U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED) For the fiscal year ended: DECEMBER 31, 1999
// TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For transition period from _______
to _______.
Commission File Number:
ORIGIN INVESTMENT GROUP, INC.
(Name of issuer in its charter)
MARYLAND 36-4286069
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
980 NORTH MICHIGAN AVENUE, SUITE 1400, CHICAGO, ILLINOIS 60611
(Address of principal executive offices)(Zip Code)
Issuer's telephone number: (312) 988-4836
Securities registered under Section 12 (b) of the Exchange Act:
NONE
Securities registered under Section 12 (g) of the Exchange Act:
COMMON STOCK, $.001 PAR VALUE
(Title of Class)
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Exchange during the past 12 months
(or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
Days: Yes / / No /X/
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained in this form, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K: / /
The aggregate market value of the voting stock held by non-affiliates of the
Registrant was $7,955,213 based on the last sale price of the Registrant's
common stock on April 10, 2000, ($3.75 per share) as reported by the Nasdaq
Stock Market.
The issuer had 4,121,390 shares of common stock outstanding as of April 10,
2000. Documents incorporated by reference: YES
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ITEM 1: Description of Business
Except for historical information, the following description of our
business contains forward-looking statements based on current expectations that
involve risks and uncertainties. Our actual results could differ materially from
those set forth in these forward-looking statements as a result of a number of
factors. Unless specified otherwise, the terms "we," "us," "our," "the company"
and "Origin" refer to Origin Investment Group, Inc.
Our Company
We were formed on April 6, 1999 as a non-diversified closed-end management
investment company, as those terms are used in the Investment Company Act of
1940 ("1940 Act"). We have elected to be regulated as a business development
company under the 1940 Act. The 1940 Act defines a business development company
(a "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"
consisting of (a) "eligible portfolio companies" as defined in the 1940 Act and
(b) certain other assets including cash and cash equivalents. Because we are
currently in the development stage, we have not invested any of our assets and
all capital raised thus far has been used for working capital. However, we
intend to allocate 70% of our total assets in qualifying assets once we have
successfully completed our Series A Convertible Preferred Stock offering (See
Item 5 below). Upon completion of this offering, if fully subscribed, we will
have raised since our inception, a total of five million dollars ($5,000,000).
We anticipate but are not certain that we will complete this offering in our
current 2000 fiscal year.
An eligible portfolio company generally is a U.S. 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 applied for having its shares listed on a nationally
recognized exchange such as the New York Stock Exchange (NYSE), 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 that is subject to filing, has filed, or has
recently emerged from reorganization protection under Chapter 11 of the
Bankruptcy Act.
Our Business and the Venture Capital Industry
We are in the business of investing in emerging companies that are in the
growth stage of development by providing investment capital and managerial
assistance and otherwise actively helping to build those companies. Initially,
we will seek to invest in companies that are profitable and engaged in
information-technology businesses, broadly defined to include those that
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acquire, warehouse, process and disseminate information and related technology
that is developed to improve business and personal productivity. We have also
identified the following industries that have, in our opinion, strong growth
forecasts in the upcoming several years: manufacturing and distribution of
medical equipment and devices; manufacturing, warehousing and distribution of
computer supplies; manufacturing, procurement and configuration of personal
computers including network integration, imaging equipment, and software
telecommunications technologies; development and manufacture of business
application software and related products and services; Internet electronic
commerce development and consulting services, Web-site development and services,
the manufacture of Internet-related software and products and internet marketing
and consulting services. We may later identify other industries that we believe
offer favorable investment opportunities for us. Regardless of the industry, we
intend to invest in companies seeking to expand their market position and at a
stage of development that would benefit from our financing, market knowledge and
business development and management support.
Our business is a part of the venture capital industry, which is the
providing of growth capital to emerging companies and actively helping to build
those companies. In the past twenty years, venture capital has become a
multi-billion dollar industry that is recognized as one of the country's primary
sources of new economic growth. The principal reasons for this dramatic growth
have been (i) the venture capital industry's investment rate of return and (ii)
the industry's ability to demonstrate that the high risks of loss inherent in
investing in unproven companies can be significantly mitigated through investing
in a number of companies in a balanced portfolio, and through active
professional management of the investments in the individual companies invested
in.
We intend to use many of the risk management and investment strategies
common to the venture capital industry such as diversification, co-investment
with other funds and investing in companies in varying stages of development.
However, historical industry performance is not an indication of future industry
performance or of our performance.
The venture capital industry has grown substantially in recent years. Both
the number of companies receiving venture capital investments and the total
dollar value of those investments have increased substantially. A significant
portion of the increase in venture capital investment has been in
Internet-related companies, a sector of the economy that we intend to emphasize
in our own investing. We believe the substantial growth in venture capital
investing is an indication of the favorable investment opportunities the U.S.
economy offers to companies engaged in venture capital investing, including BDCs
such as Origin. However, there can be no certainty that the economic conditions
that have spurred the growth in venture capital investing opportunities will
continue into the future or that returns offered through venture capital
investing will remain at current levels.
There is a high level of competition in our business. Recently, a large
number of new venture capital companies have come into the marketplace, while at
the same time, already-established venture capital firms have been significantly
increasing the amounts of capital they are raising and investing. According to
statistics provided by the National Venture Capital Association (www.nvca.com)
in 1999, 409 venture capital firms raised a record $46.55 billion, which is a
66.9% increase from 1998 when 275 venture capital firms raised $27.9 billion.
This dramatic growth is not surprising, considering the excellent returns that
venture capital investing has delivered to investors in recent years. Most U.S.
regions saw increases in venture fundraising in 1999. The Northeast ranked the
highest with $16.62 billion raised. Northern California ranked second with
$16.22 billion raised. Southern California and the Rocky Mountains region saw
the largest increase in fundraising activity, 483% and 438% respectively.
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Although we reside in the Midwest, where there is a relatively smaller
number of venture capital companies operating, our search for eligible portfolio
companies extends to other regions and as a result, we will face competition not
only among venture capital companies located in the Midwest but among funds in
regions in which our portfolio companies reside. One of the major disadvantages
that we have in relation to other venture capital companies is that our asset
base, even when we have successfully completed our current Series A Convertible
Preferred offering, will be considerably smaller than those of a majority of
other funds. As a result, we will have less money for diversification of our
investments, which will subject our investments to risks associated with
non-diversified portfolios. In addition, our management has very little
experience in assessing companies for investments, or negotiating and
structuring investments in companies that we identify.
Start-Up Status of Our Company
Our operations began as recently as the latter half of 1999, and we have
had no revenues since inception. And although we have identified a number of
industry sectors in which we may invest, we have not yet made any investments.
Accordingly, it is not possible to describe any revenues, operating profit or
loss and identifiable assets attributable to any industry sectors invested in.
Planned Initial Investment
We intend our first investment to be the acquisition of Encore Investments,
Inc. and Sigma Solutions, Inc., two San Antonio, Texas information-technology
companies. Encore and Sigma are each owned by the same group of four individuals
and are value-added resellers of UNIX and IBM hardware and software solutions
and providers of systems integration services. Sigma intends, in addition, to
enter into the application service provider (ASP) industry through the
development of a data center and the establishment of relationships with
software vendors running on the UNIX, NT and LINUX platforms.
We have entered into a stock purchase agreement with the shareholders of
these two companies providing for us to purchase 100% of the companies'
outstanding capital stock. A copy of the stock purchase agreement between Origin
and the shareholders of Encore and Sigma, as well as copies of the amendments to
it and the letter of intent relating to it, are provided as exhibits to this
annual report. See the "Exhibit Index" at the end of the report.
The acquisition is currently scheduled to close on May 16, 2000.
The purchase price and terms of payment under the agreement, as amended,
are as follows: (a) at closing, Origin is to purchase 80% of Encore's and
Sigma's capital stock by making a cash payment to their shareholders in the
amount of $2,750,000 and delivering promissory notes in the aggregate amount of
$1,300,000 secured by a letter of credit ("LC") issued by an acceptable
financial institution, which notes are to bear 6% simple interest and be due and
payable in full on the first anniversary of the date of closing; and (b) on the
third anniversary of the Closing, Origin is to purchase the remaining 20% of
Encore's and Sigma's capital stock by paying, in cash or restricted Origin
common stock, at the selling shareholders' option, an aggregate amount
equivalent to 20% times then trailing 12 months EBITDA (earnings before
interest, taxes, depreciation and amortization) of Encore and Sigma multiplied
by 4.
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We intend to meet the portion of our purchase-price obligations for this
acquisition required at closing in the following manner: (a) the $2,750,000 cash
amount we are required to pay at closing is to come from the proceeds of our
current offering of Origin Series A Convertible Preferred Stock; and (b) we will
seek the issuance of the required LC in the amount of $1,300,000 by either
depositing sufficient funds with our bank to secure the LC or by issuing
restricted stock to one or more non-affiliated third parties in exchange for
their transfer of an irrevocable LC in favor of Encore and Sigma's selling
shareholders.
In the event that we are unable to complete our current Series A Preferred
offering or fail to raise a sufficient amount of funds through the offering by
the date of the closing of the Encore/Sigma transaction, we will not be able to
meet our stock purchase obligations under the Encore/Sigma stock purchase
agreement, and hence may lose the opportunity to invest in Encore and Sigma. In
addition, in the event that we are unable to reach acceptable terms with any
non-affiliated accredited investors in securing the LC, but are successful in
raising the entire amount of funds sought in our current offering, we will have
to collateralize an LC from our bank with $1,300,000 in cash. This would result
in our having a very limited amount of working capital for our current year of
operations. Also, we have already paid the shareholders of Encore a total of
$200,000 which is nonrefundable and on closing will be applied against the cash
portion of the purchase price, requiring us to pay $2,550,000 instead of
$2,750,000 on the date of closing. In the event that we are unable to complete
our current Series A Preferred offering or fail to raise a sufficient amount of
funds through the offering by the date of the closing, we will forfeit the
$200,000 that we have paid the Encore/Sigma shareholders, as that will then be
construed as a "break up" fee.
We plan to use the remaining proceeds of our current Series A Preferred
offering for working capital and may invest a portion of the excess funds in
professionally managed portfolios of marketable securities. However, we intend
to adhere to our capital structure requirements by not investing greater than
30% of our total assets in non-qualifying assets. See the discussion of
"qualifying assets" earlier in this Item 1.
Our Growth Strategy
Origin's growth strategy is to invest in a diverse array of businesses that
are involved in information technology and are at various stages of business
development. Out of the funds we raise in our current Series A Preferred
offering and all subsequent offerings in the next 30 months, our strategy is to
invest 65% of the funds that we are required to invest in qualifying assets (see
above), in companies that are in the emerging-growth and/or mezzanine stage of
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development. We define emerging growth-stage companies as those that have
initiated or are about to initiate full-scale operations and sales, but may not
be showing a profit. We define mezzanine-stage companies as those that are
approaching or have attained break even or profitability and are continuing to
expand.
We may invest the remaining funds that we are required to invest in
qualifying assets in companies in the start-up stage or the seed-capital stage.
We will limit our investments in seed-capital companies to 10% of the funds that
we are required to invest in qualifying assets. We define start-up companies as
those that are completing or have completed product development and initial
marketing, but have not sold their products commercially. Generally such
companies have made market studies, assembled key management, developed a
business plan and are ready to commence operations. We believe that 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. Seed-capital companies' 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. We believe it is beneficial to minimize the inherent
risks associated with investing in early-stage companies. Our current policy is
therefore to invest only a total of 35% of our assets that are classified as
qualifying assets in companies at the seed and start-up level over the next
three years.
Number of Persons Employed
We currently have three employees. We anticipate hiring a chief financial
officer, one marketing executive, and one in house attorney within a few weeks
of closing of our current Series A Preferred offering. We have not yet
identified any specific individuals for these positions.
Available Information About Our Company
We are classified as a reporting company and therefore periodically file
reports with the United States Securities and Exchange Commission. The public
may read and copy any materials we file with the SEC at the SEC's Public
Reference Room located at 450 Fifth Street, N.W., Washington, D.C. 20549.
Information on the operation of the Public Reference Room is available by
calling the SEC at 1-800-SEC-0330.
We occasionally file reports electronically with the SEC. The public may
access reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC online at
`http://www.sec.gov'. Other information about our company is available at our
Web site located at `http://www.origininternational.com'.
ITEM 2: PROPERTIES
We currently lease office space and facilities at two locations in downtown
Chicago, Illinois, 200 South Wacker Drive, Suite 3100, and 980 North Michigan
Avenue, Suite 1400. Our South Wacker Drive address is our principal office and
we hold this space under a month-to-month lease. Our North Michigan Avenue
address contains additional conference and office facilities we periodically
utilize and is held under an automatically renewing month-to-month lease that is
cancelable on thirty days' written notice. We believe our space at both
addresses is suitable and adequate to meet our current needs, although we
foresee a need for more space as our operations expand. We presently intend to
lease additional office space at our South Wacker Drive address later in the
year.
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ITEM 3. LEGAL PROCEEDINGS
We are not a party to any legal proceeding, nor is any of our property the
subject of any legal proceeding. We are not aware of any such legal proceedings
being contemplated by governmental authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We held a special meeting of stockholders on November 30, 1999 in which a
majority of our record stockholders as of November 29, 1999 approved: (1) the
adoption of our 1999 Employee Stock Incentive Plan and (2) the adoption of our
1999 Management Incentive Program. We believe that the Employee Stock Incentive
Plan plays an integral role in our ability to attract and retain key employees
and directors and provides incentives for them to promote our financial success.
We believe that the 1999 Management Incentive Program will also play a central
role in rewarding and providing incentives to key management personnel of Origin
and its business units for achieving performance goals that promote Origin's
financial success and enhance the value of our shares for our stockholders. As
of the record date of November 29, 1999, there were a total of 3,855,000 shares
of common stock issued and outstanding held by 323 stockholders. On November 30,
1999, holders of a majority of the outstanding shares of our common stock,
representing 2,000,000 shares, voted in favor of adopting the 1999 Employee
Stock Incentive Plan and the 1999 Management Incentive Program. We mailed an
information statement as required under the SEC's Regulation 14C to our
stockholders of record on December 3, 1999 and filed a definitive information
statement on Schedule 14C on December 6, 1999.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information
During the year 1999, there was no established public trading market for
our common stock. Beginning February 9, 2000, our common stock has traded on the
NASDAQ Over-the-Counter Bulletin Board under the symbol "OGNI." Since March 15,
2000, our common stock has traded on the Frankfurt Stock Exchange under the
symbol "OGN."
Holders
As of April 10, 2000 there were approximately 296 holders of record of
Origin common stock.
Dividends
To date, we have not paid a cash dividend. We do not intend to pay any cash
dividends before we have determined that we will qualify for the favorable
pass-through tax treatment available to registered investment companies ("RICs")
under the Internal Revenue Code. Until we meet those requirements, we will be
taxed as an ordinary corporation on our taxable income for a given year (even if
the income is distributed to our stockholders). We wish to avoid this double
taxation of any net investment income and realized capital gains we may be able
to distribute to our stockholders. In order to qualify as a RIC, we must, at the
end of the first year in which we so qualify, have no accumulated earnings and
profits from years in which we were not taxed as a RIC. There are also other
requirements we will have to meet, including diversification requirements. We
expect that, starting in the year 2001, we will seek to meet the requirements.
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Recent Sales Of Unregistered Securities
On May 5, 1999, Origin issued 1,000,000 shares of common stock each to Omar
A. Rizvi, Origin's Chairman of the Board and President, and Gregory H. Laborde,
Origin's Chief Executive Officer and a director of Origin. Mr. Rizvi and Mr.
Laborde initially purchased the shares at a price equal to the shares' par
value, $.001 per share, each paying $1,000. On January 12, 2000, Origin's Board
of Directors determined that it was in the best interests of Origin that Mr.
Rizvi and Mr. Laborde pay the same value for their shares as that paid by public
investors in Origin's initial 1999 Regulation E offering. Accordingly, on that
date Mr. Rizvi and Mr. Laborde each executed a secured promissory note payable
to Origin in the principal amount of $99,000. Each note bears interest at the
rate of 5.16% per annum and principal and interest on each note is due January
12, 2005. Origin's sales of common stock to Mr. Rizvi and Mr. Laborde were
exempt from registration under the Securities Act of 1933 pursuant to Section
4(2) of that act's exemption for transactions by an issuer not involving any
public offering. Mr. Rizvi and Mr. Laborde purchased their shares as a long-term
investment.
Origin sold 2,000,000 shares of its common stock to the public in an
offering that commenced on August 24, 1999 and closed on December 3, 1999. The
aggregate offering price was $200,000. Origin conducted the offering according
to the requirements of Regulation E under the Securities Act, exempting the
shares issued from registration.
Origin sold 100,000 shares of common stock for $100,000 to an investor on
January 18, 2000, and sold 21,390 shares of common stock for $99,998.25 to
another investor on February 12, 2000. These investors were persons personally
known to Origin officers. Each of the sales was conducted according to the
requirements of Regulation E, exempting the shares issued from registration.
