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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
General Form for Registration of Securities of
Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
IR Operating Corporation
(Name of Small Business Issuer in its charter)
DELAWARE 11-2165149
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
112 Main Street, Webster, MA 01570
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (888) 444-4762
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered Each class is to be registered
Common Stock, par value $0.001 Nasdaq OTC Bulletin Board
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PART I
Item 1. Description of Business.
(a) Business Development.
The Company was originally named Atlantic Medical Corporation which was
the surviving corporation of a Delaware statutory merger with Rusco Development
Corporation, a New York corporation, in January 1972 and the surviving
corporation of the acquisition of Fox Group Enterprises, Inc. a Delaware
corporation ("Fox Group") which took place on March 29, 1999. After the
acquisition of Fox Group Enterprises, Inc. the corporation was named I-ROCK
Industries, Inc. In April 1999 the Company changed its name to IR Operating
Corporation.
The Company generally has been inactive. The Company plans to seek and
acquire suitable business opportunities or technologies within the recycling
field. At present no such opportunities have been identified. The cash
requirements for this search are minimal and it is not anticipated that
additional funds will be needed until such time an acquisition occurs. The
Company will not require any employees until a suitable business has been
acquired.
The Company is currently not required to deliver an annual report to
security holders, however a copy of the Company's most recent annual report,
which includes audited financial statements will be provided to any shareholder
requesting such material, in writing, to the Secretary of the Company. The
Company currently does not file reports with Securities and Exchange Commission.
(b) Business of Issuer.
Since its acquisition of Fox Group, the Company has conducted no
business operations except for organizational activities. Prior to the
acquisition of Fox Group, the Issuer was an inactive company. It has no material
assets, no business, no sales or revenue. The Issuer was seeking a merger
partner that could bring in substantial assets to the corporation. The Issuer
acquired Fox Group on March 29, 1999. Fox Group at the time of the acquisition
had signed letters of intent to acquire the technology, the patent and certain
assets that were for producing plastic pallets and other plastic profile shapes,
from recycled material, using a process known as the I-ROCK Process. On April
30, 1999, the Issuer allowed the letters of intent for the I-ROCK Process to
expire because the technology will require additional development before it can
be commercialized. The Corporation is currently looking for other business
opportunities and technologies. To make acquisitions the Issuer may need to
raise additional capital that will be used to acquire the technology and to
operate the Issuer during the start up phase.
It is anticipated that the Company's CEO and directors will receive
reasonable salaries for services as executive officers at such time as the
Company commences business operations. (See Part I,
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Item 6. "Executive Compensation.") These individuals will devote such time and
effort as may be necessary to participate in the day-to-day management of the
Company. (See Part I, Item 5. "Directors, Executive Officers, Promoters and
Control Persons - Executive Officers and Directors.") The Company proposes to
acquire recycling technologies that will utilize low cost raw material to make
products.
No Operating History, Revenues or Earnings. As of the date hereof, the
Company has no operations and no recent operating revenues or earnings. Since
the acquisition of Fox Group, most of the time and resources of IR's management
have been spent in reorganizing the Company, obtaining interim financing and
developing a business plan. The Company's success is dependent upon its locating
suitable business opportunities and/or technologies and obtaining additional
financing for intended operations from placement of its equity or debt or from
third party funding sources. There is no assurance that IR will be able to
locate a suitable business opportunity or obtain additional debt or equity
financing from any source. The Company, during the development stage of its
operations, can be expected to sustain substantial operating expenses without
generating any operating revenues or the operating revenues generated can be
expected to be insufficient to cover expenses. Thus, for the foreseeable future,
unless the Company attains profitable operations, which is not anticipated, the
Company's financial statements will show an increasing net operating loss. (See
Part I, Item 1. "Description of Business.")
Minimal Assets, Working Capital and Net Worth. As of June 30, 1999, the
Company had total assets of $68,231 consisting principally of purchased patents
and trademarks. As a result of its minimal assets and reported losses, as of
June 30, 1999, the Company has negative net worth. Further, IR had a working
capital deficit of approximately $233,000 at June 30, 1999. There can be no
assurance that the Company's financial condition will improve. The Company is
expected to continue to have minimal working capital or a working capital
deficit as a result of its lack of revenues. Since the acquisition of Fox Group
the Company has been financed through loans from Murray Fox, President & CEO,
for which the Company has issued promissory notes in the amount of $218,000. The
Company at the time of the acquisition of Fox Group issued 1,762,230 shares of
the Company's Common Stock to fourteen individuals in consideration for the
acquisition. Also the shareholders of Fox Group received 7,441,700 shares of
common stock. Of the shares that were issued for the acquisition of Fox Group,
Murray Fox, the CEO, received 3,906,892 shares, Anthony Conte, Vice President
received 1,901,354 shares, David Katz, Secretary, received 893,004 shares and
740,450 shares were issued to other shareholders of Fox Group.
Need for Additional Capital: Going Concern Qualification Expressed by
Auditor. While the Company is looking for business opportunities and/or
technologies the ongoing expenses will be minimal. However, to grow the Company
will need to raise additional equity and/or debt financing. IR's independent
certified public accountant has expressed this as a "going concern"
qualification. The Company does not anticipate the receipt of operating revenues
until management successfully implements its business plan, which is not
assured. Further, IR may incur significant unanticipated expenditures which
deplete its capital at a more rapid rate because of, among other things, the
current state of its business, its limited personnel and other
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resources. Because of these and other factors, management is presently
unable to predict what additional costs might be incurred by the Company. IR has
no identified sources of funds, and there can be no assurance that resources
will be available to the Company when needed.
Dependence on Management. The possible success of the Company is
expected to be largely dependent on the continued services of Murray Fox. Murray
Fox, Anthony Conte and David Katz are expected to devote only such time and
effort to the business and affairs of the Company as may be necessary to perform
their responsibilities as executive officers of IR. The loss of the services of
Murray Fox would adversely affect the conduct of the Company's business and its
prospects for the future. The Company presently holds no key-man life insurance
on the life of Murray Fox, and has an employment agreement with Murray Fox.
Ability to Grow Dependent on Acquisitions. The Company expects to grow
through acquiring other business opportunities and/or technologies. There is no
assurance that the Company will be able to locate suitable business
opportunities or technologies or that the Company will be able to acquire any
business or technology that has been identified.
Absence of Public Market for Shares. The Company's shares of Common
Stock are registered with the U.S. Securities and Exchange Commission under the
Act. There is no active public market for the shares of Common Stock and no
assurance that one will develop.
Potential Sale of Restricted Shares. Of its outstanding shares, the
Company has issued 7,441,700 shares of common stock to persons affiliated with
Fox Group pursuant to an exemption from registration provided by Rule 4(2) and
Regulation D promulgated under Section 3(b) of the Act. These shares are
"restricted securities." Rule 144 of the Act provides, in essence, that holders
of restricted securities, for a period of one year after the acquisition thereof
from the Company or an affiliate of the Company, may, every three months, sell
to a market maker or in ordinary brokerage transactions an amount equal to one
percent of the Company's then outstanding securities. Non-affiliates of the
Company who hold restricted securities for a period of two years may sell their
securities without regard to volume limitations or other restrictions. Resales
of the free trading shares of Common Stock by "affiliates, control persons
and/or underwriters" of IR, as those terms are defined in the Act, will be
subject to the volume limitations, described in paragraph (e) of Rule 144. Any
transfer or resale of the shares of IR's Common Stock will be subject, in
addition to the Federal securities laws, to the "blue sky" laws of each state in
which such transfer or resale occurs. A total of 7,441,700 shares of the
Company's Common Stock will be available for resale under Rule 144 commencing on
March 30, 2000. Sales of shares of Common Stock under Rule 144 may have a
depressive effect on the market price of the Company's Common Stock, should a
public market develop for such stock. Such sales also might impede future
financing by the Company. (See Part III, Item 11. "Security Ownership of Certain
Beneficial Owners and Management.")
No Dividends. While payments of dividends on the Common Stock rests
with the discretion of the Board of Directors, there can be no assurance that
dividends can or will ever
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be paid. Payment of dividends is contingent upon, among other things, future
earnings, if any, and the financial condition of the Company, capital
requirements, general business conditions and other factors which cannot now be
predicted. It is highly unlikely that cash dividends on the Common Stock will be
paid by the Company in the foreseeable future.
No Cumulative Voting. The election of directors and other questions
will be decided by a majority vote. Since cumulative voting is not permitted,
investors who purchase shares of the Company's Common Stock may not have the
power to elect even a single director and, as a practical matter, the current
management will continue to effectively control the Company.
Control by Present Shareholders. The present shareholders of the
Company's Common Stock will, by virtue of their percentage share ownership and
the lack of cumulative voting, be able to elect the entire Board of Directors,
establish the Company's policies and generally direct its affairs. Accordingly,
persons investing in the Company's Common Stock will have no significant voice
in Company management, and cannot be assured of ever having representation on
the Board of Directors. (See Part III, Item 11. "Security Ownership of Certain
Beneficial Owners and Management.")
