WITNESS WHEREOF, this Agreement has been executed by the Subscriber
as of the date of the Subscriber's signature set forth on the signature page
hereto and, if accepted by the Company, becomes an Agreement binding on the
Company as of the date of the signature signifying acceptance set forth on the
attached signature page.
SUBSCRIBER agrees to purchase _____________ shares of common stock of Origin
Investment Group, Inc. (at a purchase price of $.10 per share of common stock)
in the total amount of ______________ dollars, which is immediately payable by
check submitted with this subscription agreement payable to "Origin Investment
Group, Inc.", 980 North Michigan Avenue, Suite 1400, Chicago, Illinois 60611 or
payable via wire transfer within two business days of mailing this subscription
agreement to Firstar Bank Illinois, 30 North Michigan Avenue, Chicago, Illinois
60602-3496 to the account of "Origin Investment Group, Inc.", with the routing
number 071904779 and account number 422600.
SUBSCRIBER
- --------------------------------------- --------------------
Signed: Date
Please Type or Print the following information:
Name: ________________ ___ _______________________
First Init. Last
Home Address: _____________________________________________________________
Street
---------------------------- ------ ------------------
City State Zip
Home Phone: ___________________ Work Phone: ________________
Other (Pager/Cellular)________________
Social Security Number or Taxpayer ID: ______-___-_____________