At the time of this annual report, Origin is conducting an offering of
16,000 shares of Series A Convertible Preferred Stock for an aggregate offering
price of $4,600,000, or $287.50 per share of Series A Convertible Preferred
Stock, available only to accredited investors. The Series A Convertible
Preferred Stock converts into common stock in stages occurring at one-month
intervals over a 10-month period. Ten percent of the outstanding shares of the
Series A Convertible Preferred Stock will automatically convert into Origin
common stock on the 15th of every month beginning in April 2000 and ending in
January 2001. Each share will convert into 100 shares of free-trading common
stock. The conversions will occur on a pro rata basis so that 10% of each
holder's shares will convert each month. Holders of Series A Convertible
Preferred Stock will pay no additional consideration for the conversion into
common stock. The funds we receive from this offering are to be placed in an
escrow account to be released to us once a total of $2,650,000 has been
deposited into this escrow account. In the event the funds deposited do not
reach $2,650,000 on or before the closing date of the Encore/Sigma transaction
(described in Item 1 above), we will direct the escrow agent to return these
funds to the original investors. The offering is being conducted according to
the terms of Regulation E, making the shares of preferred stock and the shares
of common stock underlying the preferred stock exempt from registration under
the Securities Act.
In addition to the current offering of Series A Convertible Preferred
Stock, we are offering restricted stock to persons who invest in that offering.
Investors in the Series A Preferred offering are being offered one additional
restricted common share for every $10 they invest in the Series A Preferred
offering if they will agree not to deposit their funds into the escrow account
and allow us to use their funds for current working capital. For example, an
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investor who purchases 200 Series A Preferred shares and agrees to put his
investment at risk to be used as working capital will receive an additional
5,750 shares of restricted common stock. The total shares of common stock to be
received by that investor would be 20,000 free-trading shares to be received
through conversion of his preferred shares, and 5,750 restricted shares issued
on the date of investment.
ITEM 6: SELECTED FINANCIAL DATA
Operating Expenses $(199,370)
Other expense, net (6,059)
Net Loss $(205,429)
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Average Common Shares Outstanding and Common
Share Equivalent 2,777,357
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Net Loss Per Common Share - Basic and Diluted $(0.07)
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Note: Since its inception, the Company's efforts have been devoted to raising
capital and seeking out companies to acquire. Accordingly, through the date of
these financial statements, the Company is considered to be in the development
stage and the accompanying financial statements represent those of a development
stage enterprise.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the financial statements and the
related notes included elsewhere in this report. This discussion contains
forward-looking statements, the accuracy of which depends on risks and
uncertainties. Actual results could differ materially from those expressed in
the forward-looking statements.
Overview
Since its inception, the Company's efforts have been devoted to raising
capital and seeking out companies to acquire. Accordingly, through the date of
these financial statements, the Company is considered to be in the development
stage and the accompanying financial statements represent those of a development
stage enterprise.
The Company's financial statements are presented on a going concern basis,
which contemplates the realization of assets and satisfaction of liabilities in
the normal course of business.
The Company has experienced a loss since inception and has negative cash
flows from operations and has a stockholder's equity deficiency. For the period
ended December 31, 1999, the Company experienced a net loss of $205,429.
The Company's ability to continue as a going concern is contingent upon its
ability to raise additional capital. In addition, the Company's ability to
continue as a going concern must be considered in light of the problems,
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expenses and complications frequently encountered by entrance into established
markets and the competitive environment in which the Company operates.
Management is pursuing various sources to raise capital and has purchase
agreements in place to acquire certain companies, contingent on due diligence
and the ability to raise capital. There can be no assurance that the Company
will be able to raise capital when needed or obtain such on terms satisfactory
to the Company, if at all. Failure to raise capital may result in the Company
depleting its available funds and not being able to fund its investment
pursuits.
The report of the Company's Independent Certified Public Accountants'
includes an explanatory paragraph expressing substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the Company to
continue as a going concern.
For the period from inception through December 31, 1999, our activities
were limited to: investigating and identifying potential eligible portfolio
companies; raising capital through the offering of our stock; structuring and
negotiating investment contracts with two eligible portfolio companies, Encore
Investments, Inc. and Sigma Solutions, Inc. (see Item 1); performing due
diligence concerning identified eligible portfolio companies; and conducting
financial audits on our initial planned investment in Encore and Sigma. As a
result of these activities, our operating expense was $199,370 for the period
ending December 31, 1999, consisting primarily of professional fees, $109,442,
travel and entertainment, $31,655, and office rent, $23,007. Our operations
since December 31, 1999 have consisted of these same activities. We have not yet
acquired any portfolio investments and since inception we have had no revenues.
In our initial Regulation E offering of common stock that commenced August
24, 1999 and ended December 3, 1999, we raised an aggregate amount of $200,000
of capital. We used the funds for operating expenses, legal and accounting fees,
working capital and the preparation of an initial due diligence report on Encore
and Sigma. During the first quarter of 2000 we raised an additional $200,000 in
another Regulation E offering of common stock. See Item 5 for a discussion of
these offerings.
In order to continue our activities, we will have to continue to raise
capital through offerings of Origin securities. In particular, we are in
immediate need of additional capital for use in closing our acquisition of
Encore and Sigma on May 16, 2000. Although we expect our current offering of
Series A Convertible Preferred Stock to provide us with the approximately
$2,750,000 we require for the acquisition, we are not certain that we will
succeed in raising that amount. If we cannot raise the capital we need for this
acquisition and our stock purchase agreement with the shareholders of Encore and
Sigma terminates, we will forfeit $200,000 that we have paid them for postponing
the closing date, an amount that is to be credited against our purchase price if
the closing occurs by May 16, 2000. Any failure to raise sufficient capital in
the current or in later Origin offerings could, in addition, require us to
substantially curtail our portfolio-investment acquisition efforts in general,
and could require us to cease operations.
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Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards "SFAS" No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments and hedging activities. It requires that an
entity recognizes all derivatives as either assets or liabilities in the
statement of financial position and measures these instruments at fair market
value. SFAS No. 133 has been amended by SFAS No. 137, which delayed the
effective date to periods beginning after June 15, 2000. The Company, to date,
has not engaged in derivative and hedging activities.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 is effective for
financial statements for years beginning after December 15, 1998. SOP 98-1
provides guidance over accounting for computer software developed or obtained
for internal use, including the requirement to capitalize and amortize specific
costs. The Company has followed this policy since its inception.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Origin does not engage in any hedge transactions or hold any derivative
financial instruments. As of the end of 1999, Origin was not exposed to any
material interest-rate, foreign-currency, commodity-price or other type of
market or price risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data called for by this item are
listed in the accompanying table of contents for financial statements and
financial statement schedule and are filed herewith.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is information about our directors and executive officers,
including information about their principal occupations during the last five
years, other directorships held by them, and their ages. Directors are elected
to serve until the next annual meeting. Officers are elected annually by our
directors and serve at the discretion of the Board.
Name Age Position
- ---- --- --------
Omar A. Rizvi 33 Chairman of the Board and President
Gregory H. Laborde 35 Director and Chief Executive Officer
Scott K. Lindenberger 25 Corporate Secretary and Vice
President of Operations
David W. Sear 55 Advisory Director
Ronald J. Kaufman 31 Advisory Director
-11-
<PAGE>
Backgrounds
Omar A. Rizvi. Mr. Rizvi has held the positions of Chairman of the Board
and President of Origin since Origin was formed in April 1999. Since 1993 he has
been Managing Partner of Rizvi & Associates, LLP, a Chicago law firm
specializing in corporate and securities law. From June, 1997 to December, 1998
he held the position of Executive Vice President and General Counsel at Griffin
Industries, Inc., a Seattle-based business development company specializing in
equipment rental and distribution companies. There he was responsible for
managing all aspects of Griffin's corporate, transactional and
securities-related legal work from the time of its incorporation to its
successful raising of several million dollars in equity capital. While at
Griffin he also organized an in-house due-diligence review program for assessing
investment opportunities in potential eligible portfolio companies. From 1994 to
1995, Mr. Rizvi was General Counsel for Hughes Resources, Inc., an oil and gas
holding and distribution company located in Houston, Texas. He has acted as
issuer's counsel for several publicly traded companies, including Canton
Industrial and Applied Technologies, Inc. Mr. Rizvi holds a B.A. in economics
and philosophy with a minor in engineering from the University of Illinois, a
J.D. from the University of San Francisco School of Law, and an LL.M. (master of
laws degree) in securities regulation from the Georgetown University Law Center.
Gregory H. Laborde. Mr. Laborde has been a director and the Chief Executive
Officer of Origin since April 1999. Since January 1998, he has been the
President and CEO at GHL Group, Ltd., a New York City-based corporate consulting
firm he founded. GHL Group specializes in providing private companies with
strategic financial planning and assisting them with the processes of going
public, raising additional capital and increasing shareholder awareness. From
1986 to 1997, Mr. Laborde has worked as an investment banker and producing
stockbroker at a number of investment banks and brokerage firms in New York
City. During that time, he was involved in over 20 public and private financing
transactions involving such companies as Dove Entertainment, a firm he helped
structure and which he assisted in raising $7.5 million in a private placement.
From February 1997 to January 1998 he was a partner with Tiger Financial Group,
LLC an investment banking firm. From June 1994 to February 1997 Mr. Laborde was
a producing stock broker with Whale Securities Co., LP. Mr. Laborde holds a B.S.
in engineering from Lafayette College.
Scott K. Lindenberger. Mr. Lindenberger has been Corporate Secretary and
Vice President of Operations of Origin since April 1999. From November, 1998 to
May, 1999, he worked as Client Services Associate for InterOffice/Advantis, a
nationwide executive suite company where his responsibilities included
development and implementation of new marketing initiatives, client relations,
and development of core business services. From October, 1997 to June, 1998 Mr.
Lindenberger worked as Marketing Assistant for Trus Joist MacMillan, a large
international manufacturing company. There his responsibilities included
developing marketing materials, coordinating corporate marketing projects, and
supporting Trus Joist's Regional Marketing Manager. Mr. Lindenberger holds a
B.A. in English and cultural studies from Drake University.
David W. Sear, Ph.D. Dr. Sear, who holds a Ph.D. in solid state physics
from the University of London, has been an advisory director of Origin since
April 1999. An advisory director is not a member of the Board of Directors. From
1994 to 1996, Dr. Sear was employed by Integrated Circuit Systems of San Jose,
-12-
<PAGE>
California, a [kind of business] company where he was responsible for marketing
and engineering. From 1995 to 1996, Dr. Sear was that company's President and
Chief Operating Officer. While there, he focused his efforts on restructuring
the company to develop a CMOS single-chip 100Mbs Ethernet transceiver. From 1991
to 1994, Dr. Sear was the President and Chief Operating Officer of Catalyst
Semiconductor. During his tenure there, in May 1993, Catalyst Semiconductor
raised $33 million in a public offering. From 1987 to 1991, Dr. Sear was
employed by Fujitsu Microelectronics as Vice President of Marketing for all of
Fujitsu's integrated services products marketed in North and South America. From
1984 to 1987, Dr. Sear was Vice President of Marketing and Sales at ICI Array
Technology, whose sales at the time increased from $1 million in 1983 to $5.5
million in 1984 and $14.5 million in 1985. From 1978 to 1980, Dr. Sear held the
position of Manager of Worldwide Computer Marketing at Advanced Micro Devices.
In addition, Dr. Sear founded Perex, Inc., a U.S.-based subsidiary of a U.K.
peripherals company.
Ronald J. Kaufman. Mr. Kaufman has been an advisory director of Origin
since November, 1999. Since April 1999 he has been Director of US operations for
International Informatics Solutions, a subsidiary of British-owned FI Group,
which provides Business Technology Solutions. From February 1997 to March 1999,
Mr. Kaufman held the position of Vice President of Business Development with
Anderson Consulting in New York City, where he worked to restructure the
Business Technology Services group of Anderson Consulting. From March 1996 to
February 1997, Mr. Kaufman served as Chief Information Officer of Process
Engineering for the Corporate Technology group of GE Capital, where his
responsibilities included capitalization of applications development across all
28-business groups. From May 1993 to March 1996, Mr. Kaufman worked as Senior
Project Manager at GE Capital in Stamford, Connecticut. Mr. Kaufman obtained the
rank of Lieutenant in the United States Navy in 1993 and has served overseas in
the Persian Gulf Theater and in Bosnia as Weapons Logistics Officer aboard the
USS Mount Baker AE-34 and USS Santa Barbara AE-28. Mr. Kaufman holds an M.A. in
management information systems from New York University as well as a M.A. from
Lehigh University. Mr. Kaufman has a B.S. in Psychology from the University of
North Carolina.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires our executive officers and directors, and persons who beneficially own
more than 10% of a registered class of Origin's equity securities, to file
reports of beneficial ownership and changes in ownership with the SEC. Our
executive officers, directors and 10% beneficial owners have failed to file
these reports. Omar A. Rizvi has not yet filed: a Form 3 to report his status as
an Origin executive officer, director and 10% beneficial owner, and his stock
ownership at the time Origin's registration under Section 12 of the Exchange Act
became effective in October 1999; a Form 4 to report his receipt in November
1999 of options to purchase Origin common stock; or a Form 5 reporting those
matters after the end of fiscal year 1999. Gregory H. Laborde has not yet filed:
a Form 3 to report his status as an officer, director and 10% beneficial owner,
and his stock ownership at the time Origin's registration under Section 12 of
the Exchange Act became effective in October 1999; a Form 4 to report his
receipt in November 1999 of options to purchase Origin common stock; or a Form 5
reporting those matters after the end of fiscal year 1999. Scott K. Lindenberger
has not yet filed: a Form 3 to report his status as an Origin executive officer;
a Form 4 to report his receipt in November 1999 of options to purchase Origin
common stock; or a Form 5 reporting those matters after the end of fiscal year
1999. Neither David W. Sear nor Ronald J. Kaufman has yet filed a Form 3 to
report his status as an Origin advisory director or a Form 5 reporting that
after the end of fiscal year 1999. These filings have not been filed as a result
of oversight and will be filed within the next several days.
-13-
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation
The following table provides information about the compensation earned
by Origin's executive officers during Origin's 1999 fiscal year, which began on
April 6, 1999 when the company was formed and ended December 31, 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d)
Name Securities
and Other Restricted Underlying
Principal Annual Stock Options/ LTIP All Other
Position Year Salary Bonus Compensation Awards SARs Payouts Compensation
========================= ====== ======= ======= =============== ================ ============ ======= =============
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Omar A. Rizvi 1999 0 0 0 - 200,000/0 - $50,825
Chairman, President
========================= ====== ======= ======= =============== ================ ============ ======= =============
Gregory H. Laborde 1999 0 0 0 - 200,000/0 - -
CEO, Director
========================= ====== ======= ======= =============== ================ ============ ======= =============
Scott K. Lindenberger 1999 0 0 0 - 50,000/0 - -
Corporate Secretary
========================= ====== ======= ======= =============== ================ ============ ======= =============
Footnotes to table:
<FN>
(a) Origin was formed in April 1999 and had no operations during 1997 and
1998.
(b) Salary is not calculable at this time salary was not paid to any employee
during the 1999 fiscal year. Salaries will be disclosed as appropriate in
subsequent fiscal years.
(c) Bonuses are not calculable at this time no bonuses were paid to any employee
during the 1999 fiscal year. Bonuses will be disclosed as appropriate in
subsequent fiscal years.
(d) Origin paid $50,825 to Mr. Rizvi's law firm, Rizvi & Associates, LLP, for
its legal services to Origin. The amount of $50,825 represents 75% of Rizvi &
Associates' regular rates for the services that were performed.
</FN>
</TABLE>
Stock Options Granted
The following table provides information about all Origin stock options
granted during fiscal year 1999 to Origin officers.
-14-
<PAGE>
<TABLE>
<CAPTION>
OPTIONS GRANTED IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
- ---------------------------------------------------------------------------- -------------------------------
(a) (b)
Number of
Securities % Total
Underlying Options
Options Granted to Exercise
Employees Price Expiration
Name Granted in Fiscal Year ($/Sh) Date
- ------------------------- ----------- ---------------- -------- ------------ -------------------- ----------
Grant
Date
Present
5% 10% Value
- ------------------------- ----------- ---------------- -------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Omar A. Rizvi 100,000 22.22% $.10 12/23/02 $1,025 $2,100 $ 0
Chairman, President 100,000 22.22% $.20 05/23/03 $2,050 $4,200 $ 0
- ------------------------- ----------- ---------------- -------- ------------ ---------- --------- ----------
Gregory H. Laborde 100,000 22.22% $.10 12/23/02 $1,025 $2,100 $ 0
CEO, Director 100,000 22.22% $.20 05/23/03 $2,050 $4,200 $ 0
- ------------------------- ----------- ---------------- -------- ------------ ---------- --------- ----------
Scott K. Lindenberger 25,000 5.55% $.10 12/23/02 $ 256 $ 525 $ 0
Corporate Secretary 25,000 5.55% $.20 05/23/03 $ 512 $1,050 $ 0
- ------------------------- ----------- ---------------- -------- ------------ ---------- --------- ----------
Footnotes to table:
<FN>
General: The options granted to Origin executive officers in fiscal year 1999
were awarded under the company's 1999 Employee Stock Incentive Plan.