Possible Adverse Effect of Penny Stock Regulations on Liquidity of
Common Stock in any Secondary Market. In the event a market develops in the
Company's shares, of which there can be no assurance, the Common Stock is
expected to come within the meaning of the term "penny stock" under 17 CFR
240.3a51-1 because such shares are issued by a small company; are low-priced
(under five dollars); and are not traded on NASDAQ or on a national stock
exchange. The Securities and Exchange Commission has established risk disclosure
requirements for broker-dealers participating in penny stock transactions as
part of a system of disclosure and regulatory oversight for the operation of the
penny stock market. Rule 15g-9 under the Securities Exchange Act of 1934, as
amended, obligates a broker-dealer to satisfy special sales practice
requirements, including a requirement that it make an individualized written
suitability determination of the purchaser and receive the purchaser's written
consent prior to the transaction. Further, the Securities Enforcement Remedies
and Penny Stock Reform Act of 1990 require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure
instrument that provides information about penny stocks and the risks in the
penny stock market. Additionally, the customer must be provided by the
broker-dealer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and the salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. For so long as the Company's Common Stock is considered
penny stock, the penny stock regulations can be expected to have an adverse
effect on the liquidity of the Common Stock in the secondary market, if any,
which develops.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operations
Since 1981, the Company has conducted no business operations except for
organizational activities and looking for a merger partner. For the period from
the acquisition of Fox Group (March 29, 1999) through June 30, 1999, the Company
had no income from operations and operating expenses aggregating $467,769. The
Company is actively working to find suitable business opportunities and/or
technologies. The Company is concentrating its efforts in the recycling and
environmental business segments.
The Company may have to raise additional funds from outside investors
to fund any business opportunities it may locate. Management intends to explore
all available alternatives for debt and/or equity financing, including but not
limited to private and public securities offerings. Even before an acquisition
the Company expects that the cash on hand will not be sufficient to meet its
operating needs for the next 12 months and will have to obtain further loans
from stockholders. Accordingly, management expects that it will be necessary for
IR to raise additional funds when IR is ready to make an acquisition.
In addition, at least initially, the Company intends to operate out of
an office provided by Murray Fox. Thus, it is not anticipated that IR will lease
or purchase office space or computer equipment in the foreseeable future. IR may
in the future establish its own facilities and/or acquire computer equipment if
the necessary capital becomes available; however, the Company's financial
condition does not permit management to consider the acquisition of office space
or equipment at this time.
Financial Condition, Capital Resources and Liquidity
At June 30, 1999, the Company had assets totaling $68,231 and accrued
expenses of $23,130 attributable to accrued legal expenses, organization
expenses and professional fees. Since the Company's acquisition of Fox Group in
March 1999, it has received $218,000 in cash in the form of loans from Murray
Fox which are represented by promissory notes issued by the Company.
IR's working capital is presently minimal and there can be no assurance
that the Company's financial condition will improve. The Company is expected to
continue to have minimal working capital or a working capital deficit as a
result of its lack of revenues. The ability of the Company to continue as a
going concern is dependent upon its ability to acquire a viable business or
technology.
Net Operating Losses
The Company incurred a net operating loss of $467,769 during the period
January 10, 1999 through June 30, 1999, and had a stockholders' deficiency of
$172,899 at June 30, 1999.
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Year 2000 Compliance
The Company is currently in the process of evaluating its information
technology for Year 2000 compliance. The Company does not expect that the cost
to modify its information technology infrastructure to be Year 2000 compliant
will be material to its financial condition or results of operations. The
Company does not anticipate any material disruption in its operations as a
result of any failure by the Company to be in compliance.
Forward-Looking Statements
This Form 10-SB includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included or incorporated by reference in
this Form 10-SB which address activities, events or developments which the
Company expects or anticipates will or may occur in the future, including such
things as future capital expenditures (including the amount and nature thereof),
business strategy, expansion and growth of the Company's business and
operations, and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by the Company in
light of its experience and its perception of historical trends, current
conditions and expected future developments as well as other factors it believes
are appropriate in the circumstances. However, whether actual results or
developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, general economic market and
business conditions; the business opportunities (or lack thereof) that may be
presented to and pursued by the Company; changes in laws or regulation; and
other factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this Form 10-SB are
qualified by these cautionary statements and there can be no assurance that the
actual results or developments anticipated by the Company will be realized or,
even if substantially realized, that they will have the expected consequence to
or effects on the Company or its business or operations. The Company assumes no
obligations to update any such forward-looking statements.
Item 3. Description of Property:
The Company's executive offices are located at 112 Main Street,
Webster, MA, 01570. Its telephone number is (888) 444-4762. The Company pays no
rent for this space. The Company owns no real or personal property.
Item 4. Security Ownership of Certain Beneficial Owners and Managers
The following table sets forth information as of June 30, 1999,
regarding the ownership of the Company's Common Stock by each shareholder known
by the Company to be the beneficial owner of more than five per cent of its
outstanding shares of Common Stock, each director and all executive officers and
directors as a group. Except as otherwise indicated, each
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of the shareholders has sole voting and investment power with respect to the
shares of Common Stock beneficially owned.
(a) Security ownership of certain beneficial owners;
<TABLE>
<CAPTION>
(1) (2) (3) (4)
--- --- --- ---
Title of Class Name and Address Amount and Percent of Class
-------------- ---------------- ---------- ----------------
of Beneficial Nature of
------------- ---------
Owner Beneficial Owner
----- ----------------
<S> <C> <C> <C>
Common Stock, par Murray Fox (1)(2)(3) 3,906,892 43.8%
value $0.001 112 Main Street
Webster, MA 01570
Anthony Conte (1)(2)(3) 1,901,354 21.4%
9 Suncrest Drive
Dix Hills, NY 11746
David Katz (1)(2)(3) 893,004 10.0%
54 Tarn Drive
Morris Plains, NJ
07950
(b) Security ownership of management
(1) (2) (3) (4)
--- --- --- ---
Title of Class Name and Address Amount and Percent of Class
-------------- ---------------- ---------- ----------------
of Beneficial Nature of
------------- ---------
Owner Beneficial Owner
----- ----------------
Common Stock, par Murray Fox 3,906,892 43.8%
value $0.001 112 Main Street
Webster, MA 01570
Anthony Conte 1,901,354 21.4%
9 Suncrest Drive
Dix Hills, NY 11746
David Katz 893,004 10.0%
54 Tarn Drive
Morris Plains, NJ
07950
Total 6,701,250 75.3%
</TABLE>
(1) Based upon 8,900,000 shares of the Company's Common Stock issued and
outstanding as of June 30, 1999.
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(2) Executive officer of the Company.
(3) Member of the Board of Directors of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons
Murray J. Fox - Director, President and Chief Executive Officer
Mr. Fox has been in the recycling business in excess of twenty years. He founded
Recycling Enterprises, Inc., a glass recycler in the 1970's. Mr. Fox was also a
co-founder of REI Distributors, Inc. in 1981 and became the largest glass
recycler in the state of New Jersey. REI merged with Pure Tech International,
Inc., a plastics recycler, in 1991. The newly combined business continued under
the Pure Tech name and became one of the largest plastic recycler in the United
States. In 1995 Pure Tech merged with Ozite Corporation and thus became a
diversified manufacturer of plastic materials and products as well as continuing
in the recycling field. Mr. Fox remained a director and officer of the newly
named PureTec Corporation until it was sold and privatized in 1998. Anthony
Conte - Director and Vice President
Mr. Conte was President of Pure Tech Plastics from 1992-1998 and in that
capacity was responsible for all facets of the business. This included five
plastics recycling facilities in the Northeastern United States as well as the
building of several plants in the Far East that were licensed from Pure Tech.
From 1989 to 1991, Mr. Conte worked as an independent consultant to Pure Tech
International. From 1977 to 1988, Mr. Conte founded and was COO of Alcon
Enterprises, an independent supplier of services and part to the food and
beverage industries. Mr. Conte is currently Chairman of Ecoboard Holdings, Inc.
David Katz, Director, Secretary and Consultant
Mr. Katz served the President and COO of PureTec Corporation from
1988-1998 when the company was sold to a private buyer. Prior to joining PureTec
he was a consultant to the food and beverage packing industry. From 1982-1987 he
was Vice President and Director of Operations for Taylor Wine Company a
subsidiary of The Coca-Cola Company. Prior to that he was US Director of
Packaging for the Coca-Cola Company in Atlanta, Georgia and was responsible for
coordinating the introduction of PET bottles to the U.S. soft drink industry.
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Executive Officers and Directors
Set forth below are the names, ages, positions with the Company and
business experiences of the executive officers and directors of the Company.
Name Age Position(s) with Company
- - ----- --- ---------------------------
Murray Fox 76 President, Chief Executive
Officer & Director
Anthony Conte 45 Vice President and Director
David Katz 59 Secretary and Director
The above-named persons became directors of the Company in March 1999 and may be
deemed to be "promoters" and "parents" of the Company, as those terms are
defined under the Rules and Regulations promulgated under the Act.
