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
(Amendment No. 1)
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 eligible 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
notification 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 initial $200,000
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;
CODE OF ETHICS. The Company recently adopted a Code of Ethics that is to be
adhered to by each Officer, Director and employee of the Company. The Code,
which in part requires that no Officer, Director or employee is to engage in any
activity that would otherwise harm or compromise the integrity of the Company or
any of its Officers, has been established to prevent the misuse of corporate
assets and to act as a set of standards of conduct to be exercised by each
Officer, Director and employee of the Company. The Code further prevents any
Officer, Director and employee from making any false or misleading statements
concerning the business affairs of the Company or that of its employees to any
party outside of the organization.
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 Disinterested 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 identifying 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. As of January 12, 2000, the Company had a total of 4,000,000
shares of common stock outstanding, which equals to a net asset value of $0.10
per share.
On May 5, 1999, the officers, directors and other present shareholders
purchased 2,0000,000 shares of common stock. At the time of issuance of these
shares, the Officers and Directors purchased said shares at a value equal to
$.001 per share or par value. The Company subsequently offered 2,000,000 shares
of its common stock to the public at a price of $.10 per share. On January 12,
2000 the Board of Directors determined that it would be in the best interest of
the Corporation if the original Officers and Directors paid the equivalent value
for the shares issued previously on May 5, 1999 as the value charged to the
public shareholders in the recently completed exempt public offering, so as to
mitigate any dilutive effect the earlier issuance had to the Company's net asset
value per share. Thus, each Officer and Director of the Company who received
shares of the Company at $.001 per share has agreed to pay the difference
between the original purchase price of his/her shares and the price paid by the
public investors. As a result, the Officers and Directors of the Company own
2,000,000 shares or 50.00% of the Company's common stock outstanding, and the
public purchasers own 2,000,000 shares or 50.00% of the Company's common stock
outstanding, for which the public purchasers paid to the Company a total of
$200,000.00 (or $.10 per share.) and the Officers, Directors will have paid a
total of $200,000.00. 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) $0.10
Increase per share attributable to new Investors $0.00
Net Asset Value per share after offering (3) $0.10
Dilution of Net Asset Value per share to new Investors $0.00
(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:
Percent
Total of total Average
Percent consid- consid- price
Shares of total eration eration per
Owned Shares paid paid share
----- ------ ---- ---- -----
Officers/Directors 2,000,000 50.00 $200,000.00 50.0% $.10
Public Investors 2,000,000 50.00 $200,000.00 50.0% $.10
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 two 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 diversity 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.
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
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:
NAME POSITION
---- --------
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
- ----------------------------------------
* 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 registered investment 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 $14.5 million in 1985. Dr. Sear also founded Perex,
Inc., a U.S. based subsidiary of a UK peripherals company. Dr. Sear has also
worked for Advanced Micro Devices between 1978 and 1980 as Manager of Worldwide
Computer Marketing.
The Company anticipates nominating an additional two outside
advisory/disinterested directors within the next several weeks. It is
anticipated that such nominations will be in place prior to entering into any
definitive financing agreements with any eligible portfolio companies.
ITEM 6. EXECUTIVE COMPENSATION.
The Company has not had any operations nor has it paid any remuneration to
any of its officers or directors to date. None of the Officers and Directors
will receive any salary compensation until the Company has raised additional
funding pursuant to a second offering and has entered into a binding letter of
intent to acquire an equity investment interest within an eligible portfolio
company.
Name & Position Salary($)
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
As of January 12, 2000, the Company had a total of 4,000,000 shares of
common stock outstanding which equals to a net asset value of $0.10 per share.
On January 12, 2000, the Board of Directors of the Company determined that
it was in best interests of the Company and of its shareholders to cause Mr.
Rizvi and Mr. Laborde to pay the equivalent value for shares of common stock
originally issued to them on May 5, 1999 as the value paid by public investors
for common stock in the recent exempt public offering ("Initial Reg. E
Offering"). By enacting such measure, the Company retrospectively increased the
net asset value per share of the Company, which was otherwise diluted as a
result of the lower value previously paid by Messrs. Rizvi and Laborde for their
original shares within the Company.
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) $0.10
Increase per share attributable to new Investors $0.00
Net Asset Value per share after offering (3) $0.10
Dilution of Net Asset Value per share to new Investors $0.00
(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:
Percent
Total of total Average
Percent consid- consid- price
Shares of total eration eration per
Owned Shares paid paid share
----- ------ ---- ---- -----
Present Shareholders 2,000,000 50.00 $200,000.00 50.0% $.10
Public Investors 2,000,000 50.00 $200,000.00 50.0% $.10
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 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: 01/13/2000 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. Incorporated by Reference from Form 10
filed on 8/16/99.
3(ii)Bylaws of the Company. Incorporated by Reference from Form 10 filed on
8/16/99.
4.1 Form of Subscription Agreement between the Company and Individual
Investors, previously filed. Incorporated by Reference from Form 10 filed on
8/16/99.
10.2 Form of Stock Transfer Agent Fee Services Agreement between the
Company and Securities Transfer Agent. Incorporated by Reference from Form 10
filed on 8/16/99.