The options that have an exercise price of $0.10 per share vested on
December 23, 1999. The options that have an exercise price of $.20
per share vest on the earlier of May 23, 2000 or when Origin has
entered into its first definitive financing transaction with an
eligible portfolio company, as that term is defined under the
Investment Company Act of 1940 (see discussion under Item 1 of this
report) and raised sufficient additional capital to finance such
investment.
(a) Under the terms of the grant agreements for the options shown in the
table, the Compensation Committee of the Origin Board of Directors
has discretion to lower the exercise price, however, such discretion
is limited in that such adjustment to the exercise or conversion
price is not less than the current market value at the date of
issuance, or if no such market value exists, the current net asset
value of the voting securities of the Company.
(b) On the date the options were granted, November 29, 1999, there was no
public market for the common stock underlying the options. Therefore
no grant-date present value can reasonably be determined.
</FN>
</TABLE>
-15-
<PAGE>
Option Exercises and Year-End Values
The following table provides information about fiscal year 1999
exercises, exercisability and year-end values, of Origin stock options held by
the company's executive officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
- ------------------------------- ----------------- ------------------ ------------------- --------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options Options
at FY-End at FY-End ($)
Shares
Acquired on Exercisable/ Exercisable/
Name Exercise (#) Value Realized ($) Unexercisable Unexercisable
- ------------------------------- ----------------- ------------------ ------------------- --------------------
<S> <C> <C> <C> <C>
Omar A. Rizvi 0 0.00 100,000/100,000 0/0
Chairman, President
- ------------------------------- ----------------- ------------------ ------------------- --------------------
Gregory H. Laborde 0 0.00 100,000/100,000 0/0
CEO, Director
- ------------------------------- ----------------- ------------------ ------------------- --------------------
Scott K. Lindenberger 0 0.00 25,000/25,000 0/0
Corporate Secretary
- ------------------------------- ----------------- ------------------ ------------------- --------------------
</TABLE>
Compensation of Directors
Members of Origin's Board of Directors currently do not receive any
compensation from Origin for serving on the Board. At some time in the future,
when the Board of Directors has judged the company to have raised sufficient
funding, Origin intends to begin paying an annual directors' fee of between
$3,000 and $10,000 to each non-employee director who assists in locating one or
more companies that are probable candidates for investment by Origin. Origin
also intends, when the Board of Directors has judged the company to have raised
sufficient funding to permit, to begin paying non-employee directors a per diem
fee of $500 for attendance in person at any meeting of the Board or any Board
committee, as well as reimbursement for their expenses in connection with
attending such meetings.
Executive Officer Employment Agreements
There are currently no employment contracts between Origin and any of its
officers or directors. However, we anticipate that upon successful completion of
our current Series A Preferred offering Origin will enter into employment
contracts with its executive officers and certain of its directors.
-16-
<PAGE>
Compensation Committee Interlocks and Insider Participation
Origin's compensation committee is a committee consisting of 3 members of
the Origin Board of Directors and Advisors. The current members of the Committee
are Omar A. Rizvi, Chairman of the Board and President of Origin, Gregory H.
Laborde, Chief Executive Officer of Origin, and Dr. David W. Sear, Advisory
Director of Origin. There are no compensation committee interlocks involving Mr.
Rizvi or Mr. Laborde or any other officer, director or advisory director of
Origin.
Omar Rizvi is also the Managing Partner of Rizvi & Associates, L.L.P., a
California limited liability partnership which maintains offices in Chicago and
San Francisco. Although there was and is no formal contract for services between
Rizvi & Associates and Origin, Rizvi & Associates has provided
corporate-transactional and securities-regulatory legal services to Origin
during fiscal year 1999 for a fee of $50,825. Because Mr. Rizvi is both an
officer and director of Origin as well as a managing partner of Rizvi and
Associates, these transactions cannot be construed as occurring at arms length
between Origin and Rizvi and Associates. Mr. Rizvi will receive an indirect
pecuniary benefit as a partner of Rizvi and Associates from this arrangement.
However, Rizvi & Associates has charged 75% of their regular rates to offset any
unfair dealing that could result from the transactions not occurring at arms
length.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Five-Percent Beneficial Owners
The following table sets forth the beneficial ownership of Origin common
stock as of April 10, 2000 by persons who beneficially owned more than 5% of the
common stock. The percentage of shares of common stock shown for each person
listed is based on shares of common stock outstanding as of April 10, 2000.
Management believes that each of the persons listed in the table has sole
investment and sole voting power over the shares indicated next to their names.
Name and Address Number of Shares Percentage of
of Beneficial Owner Beneficially Owned Common Stock
- ------------------- ------------------ ------------
Omar A. Rizvi 1,200,000 (1) 26.25%
175 North Harbor Drive
Chiago, Illinois 60601
Gregory H. Laborde 1,200,000 (2) 26.25%
110 Wall Street, Ste. 15C
New York, New York 10005
(1) Mr. Rizvi beneficially owns 1,000,000 restricted common shares
and has the right to acquire beneficial ownership of an
additional 200,000 shares through exercise of options owned by
him.
(2) Mr. Laborde beneficially owns 1,000,000 restricted common shares
and has the right to acquire beneficial ownership of an
additional 200,000 shares through exercise of options owned by
him.
-17-
<PAGE>
Directors and Executive Officers
The following table shows the beneficial ownership of Origin common
stock as of April 10, 2000 by Origin executive officers, directors, nominees for
director, and executive officers and directors as a group. The percentage of
shares of common stock shown for each person listed is based on shares of common
stock outstanding as of April 10, 2000. Management believes that each of the
persons listed in the table has sole voting and sole investment power over the
shares indicated next to their names.
Name of Number of Shares Percentage of
Beneficial Owner Beneficially Owned Common Stock
- ---------------- ------------------ ------------
Omar A. Rizvi 1,200,000 (1) 26.25%
President, Chairman of
the Board
Greg H. Laborde 1,200,000 (2) 26.25%
Chief Executive Officer,
Director
Scott K. Lindenberger 50,000 (3) 1.09%
Corporate Secretary
All Directors and Officers 2,450,000 53.59%
as a Group
(1) Mr. Rizvi beneficially owns 1,000,000 restricted common shares and has
the right to acquire beneficial ownership of an additional 200,000
shares through exercise of options owned by him.
(2) Mr. Laborde beneficially owns 1,000,000 restricted common shares and
has the right to acquire beneficial ownership of an additional 200,000
shares through exercise of options owned by him.
(3) Mr. Scott K. Lindenberger has the right to acquire beneficial
ownership of 50,000 shares of common stock through exercise of options
owned by him.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following persons are said to have direct interests in Origin
Investment Group, Inc. by virtue of their security holdings or otherwise deemed
to be "affiliated" as that term is defined in Section 56 of the Investment
Company Act of 1940: Omar A. Rizvi and Gregory H. Laborde.
The Chairman and President of the Origin Investment Group, Inc., Mr.
Omar Rizvi, is also the Managing Partner of Rizvi & Associates, L.L.P., a
California limited liability partnership which maintains offices in Chicago and
San Francisco. Although there was and is no formal contract for services between
Rizvi & Associates and Origin, Rizvi & Associates has provided
corporate-transactional and securities-regulatory legal services to Origin
during fiscal year 1999 for a fee of $50,825. Mr. Rizvi will receive an indirect
pecuniary benefit as a partner of Rizvi and Associates from this arrangement.
Because Mr. Rizvi is both an officer and director of Origin as well as a
managing partner of Rizvi and Associates, these transactions between Origin and
Rizvi and Associates have not occurred at arms length. However, Rizvi &
Associates has charged 75% of their regular rates to offset any unfair dealing
that could result from the transactions not occurring at arms length.
-18-
<PAGE>
Notwithstanding the foregoing, we have not entered into any transaction, or
series of similar transactions, since the beginning of our last fiscal year, and
there are no currently proposed transactions or series of similar transactions
to which Origin or any of our subsidiaries were or is to be a party involving
amounts in excess of $60,000 and in which Mr. Rizvi or Mr. Laborde had or is to
have a direct or indirect material interest.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Documents Filed As Part Of Report
1. Financial Statements
Index to Financial Statements Page Number
Report of Independent Certified Public Accountants F-3
Balance Sheet at December 31, 1999 F-4
Statement of Operations for the period
April 6, 1999 through December 31, 1999 F-5
Statement of Stockholders' Equity Deficiency for the period
April 6, 1999 through December 31, 1999 F-6
Statement of Cash Flows for the period
April 6, 1999 through December 31, 1999 F-7
Notes to Financial Statements F-8 - F-16
2. Financial Statement Schedules
[All schedules are omitted because they are not applicable or not required, or
because the required information is included in the Financial Statements or
Notes to Financial Statements.]
3. Exhibits
Exhibit
Number Description
2.1 Letter of Intent, dated November 10, 1999, between Origin, Bertrand O.
Baetz, Jr., Gene V. Larsen, Frank G. Jarzombek and Scott E. Gruendler.
(Incorporated herein by reference to Exhibit (a)(8) to Form 1-E filed
by Origin on February 14, 2000.)
2.2 Stock Purchase Agreement, dated as of December 31, 1999, between
Origin, Bertrand O. Baetz, Jr., Gene V. Larsen, Frank G. Jarzombek and
Scott E. Gruendler. (Incorporated herein by reference to Exhibit
(a)(9) to Form 1-E filed by Origin on February 14, 2000.)
2.3 Amendment to Stock Purchase Agreement, dated March 2, 2000, between
Origin, Bertrand O. Baetz, Jr., Gene V. Larsen, Frank G. Jarzombek and
Scott E. Gruendler.(Incorporated herein by reference to Exhibit (a)(9)
to Form 1-E filed by Origin on February 14, 2000.)
2.4 Amendment to Stock Purchase Agreement, dated March 24, 2000, between
Origin, Bertrand O. Baetz, Jr., Gene V. Larsen, Frank G. Jarzombek and
Scott E. Gruendler.
3.1 Articles of Incorporation of Origin filed with the Maryland Secretary
of State on April 6, 1999. (Incorporated herein by reference to
Exhibit 3(i) to Form 10 filed by Origin on August 16, 1999.)
-19-
<PAGE>
3.2 Bylaws of Origin. (Incorporated herein by reference to Exhibit 3(ii)
to Form 10 filed by Origin on August 16, 1999.)
10.1 Agreement, dated November 5, 1999, between Origin and Len Ruggiero of
Amvest Financial, Inc. (Incorporated herein by reference to Exhibit
(a)(4) to Form 1-E filed by Origin on February 14, 2000.)
10.2 Agreement, dated November 16, 1999, between Origin and World of
Internet.com AG. (Incorporated herein by reference to Exhibit (a)(5)
to Form 1-E filed by Origin on February 14, 2000.)
10.3 Agreement, dated September 15, 1999, between Origin and Halter Capital
Corporation. (Incorporated herein by reference to Exhibit (a)(6) to
Form 1-E filed by Origin on February 14, 2000.)
10.4 Origin Investment Group, Inc. 1999 Management Incentive Program.
10.6 Origin Investment Group, Inc. 1999 Employee Incentive Plan.
27 Financial Data Schedule.
99.1 Promissory Note of Omar A. Rizvi, dated January 12, 2000, payable to
Origin.
99.2 Promissory Note of Greg H. Laborde, dated January 12, 2000, payable to
Origin.
REPORTS ON FORM 8-K
Origin filed no reports on Form 8-K during the 1999 fiscal year.
-20-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: May 2, 2000 ORIGIN INVESTMENT GROUP, INC.
/S/ OMAR A. RIZVI
-----------------------------------------
Omar A. Rizvi, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: May 2, 2000 /S/ OMAR A. RIZVI
-----------------------------------------
Omar A. Rizvi, President and Director
Date: May 2, 2000 /S/ GREG H. LABORDE
-----------------------------------------
Greg H. Laborde, CEO and Director
Date: May 2, 2000 /S/ DAVID W. SEAR
-----------------------------------------
David W. Sear, Director
Date: May 2, 2000 /S/ RONALD J. KAUFMAN
-----------------------------------------
Ronald J. Kaufman, Director
-21-
<PAGE>
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
PERIOD FROM INCEPTION (APRIL 6, 1999) THROUGH DECEMBER 31, 1999
F-1
<PAGE>
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
CONTENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-3
FINANCIAL STATEMENTS
Balance Sheet F-4
Statement of Operations F-5
Statement of Changes in Stockholders' Equity Deficiency F-6
Statement of Cash Flows F-7
Notes to Financial Statements F-8 - F-16
F-2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of
Origin Investment Group, Inc.
Chicago, Illinois
We have audited the accompanying balance sheet of Origin Investment Group,
Inc. (A Development Stage Company) as of December 31, 1999 and the related
statement of operations, changes in stockholders' equity deficiency and cash
flows for the period from inception (April 6, 1999) through December 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Origin Investment Group,
Inc. (A Development Stage Company) as of December 31, 1999, and the results of
its operations and its cash flows for the period from inception (April 6, 1999)
through December 31, 1999, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1, the Company is
in the development stage and has incurred losses since inception and has
negative cash flows from operations and has a stockholders' equity deficiency.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans in regard to these matters are also
described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/S/ BDO Seidman, LLP
Chicago, Illinois
February 15, 2000
F-3
<PAGE>
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................... $ 908
Advances to officer for business expenses................... 12,103
Miscellaneous receivable.................................... 4,250
Prepaid Expense............................................. 25,000
Other....................................................... 8,550
-----------
TOTAL CURRENT ASSETS 50,811
Office Equipment................................................. 4,211
Less accumulated depreciation............................... 389
-----------
Net Office Equipment............................................. 3,822
TOTAL ASSETS $ 54,633
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts Payable............................................ $ 58,062
-----------
TOTAL LIABILITIES $ 58,062
COMMITMENTS AND CONTINGENCIES (NOTE 5)
STOCKHOLDERS' EQUITY DEFICIENCY (NOTE 3)
Common Stock, $.001 par value, 4,000,000 shares
authorized, issued and outstanding (Note 3)................. 4,000
Paid-in capital............................................. 396,000
Deficit accumulated during development stage................ (205,429)
-----------
194,571
Less subscription receivable................................ (198,000)
-----------
TOTAL STOCKHOLDERS' EQUITY DEFICIENCY (3,429)
-----------
$ 54,633
===========
See accompanying notes to financial statements
F-4
<PAGE>
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from inception (April 6, 1999) Through December 31, 1999
OPERATING EXPENSES
Professional Fees........................................... $ 109,442
Travel and entertainment.................................... 31,655
Office Rent................................................. 23,007
Other....................................................... 35,266
-----------
TOTAL OPERATING EXPENSES 199,370
OTHER EXPENSE, net............................................... 6,059
-----------
NET LOSS $ 205,429
===========
NET LOSS PER COMMON SHARE - BASIC AND DILUTED.................... $ (0.07)
===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING....................... 2,777,357
===========
See accompanying notes to financial statements
F-5
<PAGE>
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY DEFICIENCY
Period from inception (April 6, 1999) Through December 31, 1999
<TABLE>
Deficit
Accumulated
Common Stock During the
------------------------------ Paid-In Development Subscription
Shares Amount Capital Stage Receivable Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of Shares of
Common Stock 4,000,000 $ 4,000 $ 396,000 $ - $ (198,000) 202,000
Net Loss - - - (205,429) - (205,429)
- ------------------------------------------------------------------------------------------------------------------------------
Balance, at December 31, 1999 4,000,000 $ 4,000 $ 396,000 (205,429) (198,000) $ (3,429)
See accompanying notes to financial statements
F-6
</TABLE>
<PAGE>
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS Period from inception
(April 6, 1999) Through December 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss..................................................... $ (205,429)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation............................................ 389
Increase in miscellaneous receivable.................... (4,250)
Increase in advances to officer for business expenses... (12,103)
Increase in prepaid expenses and other.................. (35,550)
Increase in accounts payable............................ 58,062
NET CASH USED IN OPERATING ACTIVITIES (196,881)
==========
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of office equipment................................. (4,211)
----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock issuances......................... 202,000
----------
NET INCREASE IN CASH AND CASH EQUIVALENTS......................... 908
CASH AND CASH EQUIVALENTS, at beginning of period................. -
CASH AND CASH EQUIVALENTS, at end of period...................... $ 908
==========
See accompanying notes to financial statements
F-7
<PAGE>
ORIGIN INVESTMENT GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING
POLICIES
DESCRIPTION OF BUSINESS
Origin Investment Group, Inc. (the "Company") was incorporated April 6,
1999 and is in the business of venture capital, which is providing growth
capital to emerging companies. The Company has elected to be regulated as a
business development company under the Investment Company Act of 1940 and
will operate as a nondiversified company.
Since its inception, the Company's efforts have been devoted to raising
capital and seeking out companies to acquire. Accordingly, through the date
of these financial statements, the Company is considered to be in the
development stage and the accompanying financial statements represent those
of a development stage enterprise.
The Company's financial statements are presented on a going concern basis,
which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business.
The Company has experienced a loss since inception and has negative cash
flows from operations and has a stockholders' equity deficiency. For the
period ended December 31, 1999, the Company experienced a net loss of
$205,429.
The Company's ability to continue as a going concern is contingent upon its
ability to raise additional capital. In addition, the Company's ability to
continue as a going concern must be considered in light of the problems,
expenses and complications frequently encountered by entrance into
established markets and the competitive environment in which the Company
operates.