All directors hold office until the next annual meeting of the
Company's shareholders and until their successors have been elected and qualify.
Officers serve at the pleasure of the Board of Directors. Murray Fox, Anthony
Conte and David Katz will devote such time and effort to the business and
affairs of the Company as may be necessary to perform their responsibilities as
executive officers and/or directors of the Company.
Aside from the above-named officers and directors, there are no other
persons whose activities will be material to the operations of the Company at
this time.
Family Relationships
There are no family relationships between or among the executive
officers and directors of the Company.
Item 6. Executive Compensation:
The Company, in consideration for various services performed for the
Company, has signed an employment agreement with Murray Fox. Murray Fox is to
receive annual compensation in the amount of $100,000 per year. However, at
present no cash payments are being made to Murray Fox and the salary due is
being accrued on the books of the Company. Except for the above-described
compensation, it is not anticipated that any executive officer of the Company
will receive any cash or non-cash compensation for his or her services in all
capacities to the Company until such time as the Company commences business
operations. At such time as IR commences operations, it is expected that the
Board of Directors will approve the payment of salaries in a reasonable amount
to each of its officers for their services in the positions. At such time, the
Board of Directors may, in its discretion, approve the payment of additional
cash or non-cash compensation to the foregoing for their services to the
Company.
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The Company does not presently provide officers with pension, stock
appreciation rights, long-term incentive or other plans but has the intention of
implementing such plans in the future.
Compensation of Directors
The Company has no standard arrangements for compensating the directors
of the Company for their attendance at meetings of the Board of Directors.
Item 7. Certain Relationships and Related Transactions:
Escrow Agreement - As part of the acquisition of Fox Group the
shareholders of Fox Group signed an Escrow Agreement with Reva Enterprises, Inc.
and John B. Lowy, P. C., who are shareholders of the Company which calls for the
former Fox Group shareholders to return on pro-rata basis 750,000 shares of
common stock that was issued to them at the time of the acquisition if the
Company does not achieve a tangible net worth of at least $4,000,000 within six
months of the date of the acquisition (March 29,1999).
Fox Group Shareholder Agreement - The shareholders of Fox Group at the
time of the acquisition of Fox Group signed an agreement that calls for the
return of 3,867,204 shares to the Company to be used for the acquisition of
I-ROCK technology and/or company. The shares are to be returned at the time of
the I-ROCK acquisition or on the six month anniversary date of the Fox Group
acquisition, whichever comes first.
Since the Company's acquisition of Fox Group in March 1999, it has
received $218,000 in cash in the form of loans from Murray Fox which are
represented by promissory notes issued by the Company. The promissory notes bear
interest at 5.5% per annum, with a default interest rate of 18% per annum.
See "Item 1. Description of Business" regarding transactions between
the Company and its current directors in connection with the acquisition of Fox
Group.
Item 8. Description of Securities.
Common Stock, par value $0.001, 50,000,000 shares authorized, 8,900,000
shares issued at July 30, 1999.
The Company has authorized 50,000,000 shares, par value $0.001, of
common stock. The common stock has one vote per share, with no cumulative
voting. There are no pre-emptive rights, no conversion rights, no preferences,
no redemption provisions, no sinking fund provisions or any liability for
further calls or assessments. There are no stated liquidation rights other than
those that may exist under Delaware law. Dividends may be declared and paid out
of any funds available therefor, as often, in such amounts, and at such times as
the board of directors may determine. No other dividend rights exist. The board
has not declared any
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dividend to date, and presently does not intend to declare any dividend in the
future. The rights of shareholders cannot be changed without a majority vote of
the outstanding shares of the Company, except that a quorum consists of a
majority of the outstanding shares, and a majority of the quorum may change the
rights of the shareholders. The board of directors currently controls
approximately 75% of the outstanding shares of the company and therefore can
effectively control any vote of shareholders. See "Item 1: Description of
Business - Potential Sale of Restricted Shares" for information about shares of
Common Stock which may become saleable in the future.
Preferred Stock, par value $0.001, 5,000,000 shares authorized, none issued at
July 30, 1999
The Company has authorized 5,000,000 shares, par value $0.001 of
preferred stock. Shares of preferred stock may be issued in such classes or
series, and may have such voting powers, full or limited, or no voting powers,
and such designations, preferences and relative, participating, optional or
other special rights and qualifications, or restrictions thereof, shall be
stated and expressed in the Articles of Incorporation or of any amendment
thereto, or in the resolution or resolutions providing for the issue of such
stock adopted by the Board of Directors pursuant to the authority which is
expressly vested in it by the provisions thereof.
Transfer Agent
The transfer agent and address for the Company:
Jersey Transfer and Trust Co.
201 Bloomfield Avenue
Verona, NJ 07044
973-239-2712
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
(a) Market Information.
The Company's common stock is traded on the Nasdaq Bullet Board system
under the trading symbol IROC. The following table shows the high and low sales
price which are available for each quarter within the last two complete fiscal
years as well as the subsequent interim quarters. These prices represent
interdealer prices, without retail mark-up, mark-down or commission, and may not
represent actual transactions.
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Quarter Ended High Low
March 31, 1997 * *
June 30, 1997 2-3/4 1/2
September 30, 1997 1-1/8 1-1/8
December 31, 1997 1-1/8 1-1/8
March 31, 1998 18 2-1/4
June 30, 1998 2-1/4 2-1/4
September 30, 1998 9 2-1/4
December 31, 1998 7-7/8 6-3/4
March 31, 1999 7-1/32 29/128
June 30, 1999 5 1/4
* Not available.
(b) Holders.
As of June 30, 1999, the Company had approximately 330 shareholders of
record of its outstanding shares of Common Stock.
(c) Dividends.
The Company has never paid or declared any dividends on its Common
Stock and does not anticipate paying cash dividends in the foreseeable future.
Item 2. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.
Item 3. Changes in and Disagreements with Accountants
The Board of Directors of the Company have appointed Holtz Rubenstein &
Co., LLP ("HR") as auditors for the Company. Ralph S. Inocencio CPA, had been
the outside accountant for the Company through March 29, 1999. During the year
ended December 31, 1998 and the three months ended March 29, 1999, there were no
disagreements between IR and Ralph S. Inocencio on any matter of accounting
principles and practices, financial statement disclosure, or audit scope and
procedure, which disagreement, if not resolved to the satisfaction of Mr.
Inocencio, would have caused him to make reference to the subject matter of the
disagreement in connection with his report.
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Item 4. Recent Sales of Unregistered Securities
On March 29, 1999, 7,441,700 shares of common stock were issued to the
shareholders of Fox Group Enterprises, Inc. in connection with acquisition of
Fox Group by the Company.
On March 29, 1999, the Company issued 1,0762,230 shares of stock to
fourteen (14) individuals in consideration for consulting work performed in
connection with the acquisition of Fox Group. The Company claimed the exemption
from registration in connection with each of the offerings provided under
Section 4(2) of the Act and Rule 504 of Regulation D promulgated thereunder.
PART F/S
The Financial Statements of IR, and Notes to Financial Statements together with
the Independent Auditor's Report of Holtz Rubenstein and Co., LLP required by
this Item 13 commence on page F-1 hereof.
IR Operating Corporation
(A Development Stage Enterprise)
Financial Statements
Period January 10, 1999 (inception) through March 31, 1999
and the three months ended June 30, 1999
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report ............................................. F-2
Balance Sheets ........................................................... F-3
Statements of Operations ................................................. F-4
Statement of Changes in Stockholders' Equity ............................. F-5
Statements of Cash Flows ................................................. F-6
Notes to Financial Statements ....................................... F-7 - F-9
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Independent Auditors' Report
Board of Directors and Stockholders
IR Operating Corporation
We have audited the accompanying balance sheet of IR Operating Corporation (a
development stage company) as of March 31, 1999, and the related statements of
operations and cash flows for the period January 10, 1999 (inception) through
March 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 IR Operating Corporation as of
March 31, 1999, and the results of its operations and its cash flows for the
period January 10, 1999 (inception) through March 31, 1999 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that IR
Operating Corporation will continue as a going concern. As discussed in Note 1
to the financial statements, IR Operating Corporation has suffered a loss in the
current period and has negative working capital. These factors raise substantial
doubt regarding its 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 adjustments that might result from the outcome of this
uncertainty.