Management is pursuing various sources to raise capital and has purchase
agreements in place to acquire certain companies, contingent on due
diligence and the ability to raise capital. There can be no assurance that
the Company will be able to raise capital when needed or obtain such on
terms satisfactory to the Company, if at all. Failure to raise capital may
result in the Company depleting its available funds and not being able to
fund its investment pursuits.
F-8
<PAGE>
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
ADVANCES FOR BUSINESS EXPENSES
The Company advances cash to an officer for business expenses that are
incurred by the officer on the Company's behalf. Net amounts advanced
against reimbursable expenses at the balance sheet date will be used for
business expenses in the subsequent period.
OFFICE EQUIPMENT
Office equipment is stated at cost and is depreciated over its estimated
useful life of five years using the straight-line method.
TAXES ON INCOME
The Company is taxed as a "C" corporation. Income taxes are accounted for
using the asset and liability method under which deferred income taxes are
recognized for the estimated tax consequences of temporary differences
between the financial statement carrying amounts and the tax bases of
assets and liabilities and for the benefits, if any, of tax credit or loss
carryforwards. The amounts of any future tax benefits are reduced by a
valuation allowance to the extent such benefits are uncertain as to
realization.
COSTS OF START UP ACTIVITIES
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-5, "Reporting on the Cost of
Start-up Activities." This SOP requires that the cost of start-up
activities, including organization costs, be expensed as incurred. The
Company has followed this policy since its inception.
F-9
<PAGE>
NET LOSS PER COMMON SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128 "Earnings Per Share,"
which the Company has adopted. Basic EPS is calculated by dividing the loss
available to common shareholders by the weighted average number of common
shares outstanding for the period without consideration for common stock
equivalents. "Diluted" EPS gives effect to all dilutive potential common
shares outstanding for the period. Shares of common stock issuable upon the
exercise of options (450,000 shares for the period) are antidilutive and
are not included in the computation of shares outstanding.
FINANCIAL INSTRUMENTS
The carrying values reflected in the balance sheets reasonably approximate
the fair values for cash, receivables, accounts payable and other current
assets because of the short-term maturity of these financial instruments.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards "SFAS" No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and
reporting standards for derivative instruments and hedging activities. It
requires that an entity recognizes all derivatives as either assets or
liabilities in the statement of financial position and measures these
instruments at fair market value. SFAS No. 133 has been amended by SFAS No.
137, which delayed the effective date to periods beginning after June 15,
2000. The Company, to date, has not engaged in derivative and hedging
activities.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 is effective for
financial statements for years beginning after December 15, 1998. SOP 98-1
provides guidance over accounting for computer software developed or
obtained for internal use, including the requirement to capitalize and
amortize specific costs. The Company has followed this policy since its
inception.
F-10
<PAGE>
2. RELATED PARTY TRANSACTIONS
During the period, the Company incurred legal expenses of $50,825 from
Rizvi & Associates, L.L.P. whose Managing Partner, Omar Rizvi, is the
Company's Chairman and President. Due to the relationship between the
Company and the Managing Partner, the legal fees charged to the Company
cannot be construed as occurring at arms length.
3. STOCKHOLDER'S EQUITY DEFICIENCY
(A) Common Stock Issuances
(i) Sale of common stock on May 5, 1999 - 2,000,000 shares of restricted
common stock were sold to the Chairman of the Board and to the Chief
Executive Officer (1,000,000 each) at their par value of $.001 per
share. The shares are "restricted securities" as defined in Rule 144
under the Securities Act of 1933. The shares may not be offered for
sale, sold, or otherwise transferred except pursuant to an effective
registration statement under the Act.
Subsequent to this issuance, the Company's Board of Directors realized
that the initial value paid for these 2,000,000 shares was not equal
to the sale price of $.10 per share for the 2,000,000 shares sold in
connection with an offering commencing August 1999 (Note 3 (a)(ii)).
Therefore, in order to pay the same value for their shares as paid by
the investors, each officer executed a secured promissory note payable
to the Company for $99,000 - $198,000 in total. The notes were
executed just after year end and will bear interest at 5.16% per year
with principal and interest due January 12, 2005. As of the balance
sheet date, the subscription receivable amount of $198,000 is
reflected as a contra account in the stockholders' equity section on
the balance sheet.
(ii) Sale of common stock - in connection with an offering, the Company
sold 2,000,000 shares at $.10 per share that commenced on August 24,
1999 and closed on December 3, 1999.
F-11
<PAGE>
(B) Employee and Management Incentive Plans
The Company applies APB No. 25, Accounting for Stock issued to
employees, and related interpretations, in accounting for options
granted to employees. Under APB No. 25, because the exercise price of
the options equals the market price of the underlying stock on the
measurement date, no compensation expense is recognized.
(i) In 1999, the Company's Board of Directors adopted an Employee
Stock Incentive Plan, which provides for the granting of
Incentive Stock Options ("ISOs"), Restricted Stock, Stock Awards,
Performance Share Awards and Stock Appreciation Rights ("SARs")
to Officers, Directors, Employees, Nonemployee Directors and
other persons who perform services which contribute to the
successful performance of Origin or its Subsidiaries. The
Employee Stock Incentive Plan provides for a total number of
shares available for grant of awards under the Plan not to exceed
15% of the total issued and outstanding shares as of the date of
any award; provided that the number of shares available for grant
as ISOs under the Plan shall not exceed an aggregate of 1,000,000
shares in any given year.
The Company has granted to key employees options to purchase
shares of common stock with exercise prices of $0.10 and $0.20
per share under the plan. The exercise price approximates market
price on the date of grant. The $0.10 options were fully vested
on December 23, 1999 and the $0.20 options will vest at the
earlier of the Company's first definitive financing transaction
or May 23, 2000. At December 31, 1999, options to purchase
450,000 shares of common stock are outstanding under the plan.
These options are currently outstanding and expire through May
2003.
F-12
<PAGE>
The following table summarizes the employee stock options granted,
exercised and outstanding:
<TABLE>
<CAPTION>
Weighted
Average Exercise
Shares Price
---------- ----------------
<S> <C> <C>
Options granted, November 1999 450,000 $ 0.15
Options outstanding December 31,1999 450,000 $ 0.15
----------------------------------------------------------------------------
Options exercisable December 31, 1999 225,000 $ 0.10
----------------------------------------------------------------------------
</TABLE>
The weighted-average grant date fair value of stock options granted to
employees during the year and the weighted-average significant
assumptions used to determine those fair values, using a modified
Black-Sholes option pricing model, and the pro forma effect on
earnings of the fair value accounting for employee stock options under
Statement of Financial Accounting Standards No. 123 are as follows:
1999
----------
Grant-date fair value per share
Options issued at market .............................. $ 0.10
Weighted average exercise prices
Options issued at market ............................... $ 0.15
Significant assumptions (weighted average)
Risk-free interest rate at grant date .................. 6.05%
Expected stock price volatility ........................ 100.00%
Expected dividend payout ............................... n/a
Expected option life (years) ........................... 3.0
Net loss
As reported ...........................................$(205,429)
Pro forma .............................................$(230,179)
F-13
<PAGE>
1999
---------
Net Loss per share - basic and diluted
As reported ...........................................$ (0.07)
Pro Forma .............................................$ (0.08)
The following table summarizes information about employee stock
options outstanding at December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------ ---------------------------
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$0.10 225,000 10 years $0.10 225,000 $0.10
$0.20 225,000 10 years $0.20 225,000 $0.20
</TABLE>
(ii) In 1999, the Company's Board of Directors adopted a Management
Incentive Program, which will provide incentives and reward key
management personnel of the Company and its business units for
achieving performance goals that promote the financial success of
the Company and enhance value for the Company's stockholders. The
Management Incentive Program shall be administered by a Program
Committee designated by the Board of Directors. The maximum award
payable to an executive in any year will be $1 million, which
will be paid in such form as the Program Committee provides. The
Plan becomes effective January 1, 2000.
F-14
<PAGE>
(C) Subsequent Issuances of Common Stock
The Company sold 100,000 shares of common stock for $100,000 to a
single investor on January 18, 2000 and sold 21,390 shares of common
stock for $99,998 to another investor on February 12, 2000. Each of
these sales was conducted according to the requirements of Regulation
E, exempting the shares issued from registration.
4. INCOME TAXES
Due to net operating losses and the uncertainty of realization, no tax
benefit has been recognized for operating losses.
At December 31, 1999, net federal operating losses of approximately
$200,000 are available for carryforward against future years' taxable
income and expire in 2019. The Company's ability to utilize its
federal net operating loss carryforwards is uncertain and thus a
valuation reserve has been provided against the Company's net deferred
tax assets.
The effective tax rate differs from the U.S. statutory federal income
tax rate of 34% as described below:
Period from inception (April 6, 1999)
through December 31, 1999
------------
Federal income tax benefit at statutory rate............ $ (60,000)
State income tax benefit, net of fedreal................ $ (10,000)
Valuation Allowance..................................... $ (70,000)
----------------------------------------------------------------------
$ -
F-15
<PAGE>
The net deferred tax assets consist of the following
December 31, 1999
------------
Net federal operating loss carryforward................. $ (70,000)
Valuation allowance..................................... $ (70,000)
----------------------------------------------------------------------
Net deferred taxes $ -
5. COMMITMENTS AND CONTINGENCIES
(a) The Company is currently leasing office space in Chicago, Illinois at
two locations. The leases are short term and rent expense for the
period from inception (April 6, 1999) through December 31, 1999 was
approximately $23,000.
(b) In November 1999, the Company signed a letter of intent to acquire
100% of the outstanding capital stock of Encore Investments, Inc., a
Texas corporation, and 100% of the outstanding capital stock of Sigma
Solutions, Inc., also a Texas corporation (Encore Investments, Inc.
and Sigma Solutions, Inc. collectively referred to herein as
"Encore/Sigma").
Subsequent to period end, the Company entered into a Definitive Stock
Purchase Agreement to acquire 100% of the outstanding capital stock of
Encore/Sigma, where the closing of this contemplated transaction is
scheduled for May 16, 2000. The Agreement indicates that the purchase
price is as follows. The Company is to purchase 80% of Encore/Sigma
with a cash payment to the sellers of Encore/Sigma in the amount of
$2,750,000 and a secured promissory note in the aggregate amount
representing an additional $1,300,000. On the third anniversary date
of the closing, the Company will purchase the remaining 20% of
Encore/Sigma with a cash payment equivalent to 20% multiplied by the
then trailing 12 months EBITDA multiplied by a factor of 4 of
Encore/Sigma.
This purchase will be contingent on the Company's ability to raise the
$2,750,000 by the closing date. Subsequent to period end, the Company
made a $200,000 deposit to Encore/Sigma towards the purchase. This
amount is nonrefundable should the purchase not take place.
F-16
Encore Investments, Inc.
And
Sigma Solutions, Inc.
March 2, 2000
Amendment to Stock Purchase Agreement
Omar A. Rizvi, President
Origin Investment Group, Inc.
One Magnificent Mile
980 North Michigan Avenue, Suite 1400
Chicago, IL 60611
Re: Stock Purchase Agreement dated effective as of December 31, 1999
("Agreement"), by and among Origin Investment Group, Inc. ("Buyer"), and
Gene V. Larsen, Bertrand O. Baetz, Jr., Frank G. Jarzombek and Scott E.
Gruendler ("Sellers").
Dear Omar:
By this letter, Buyer and Sellers amend the Agreement as follows, effective
the date hereof:
1. Extension of Closing Date. Subject to Buyer satisfying the conditions
listed in paragraph 2 below on or before March 8, 2000, we agree to extend the
Closing Date from March 8, 2000, to March 22, 2000. Please understand that
Sellers do not intend to extend the Closing Date beyond March 22, 2000. The date
in paragraph 9(d) will also be extended from March 8, 2000, to March 22, 2000.
2. Conditions to Extension of Closing Date. Buyer must satisfy 2(a) and
2(b), fully and unconditionally, on or before March 8, 2000, and 2(c), fully and
unconditionally, on or before March 31, 2000, in order to obtain the extension
of the Closing Date set forth in Paragraph 1:
-1-
<PAGE>
(a) Buyer shall deliver the form of, and the written confirmation of a
major national bank, acceptable to Sellers in their sole discretion, that the
bank will issue in favor of Sellers an irrevocable letter of credit in the
amount of $1.3 million upon which Sellers may draw on the first anniversary of
the Closing Date.
(b) Buyer shall deliver to Sellers a cashier's check issued by a nationally
recognized bank in the amount of $100,000 payable to Sellers, to fund the
payment of the "break up" fee described herein.
(c) BDO Seidman Audit. Buyer shall cause BDO Seidman, L.L.P. to deliver to
Sellers no less than 3 original copies of its signed final audit report on the
financial statements of the Acquired Company. If BDO Seidman has not completed
its signed final audit by March 31, 2000, Buyer shall cause BDO Seidman to
finish their audit report, at Buyer's sole cost, and deliver the 3 signed final
audit reports to Sellers as soon as possible.
3. "Break Up" Fee. Sellers may deposit the $100,000 "break up" fee to be
paid pursuant to Paragraph 2(c) in their personal accounts. Sellers shall be
entitled to all interest and earnings on the deposit and shall be under no
obligation to repay or refund the payment or any interest or earnings thereon.
If the Closing occurs prior to March 23, 2000, Buyer shall be given a credit of
$100,000 against the cash payment payable to Sellers, as adjusted below. If the
Closing does not occur before March 23, 2000, the Agreement shall terminate,
subject to all rights of either party for any breaches occurring prior thereto,
and Seller shall retain the payment.
4. Purchase Price Increase. The cash payment payable to Sellers at Closing
by Buyer pursuant to Paragraph 2.2(a) and Paragraph 2.4(b)(i) of the Agreement
is increased to $2.75 million if the Closing occurs after March 8, 2000. All
other amounts and consideration payable to Sellers under the Agreement shall
remain the same, and shall not be decreased by the additional cash to be paid at
Closing.
5. Broker. The Heim Group, Inc. ("Heim Group") expressly acknowledges and
agrees that if the Closing does not occur on or before March 22, 2000, the Heim
Group will only be entitled to $12,500 out of any funds paid to Sellers, being
one-half of the original "break up" fee. The Heim Group expressly waives any
rights they may have to the increased "break up" fee.
* * * *
Except as specifically amended by this letter, the terms of the Agreement
shall continue. All capitalized terms used herein shall have the meaning given
to them in the Agreement.
-2-
<PAGE>
Please sign a copy of this letter where indicated below, and return it to
us on or before 5:00 p.m. San Antonio time, March 6, 2000, whereupon it shall
become our binding agreement.
Very Truly Yours,
/S/ GENE V. LARSEN
-----------------------------
Gene V. Larsen
/S/ BERTRAND O. BAETZ, JR.
-----------------------------
Bertrand O. Baetz, Jr.
/S/ FRANK G. JARZOMBEK
-----------------------------
Frank G. Jarzombek
/S/ SCOTT E. GRUENDLER
-----------------------------
Scott E. Gruendler
AGREED:
Origin Investment Group, Inc.
By: /S/ OMAR A. RIZVI
-------------------------
Omar A. Rizvi, President
Date: March 6, 2000
The Heim Group, Inc.
By: /S/ GORDON GREVE
-------------------------
Date: March 6, 2000
cc: Mike Kreager
Law Offices of Mike Kreager, P.C.
7744 Broadway, Suite 204
San Antonio, Texas 78209-3262
Encore Investments, Inc.
and
Sigma Solutions, Inc.
March 24, 2000
Amendment Number 2 to Stock Purchase Agreement
Omar A. Rizvi, President
Origin Investment Group, Inc.
One Magnificent Mile
980 North Michigan Avenue, Suite 1400
Chicago, IL 60611
Re: Stock Purchase Agreement dated effective as of December 31, 1999, as
amended by the Amendment to the Stock Purchase Agreement dated March 2,
2000 (collectively, the "Agreement"), by and among Origin Investment Group,
Inc. ("Buyer"), and Gene V. Larsen, Bertrand O. Baetz, Jr., Frank G.
Jarzombek and Scott E. Gruendler ("Sellers").
Dear Omar:
By this letter, Buyer and Sellers amend the Agreement as follows, effective
the date hereof:
1. Extension of Closing Date. Subject to Buyer satisfying the conditions
listed in paragraph 2 below, we agree to extend the Closing Date from March 22,
2000, to May 16, 2000. Please understand that Sellers do not intend to extend
the Closing Date beyond May 16, 2000. The date in paragraph 9.1(d) will also be
extended from March 22, 2000, to May 16, 2000.
2. Conditions to Extension of Closing Date. Buyer must satisfy the
conditions: (i) in paragraph 2(a) below fully and unconditionally on or before
March 31, 2000; (ii) in paragraphs 2(b), 2(c) and 2(d) fully and unconditionally
on or before May 11, 2000, in order to obtain the extension of the Closing Date
set forth in Paragraph 1:
(a) Buyer shall deliver to Sellers a cashier's check issued by a nationally
recognized bank in the amount of $100,000 payable to Sellers, in consideration
of Sellers extending the closing date.
(b) Buyer shall deliver the form of, and the written confirmation of a
major national bank, acceptable to Sellers in their sole discretion, that the
bank will issue in favor of Sellers an irrevocable letter of credit in the
amount of $1.3 million upon which Sellers may draw on the first anniversary of
the Closing Date.