HOLTZ RUBENSTEIN & CO., LLP
Melville, New York
June 10, 1999
F-2
<PAGE>
IR OPERATING CORPORATION
------------------------
(A Development Stage Company)
BALANCE SHEETS
--------------
<TABLE>
<CAPTION>
March 31, June 30,
ASSETS 1999 1999
------ ------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSET:
Cash $ - $ 8,451
PATENTS AND TRADEMARKS - 59,780
------------ ------------
$ - $ 68,231
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
- - ----------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 24,062 $ 23,130
Loan payable - stockholder (Note 3) 73,000 218,000
------------ ------------
Total current liabilities 97,062 241,130
------------ ------------
COMMITMENT (Note 8)
STOCKHOLDERS' DEFICIENCY: (Note 5)
Common stock, par value $.001 per share;
authorized 50,000,000 shares, issued and
outstanding 8,900,000 shares 8,900 8,900
Preferred stock, par value $.001; authorized
5,000,000 shares; 0 issued and outstanding - -
Additional paid-in capital 285,970 285,970
Deficit accumulated during the development stage (391,932) (467,769)
------------ ------------
(97,062) (172,899)
------------ ------------
$ - $ 68,231
============ ============
</TABLE>
See notes to financial statements
F-3
<PAGE>
IR OPERATING CORPORATION
------------------------
(A Development Stage Company)
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
January 10, 1999 Cumulative
(Inception) Three Months During
Through, Ended Development
March 31, 1999 June 30, 1999 Stage
----------------- --------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
EXPENSES:
Organization and merger costs (Note 4) $ 288,000 $ 56,534 $ 344,534
Loss on aborted acquisition (Note 6) 103,856 18,258 122,114
General and administrative 76 1,045 1,121
------------ ----------- ------------
NET LOSS $ (391,932) $ (75,837) $ (467,769)
============ =========== ============
NET LOSS PER SHARE (Note 5) $(.05) $(.01) $ (.06)
===== ===== ============
WEIGHTED AVERAGE NUMBER
OF SHARES OF COMMON
STOCK OUTSTANDING 7,678,674 8,900,000 8,328,619
========= ========= =========
</TABLE>
See notes to financial statements
F-4
<PAGE>
IR OPERATING CORPORATION
------------------------
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
---------------------------------
(Notes 4 and 5)
<TABLE>
<CAPTION>
Common Stock Preferred Stock
50,000,000 Shares 5,000,000 Shares
Common Stock $.001 Par Value $.01 Par Value
---------------------- ---------------------- -------------------
Par Par Par
Shares Value Shares Value Shares Value
--------- ----------- ----------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 10, 1999 - $ - - $ - - $ -
Common stock issued for cash 1,000 300,000 - - - -
Common stock shares issued for
acquisition of Fox Group
Enterprises, Inc. (1,000) (300,000) 7,837,770 7,838 - -
Common stock issued to consultants - - 1,062,230 1,062 - -
Net loss - - - - - -
-------- ----------- ----------- -------- ---------- ----
BALANCE, March 31, 1999 - - 8,900,000 8,900 - -
Net loss (unaudited) - - - - - -
-------- ----------- ----------- -------- ---------- ----
BALANCE, June 30, 1999
(unaudited) - $ - 8,900,000 $ 8,900 - $ -
======== =========== =========== ======== ========== ====
<CAPTION>
Deficit
Accumulated
Additional During the
Paid-in Development
Capital Stage Total
-------- ---------- ---------
BALANCE, January 10, 1999 $ - $ - $ -
Common stock issued for cash - - 300,000
Common stock shares issued for
acquisition of Fox Group
Enterprises, Inc. 269,032 - (23,130)
Common stock issued to consultants 16,938 - 18,000
Net loss - (391,932) (391,932)
----------- ------------ -----------
BALANCE, March 31, 1999 285,970 (391,932) (97,062)
Net loss (unaudited) - (75,837) (75,837)
----------- ------------ -----------
BALANCE, June 30, 1999
(unaudited) $ 285,970 $ (467,769) $(172,899)
=========== =========== =========
</TABLE>
See notes to financial statements
F-5
<PAGE>
IR OPERATING CORPORATION
------------------------
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
January 10, 1999 Cumulative
(Inception) Three Months During
Through, Ended Development
March 31, 1999 June 30, 1999 Stage
--------------- ----------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (391,932) $ (75,837) $ (467,769)
Adjustments to reconcile net loss to net
cash used in operating activities:
Loss incurred in merger transaction 200,000 - 200,000
Non-cash compensation 18,000 - 18,000
Changes in operating assets and liabilities:
Increase in liabilities:
Accounts payable and accrued
expenses 932 (932) -
----------- ---------- -----------
Net cash used in operating activities (173,000) (76,769) (249,769)
----------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used in business acquisition (200,000) - (200,000)
Acquisition of intangible assets - (59,780) (59,780)
----------- ---------- -----------
Net cash used in investing activities (200,000) (59,780) (259,780)
----------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan payable - stockholder 73,000 145,000 218,000
Proceeds from issuance of common stock 300,000 - 300,000
----------- ---------- -----------
Net cash provided by financing activities 373,000 145,000 518,000
----------- ---------- -----------
Net increase in cash and cash equivalents - 8,451 8,451
Cash and cash equivalents at beginning of period - - -
----------- ---------- -----------
Cash and cash equivalents at end of period $ - $ 8,451 $ 8,451
=========== ========== ===========
</TABLE>
See notes to financial statements
F-6
<PAGE>
IR OPERATING CORPORATION
------------------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
PERIOD JANUARY 10, 1999 (INCEPTION) THROUGH
-------------------------------------------
MARCH 31, 1999 AND THREE MONTHS ENDED JUNE 30, 1999
---------------------------------------------------
(Information with respect to the three months ended June 30, 1999 is unaudited)
1. Nature of Operations:
---------------------
IR Operating Corporation's (the "Company") financial statements for
the period ended March 31, 1999 have been prepared on a going concern basis
which contemplates the realization of assets and the settlement of liabilities
and commitments in the normal course of business. The Company incurred a net
loss of approximately $392,000 for the period January 10, 1999 (inception)
through March 31, 1999. This is due to the fact that the Company has been in the
development stage since inception. Management's plans regarding improving the
results of future operations and liquidity include acquisitions and mergers.
2. Summary of Significant Accounting Policies:
-------------------------------------------
a. Statement of cash flows
-----------------------
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
b. Estimates
---------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
c. Organization costs
------------------
The Company expenses organization costs as incurred. Organization
costs incurred in the period January 10, 1999 (inception) through March 31, 1999
and the three months ended June 30, 1999 approximated $70,000 and $57,000,
respectively.
d. Interim financial statements
----------------------------
The unaudited financial statements reflect all adjustments (consisting
only of normal recurring accruals) which are, in the opinion of management,
necessary for a fair statement of the results for the period. The results of
operations are not necessarily indicative of the results expected for the fiscal
year.
3. Loan Payable - Stockholder:
---------------------------
On March 31, 1999, the Company issued a promissory note to a stockholder
in the amount of $73,000, together with interest accruing at the rate of 5.5%
per annum, until such time as the note is paid. The entire amount must be repaid
when the Company receives funding of $1,500,000.
F-7
<PAGE>
3. Loan Payable - Stockholder: (Cont'd)
---------------------------
In the event of default when due, or in the event of suspension of actual
business, insolvency, assignment for the benefit of creditors, adjudication of
bankruptcy, or appointment of a receiver, the unpaid principal balance shall, at
the option of the holder, become immediately due, with the amount then due
accruing interest at a rate of 18% per annum or the highest rate permitted by
law, which ever is less.
4. Merger Agreement:
-----------------
On March 29, 1999, Atlantic Medical Corporation ("Atlantic") acquired
100% of the issued and outstanding common stock of Fox Group Enterprises, Inc.
("Fox") making the Fox a wholly-owned subsidiary of Atlantic. Under the terms of
the merger agreement, the holders of Fox were issued 7,441,700 shares of the
Company's common stock. A maximum of 750,000 of the shares issued to the Fox
holders are subject to reversion to the Atlantic shareholders in the event
certain conditions are not met within 180 days after the merger. An additional
1,062,230 shares of common stock (valued at $18,000) were issued to consultants
in connection with the transaction. The pre-merger shareholders of Atlantic were
paid $200,000 by Fox.
Although in the form of a merger, the transaction is, in substance, an
acquisition of Atlantic by Fox. Atlantic and stockholders agree that all issued
and outstanding shares of common stock of Fox, equal to one hundred percent
(100%), shall be exchanged with Atlantic for approximately 84% of the common
stock of Atlantic. Stockholders represent and warrant that they will hold such
shares of Atlantic for investment purposes and not for further public
distribution. These shares will be appropriately restricted.
The excess of the consideration paid over the fair value of the net
assets received was charged to operations in the period ended March 31, 1999.
Prior to the closing of the merger agreement unanimous written consent
was received of Atlantic's directors and a majority of Atlantic's shareholders
approved Atlantic changing its name to "IR Operating Corporation".
5. Stockholders' Equity:
---------------------
a. Capitalization
--------------
Pursuant to an amendment of the Company's certificate of
incorporation, the Company has authorized shares of common stock of 50,000,000
at $.001 par value.
b. Net loss per share
------------------
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" (SFAS No. 128) requires dual presentation of basic and diluted EPS. Basic
EPS excludes dilution and is computed by dividing net income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if stock
options or convertible securities were exercised or converted into common stock.
Basic and diluted loss per share amounts were equivalent for all
periods presented.
F-8
<PAGE>
6. Loss on Aborted Acquisition:
----------------------------
During the period January 10, 1999 (inception) through March 31, 1999 and
the three months ended June 30, 1999, the Company incurred charges to operations
of approximately $104,000 and $18,000, respectively, relating to an aborted
acquisition of assets.
7. Supplementary Information - Statement of Cash Flows:
----------------------------------------------------
The Company assumed accounts payable approximating $23,100 in connection
with the merger with Atlantic.
8. Commitment:
-----------
The Company entered into an employment agreement with an officer,
commencing July 1, 1999, which provides for a minimum annual salary of $100,000.
F-9
<PAGE>
PART III
Item 1. Index to Exhibits
2(i) Articles of Incorporation the Company, as amended
2(ii) Bylaws of the Company
3(i) Escrow Agreement dated March 29, 1999 with Reva Enterprises, Inc. and
John B. Lowy, P. C.
3(ii) Fox Group Enterprises Stockholder Agreements dated March 29, 1999
15
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
IR Operating Corporation
(Registrant)
Date: August 26, 1999 By: /s/ Murray Fox
-------------------------
Murray Fox, President
In accordance with the Exchange Act, 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 Signature Title
---- --------- -----
August 26, 1999 By: /s/ Murray Fox President and Director
-----------------------
Murray Fox
16
<PAGE>
CERTIFICATE OF INCORPORATION
OF
ATLANTIC MEDICAL CORPORATION
---------------
The undersigned... a natural person, for the purposes of organizing a
corporation for conducting the business and promoting the purpose hereinafter
stated, under the provisions and subject to the requirements of the laws of the
Sate of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and know, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
ARTICLE I
Name
The name of the corporation (hereinafter referred to as the "Corporation") is:
ATLANTIC MEDICAL CORPORATION
ARTICLE II
Address
The address, including street, number, city and county of the
registered office of the corporation in the State of Delaware is 229 south State
Street, City of Dover, County of Kent; and the name of the registered agent of
the Corporation in the State of Delaware at such address is the Prentice-Hall
Corporation System, Inc.
<PAGE>
ARTICLE III
Purposes
The nature of the business of the Corporation and the objects and
purposes to be transacted, promoted, and carried on by it are to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE IV
Capital Stock
The total number of shares of stock which the Corporation shall have
authority to issue is TEN MILLION (10,000,000) shares, all of which shall be of
a class designated as Common Stock with a par value of ONE ($.01) CENT per
share. All or any part of the authorized capital stock of the Corporation may be
issued and sold, from time to time, by the Corporation, without further action
by stockholders, for such consideration (but not less than the par value
thereof) and to such persons and on such terms and conditions as may, from time
to time, be fixed or determined by the Board of directors.
ARTICLE V
Incorporator
The name and the mailing address of the incorporator are as follows:
Name MAILING ADDRESS
R. G. Dickenson 229 south State Street
Dover, Delaware 19901
ARTICLE VI
Management
The following provisions are inserted for the management o the business
and for the
<PAGE>
conduct of the affairs of the Corporation and for further defining, limiting and
regulating the powers of the Corporation and its directors and stockholders:
(a) The By-Laws of the Corporation shall fix the number of
directors which shall constitute the whole Board and may prescribe
their term of office and may provide that from time to time the number
of directors may be increased or decreased by amendment of the By-Laws
, provided in no case shall the number of directors be less than three.
The directors need not be stockholders and they need not be chosen by
ballot. Except as may be otherwise be required by law, vacancies in the
Board of Directors and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum.
(b) All Corporate powers of the Corporation shall be exercised
by the Board of Directors except as otherwise provided herein or by
law. In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors is expressly
authorized and empowered, without the assent or vote of the
stockholders, as follows:
(1) By resolution or resolutions passed by majority
of the whole board, to designate one or more committees, each
committee to consist of two or more of the directors of the
Corporation, which, to the extent provided in said resolution
or resolutions or in the By-Laws of the Corporation, shall
have the powers of the Board of directors in the management of
the business and affairs of the Corporation and may have the
power to authorize the seal of
<PAGE>
the Corporation to be affixed to all papers which may require
it. Such committee or committees shall have such name or names
as may be stated in the By-Laws or as may be determined from
time to time by resolution adopted by the Board of Directors.
(2) Subject to any restrictions contained in the
certificate of Incorporation, to declare and pay dividends
upon the shares of the capital stock of the Corporation as
provided by the laws of the state of Delaware and to fix the
time for payment thereof. The Board of Directors shall have
authority from time to time to set apart out of any of the
funds of the Corporation available for dividends a reserve or
reserves as working capital or for any other proper purpose or
purposes, and to abolish in whole or in part or add to any
such reserve or reserves from time to time, as said Board may
deem to be in the interests of the Corporation, in the manner
in which it was created; and said Board shall likewise have
power to determine in its discretion what part of the assets
of the Corporation available for dividends in excess of such
reserve or reserves, if any, shall be declared in dividends
and paid to the stockholders of the Corporation.
(3) To make, alter, or repeal the By-Laws of the
Corporation.
(4) To authorize and cause to be executed mortgages
and liens upon the real and personal property of the
Corporation.
<PAGE>
(5) To determine from time to time whether, and, if
allowed, under what conditions and regulations, the accounts
and books of the Corporation (other than the stock and
transfer books), or any of them shall be open to the
inspection of the stockholders, and the stockholders' rights
in this respect are and shall be restricted and limited
accordingly.
(c) Any contract, transaction or act of the Corporation or of
the Board of Directors which shall be ratified by a majority of a
quorum of the stockholders entitled to vote at any annual meeting or at
any special meeting called for hat purpose shall be as valid and
binding as though ratified by every stockholder of the Corporation;
provided, however, that any failure of the stockholders to approve or
ratify such contract, transaction or act when and if submitted, shall
not be deemed in any way to invalidate the same or to deprive the
Corporation, its Directors or officers of their rights to proceed with
such contract, transaction or act.
(d) The Board of Directors shall have the power at any time
and from time to time (without any action by the stockholders of the
Corporation) to create and issue, whether or not in connection with the
issue or sale of any shares of stock or bonds, debentures or securities
of the Corporation, rights or options entitling the holders thereof to
purchase from the Corporation shares of its stock of any class, such
rights or options to be evidenced by or in such warrants or other
instruments as shall be approved by the Board of Directors. The terms
;upon which and the time or times, which may be limited or unlimited in
duration, at or
<PAGE>
within which such rights or options shall be issued shall be such as
shall be fixed and stated in the resolution or resolutions adopted by
the Board of Directors providing for the creation and issue of such
rights or options.
(e) Except as otherwise provided in the By-Laws, the
Corporation and the stockholders and the Board of Directors thereof may
hold their meetings and have an office or offices in the State of
Delaware as well as in other states of the United States and in all
foreign countries, and, subject to the provisions of the laws of said
State or foreign country, may keep the books of the Corporation outside
of the State of Delaware at such places as may, from time to time, be
designated by the Board of Directors.
ARTICLE VII
Dissolution, Receivers and Trustees
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court or equitable
jurisdiction within the Sate of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of section 279 of Title 8 of the
Delaware code or a meeting of the creditors or class of creditors, and/or of the
stockholders of class of stockholders of this Corporation, as the case may be to
be summoned in such manner as that said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this
<PAGE>
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on this Corporation.
ARTICLE VIII
Reservations of Rights
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservations.
Signed at Dover, Delaware on December 2, 1971
/s/ R. G Dickerson
------------------
R. G. Dickerson
Incorporator
<PAGE>
STATE OF DELAWARE
COUNTY OF KENT
BE IT REMEMBERED, that personally appeared before me, the
undersigned, a Notary Public duly authorized to take acknowledgment of deeds by
the laws of the place where the foregoing certificate of incorporation was
signed, R. G. Dickenson, the incorporator, who signed the foregoing certificate
of incorporation, known to me personally to be such, and who acknowledged the
same to be his act and deed, and that the facts therein stated are true.
GIVEN under my hand on December 2, 1971.
/s/ Nancy S. Turax
--------------------------
Nancy S. Turax
Notary Public
SEAL
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
ATLANTIC MEDICAL CORPORATION
Under Section 242 of the
Corporation Law of the State of Delaware
----------------------------------------
ATLANTIC MEDICAL CORPORATION (the "Corporation"), a
corporation organized and existing under and by virtue of the General
corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by written
consent filed with the minutes of the Board, adopted the following resolution
proposing and declaring advisable the following amendment to the certificate of
Incorporation of said corporation:
1. That Article FIRST of the Certificate of Incorporation be amended
and, as amended, read as follows:
FIRST The name of the Corporation is "I-ROCK INDUSTRIES, INC."