(c) BDO Seidman Audit. Buyer shall cause BDO Seidman, L.L.P. to deliver to
Sellers no less than 3 original copies of its signed final audit report on the
financial statements of the Acquired Company. If BDO Seidman has not completed
its signed final audit by May 11, 2000, Buyer shall cause BDO Seidman to finish
their audit report, at Buyer's sole cost, and deliver the 3 signed final audit
reports to Sellers as soon as possible.
-1-
<PAGE>
(d) Buyer shall deliver the written confirmation of a major national bank,
acceptable to Sellers in their sole discretion, that the bank has opened a line
of credit upon which Encore Investments and Sigma Solutions will have exclusive
access to cover their customary cash flow requirements after the closing in the
minimum amount of $1,000,000. Buyer agrees that the line of credit, in the
minimum amount of $1,000,000 shall remain open until the end of Sellers earn out
period.
3. Consideration for Extension of Closing Date. Sellers may deposit the
$100,000 to be paid pursuant to Paragraph 2(a) in their personal accounts.
Sellers shall be entitled to all interest and earnings on the deposit and shall
be under no obligation to repay or refund the payment or any interest or
earnings thereon. If the Closing occurs prior to May 17, 2000, Buyer shall be
given a credit of $200,000 against the cash payment payable to Sellers, as
adjusted below. If the Closing does not occur before May 17, 2000, the Agreement
shall terminate, subject to all rights of either party for any breaches
occurring prior thereto, and Sellers shall retain this payment of $100,000, as
well as the payment of $100,000 paid pursuant to the first Amendment to the
Agreement.
4. Purchase Price. The cash payment payable to Sellers at Closing by Buyer
pursuant to Paragraph 2.2(a) and Paragraph 2.4(b)(i) of the Agreement remains
$2.75 million. All other amounts and consideration payable to Sellers under the
Agreement shall remain the same, and shall not be decreased by the additional
cash to be paid at Closing.
Except as specifically amended by this letter, the terms of the Agreement
shall continue. All capitalized terms used herein shall have the meaning given
to them in the Agreement.
Please sign a copy of this letter where indicated below, and return it to
us on or before 5:00 p.m. San Antonio time, March 27, 2000, whereupon it shall
become our binding agreement.
Very Truly Yours,
/S/ GENE V. LARSEN
-----------------------------
Gene V. Larsen
/S/ BERTRAND O. BAETZ, JR.
-----------------------------
Bertrand O. Baetz, Jr.
/S/ FRANK G. JARZOMBEK
-----------------------------
Frank G. Jarzombek
/S/ SCOTT E. GRUENDLER
-----------------------------
Scott E. Gruendler
AGREED:
Origin Investment Group, Inc.
By: /S/ OMAR A. RIZVI
-------------------------
Omar A. Rizvi, President
Date: March 27, 2000
cc: Mike Kreager
Law Offices of Mike Kreager, P.C.
7744 Broadway, Suite 204
San Antonio, Texas 78209-3262
-2-
ORIGIN INVESTMENT GROUP, INC.
MANAGEMENT INCENTIVE PROGRAM
EFFECTIVE AS OF JANUARY 1, 2000
1. ESTABLISHMENT AND EFFECTIVE DATE OF PLAN
Origin Investment Group, Inc. (the "Company") hereby adopts the Origin
Investment Group, Inc. Management Incentive Program (the "Plan") for its
executive officers and certain other executives of the Company, its Business
Units and affiliates who are in management positions designated as eligible for
participation by the Compensation Committee (the "Committee") of the Board of
Directors of the Company or its designee. The Plan shall be effective as of
January 1, 2000 and shall remain in effect, subject to the rights of amendment
and termination in Section 15. Payments under the Plan shall only be made to
Named Executive Officers after the Plan is approved by the stockholders of the
Company, unless the Board of Directors determines otherwise.
2. PURPOSE OF THE PLAN
The purpose of the Plan is to reward certain key management personnel of
the Company and its Business Units for achieving performance goals relating to,
among other things, increasing operating income and return on investment,
increasing shareholder value, promoting growth and efficient use of resources
and achieving specific individual goals.
3. DEFINITIONS
(a) "Base Annual Salary" means the base salary established for a
Participant during the applicable Plan Year, as determined by the Committee
(which shall include the amount of any pre-tax deferrals or other pre-tax
payments made by the Participant to the Company's deferred compensation or
welfare plans, whether qualified or non-qualified).
(b) "Board of Directors" means the Board of Directors of the Company.
(c) "Business Unit" means a separate business operating unit of the Company
with respect to which separate performance goals may be established hereunder.
(d) "Change in Control" means any of the following events:
(i) The acquisition (other than from the Company) by any "Person" (as the
term person is used for purposes of Sections 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of twenty
percent (20%) or more of the combined voting power of the Company's then
outstanding voting securities; or
(ii) The individuals who, as of January 1, 2000, are members of the Board
of Directors (the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the Board of Directors; provided, however, that if the
election, or nomination for election by the Company's stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent Board,
such new director shall, for purposes of this Plan, be considered as a member of
the Incumbent Board; or
-1-
<PAGE>
(iii) Approval by stockholders of the Company of (1) a merger or
consolidation involving the Company if the stockholders of the Company,
immediately before such merger or consolidation do not, as a result of such
merger or consolidation, own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting securities of
the corporation resulting from such merger or consolidation in substantially the
same proportion as their ownership of the combined voting power of the voting
securities of the Company outstanding immediately before such merger or
consolidation, or (2) a complete liquidation or dissolution of the Company or an
agreement for the sale or other disposition of all or substantially all of the
assets of the Company.
Notwithstanding the foregoing, for purposes of subsection (i) above,
"person" shall not include any person who on the date hereof owns 100% or more
of the Company's outstanding securities, and a Change in Control shall not be
deemed to occur solely because twenty percent (20%) or more of the combined
voting power of the Company's then outstanding securities is acquired by (i) a
trustee or other fiduciary holding securities under one or more employee benefit
plans maintained by the Company or any of its subsidiaries, or (ii) any
corporation, which, immediately prior to such acquisition, is owned directly or
indirectly by the stockholders of the Company in the same proportion as their
ownership of stock in the Company immediately prior to such acquisition.
(e) "Chief Executive Officer" means the chief executive officer of the
Company, unless otherwise specified.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the Compensation Committee of the Board of Directors
or any other committee designated by the Board of Directors which is responsible
for administering the Plan.
(h) "Common Stock" means the common stock of the Company, par value $.001
per share.
(i) "Company" means Origin Investment Group, Inc., a Maryland corporation,
and its successors.
(j) "Estimated Earnings" means the Company's estimated earnings for the
fiscal year based upon the consensus estimate forecasted by analysts and market
makers for the fiscal year, as adjusted by the Committee in its discretion.
(k) "Incentive Award" or "Award" means the cash and, if applicable, Shares
or restricted Shares awarded to Participants under the terms of the Plan.
(l) "Maximum Award" means the maximum percentage of Base Annual Salary
which may be paid based upon the Company's or Business Unit's Relative
Performance during the Plan Year.
(m) "Named Executive Officer" means a Participant who as of the date of
payment of an Incentive Award is one of the group of "covered employees" under
Code Section 162(m) and the regulations thereunder.
(n) "Participant" means an executive of the Company, a Business Unit or an
affiliate who is designated by the Committee (or its designee) to participate in
the Plan.
(o) "Personal Performance Goals" means the goals established for each
Participant each year to improve the effectiveness of the Participant's area of
responsibility as well as the Company as a whole.
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(p) "Plan Year" means the twelve month period which is the same as the
Company's fiscal year. The initial Plan Year shall be January 1 through December
31, 2000.
(q) "Program Rules" means the eligible Participants, performance measures,
Incentive Award amounts, and other rules and conditions established annually by
the Committee pursuant to Section 4, subject to ratification by the Board of
Directors. The Program Rules for Participants other than Named Executive
Officers may be established by a designee of the Committee.
(r) "Relative Performance" means the extent to which the Company, or
designated Business Unit, as applicable, achieves the performance measurement
criteria set forth in the Program Rules.
(s) "Shares" means the shares of Common Stock of the Company (including any
new, additional or different stock or securities resulting from the changes
described in Section 7).
(t) "Target Award" means the percentage (which may vary among Participants
and from Plan Year to Plan Year) of Base Annual Salary which will be paid to a
Participant as an Incentive Award if the performance measurement criteria
applicable to the Participant for the Plan Year is achieved, as reflected in the
Program Rules for such Plan Year.
(u) "Threshold Award" means the minimum percentage of Base Annual Salary
which may be paid based on the Company's Relative Performance during the Plan
Year.
4. ADMINISTRATION OF THE PLAN
The Plan will be administered by the Committee; provided, however, the
Committee shall have the right to delegate as it may deem necessary or
appropriate to the Chairman of the Board, the Chief Executive Officer, the Chief
Operating Officer or the Chief Financial Officer its authority and
responsibility for administration of parts of the Plan as it applies to
Participants other than Named Executive Officers. Subject to the right of the
Board of Directors to ratify such Program Rules, the Committee (or its designee)
will have the authority, from time to time, to determine the Program Rules for
the following matters:
(a) the executives who are eligible to participate in the Plan;
(b) the types of Awards to grant under the Plan, such as the use of a
performance matrix or bonus pool, which may vary among Participants and from
year to year;
(c) the Target Award, Maximum Award and Threshold Award that can be granted
to each Participant and the method for determining such award, which the
Committee may amend from time to time;
(d) the performance targets and the measurement criteria to be used in
determining the Company's or a Business Unit's Relative Performance, which will
include one or more of the following, as determined by the Committee each year:
operating income, return on investment, Estimated Earnings, net income, earnings
per share, return on equity, return on assets (or net assets), profit before
taxes, market value of the Company's stock, and total shareholder return;
(e) the time or times and the conditions (such as continuing employment
requirements) subject to which any Incentive Award may become payable; and
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(f) the form in which the Award will be paid, such as cash, Shares or
restricted Shares or any combination of the foregoing.
The Program Rules will be adopted by the Committee prior to, or as soon
as practical after, the commencement of each Plan Year. Subject to the
provisions of the Plan and its right to delegate its responsibilities, the
Committee will also have the discretionary authority to interpret the Plan and
the Incentive Awards issued under the Plan; to prescribe, amend and rescind
rules and regulations relating to the Plan and the Awards; and to make all other
determinations deemed necessary or advisable in administering the Plan. The
determinations of the Committee on the matters referred to in paragraphs (a)
through (f) of this Section 4 shall be submitted at least annually to the Board
of Directors for its consideration and ratification. For Participants who are
not Named Executive Officers, the Committee may in its discretion establish
performance measures not listed in this Section 4 without obtaining shareholder
approval.
5. PARTICIPATION
Eligibility for participation in the Plan is limited to the Presidents
and certain other executives of the Company's Business Units or affiliates
thereof who hold key management and staff positions. From among those eligible
and based upon the recommendations of the Chairman of the Board and/or the Chief
Executive Officer and other designees, the Committee will designate by name or
position the Participants each Plan Year. Any employee who is a Participant in
one Plan Year may be excluded from participation in any other Plan Year. If,
during the Plan Year, a Participant other than a Named Executive Officer,
changes employment positions to a new position which corresponds to a different
award level, the Committee may, in its discretion adjust the Participant's award
level for such Plan Year. The Committee may, in its discretion, designate
employees who are hired after the beginning of the Plan Year as Participants for
such Plan Year and as eligible to receive full or partial Incentive Awards for
such year.
6. INCENTIVE AWARDS
(A) DETERMINATION OF THE AMOUNT OF INCENTIVE AWARDS
As soon as administratively practical after the end of each Plan Year,
the Committee shall certify the extent to which the performance targets and
measurement criteria established pursuant to Section 4 have been achieved for
such Plan Year based upon information prepared by the Company's Chief Financial
Officer. Subject to the right to decrease an award as described in the next
paragraph, the Participant's Incentive Award shall be computed by the Committee
based upon the achievement of the established performance targets, measurement
criteria and the requirements of the Plan. The Committee may in determining
whether performance targets have been met adjust the Company's financial results
to exclude the effect of unusual charges or income items or other events,
including acquisitions or dispositions of businesses or assets, restructurings,
reductions in force, currency fluctuations or changes in accounting, which are
distortive of financial results (either on a segment or consolidated basis);
provided, that for purposes of determining the Incentive Awards of Named
Executive Officers, the Committee shall exclude unusual items whose exclusion
has the effect of increasing income, earnings, or other measurements if such
items constitute "extraordinary items" under generally accepted accounting
principles or are significant unusual items. In addition, the Committee will
adjust its calculations to exclude the effect on financial results of changes in
the Code or other tax laws, or the regulations relating thereto.
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The Committee may, in its discretion, decrease the amount of a
Participant's Incentive Award for a Plan Year based upon such factors as it may
determine, including the failure of the Company or a Business Unit to meet
certain performance goals or of a Participant to meet his Personal Performance
Goals. The factors to be used in reducing an Incentive Award may be established
at the beginning of a Plan Year and may vary among Participants.
In the event that the Company's or a Business Unit's performance is
below the performance thresholds for the Plan Year and the Incentive Awards are
reduced or canceled, the Committee may in its discretion grant Incentive Awards
to deserving Participants, except for Participants who are Named Executive
Officers.
The Program Rules and Incentive Awards under the Plan shall be
administered in a manner to qualify payments under the Plan to the Named
Executive Officers for the performance based exception under Code Section 162(m)
and the regulations thereunder, except where the Board of Directors determines
such compliance is not necessary or desirable. The maximum Incentive Award that
may be paid to an individual Participant for a Plan Year shall not exceed $1.0
million.
(B) ELIGIBILITY FOR PAYMENT OF INCENTIVE AWARD
No Participant will have any vested right to receive any Incentive
Award until such date as the Board of Directors has ratified the Committee's (or
its designee's) recommendation with respect to the payment of individual
Incentive Awards, except where the Committee determines such ratification is not
necessary. No Incentive Award will be paid to any Participant who is not an
active employee of the Company or an affiliate on the date the Board of
Directors has ratified the payment of such Incentive Awards; provided, however,
at the discretion of the Committee or its designee (subject to ratification by
the Board of Directors, where required), a partial Incentive Award may be
authorized by the Committee to be paid to Participants (or their beneficiaries)
who are terminated by the Company without cause or who retire, die or become
permanently and totally disabled during the Plan Year or prior to payment of the
Incentive Award. No Participant entitled to receive an Incentive Award shall
have any interest in any specific asset of the Company, and such Participant's
rights shall be equivalent to that of a general unsecured creditor of the
Company.
(C) PAYMENTS OF AWARDS
The Awards will be payable in cash, provided that the Committee shall
have the authority to provide in the Program Rules that all or a portion of the
Award will be paid in Shares and/or that the Participant may elect to receive
all or a portion of his Award in Shares. For this purpose, the Shares will be
valued at the closing price of the Shares on the primary securities exchange on
which they are traded on the last trading day of the fiscal year, unless the
Committee provides otherwise. The Committee may elect to place transferability,
vesting and resale restrictions on the Shares.
The Committee may also provide in the Program Rules that if the
Participant elects to receive a portion of the Award in Shares, the Participant
will receive an additional number of Shares ("Additional Shares") equal to a
certain percentage (not to exceed 100%) of the number of Shares received by
reason of his election, plus an additional cash bonus equal to the fair market
value (determined as of the last trading day of the fiscal year) of the
Additional Shares received multiplied by a percentage amount to help offset
income tax liability. The Committee may elect to place restrictions, such as a
vesting schedule related to continuing employment, transferability, and resale
restrictions, on the Additional Shares. Subject to adjustment as provided in
Section 7, the maximum number of Shares that may be issued pursuant to the Plan
is 250,000.
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Payment of the Awards shall be made within 90 days after the close of
the Company's fiscal year, or such other period as may be specified by the
Committee in the Program Rules.
7. RECAPITALIZATION OF THE COMPANY
In the event of a recapitalization of the Company or its merger into or
consolidation with another corporation, a Participant shall be entitled to
receive such securities which he or she would have been entitled to receive had
he or she been a shareholder of the Company holding Shares pursuant to the Plan
at the time of such recapitalization, merger or consolidation. In the event of a
stock split, stock dividend or combination of shares with respect to the Common
Stock of the Company after the determination of the number of Shares to which a
Participant is entitled but before delivery of such Shares to the Participant,
then the number of Shares that such Participant shall be entitled to receive
shall be proportionately adjusted.
8. INVESTMENT REPRESENTATION AND RESTRICTIONS ON THE STOCK
Any Shares to be issued to a Participant pursuant to the Plan may be
unregistered and, at the option of the Company, the Participant may be required
to execute an investment letter in form satisfactory to the Company. The Shares
shall bear a legend reflecting the investment representation and the
unregistered status of the Shares.
9. CHANGE IN CONTROL
The Committee may provide in the Program Rules or in the Award
agreement that upon the occurrence of a Change in Control, the Participant's
Incentive Award for the Plan Year, determined at the Target Award level (without
any reductions under Section 6(a)) shall be deemed to have been fully earned for
the Plan Year. The Committee may also provide that the Participant shall only be
entitled to a pro rata portion of his Incentive Award based upon the number of
days within the Plan Year that had elapsed as of the effective date of the
Change in Control. The Award agreement may also provide for accelerated payments
of Incentive Awards upon the occurrence of a Change in Control.