2. That Article FOURTH of the Certificate of Incorporation be amended
and, as amended, read as follows:
FOURTH: The Corporation shall be authorized to issue the following
shares:
CLASS Number of Shares Par Value
Common 50,000,000 $0.001
Preferred 5,000,000 $0.001
The Preferred stock and the Common Stock may be issued in such classes
or series, and may have such voting powers, ful or limited, or no voting powers,
and such designations, preferences and relative, participating, optional or
other special rights, and qualifications, or restrictions thereof, as shall be
stated and expressed in the Articles of Incorporation or of any amendment
thereto, or in the resolution or resolutions providing for the issue of such
stock adopted by the Board of Directors pursuant to the authority which is
expressly vested in it by the
<PAGE>
provisions hereof. Any of the voting powers, designations, preferences, rights
and qualifications, limitations or restrictions of as such class or series of
stock may be made dependent upon facts ascertainable outside these Articles of
Incorporation or of any amendment thereto, or outside the resolutions or
resolutions providing for the issue of such stock adopted by the Board of
Directors pursuant to the authority which is expressly vested in it by the
provisions hereof, provided that the manner in which such facts shall operate
upon the voting powers, designations, preferences, rights and qualifications,
limitations or restrictions of such class or series of stock is clearly and
expressly set forth in these Articles of Incorporation or in the resolution or
resolutions providing for the issue of such stock adopted by the Board of
Directors. Notwithstanding the foregoing, each share of Common Stock shall be
entitled to one vote on all matters requiring approval by the holders of the
Corporation's Common stock. Fully paid stock of this Corporation shall not be
liable to any further call or assessment. All shares of stock shall be voted
together on all matters except those pertaining to the rights of particular
classes of stock. The rights of any class of stock may not be changes without
the consent of a majority of the share entitled to vote on such a change.
4. Effective as of the opening of business on April 5, 1999, the
Corporation's outstanding share are reverse split on a two-for-nine basis, so
that such nine shares of Common Stock $.001 par value outstanding prior to the
reverse split shall be come two shares of Common Stock $.001 par value after the
reverse split.
SECOND: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Section 242 of the General Corporation Law of
the State of Delaware.
THIRD: Prompt notice of the taking of this corporate actions is being
given to all stockholders who did not consent in writing, in accordance with
Section 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Leonard Williams, its President, this 25th day of March, 1999.
ATLANTIC MEDICAL CORPORATION
/s/ Leonard Williams
By:____________________________
Leonard Williams, President
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
I-ROCK INDUSTRIES, INC
Under Section 242 of the
Corporation Law of the State of Delaware
----------------------------------------
I-ROCK INDUSTRIES, INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the General corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by written
consent filed with the minutes of the Board, adopted the following resolution
proposing and declaring advisable the following amendment to the certificate of
Incorporation of said corporation:
1. That Article FIRST of the Certificate of Incorporation be amended
and, as amended, read as follows:
FIRST The name of the Corporation is "IR Operating Corporation."
2. That Article FOURTH of the Certificate of Incorporation be amended
and, as amended, read as follows:
FOURTH: The Corporation shall be authorized to issue the following
shares:
CLASS Number of Shares Par Value
----- ---------------- ---------
Common 50,000,000 $0.001
Preferred 5,000,000 $0.001
The Preferred stock and the Common Stock may be issued in such classes
or series, and may have such voting powers, ful or limited, or no voting powers,
and such designations, preferences and relative, participating, optional or
other special rights, and qualifications, or restrictions thereof, as shall be
stated and expressed in the Articles of Incorporation or of any amendment
thereto, or in the resolution or resolutions providing for the issue of such
stock adopted by the Board of Directors pursuant to the authority which is
expressly vested in it by the
<PAGE>
provisions hereof. Any of the voting powers, designations, preferences, rights
and qualifications, limitations or restrictions of as such class or series of
stock may be made dependent upon facts ascertainable outside these Articles of
Incorporation or of any amendment thereto, or outside the resolutions or
resolutions providing for the issue of such stock adopted by the Board of
Directors pursuant to the authority which is expressly vested in it by the
provisions hereof, provided that the manner in which such facts shall operate
upon the voting powers, designations, preferences, rights and qualifications,
limitations or restrictions of such class or series of stock is clearly and
expressly set forth in these Articles of Incorporation or in the resolution or
resolutions providing for the issue of such stock adopted by the Board of
Directors. Notwithstanding the foregoing, each share of Common Stock shall be
entitled to one vote on all matters requiring approval by the holders of the
Corporation's Common stock. Fully paid stock of this Corporation shall not be
liable to any further call or assessment. All shares of stock shall be voted
together on all matters except those pertaining to the rights of particular
classes of stock. The rights of any class of stock may not be changes without
the consent of a majority of the share entitled to vote on such a change.
SECOND: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Section 242 of the General Corporation Law of
the State of Delaware.
THIRD: Prompt notice of the taking of this corporate actions is being
given to all stockholders who did not consent in writing, in accordance with
Section 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Murray Fox, its President, this 26th day of April, 1999.
I-ROCK INDUSTRIES, INC.
By:____________________________
Murray Fox, President
<PAGE>
BY-LAWS
-OF-
I-ROCK Industries, Inc.
(a Delaware corporation hereinafter called the "Corporation")
ARTICLE I
---------
Offices
-------
Section 1.01. Office. The office of the Corporation shall be located at
such address as the Board of Directors shall fix.
ARTICLE II
----------
Shareholders
------------
Section 2.01. Annual Meeting. The annual meeting of shareholders for
the election of directors and the transaction of such other business as may come
before it shall be held on such date, and at such place, as shall be fixed by
the Board of Directors.
Section 2.02. Special Meetings. Special meetings of the shareholders,
for any purpose or purposes, may be called by the Chairman, the President or the
Secretary, or by resolution of the Board of Directors.
Section 2.03. Quorum. The holders of one-half (1/2) of the shares
entitled to vote thereat shall constitute a quorum at a meeting of shareholders
for the transaction of any business.
Section 2.04. Ballots. The vote upon any question before any
shareholders' meeting need not be by ballot.
Section 2.05. Election of Directors. Directors shall be elected by
plurality vote of the stockholders.
ARTICLE III
-----------
Directors
---------
Section 3.01. Number of Directors. The number of directors which shall
constitute the entire Board shall be as set by the Board of Directors from time
to time, and shall initially be three.
Section 3.02. Term. Each director shall hold office for a term of one
year or until his successor is elected and has qualified.
<PAGE>
Section 3.03. Resignations. Any director of the Corporation may resign
at any time by giving written notice to the Board of Directors, the Chairman or
the President of the Corporation.
Section 3.04. Removal of Directors. Except as expressly provided
otherwise by law, any or all of the directors may be removed at any time by vote
of the shareholders.
Section 3.05. Vacancies and newly Created Directorships. If the office
of any director or directors becomes vacant for any reason, including but not
limited to, the removal of a director or directors without cause, the directors
in office, although less than a quorum, by a majority vote, or such number
greater than such majority as the Certificate of Incorporation of the
Corporation may provide, may choose a successor or successors, who shall hold
office for the unexpired term in respect of which vacancy or vacancies occurred
or until the next election of directors; or any such vacancy may be filled by
the share-holders at nay meeting thereof. Newly created directorships resulting
from an increase in the number of directors shall be filled in the same manner
as vacancies as aforesaid.
Section 3.06. Quorum of Directors. At all meetings of the Board of
Directors, a majority of the entire Board shall be necessary and sufficient to
constitute a quorum for the transaction of business.
Section 3.07. Regular Meetings. Regular meetings of the Board of
Directors may be held at such time and place as shall from time to time be fixed
by the Board of Directors and no notice thereof shall be necessary.
Section 3.08. Special Meetings. Special meetings of the Board of
Directors shall be held upon notice to the directors by the Chairman, the
President or the Secretary, or by resolution of the Board or by waiver of
notice. Unless waived, notice of each special meeting of the directors, stating
the time and place of the meeting, shall be given to each director by letter, by
telegram or by personal communication either over the telephone or otherwise, in
each such case at least 24 hours prior to the meeting.
Section 3.09. Committees. The Board of Directors, by resolution adopted
by a majority of the entire Board, may designate from among its members one or
more committees to have such powers as are conferred on such committees by the
Board of Directors.
Section 3.10. Unanimous Written Consent in Place of Meeting. An action
required or permitted to be taken by the Board or any committee thereof may be
taken without a meeting if all the members of the Board or committee consent in
writing to the adoption of a resolution authorizing the action.
Section 3.11. Meetings by Conference Telephone or Similar Device. Any
meeting of the Board or a committee thereof may be conducted by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
<PAGE>
ARTICLE IV
----------
Officers
--------
Section 4.01. Executive Officers. The executive officers of the
Corporation shall be a President, a Secretary, a Treasurer, and such member of
Vice Presidents, Assistant Secretaries and Assistant Treasurers, and such other
officers, if any, as the Board of Directors may from time to time determine. Any
officer may, but no officer need, be chosen from among the Board of Directors.
Section 4.02. President. The President shall be the Chief Executive
Officer of the Corporation and shall have all powers customarily appertaining to
his office; he shall preside at all meetings of the shareholders and, unless a
Chairman of the Board of Directors has been elected and is present, at all
meetings of the Board of Directors; he shall sse that all orders and resolutions
of the Board of Directors are carried into effect, subject to the right of the
Board of Directors to delegate any specific powers to any other officer or
officers of the Corporation.
Section 4.03. Vice President. Any Vice President shall have the duties
which customarily appertain to his office. If there is more than one Vice
President, each shall have the seniority prescribed by the Board of Directors.