10. DEFERRAL
The Committee may permit a Participant to defer to another plan or
program such Participant's receipt of Shares or cash that would otherwise be due
to such Participant by virtue of earning an Award under this Plan. If any such
deferral election is required or permitted, the Committee shall, in its
discretion, establish rules and procedures for such payment deferral.
11. BENEFICIARY
Each Participant will designate a person or persons to receive, in the
event of death, any Incentive Award to which he or she would then be entitled
under Section 6(b). Such designation will be made in the manner determined by
the Committee and may be revoked by the Participant in writing. If a Participant
fails effectively to designate a beneficiary, then his or her estate will be
deemed to be the beneficiary.
12. WITHHOLDING OF TAXES
The Company shall deduct from each Incentive Award the amount of any
taxes required to be withheld by any governmental authority.
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13. EMPLOYMENT
Nothing in the Plan or in any Incentive Award shall confer (or be
deemed to confer) upon any Participant the right to continue in the employ of
the Company, a Business Unit or an affiliate, or interfere with or restrict in
any way the rights of the Company, a Business Unit or an affiliate to discharge
any Participant at any time for any reason whatsoever, with or without cause.
14. SUCCESSORS
All obligations of the Company under the Plan with respect to Incentive
Awards granted hereunder shall be binding upon any successor to the Company,
whether such successor is the result of an acquisition of stock or assets of the
Company, a merger, a consolidation or otherwise.
15. TERMINATION AND AMENDMENT OF THE PLAN; GOVERNING LAW
The Committee, subject to the ratification rights of the Board of
Directors, has the right to suspend or terminate the Plan at any time, or to
amend the Plan in any respect, provided that no such action will, without the
consent of a Participant, adversely affect his or her rights under an Incentive
Award approved under Section 6(b).
The Plan shall be interpreted and construed under the laws of the State
of Maryland.
The Plan is intended to comply with Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended, and the Committee shall interpret
and administer the provisions of the Plan and any Award agreement in a manner
consistent therewith. Any provisions inconsistent with such Rule shall be
inoperative and shall not affect the validity of the Plan.
In the event that changes are made to Code Section 162(m) to permit
greater flexibility with respect to any Award under the Plan, the Committee may,
subject to this Section 15, make any adjustments it deems appropriate in such
Award.
AS ADOPTED BY THE BOARD OF DIRECTORS,
December 3, 1999
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ORIGIN INVESTMENT GROUP, INC.
STOCK INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Origin Investment Group, Inc., a Maryland
Corporation (hereinafter referred to as the "COMPANY"), hereby establishes a
stock option and incentive award plan known as the "Origin Investment Group,
Inc. Stock Incentive Plan" (the "PLAN"), as set forth in this document. The Plan
permits the grant of Incentive Stock Options, Nonqualified Stock Options,
Restricted Stock, Stock Awards, Performance Share Awards and Stock Appreciation
Rights.
The Plan shall become effective on the date it is approved by the Board
of Directors (the "EFFECTIVE DATE"), subject to approval of the Plan by the
Company's stockholders within the 12-month period immediately thereafter, and
shall remain in effect as provided in SECTION 1.3.
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to secure for the
Company and its shareholders the benefits of the incentive inherent in stock
ownership in the Company by employees, directors, and other persons who perform
services for the Company, who are responsible for its future growth and
continued success. The Plan promotes the success and enhances the value of the
Company by linking the personal interests of Participants (as defined below) to
those of the Company's shareholders, and by providing Participants with an
incentive for outstanding performance. The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract and retain the
services of Participants upon whose judgment, interest and special effort the
successful conduct of its operation largely depends.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective
Date, and shall remain in effect, subject to the right of the Board of Directors
to amend or terminate the Plan at any time pursuant to ARTICLE 14, until the day
prior to the tenth (10th) anniversary of the Effective Date.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below:
(a) "AGREEMENT" means an agreement entered into by each Participant and
the Company, setting forth the terms and provisions applicable to Awards granted
to Participants under this Plan.
(b) "AWARD" means, individually or collectively, a grant under this
Plan of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock,
Stock Awards, Performance Share Awards or Stock Appreciation Rights.
(c) "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning
ascribed to such term in Rule 13d-3 of the Exchange Act.
(d) "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
(e) "CAUSE" means: (i) willful misconduct on the part of a Participant
that is materially detrimental to the Company; or (ii) the conviction of a
Participant for the commission of a felony. The existence of "Cause" under
either (i) or (ii) shall be determined by the Committee. Notwithstanding the
foregoing, if the Participant has entered into an employment agreement that is
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binding as of the date of employment termination, and if such employment
agreement defines "Cause," and/or provides a means of determining whether
"Cause" exists, such definition of "Cause" and means of determining its
existence shall supersede this provision.
(f) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
(g) "COMMITTEE" means a committee of two or more Non-Employee Directors
appointed by the Board to administer the Plan with respect to grants of Awards,
as specified in ARTICLE 3, and to perform the function set forth therein.
(h) "COMMON STOCK" means the common stock of the Company, par value
$.001 per share.
(i) "COMPANY" means Origin Investment Group, Inc., a Maryland
corporation, or any successor thereto as provided in ARTICLE 17.
(j) "CORRESPONDING SAR" means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the
Company, unexercised, of that portion of the Option to which the SAR relates.
(k) "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.
(l) "DISABILITY" shall have the meaning ascribed to such term in the
Company's long-term disability plan covering the Participant, or in the absence
of such plan, a meaning consistent with Section 22(e)(3) of the Code.
(m) "EMPLOYEE" means any employee of the Company, or the Company's
Subsidiaries. Directors who are not otherwise employed by the Company or the
Company's Subsidiaries are not considered Employees under this Plan.
(n) "EFFECTIVE DATE" shall have the meaning ascribed to such term in
SECTION 1.1.
(o) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
(p) "FAIR MARKET VALUE" shall be determined as follows:
(i) If, on the relevant date, the Shares are traded on a
national or regional securities exchange or on The Nasdaq
Stock Market ("Nasdaq") and closing sale prices for the Shares
are customarily quoted, on the basis of the closing sale price
on the principal securities exchange on which the Shares may
then be traded or, if there is no such sale on the relevant
date, then on the immediately preceding day on which a sale
was reported;
(ii) If, on the relevant date, the Shares are not listed on
any securities exchange or traded on Nasdaq, but nevertheless
are publicly traded and reported on Nasdaq without closing
sale prices for the Shares being customarily quoted, on the
basis of the mean between the closing bid and asked quotations
in such other over-the-counter market as reported by Nasdaq;
but, if there are no bid and asked quotations in the
over-the-counter market as reported by Nasdaq on that date,
then the mean between the closing bid and asked quotations in
the over-the-counter market as reported by Nasdaq on the
immediately preceding day such bid and asked prices were
quoted; and
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(iii) If, on the relevant date, the Shares are not publicly
traded as described in (i) or (ii), on the basis of the good
faith determination of the Committee.
(q) "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Shares granted under ARTICLE 6 which is designated as an Incentive Stock Option
and is intended to meet the requirements of Section 422 of the Code.
(r) "INITIAL VALUE" means, with respect to a Corresponding SAR, the
Option Price per share of the related Option, and with respect to an SAR granted
independently of an Option, the Fair Market Value of one share of Common Stock
on the date of grant.
(s) "INSIDER" shall mean an Employee who is, on the relevant date, an
officer or a director, or a ten percent (10%) beneficial owner of any class of
the Company's equity securities that is registered pursuant to Section 12 of the
Exchange Act or any successor provision, as "officer" and "director" are defined
under Section 16 of the Exchange Act.
(t) "NAMED EXECUTIVE OFFICER" means a Participant who, as of the date
of vesting and/or payout of an Award is one of the group of "covered employees,"
as defined in the regulations promulgated under Code Section 162(m), or any
successor statute.
(u) "NON-EMPLOYEE DIRECTOR" means a Director of the Company who
satisfies the requirements under Rule 16b-3(b)(3) of the Exchange Act.
(v) "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase
Shares granted under ARTICLE 6, and which is not intended to meet the
requirements of Code Section 422.
(w) "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option.
(x) "OPTION PRICE" means the price at which a Share may be purchased by
a Participant pursuant to an Option, as determined by the Committee. The Option
Price may not be less than the Fair Market Value of a Share on the date the
Option is granted.
(y) "PARTICIPANT" means an Employee, a Director, or other person who
performs services for the Company or a Subsidiary, who has been determined by
the Committee to contribute significantly to the profits or growth of the
Company and who has been granted an Award under the Plan which is outstanding.
(z) "PERFORMANCE SHARE AWARD" means an Award, which, in accordance with
and subject to an Agreement, will entitle the Participant, or his estate or
beneficiary in the event of the Participant's death, to receive cash, Common
Stock or a combination thereof.
(aa) "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
(bb) "RETIREMENT" shall mean retiring from employment with the Company
or any Subsidiary on or after attaining age 65.
(cc) "RESTRICTED STOCK" means an Award of Common Stock granted in
accordance with the terms of ARTICLE 8 and the other provisions of the Plan, and
which is nontransferable and subject to a substantial risk of forfeiture. Shares
of Common Stock shall cease to be Restricted Stock when, in accordance with the
terms hereof and the applicable Agreement, they become transferable and free of
substantial risk of forfeiture.
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(dd) "SAR" means a stock appreciation right that entitles the holder to
receive, with respect to each share of Common Stock encompassed by the exercise
of such SAR, the amount determined by the Committee and specified in an
Agreement. In the absence of such specification, the holder shall be entitled to
receive in cash, with respect to each share of Common Stock encompassed by the
exercise of such SAR, the excess of the Fair Market Value on the date of
exercise over the Initial Value. References to "SARs" include both Corresponding
SARs and SARs granted independently of Options, unless the context requires
otherwise.
(ee) "SHARES" means the shares of Common Stock of the Company
(including any new, additional or different stock or securities resulting from
the changes described in Section 4.3).
(ff) "STOCK AWARD" means a grant of Shares under ARTICLE 8 that is not
generally subject to restrictions and pursuant to which a certificate for the
Shares is transferred to the Employee.
(gg) "SUBSIDIARY" means any corporation, partnership, joint venture or
other entity in which the Company has a fifty percent (50%) or greater voting
interest.
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board, or by any other Committee appointed by the Board that is
granted authority to administer the Plan, with such Committee consisting of not
less than two (2) Directors who are Non-Employee Directors. The members of the
Committee shall be appointed from time to time by, and shall serve at the
discretion of, the Board of Directors.
3.2 AUTHORITY OF THE COMMITTEE. Subject to the provisions of the Plan,
the Committee shall have full power to select the Employees, Directors, and
other persons who perform services for the Company or a Subsidiary, who are
responsible for the future growth and success of the Company who shall
participate in the Plan (who may change from year to year); determine the size
and types of Awards; determine the terms and conditions of Awards in a manner
consistent with the Plan (including conditions on the exercisability of all or a
part of an Option or SAR, restrictions on transferability and vesting provisions
on Restricted Stock or Performance Share Awards and the duration of the Awards);
construe and interpret the Plan and any agreement or instrument entered into
under the Plan; establish, amend or waive rules and regulations for the Plan's
administration; and (subject to the provisions of ARTICLE 14) amend the terms
and conditions of any outstanding Award to the extent such terms and conditions
are within the discretion of the Committee as provided in the Plan, including
accelerating the time any Option or SAR may be exercised and establishing
different terms and conditions relating to the effect of the termination of
employment or other services to the Company. Further, the Committee shall make
all other determinations which may be necessary or advisable in the Committee's
opinion for the administration of the Plan. All expenses of administering this
Plan shall be borne by the Company.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all Persons,
including the Company, the shareholders, Employees, Participants and their
estates and beneficiaries.
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ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in SECTION 4.3,
the total number of Shares available for grant of Awards under the Plan shall
not exceed fifteen percent (15%) of the total issued and outstanding shares as
of the date any Award is granted; provided, that the number of Shares available
for grant as ISOs under the Plan shall not exceed an aggregate of 1,000,000
Shares. The Shares may, in the discretion of the Company, be either authorized
but unissued Shares or Shares held as treasury shares, including Shares
purchased by the Company.
The following rules shall apply for purposes of the determination of
the number of Shares available for grant under the Plan:
(a) While an Option, SAR, Stock Award, Restricted Stock Award
or Performance Share Award is outstanding, it shall be counted
against the authorized pool of Shares, regardless of its
vested status.
(b) The grant of an Option, SAR, Stock Award, Restricted Stock
Award or Performance Share Award shall reduce the Shares
available for grant under the Plan by the number of Shares
subject to such Award.
4.2 LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates, expires or lapses for any reason, or if Shares are withheld in
payment of the Option Price or for withholding taxes, any Shares subject to such
Award or that are withheld shall again be available for the grant of an Award
under the Plan. However, in the event that prior to the Award's cancellation,
termination, expiration or lapse, the holder of the Award at any time received
one or more "benefits of ownership" pursuant to such Award (as defined by the
Securities and Exchange Commission, pursuant to any rule or interpretation
promulgated under Section 16 of the Exchange Act), the Shares subject to such
Award shall not again be made available for regrant under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such adjustment
shall be made in the number and class of Shares which may be delivered under the
Plan, and in the number and class of and/or price of Shares subject to
outstanding Awards granted under the Plan, as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares
subject to any Award shall always be a whole number and the Committee shall make
such adjustments as are necessary to insure Awards of whole Shares.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
Any key Employee of the Company or any Subsidiary, including any such
Employee who is also a director of the Company or any Subsidiary, any
non-employee Director, and any other person who performs services for the
Company or a Subsidiary, whose judgment, initiative and efforts contribute or
may be expected to contribute materially to the successful performance of the
Company or any Subsidiary shall be eligible to receive an Award under the Plan.
In determining the individuals to whom such an Award shall be granted and the
number of Shares which may be granted pursuant to that Award, the Committee
shall take into account the duties of the respective individual, his or her
present and potential contributions to the success of the Company or any
Subsidiary, and such other factors as the Committee shall deem relevant in
connection with accomplishing the purpose of the Plan.
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ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Participants at any time and from time to time as
shall be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each Participant.
An Option may be granted with or without a Corresponding SAR. No Participant may
be granted ISOs (under the Plan and all other incentive stock option plans of
the Company and any Subsidiary) which are first exercisable in any calendar year
for Common Stock having an aggregate Fair Market Value (determined as of the
date an Option is granted) that exceeds $100,000.00. The preceding annual limit
shall not apply to NQSOs. The Committee may grant a Participant ISOs, NQSOs or a
combination thereof, and may vary such Awards among Participants.
6.2 AGREEMENT. Each Option grant shall be evidenced by an Agreement
that shall specify the Option Price, the duration of the Option, the number of
Shares to which the Option pertains and such other provisions as the Committee
shall determine. The Option Agreement shall further specify whether the Award is
intended to be an ISO or an NQSO. Any portion of an Option that is not
designated as an ISO or otherwise fails or is not qualified as an ISO (even if
designated as an ISO) shall be a NQSO. If the Option is granted in connection
with a Corresponding SAR, the Agreement shall also specify the terms that apply
to the exercise of the Option and Corresponding SAR.
6.3 OPTION PRICE. The Option Price for each grant of an ISO or NQSO
shall not be less than one hundred percent (100%) of the Fair Market Value of a
Share on the date the ISO is granted. In no event, however, shall any
Participant who, at any time would otherwise be granted an Option, owns (within
the meaning of Section 424(d) of the Code) stock of the Company possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company be eligible to receive an ISO at an Option Price less than
one hundred ten percent (110%) of the Fair Market Value of a share on the date
the ISO is granted.
6.4 DURATION OF OPTIONS. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant; provided, further, however, that any ISO granted to any Participant who
at such time owns (within the meaning of Section 424(d) of the Code) stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, shall be exercisable not later
than the fifth (5th) anniversary date of its grant.
6.5 EXERCISE OF OPTIONS. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, including conditions related to
the employment of the Participant with the Company or any Subsidiary, which need
not be the same for each grant or for each Participant. Each Option shall be
exercisable for such number of Shares and at such time or times, including
periodic installments, as may be determined by the Committee at the time of the
grant. The Committee may provide in the Agreement for automatic accelerated
vesting and other rights upon the occurrence of a Change in Control of the
Company. Except as otherwise provided in the Agreement and ARTICLE 13, the right
to purchase Shares that are exercisable in periodic installments shall be
cumulative so that when the right to purchase any Shares has accrued, such
Shares or any part thereof may be purchased at any time thereafter until the
expiration or termination of the Option. The exercise or partial exercise of
either an Option or its Corresponding SAR shall result in the termination of the
other to the extent of the number of Shares with respect to which the Option or
Corresponding SAR is exercised.
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6.6 PAYMENT. Options shall be exercised by the delivery of a written notice
of exercise to the Company, setting forth the number of Shares with respect to
which the Option is to be exercised, accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the Company in
full, either: (a) in cash, (b) cash equivalent approved by the Committee, (c) if
approved by the Committee, by tendering previously acquired Shares (or
delivering a certification of ownership of such Shares) having an aggregate Fair
Market Value at the time of exercise equal to the total Option Price (provided
that the Shares which are tendered must have been held by the Participant for
six months [if required for accounting purposes] and for the period required by
law, if any, prior to their tender to satisfy the Option Price), or (d) by a
combination of (a), (b) and (c). The Committee also may allow cashless exercises
as permitted under Federal Reserve Board's Regulation T, subject to applicable
securities law restrictions, or by any other means which the Committee
determines to be consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s), and may place appropriate
legends on the certificates representing such Shares.
6.7 LIMITED TRANSFERABILITY. If permitted by the Committee in the
Agreement, a Participant may transfer an Option granted hereunder, including but
not limited to transfers to members of his or her Immediate Family (as defined
below), to one or more trusts for the benefit of such Immediate Family members,
or to one or more partnerships where such Immediate Family members are the only
partners, if (i) the Participant does not receive any consideration in any form
whatsoever for such transfer, (ii) such transfer is permitted under applicable
tax laws, and (iii) the Participant is an Insider, such transfer is permitted
under Rule 16b-3 of the Exchange Act as in effect from time to time. Any Option
so transferred shall continue to be subject to the same terms and conditions in
the hands of the transferee as were applicable to said Option immediately prior
to the transfer thereof. Any reference in any such Agreement to the employment
by or performance of services for the Company by the Participant shall continue
to refer to the employment of, or performance by, the transferring Participant.
For purposes hereof, "IMMEDIATE FAMILY" shall mean the Participant and the
Participant's spouse, children and grandchildren. Any Option that is granted
pursuant to any Agreement that did not initially expressly allow the transfer of
said Option and that has not been amended to expressly permit such transfer,
shall not be transferable by the Participant otherwise than by will or by the
laws of descent and distribution and such Option thus shall be exercisable in
the Participant's lifetime only by the Participant.
6.8 SHAREHOLDER RIGHTS. No Participant shall have any rights as a
shareholder with respect to Shares subject to his Option until the issuance of
such Shares to the Participant pursuant to the exercise of such Option.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 GRANTS OF SARS. The Committee shall designate Participants to whom
SARs are granted, and will specify the number of Shares of Common Stock subject
to each grant. An SAR may be granted with or without a related Option. All SARs
granted under this Plan shall be subject to an Agreement in accordance with the
terms of this Plan. A payment to the Participant upon the exercise of a
Corresponding SAR may not be more than the difference between the Fair Market
Value of the Shares subject to the ISO on the date of grant and the Fair Market
Value of the Shares on the date of exercise of the Corresponding SAR.
7.2 DURATION OF SARS. The duration of an SAR shall be set forth in the
Agreement as determined by the Committee. An SAR that is granted as a
Corresponding SAR shall have the same duration as the Option to which it
relates. An SAR shall terminate due to the Participant's termination of
employment at the same time as the date specified in ARTICLE 6 with respect to
Options, regardless of whether the SAR was granted in connection with the grant
of an Option.
7.3 EXERCISE OF SAR. An SAR may be exercised in whole at any time or in
part from time to time and at such times and in compliance with such
requirements as the Committee shall determine as set forth in the Agreement;
provided, however, that a Corresponding SAR that is related to an Incentive
Stock Option may be exercised only to the extent that the related Option is
exercisable and only when the Fair Market Value of the Shares exceeds the Option
Price of the related ISO. An SAR granted under this Plan may be exercised with
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respect to any number of shares less than a full number of whole shares for
which the SAR could be exercised. A partial exercise of an SAR shall not affect
the right to exercise the SAR from time to time in accordance with this Plan and
the applicable Agreement with respect to the remaining shares subject to the
SAR. The exercise of either an Option or Corresponding SAR shall result in the
termination of the other to the extent of the number of Shares with respect to
which the Option or its Corresponding SAR is exercised.
7.4 DETERMINATION OF PAYMENT OF CASH AND/0R COMMON STOCK UPON EXERCISE
OF SAR. At the Committee's discretion, the amount payable as a result of the
exercise of an SAR may be settled in cash, Common Stock, or a combination of
cash and Common Stock. A fractional share shall not be deliverable upon the
exercise of an SAR, but a cash payment shall be made in lieu thereof.
7.5 NONTRANSFERABILITY. Each SAR granted under the Plan shall be
nontransferable except by will or by the laws of descent and distribution.
During the lifetime of the Participant to whom the SAR is granted, the SAR may
be exercised only by the Participant. No right or interest of a Participant in
any SAR shall be liable for, or subject to any lien, obligation or liability of
such Participant. A Corresponding SAR shall be subject to the same restrictions
on transfer as the ISO to which it relates.
Notwithstanding the foregoing, if the Agreement so provides, a
Participant may transfer an SAR (other than a Corresponding SAR that relates to
an Incentive Stock Option) under the same rules and conditions as are set forth
in SECTION 6.7.
7.6 SHAREHOLDER RIGHTS. No Participant shall have any rights as a
shareholder with respect to Shares subject to his SAR until the issuance of
Shares (if any) to the Participant pursuant to the exercise of such SAR.
ARTICLE 8. RESTRICTED STOCK; STOCK AWARDS
8.1 GRANTS. The Committee may from time to time in its discretion grant
Restricted Stock and Stock Awards to Participants and may determine the number
of Shares of Restricted Stock or Stock Awards to be granted. The Committee shall
determine the terms and conditions of, and the amount of payment, if any, to be
made by the Employee for, such Restricted Stock. A grant of Restricted Stock
may, in addition to other conditions, require the Participant to pay for such
Shares of Restricted Stock, but the Committee may establish a price below Fair
Market Value at which the Participant can purchase the Shares of Restricted
Stock. Each grant of Restricted Stock shall be evidenced by an Agreement
containing terms and conditions not inconsistent with the Plan as the Committee
shall determine to be appropriate in its sole discretion.
8.2 RESTRICTED PERIOD; LAPSE OF RESTRICTIONS. At the time a grant of
Restricted Stock is made, the Committee shall establish a period or periods of
time (the "RESTRICTED PERIOD") applicable to such grant which, unless the
Committee otherwise provides, shall not be less than one year. Subject to the
other provisions of this SECTION 8, at the end of the Restricted Period all
restrictions shall lapse and the Restricted Stock shall vest in the Participant.
At the time a grant is made, the Committee may, in its discretion, prescribe
conditions for the incremental lapse of restrictions during the Restricted
Period and for the lapse or termination of restrictions upon the occurrence of
other conditions in addition to or other than the expiration of the Restricted
Period with respect to all or any portion of the Restricted Stock. Such
conditions may, but need not, include the following:
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(a) The death, Disability or Retirement of the Employee to whom Restricted
Stock is granted, or
(b) The occurrence of a Change in Control (as defined in SECTION 13.1).
The Committee may also, in its discretion, shorten or terminate the
Restricted Period, or waive any conditions for the lapse or termination of
restrictions with respect to all or any portion of the Restricted Stock at any
time after the date the grant is made.
8.3 RIGHTS OF HOLDER; LIMITATIONS THEREON. Upon a grant of Restricted
Stock, a stock certificate (or certificates) representing the number of Shares
of Restricted Stock granted to the Participant shall be registered in the
Participant's name and shall be held in custody by the Company or a bank
selected by the Committee for the Participant's account. Following such
registration, the Participant shall have the rights and privileges of a
shareholder as to such Restricted Stock, including the right to receive
dividends, if and when declared by the Board of Directors, and to vote such
Restricted Stock, except that the right to receive cash dividends shall be the
right to receive such dividends either in cash currently or by payment in
Restricted Stock, as the Committee shall determine, and except further that, the
following restrictions shall apply:
(a) The Participant shall not be entitled to delivery of a certificate
until the expiration or termination of the Restricted Period for the Shares
represented by such certificate and the satisfaction of any and all other
conditions prescribed by the Committee;
(b) None of the Shares of Restricted Stock may be sold, transferred,
assigned, pledged, or otherwise encumbered or disposed of during the
Restricted Period and until the satisfaction of any and all other
conditions prescribed by the Committee; and
(c) All of the Shares of Restricted Stock that have not vested shall be
forfeited and all rights of the Participant to such Shares of Restricted
Stock shall terminate without further obligation on the part of the
Company, unless the Participant has remained an employee (or non-Employee
Director) of the Company or any of its Subsidiaries, until the expiration
or termination of the Restricted Period and the satisfaction of any and all
other conditions prescribed by the Committee applicable to such Shares of
Restricted Stock. Upon the forfeiture of any shares of Restricted Stock,
such forfeited Shares shall be transferred to the Company without further
action by the Participant and shall, in accordance with SECTION 4.2, again
be available for grant under the Plan.
With respect to any Shares received as a result of adjustments under
SECTION 4.3 hereof and any Shares received with respect to cash dividends
declared on Restricted Stock, the Participant shall have the same rights and
privileges, and be subject to the same restrictions, as are set forth in this
SECTION 8.
8.4 DELIVERY OF UNRESTRICTED SHARES. Upon the expiration or termination
of the Restricted Period for any Shares of Restricted Stock and the satisfaction
of any and all other conditions prescribed by the Committee, the restrictions
applicable to such Shares of Restricted Stock shall lapse and a stock
certificate for the number of Shares of Restricted Stock with respect to which
the restrictions have lapsed shall be delivered, free of all such restrictions
except any that may be imposed by law, to the holder of the Restricted Stock.
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The Company shall not be required to deliver any fractional Share but will pay,
in lieu thereof, the Fair Market Value (determined as of the date the
restrictions lapse) of such fractional share to the holder thereof. Concurrently
with the delivery of a certificate for Restricted Stock, the holder shall be
required to pay an amount necessary to satisfy any applicable federal, state and
local tax requirements as set out in ARTICLE 15 below.
8.5 NONASSIGNABILITY OF RESTRICTED STOCK. Unless the Committee provides
otherwise in the Agreement, no grant of, nor any right or interest of a
Participant in or to, any Restricted Stock, or in any instrument evidencing any
grant of Restricted Stock under the Plan, may be assigned, encumbered or
transferred except, in the event of the death of a Participant, by will or the
laws of descent and distribution.
ARTICLE 9. PERFORMANCE SHARE AWARDS
9.1 AWARD. The Committee may designate Participants to whom Performance
Share Awards will be granted from time to time for no consideration and specify
the number of shares of Common Stock covered by the Award.
9.2 EARNING THE AWARD. A Performance Share Award, or portion thereof,
will be earned, and the Participant will be entitled to receive Common Stock, a
cash payment or a combination thereof, only upon the achievement by the
Participant, the Company, or a Subsidiary of such performance objectives as the
Committee, in its discretion, shall prescribe on the date of grant. To the
extent required, the performance objectives applicable to Awards to Named
Executive Officers intended to qualify under Code Section 162(m) shall be
selected from among the following measures: return on equity or assets, earnings
per share, total earnings, earnings growth, return on capital, economic value
added and increase in Fair Market Value of the Shares. The determination as to
whether such objectives have been achieved shall be made by the Committee, and
such determination shall be conclusive; provided, however, that the period in
which such performance is measured shall be at least one year.
9.3 PAYMENT. In the discretion of the Committee, the amount payable
when a Performance Share Award is earned may be settled in cash, by the grant of
Common Stock or a combination of cash and Common Stock. The aggregate Fair
Market Value of the Common Stock received by the Participant pursuant to a
Performance Share Award, together with any cash paid to the Participant, shall
be equal to the aggregate Fair Market Value, on the date the Performance Shares
are earned, of the number of shares of Common Stock equal to each Performance
Share earned. A fractional share will not be deliverable when a Performance
Share Award is earned, but a cash payment will be made in lieu thereof.
9.4 SHAREHOLDER RIGHTS. No Participant shall have, as a result of
receiving a Performance Share Award, any rights as a shareholder until and to
the extent that the Performance Shares are earned and Common Stock is
transferred to such Participant. If the Agreement so provides, a Participant may
receive a cash payment equal to the dividends that would have been payable with
respect to the number of shares of Common Stock covered by the Award between (a)
the date that the Performance Shares are awarded and (b) the date that a
transfer of Common Stock to the Participant, cash settlement, or combination
thereof is made pursuant to the Performance Share Award. A Participant may not
sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of a
Performance Share Award or the right to receive Common Stock thereunder other
than by will or the laws of descent and distribution. After a Performance Share
Award is earned and paid in Common Stock, a Participant will have all the rights
of a shareholder with respect to the Common Stock so awarded.
ARTICLE 10. BENEFICIARY DESIGNATION
To the extent applicable, each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in case of his or her death before he or she receives any or all of such
benefit. Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company and shall be effective
only when filed by the Participant, in writing, with the Company during the
Participant's lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate.
If required, the spouse of a married Participant domiciled in a
community property jurisdiction shall join in any designation of a beneficiary
or beneficiaries other than the spouse.
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ARTICLE 11. DEFERRALS
The Committee may permit a Participant to defer to another plan or
program such Participant's receipt of Shares or cash that would otherwise be due
to such Participant by virtue of the exercise of an Option, the vesting of
Restricted Stock, or the earning of a Performance Share Award. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
ARTICLE 12. RIGHTS OF EMPLOYEES
12.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in
any way the right of the Company or a Subsidiary to terminate any Participant's
employment by, or performance of services for, the Company at any time, nor
confer upon any Participant any right to continue in the employ or service of
the Company or a Subsidiary. For purposes of the Plan, transfer of employment of
a Participant between the Company and any one of its Subsidiaries (or between
Subsidiaries) shall not be deemed a termination of employment.
12.2 PARTICIPATION. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
ARTICLE 13. CHANGE IN CONTROL
13.1 DEFINITION. For purposes of the Plan, a "Change in Control" shall be deemed
to have occurred if:
(a) An acquisition by any Person of Beneficial Ownership of the shares of
Common Stock of the Company then outstanding (the "COMPANY COMMON STOCK
OUTSTANDING") or the voting securities of the Company then outstanding
entitled to vote generally in the election of directors (the "COMPANY
VOTING SECURITIES OUTSTANDING"), if such acquisition of Beneficial
Ownership results in the Person beneficially owning (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) twenty-five percent (25%) or
more of the Company Common Stock Outstanding or twenty-five percent (25%)
or more of the combined voting power of the Company Voting Securities
Outstanding; provided, that immediately prior to such acquisition such
Person was not a direct or indirect Beneficial Owner of twenty-five percent
(25%) or more of the Company Common Stock Outstanding or twenty-five
percent (25%) or more of the combined voting power of Company Voting
Securities Outstanding, as the case may be; or
(b) The approval by the shareholders of the Company of a reorganization,
merger, consolidation, complete liquidation or dissolution of the Company,
the sale or disposition of all or substantially all of the assets of the
Company or similar corporate transaction (in each case referred to in this
SECTION 13 as a "CORPORATE TRANSACTION") or, if consummation of such
Corporate Transaction is subject, at the time of such approval by
shareholders, to the consent of any government or governmental agency, the
obtaining of such consent (either explicitly or implicitly); or
(c) A change in the composition of the Board such that the individuals who,
as of the Effective Date, constitute the Board (such Board shall be
hereinafter referred to as the "INCUMBENT BOARD") cease for any reason to
constitute at least a majority of the Board; provided, however, for
purposes of this SECTION 13 that any individual who becomes a member of the
Board subsequent to the Effective Date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least
a majority of those individuals who are members of the Board and who were
also members of the Incumbent Board (or deemed to be such pursuant to this
proviso) shall be considered as though such individual were a member of the
Incumbent Board; but, provided, further, that any such individual whose
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initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act, including any successor
to such Rule), or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board, shall not be so
considered as a member of the Incumbent Board.
Notwithstanding the provisions set forth in subsections (a) and (b),
the following shall not constitute a Change in Control for purposes of this
Plan:
(1) any acquisition of shares of Common Stock by, or consummation of a
Corporate Transaction with, any Subsidiary or any employee benefit plan (or
related trust) sponsored or maintained by the Company or an affiliate; or
(2) any acquisition of shares of Common Stock, or consummation of a
Corporate Transaction, following which more than fifty percent (50%) of,
respectively, the shares then outstanding of common stock of the
corporation resulting from such acquisition or Corporate Transaction and
the combined voting power of the voting securities then outstanding of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were Beneficial Owners, respectively, of
the Company Common Stock Outstanding and Company Voting Securities
Outstanding immediately prior to such acquisition or Corporate Transaction
in substantially the same proportions as their ownership, immediately prior
to such acquisition or Corporate Transaction, of the Company Common Stock
Outstanding and Company Voting Securities Outstanding, as the case may be.
13.2 LIMITATION OF AWARDS. Notwithstanding any other provisions of the
Plan, if the right to receive or benefit from any Award under this Plan, either
alone or together with payments that a Participant has the right to receive from
the Company or a Subsidiary, would constitute a "parachute payment" (as defined
in Section 280G of the Code), all such payments shall be reduced to the largest
amount that will result in no portion being subject to the excise tax imposed by
Section 4999 of the Code.