Section 4.04. Secretary. The Secretary shall have the duties which
customarily appertain to his office.
Section 4.05. Treasurer. The treasurer shall have the duties which
customarily appertain to his office.
ARTICLE V
---------
Miscellaneous
-------------
Section 5.01. Form of Certificate. The shares of the Corporation shall
be represented by certificates in such form as shall be determined by the Board
of Directors.
Section 5.02. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of is incorporation and the words "Corporate
Seal, Delaware. "
Section 5.03. Fiscal Year. The fiscal year of the Corporation shall be
fixed from time to time by resolution of the Board of Directors.
Section 5.04. Indemnification of Directors and Officers. The
Corporation shall indemnify its directors and officers to the fullest extent
permitted by law.
<PAGE>
Section 5.05. Entire Board. As used in these By-Laws, "entire Board"
means the total number of directors which the Corporation would have if there
were no vacancies.
Section 5.06. Section Headings. The headings of the Article and
Sections of these By-Laws are inserted for convenience of reference only and
shall not be deemed to be part thereof or used in the construction or
interpretation thereof.
ARTICLE VI
----------
Miscellaneous
-------------
Section 6.01. Amendment. These By-Laws, as now in effect or as
hereafter amended from time to time, may be amended or repealed and new or
additional By-Laws adopted by the Board of Directors or by vote of the
Shareholders entitled to vote in the election of directors.
<PAGE>
ESCROW AGREEMENT
THIS AGREEMENT, made as of the 29th day of March 1999, between Reva
Enterprises, Inc. (hereinafter "Reva"), Fox Group Enterprises, Inc. ("Fox")and
the Stockholders of Fox ("Stockholders") and John B. Lowy, P.C., Attorney at
Law, 645 Fifth Avenue, Suite 403, New York, NY 10022 (hereinafter "Escrow
Agent").
ESCROW
1. Appointment and acknowlegdement of escrow Agent. Reva and Fox
and Stockholders hereby appoint Escrow Agent, and Escrow Agent
hereby agrees to serve as Escrow Agent pursuant to the terms
of this Escrow Agreement (hereinafter "Agreement"). Escrow
Agent shall acknowledge receipt from the stockholders of seven
hundred fifty thousand (750,000) shares of the post-reverse
split restricted common stock, par value $.001, of I-ROCK
Industries, Inc. ("I-ROCK", formerly Atlantic Medical
Corporation or the "Company") a Delaware corporation, into the
escrow (the "Escrowed Shares").
2. Performance Obligations. The parties to this Agreement
acknowledge the importance of the Company attaining an audited
tangible net worth of at lease $4 million in order for the
Company to satisfy the net worth requirements for listing on
the small Cap market of NASDAQ. The parties hereby agree that
(750,000) shares of the restricted common stock issued to
Stockholders (pursuant to paragraph 1.2 of the Agreement and
Plan of Reorganization as executed between the Company, Fox
and the Stockholders dated March 18, 1999 (the "Reorganization
Agreement"), on a pro-rata basis, shall be placed escrow
subject to the following terms and conditions:
(a) If at, or prior to, the period ending 180 days following
the Closing Date of the acquisition of Fox by the Company
(the "Performance date"), Fox has acquired all of the assets
and technology related to the I-ROCK process as delineated in
the Reorganization Agreement and the combined public Company
has achieved a minimum tangible net worth of $4 million as
reported on (i) unaudited financial statements Compiled by an
independent Certified Public Accountant, published within 45
days after the end of the period reported, prepared in
accordance with generally accepted accounting principles, or
(ii)audited financial statements prepared by a Certified
Public Accountant published within 120 days after the end of
the period reported, then the Escrowed Shares shall be
returned to Stockholders. In the event the condition set forth
in this subparagraph (a) is not timely satisfied, then
(b) If, as of the end of the month following the Performance
date, the combined public Company has a tangible net worth
below $4 million as reported
<PAGE>
on (i) unaudited financial statements Compiled by an
independent Certified Public Accountant, published within 45
days after the end of the period reported, prepared in
accordance with generally accepted accounting principles, or
(ii) audited financial statements prepared by a certified
Public Accountant published within 120 days after the end of
the period reported, then one of the following events shall
occur:
(i) Fox and/or Stockholders shall have 30 days from
the date the financial statements are published to
remedy the deficiency and the Stockholders shall then
be entitled to receive back the 750,000 shares from
Escrow
(ii) If Fox and Stockholders elect not to cure the
deficiency, all of the Escrowed Shares shall be
distributed to Reva Enterprises, Inc.
(c) By mutual agreement, the parties hereto may waive the
requirement for unaudited financial statements to be Compiled
by an independent certified Public accountant and accept the
unaudited financial statements as prepared by the company for
purposes of determining the tangible net worth as required
herein.
3. Discretion of escrow Agent in Distributing Escrowed Shares. The
Escrow Agent, upon written notice from Reva and Fox as to whether or not the
Performance Obligation has been satisfied shall promptly release and deliver the
Escrowed Share accordingly. In the event of any disagreement between the parties
as to whether or not the Performance Obligation has been satisfied, then the
Company will obtain an audit from a certified Public Accountant agreed to by the
parties and such audit shall be the sole basis for determining if the
Performance Obligations has been satisfied.
4. Indemnification by Reva. In the event that any other shareholder of
the Company who was a shareholder on or before March 22, 19999, ("Claimant"0,
makes a claim that any of the Escrowed Shares to be distributed to Reva in
accordance with Section 3(b)(ii) herein should instead be distributed in part or
in whole to such Claimant or other shareholder(s) of the Company who were
shareholders of the Company on or before March 22, 1999, then and in such event
Reva hereby agrees to indemnify and hold harmless the Company, Fox and
Stockholders from and against any claims (including reasonable attorney's fees)
of claimant (including other t Company shareholders as of March 22, 1999), to
any of the Escrowed Shares; provided that the parties acknowledge that Reva had
previously returned to the Company's Treasury 253,392 post reverse split shares
of the Company as provided by 1.5 (D) of the agreement and Plan of
Reorganization among Reva, Fox and Stockholders upon receipt by the parties of
evidence of same at closing..
5. Operation of escrow. The parties hereto agree that the Escrow
created by this Agreement shall operate as follows:
(a) Distribution of the Escrowed Shares by escrow Agent shall
operate to divest all right, title, interest, claim and
demand, either at law or in equity, of any party to
<PAGE>
this agreement (other than the distributee) in and to the
Escrowed Shares distributed and shall be a perpetual bar, both
in law and in equity, against the parties to this Agreement
and against any person claiming or attempting to claim such
distributed Escrowed Shares from, through or under such party.
(b) Reva, Fox and Stockholders agree to indemnify and hold
harmless Escrow Agent against and i respect of any and all
claims, suits, actions, proceedings (formal and informal),
investigations, judgments, deficiencies, damages, settlements,
liabilities and legal and other expenses (including legal fees
and expenses of attorneys chosen by Escrow Agent) as and when
incurred and arising out of or based upon any act, omission,
alleged act, or alleged omission by Escrow Agent or any other
cause, in any case in connection, with the acceptance of or
the performance or non-performance by Escrow Agent of any
Escrow Agent's duties under this Agreement, except as a result
of escrow Agent's bad faith or gross negligence. Escrow Agent
shall be full protected by acting in reliance upon any notice,
advice, direction, or other document in accordance with the
provisions hereof, in connection with this a agreement, has
been duly authorized so to do, or by acting or failing to act
in good faith on the advice of any counsel retained by escrow
Agent. Escrow Agent shall not be liable for any mistake of
fact or of law or any error of judgment, or for any act or any
omission, except as a result of Escrow Agent's bad faith or
gross negligence.
(c) Escrow Agent makes no representation as to the validity,
value or genuineness of any security or other documents or
instruments held by or delivered to Escrow Agent.
(d) Escrow Agent shall have no duties or responsibilities
except those expressly set forth herein. Escrow Agent shall
not be bound by any notice of ca claim or demand with respect
thereto, or any waiver, modification, amendment, termination,
cancellation or revision of this Agreement, unless in writing
and signed by the other parties hereto, and if Escrow Agent's
duties as Escrow Agent hereunder are affected, unless escrow
Agent shall have given his prior written consent thereto,
Escrow Agent shall not be bound by any assignments hereunder
unless Escrow Agent shall have received written notice thereof
from the assignor. Escrow Agent shall perform any acts ordered
by a court of competent jurisdiction.
(e) IF Escrow Agent shall be uncertain as to Escrow Agent
duties or rights hereunder, shall receive any notice, advice,
direction or other document form any other party with respect
to the Escrowed Shares which, in Escrow Agent's opinion is in
conflict with any of the provisions of the Agreement, or
should be advised that a dispute has arisen with respect to
the ownership or right or possession of the Escrowed Shares or
any part hereto (of as to the delivery, non-delivery or
content of any notice, advice direction or other document),
Escrow agent shall be entitled, without liability to anyone to
refrain from taking any action other than to use Escrow
Agent's best efforts to keep safely the Escrowed Shares until
Escrow Agent shall be directed otherwise in writing by all
other parties hereto or by an
<PAGE>
order, decree or judgment of a court of competent jurisdiction
which has been finally affirmed on appeal or which by lapse of
time or otherwise is no longer subject to appeal, but Escrow
Agent shall be under no duty to institute or to defend any
proceeding, although escrow Agent may, in Escrow Agent's
desecration institute or d34fend such proceedings.