ARTICLE 14. AMENDMENT, MODIFICATION AND TERMINATION
14.1 AMENDMENT, MODIFICATION AND TERMINATION. The Board may, at any
time and from time to time, alter, amend, suspend or terminate the Plan in whole
or in part; provided, that, unless approved by the holders of a majority of the
total number of Shares of the Company represented and voted at a meeting at
which a quorum is present, no amendment shall be made to the Plan if such
amendment would (a) materially modify the eligibility requirements provided in
ARTICLE 5; (b) increase the total number of Shares (except as provided in
SECTION 4.3) which may be granted under the Plan, as provided in SECTION 4.1;
(c) extend the term of the Plan; or (d) amend the Plan in any other manner which
the Board, in its discretion, determines should become effective only if
approved by the shareholders even though such shareholder approval is not
expressly required by the Plan or by law.
14.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award. The Committee shall, with the written consent of
the Participant holding such Award, have the authority to cancel Awards
outstanding and grant replacement Awards therefor.
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14.3 COMPLIANCE WITH CODE SECTION 162(m). At all times when the
Committee determines that compliance with Code Section 162(m) is required or
desired, all Awards granted under this Plan to Named Executive Officers shall
comply with the requirements of Code Section 162(m). In addition, in the event
that changes are made to Code Section 162(m) to permit greater flexibility with
respect to any Award or Awards under the Plan, the Committee may, subject to
this ARTICLE 14, make any adjustments it deem appropriate.
ARTICLE 15. WITHHOLDING
15.1 TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any taxable event arising in connection with an Award under this Plan.
15.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options, or upon any other taxable event arising as a result of
Awards granted hereunder which are to be paid in the form of Shares,
Participants may elect, subject to the approval of the Committee, to satisfy the
withholding requirement, in whole or in part, by having the Company withhold
Shares having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the transaction.
All elections shall be irrevocable, made in writing, signed by the Participant,
and elections by Insiders shall additionally comply with all legal requirements
applicable to Share transactions by such Participants.
ARTICLE 16. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him in satisfaction of any judgment in
any such action, suit or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall be in addition to any other rights of indemnification to
which such persons may be entitled under the Company's Articles of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
ARTICLE 17. SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE 18. LEGAL CONSTRUCTION
18.1 GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
18.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
18.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
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18.4 REGULATORY APPROVALS AND LISTING. The Company shall not be
required to issue any certificate or certificates for Shares under the Plan
prior to (i) obtaining any approval from any governmental agency which the
Company shall, in its discretion, determine to be necessary or advisable, (ii)
the admission of such shares to listing on any national securities exchange or
Nasdaq on which the Company's Shares may be listed, and (iii) the completion of
any registration or other qualification of such Shares under any state or
federal law or ruling or regulations of any governmental body which the Company
shall, in its sole discretion, determine to be necessary or advisable.
Notwithstanding any other provision set forth in the Plan, if required
by the then-current Section 16 of the Exchange Act, any "derivative security" or
"equity security" offered pursuant to the Plan to any Insider may not be sold or
transferred for at least six (6) months after the date of grant of such Award.
The terms "equity security" and "derivative security" shall have the meanings
ascribed to them in the then-current Rule 16(a) under the Exchange Act.
18.5 SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provisions of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
18.6 GOVERNING LAW. To the extent not preempted by Federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Maryland.
AS APPROVED BY THE BOARD OF DIRECTORS OF ORIGIN INVESTMENT GROUP, INC. ON
DECEMBER 3, 1999.
ORIGIN INVESTMENT GROUP, INC.
By: /S/ OMAR A. RIZVI
---------------------------
Omar A. Rizvi
Chairman of the Board and
President
-14-
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<PERIOD-END> DEC-31-1999
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<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 50811
<PP&E> 3822
<DEPRECIATION> 389
<TOTAL-ASSETS> 54633
<CURRENT-LIABILITIES> 58062
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0
<COMMON> 4000000
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<TOTAL-LIABILITY-AND-EQUITY> 54633
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<TOTAL-COSTS> 199370
<OTHER-EXPENSES> 6059
<LOSS-PROVISION> 0
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</TABLE>
NON-NEGOTIABLE PROMISSORY NOTE
$99,000.00 January 12, 2000
FOR VALUE RECEIVED, Omar A. Rizvi, an individual residing at 175 North Harbor
Drive, Chicago, Illinois 60601 ("Maker"), promises to pay to Origin Investment
Group, Inc., Inc., a Maryland corporation, with its principal place of business
located at 980 North Michigan Avenue, Suite 1400, Chicago, Illinois 60611
("Payee"), in lawful money of the United States of America, the principal sum of
Nine Hundred Ninety-Nine Thousand Dollars ($99,000.00), together with simple
interest on the unpaid principal balance at an annual rate equal to the 90-day
Treasury Rate as published in the Wall Street Journal on January 1st in each
year of the term of this Note, payable in the manner provided below. Interest
shall be calculated on the basis of a year of 365 or 366 days, as applicable,
and charged for the actual number of days elapsed.
1. PAYMENTS
1.1 PRINCIPAL AND INTEREST
Payments shall be due on December 31st of each year of the term, which shall be
designated as five (5) complete years after the execution of this Note. Interest
on the unpaid principal balance calculated shall be equal to the 90-day Treasury
Rate as published in the Wall Street Journal on January 1st in each year of the
term of this Note.
1.2 MANNER OF PAYMENT
All payments of principal and interest on this Note shall be made by personal
check, certified check, or bank cashier's check deliverable to 980 North
Michigan Avenue, Suite 1400, Chicago, Illinois, or via wire transfer to Firstar
Bank Illinois, 30 North Michigan Avenue, Chicago, Illinois 60602-3496 to the
account of "Origin Investment Group, Inc.", with the routing number 071904779
and account number 422601455, or at such other place or to such other official
bank account in the United States of America as Payee shall designate to Maker
in writing. If any payment of principal or interest on this Note is due on a day
which is not a Business Day, such payment shall be due on the next succeeding
Business Day, and such extension of time shall be taken into account in
calculating the amount of interest payable under this Note. "Business Day" means
any day other than a Saturday, Sunday or legal holiday in the State of Illinois.
1.3 PREPAYMENT
Maker may, without premium or penalty, at any time and from time to time, prepay
all or any portion of the outstanding principal balance due under this Note,
provided that each such prepayment is accompanied by accrued interest on the
amount of principal prepaid calculated to the date of such prepayment. Any
partial prepayments shall be applied to installments of principal in inverse
order of their maturity.
1.4 RIGHT OF SET-OFF
Maker shall have the right to withhold and set-off against any amount due
hereunder the amount of any claim for indemnification or payment of damages.
1.5 SECURED ASSETS.
Maker shall deposit with Company as collateral hereunder, stock certificate #
OC3 in the amount of 1,000,000 shares of common stock. Maker shall receive the
stock certificate from Company upon full payment of all obligations hereunder.
-1-
<PAGE>
2. DEFAULTS
2.1 EVENTS OF DEFAULT
The occurrence of any one or more of the following events with respect to Maker
shall constitute an event of default hereunder ("Event of Default"):
(a) If Maker shall fail to pay when due any payment of principal or interest on
this Note and such failure continues for fifteen (15) days after Payee notifies
Maker therein writing; provided, however, that the exercise by Maker in good
faith of its right of set-off pursuant to Section 1.4 above, whether or not
ultimately determined to be justified, shall not constitute an Event of Default.
(b) If, pursuant to or within the meaning of the United States Bankruptcy Code
or any other federal or state law relating to insolvency or relief of debtors (a
"Bankruptcy Law"), Maker shall (i) commence a voluntary case or proceeding; (ii)
consent to the entry of an order for relief against it in an involuntary case;
(iii) consent to the appointment of a trustee, receiver, assignee, liquidator or
similar official; (iv) make an assignment for the benefit of its creditors; or
(v) admit in writing its inability to pay its debts as they become due.
(c) If a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (i) is for relief against Maker in an involuntary case, (ii)
appoints a trustee, receiver, assignee, liquidator or similar official for Maker
or substantially all of Maker's properties, or (iii) orders the liquidation of
Maker, and in each case the order or decree is not dismissed within 120 days.
2.2 NOTICE BY MAKER
Maker shall notify Payee in writing within five days after the occurrence of any
Event of Default of which Maker acquires knowledge.
2.3 REMEDIES
Upon the occurrence of an Event of Default hereunder (unless all Events of
Default have been cured or waived by Payee), Payee may, at its option, (i) by
written notice to Maker, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon, immediately due and payable
regardless of any prior forbearance, (ii) claim any and all shares of Maker's
common stock held by Payee at the time of the Event of Default and (iii)
exercise any and all rights and remedies available to it under applicable law,
including, without limitation, the right to collect from Maker all sums due
under this Note. Maker shall pay all reasonable costs and expenses incurred by
or on behalf of Payee in connection with Payee's exercise of any or all of its
rights and remedies under this Note, including, without limitation, reasonable
attorneys' fees.
3. MISCELLANEOUS
3.1 WAIVER
The rights and remedies of Payee under this Note shall be cumulative and not
alternative. No waiver by Payee of any right or remedy under this Note shall be
effective unless in a writing signed by Payee. Neither the failure nor any delay
in exercising any right, power or privilege under this Note will operate as a
waiver of such right, power or privilege and no single or partial exercise of
any such right, power or privilege by Payee will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right of Payee arising out of this Note can be discharged by Payee, in
whole or in part, by a waiver or renunciation of the claim or right unless in a
writing, signed by Payee; (b) no waiver that may be given by Payee will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on Maker will be deemed to be a waiver of any obligation of
Maker or of the right of Payee to take further action without notice or demand
as provided in this Note. Maker hereby waives presentment, demand, protest and
notice of dishonor and protest.
-2-
<PAGE>
3.2 NOTICES
Any notice required or permitted to be given hereunder shall be given in
accordance with Section 11.4 of the Agreement.
3.3 SEVERABILITY
If any provision in this Note is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Note will remain in full
force and effect. Any provision of this Note held invalid or unenforceable only
in part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.
3.4 GOVERNING LAW
This Note will be governed by the laws of the State of Illinois without regard
to conflicts of laws principles.
3.5 PARTIES IN INTEREST
This Note shall bind Maker and its successors and assigns. This Note shall not
be assigned or transferred by Payee without the express prior written consent of
Maker, except by will or, in default thereof, by operation of law.
3.6 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Note are provided for convenience only and will
not affect its construction or interpretation. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this Note unless
otherwise specified.
All words used in this Note will be construed to be of such gender or number as
the circumstances require. Unless otherwise expressly provided, the words
"hereof" and "hereunder" and similar references refer to this Note in its
entirety and not to any specific section or subsection hereof.
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the date
first stated above.
By: /S/ OMAR A. RIZVI
--------------------
Omar A. Rizvi
-3-
NON-NEGOTIABLE PROMISSORY NOTE
$99,000.00 January 12, 2000
FOR VALUE RECEIVED, Gregory H. Laborde, an individual residing at 379 Vesta
Court, Ridgewood, New Jersey 07400 ("Maker"), promises to pay to Origin
Investment Group, Inc., Inc., a Maryland corporation, with its principal place
of business located at 980 North Michigan Avenue, Suite 1400, Chicago, Illinois
60611 ("Payee"), in lawful money of the United States of America, the principal
sum of Nine Hundred Ninety-Nine Thousand Dollars ($99,000.00), together with
simple interest on the unpaid principal balance at an annual rate equal to the
90-day Treasury Rate as published in the Wall Street Journal on January 1st in
each year of the term of this Note, payable in the manner provided below.
Interest shall be calculated on the basis of a year of 365 or 366 days, as
applicable, and charged for the actual number of days elapsed.
1. PAYMENTS
1.1 PRINCIPAL AND INTEREST
Payments shall be due on December 31st of each year of the term, which shall be
designated as five (5) complete years after the execution of this Note. Interest
on the unpaid principal balance calculated shall be equal to the 90-day Treasury
Rate as published in the Wall Street Journal on January 1st in each year of the
term of this Note.
1.2 MANNER OF PAYMENT
All payments of principal and interest on this Note shall be made by personal
check, certified check, or bank cashier's check deliverable to 980 North
Michigan Avenue, Suite 1400, Chicago, Illinois, or via wire transfer to Firstar
Bank Illinois, 30 North Michigan Avenue, Chicago, Illinois 60602-3496 to the
account of "Origin Investment Group, Inc.", with the routing number 071904779
and account number 422601455, or at such other place or to such other official
bank account in the United States of America as Payee shall designate to Maker
in writing. If any payment of principal or interest on this Note is due on a day
which is not a Business Day, such payment shall be due on the next succeeding
Business Day, and such extension of time shall be taken into account in
calculating the amount of interest payable under this Note. "Business Day" means
any day other than a Saturday, Sunday or legal holiday in the State of Illinois.
1.3 PREPAYMENT
Maker may, without premium or penalty, at any time and from time to time, prepay
all or any portion of the outstanding principal balance due under this Note,
provided that each such prepayment is accompanied by accrued interest on the
amount of principal prepaid calculated to the date of such prepayment. Any
partial prepayments shall be applied to installments of principal in inverse
order of their maturity.
1.4 RIGHT OF SET-OFF
Maker shall have the right to withhold and set-off against any amount due
hereunder the amount of any claim for indemnification or payment of damages.
-1-
<PAGE>
1.5 SECURED ASSETS.
Maker shall deposit with Company as collateral hereunder, stock certificate #
OC4 in the amount of 1,000,000 shares of common stock. Maker shall receive the
stock certificate from Company upon full payment of all obligations hereunder.
2. DEFAULTS
2.1 EVENTS OF DEFAULT
The occurrence of any one or more of the following events with respect to Maker
shall constitute an event of default hereunder ("Event of Default"):
(a) If Maker shall fail to pay when due any payment of principal or interest on
this Note and such failure continues for fifteen (15) days after Payee notifies
Maker therein writing; provided, however, that the exercise by Maker in good
faith of its right of set-off pursuant to Section 1.4 above, whether or not
ultimately determined to be justified, shall not constitute an Event of Default.
(b) If, pursuant to or within the meaning of the United States Bankruptcy Code
or any other federal or state law relating to insolvency or relief of debtors (a
"Bankruptcy Law"), Maker shall (i) commence a voluntary case or proceeding; (ii)
consent to the entry of an order for relief against it in an involuntary case;
(iii) consent to the appointment of a trustee, receiver, assignee, liquidator or
similar official; (iv) make an assignment for the benefit of its creditors; or
(v) admit in writing its inability to pay its debts as they become due.
(c) If a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (i) is for relief against Maker in an involuntary case, (ii)
appoints a trustee, receiver, assignee, liquidator or similar official for Maker
or substantially all of Maker's properties, or (iii) orders the liquidation of
Maker, and in each case the order or decree is not dismissed within 120 days.
2.2 NOTICE BY MAKER
Maker shall notify Payee in writing within five days after the occurrence of any
Event of Default of which Maker acquires knowledge.
2.3 REMEDIES
Upon the occurrence of an Event of Default hereunder (unless all Events of
Default have been cured or waived by Payee), Payee may, at its option, (i) by
written notice to Maker, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon, immediately due and payable
regardless of any prior forbearance, (ii) claim any and all shares of Maker's
common stock held by Payee at the time of the Event of Default and (iii)
exercise any and all rights and remedies available to it under applicable law,
including, without limitation, the right to collect from Maker all sums due
under this Note. Maker shall pay all reasonable costs and expenses incurred by
or on behalf of Payee in connection with Payee's exercise of any or all of its
rights and remedies under this Note, including, without limitation, reasonable
attorneys' fees.
-2-
<PAGE>
3. MISCELLANEOUS
3.1 WAIVER
The rights and remedies of Payee under this Note shall be cumulative and not
alternative. No waiver by Payee of any right or remedy under this Note shall be
effective unless in a writing signed by Payee. Neither the failure nor any delay
in exercising any right, power or privilege under this Note will operate as a
waiver of such right, power or privilege and no single or partial exercise of
any such right, power or privilege by Payee will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right of Payee arising out of this Note can be discharged by Payee, in
whole or in part, by a waiver or renunciation of the claim or right unless in a
writing, signed by Payee; (b) no waiver that may be given by Payee will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on Maker will be deemed to be a waiver of any obligation of
Maker or of the right of Payee to take further action without notice or demand
as provided in this Note. Maker hereby waives presentment, demand, protest and
notice of dishonor and protest.
3.2 NOTICES
Any notice required or permitted to be given hereunder shall be given in
accordance with Section 11.4 of the Agreement.
3.3 SEVERABILITY
If any provision in this Note is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Note will remain in full
force and effect. Any provision of this Note held invalid or unenforceable only
in part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.
3.4 GOVERNING LAW
This Note will be governed by the laws of the State of Illinois without regard
to conflicts of laws principles.
3.5 PARTIES IN INTEREST
This Note shall bind Maker and its successors and assigns. This Note shall not
be assigned or transferred by Payee without the express prior written consent of
Maker, except by will or, in default thereof, by operation of law.
3.6 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Note are provided for convenience only and will
not affect its construction or interpretation. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this Note unless
otherwise specified.
All words used in this Note will be construed to be of such gender or number as
the circumstances require. Unless otherwise expressly provided, the words
"hereof" and "hereunder" and similar references refer to this Note in its
entirety and not to any specific section or subsection hereof.
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the date
first stated above.
By: /S/ GREG H. LABORDE
----------------------
Gregory H. Laborde
-3-