(f) Reva, Fox and Stockholders authorize Escrow Agent, if
Escrow Agent is threatened with litigation or is sued, to
interplead all interested parties in any court of competent
jurisdiction and to deposit the Escrowed Shares with the clerk
of that court.
(g) Escrow Agent's responsibilities and liabilities hereunder,
except as a result of Escrow Agent's own bad faith or gross
negligence, will terminate upon the delivery by Escrow Agent
of all the Escrowed Shares under any provision of this
Agreement.
GENERAL TERMS
6. Good Faith. Each party agrees to act in good faith in carrying out
the provisions of this Agreement and to sign documents appropriate to carrying
out its terms.
7. Binding Effect; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their heirs, successors
and assigns.
8. Severability. If any terms hereof or the application thereof, to any
person or circumstance shall be determined to be null and void, ineffectual,
invalid or unenforceable by any competent tribunal, the remaining terms hereof
or the application of such term to persons or circumstances other than to those
which were determined to be invalid or unenforceable shall not be affected
thereby and shall continue in full force and effect.
9. Waivers. The waiver by any party of a breach by another party of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
10. Notices. Any notice required to be given or made to a party
hereunder must be in writing and delivered in person or sent by certified first
class mail, return receipt requested to each of the parties whose signature
appears below.
11. Amendment. No waiver, modification or amendment of any terms of
this agreement shall be effective unless made in writing and signed by all the
parties.
12. Entire Agreement. This Agreement contains the entire understanding
between and among the parties concerning the matters herein and supersedes any
prior understandings or agreements between and among them respecting the subject
matter of this agreement.
<PAGE>
13. Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Multiple Copies. This Agreement is made in multiple copies, each of
which shall constitute an original.
15. Governing Law. This Agreement shall be deemed to be made under and
shall be construed in accordance with the laws of the state of New York without
regard to its principles of conflicts of laws.
IN WITNESS WHEREOF, the under signed have duly executed this Agreement
the day and year first above written.
WITNESS: Escrow Agent
/s/ John B. Lowy
- - --------------------------- ---------------------------------
John B. Lowy, Attorney at Law
ATTEST:: RIVA ENTERPRISES, INC.
/s/ Riva Enterprises, Inc.
By:
- - --------------------------- ------------------------------
ATTEST: FOX GROUP ENTERPRISES, INC.
/s/ Murray Fox
- - --------------------------- ---------------------------------
WITNESSES: STOCKHOLDERS OF FOX:
/s/ Anthony Conte
- - --------------------------- ---------------------------------
/s/ David C. Katz
- - --------------------------- ---------------------------------
/s/ Paul Litwinczuk
- - --------------------------- ---------------------------------
/s/ Michael Donahue
- - --------------------------- ---------------------------------
/s/ Joseph Mazza
- - --------------------------- ---------------------------------
/s/ Murray Fox
- - --------------------------- ---------------------------------
/s/ Jeager and Associates, LLC
- - --------------------------- ---------------------------------
<PAGE>
SHAREHOLDER AGREEMENT
FOX GROUP ENTERPRISES, INC.
DATED MARCH 18, 1999
Pursuant to the Agreement and Plan of Reorganization date March 29, 1999,
whereby Atlantic Medical Corporation ("Atlantic"). a publically traded Delaware
corporation is acquiring 100% common and preferred shares outstanding of Fox
Group Enterprises, Inc. ("Fox"), and pursuant to the above Agreement will be
changing its name to I-ROCK Industries, Inc. ("I-ROCK"). I hereby acknowledge
that I approve this exchange, that I have received and personably reviewed a
copy of the financial statements of Atlantic and, I represent and warrant that I
have sufficient knowledge and experience to understand the nature of the
exchange and am fully capable of bearing the economic risk of the loss of my
entire cost basis.
I further understand that Atlantic the time of closing with Fox will not have
any assets of any measurable value; and that the exchange dilutes my interest in
Fox.
I am not relying on any particular representation made by any person concerning
Fox or I-ROCK in connection with the exchange of these shares, and I understand
that I must bear the economic risk of ownership of any of these shares for a
long period of time as these are unregistered shares.
I acknowledge that I have been advised that the Shares are not being registered
under the Securities Act of 1933 (the "Act"), that the Shares will be issued to
me pursuant to the statutory exemption contained in Section 4(2) of the Act, and
that the Shares are "restricted securities" within the meaning of Rule 144
promulgated by the Securities and Exchange Commission (the "SEC") under the Act.
I represent that I will not sell the Shares without registration under the act
and any applicable state securities laws (unless exempted therefrom).
I hereby represent to you that I am acquiring the Shares for investment purposes
for my own account and not with a view to or for resale in connection with any
distribution of Shares within the meaning of the Act, and that I do not intend
to dispose of all or any part of the Shares for any reason within the near
future.
I further acknowledge that I have been advised that a legend will be placed on
the certificate or other document evidencing the Shares stating that the Shares
have not been registered under the Act or any state securities laws and setting
forth the restriction on transferability and resale of the Shares. In addition,
stop transfer restriction instructions will be issued to the Corporations's
transfer agent, making a notation in the appropriate records of the Corporation.
<PAGE>
Therefore in accordance with the Agreement I will be receiving a total of
3,906,893 shares of I-ROCK in return for my shares of Fox. I further understand
that I will receive these shares in the form of three certificates of 1,625,360,
1,887,782 and 393,750 shares respectively.
I further agree that the certificate in the amount of 1,887,782 shares will be
placed in escrow with an escrow agent as designated by I-ROCK .
In accordance with the Agreement I agree that the certificate in the amount of
393,750 shares will be placed in escrow with John Lowey and subject to the terms
and conditions contained in Section 4.5 of the Agreement.
In regard to the certificate in the amount of 4,887,782 shares, I agree that on
the date of closing of the proposed transactions with Innovative Research
Corporation and MTAE that is defined in Section 1.8 of the Agreement, the shares
represented by this certificate will be returned to the treasury of I-ROCK. In
any event, I agree that these shares will be returned to the treasury of I-ROCK
on the six month anniversary date of the closing with Atlantic.
Agreed To:
/s/ Murray Fox
- - --------------------------------
Murray Fox
- - --------------------------------
Print Name
<PAGE>
SHAREHOLDER AGREEMENT
FOX GROUP ENTERPRISES, INC.
DATED MARCH 18, 1999
Pursuant to the Agreement and Plan of Reorganization date March 29, 1999,
whereby Atlantic Medical Corporation ("Atlantic"). a publically traded Delaware
corporation is acquiring 100% common and preferred shares outstanding of Fox
Group Enterprises, Inc. ("Fox"), and pursuant to the above Agreement will be
changing its name to I-ROCK Industries, Inc. ("I-ROCK"). I hereby acknowledge
that I approve this exchange, that I have received and personably reviewed a
copy of the financial statements of Atlantic and, I represent and warrant that I
have sufficient knowledge and experience to understand the nature of the
exchange and am fully capable of bearing the economic risk of the loss of my
entire cost basis.
I further understand that Atlantic the time of closing with Fox will not have
any assets of any measurable value; and that the exchange dilutes my interest in
Fox.
I am not relying on any particular representation made by any person concerning
Fox or I-ROCK in connection with the exchange of these shares, and I understand
that I must bear the economic risk of ownership of any of these shares for a
long period of time as these are unregistered shares.
I acknowledge that I have been advised that the Shares are not being registered
under the Securities Act of 1933 (the "Act"), that the Shares will be issued to
me pursuant to the statutory exemption contained in Section 4(2) of the Act, and
that the Shares are "restricted securities" within the meaning of Rule 144
promulgated by the Securities and Exchange Commission (the "SEC") under the Act.
I represent that I will not sell the Shares without registration under the act
and any applicable state securities laws (unless exempted therefrom).
I hereby represent to you that I am acquiring the Shares for investment purposes
for my own account and not with a view to or for resale in connection with any
distribution of Shares within the meaning of the Act, and that I do not intend
to dispose of all or any part of the Shares for any reason within the near
future.
I further acknowledge that I have been advised that a legend will be placed on
the certificate or other document evidencing the Shares stating that the Shares
have not been registered under the Act or any state securities laws and setting
forth the restriction on transferability and resale of the Shares. In addition,
stop transfer restriction instructions will be issued to the Corporations's
transfer agent, making a notation in the appropriate records of the Corporation.
<PAGE>
Therefore in accordance with the Agreement I will be receiving a total of
1,901,354 shares of I-ROCK in return for my shares of Fox. I further understand
that I will receive these shares in the form of three certificates of 645,009,
1,064,721 and 191,625 shares respectively.
I further agree that the certificate in the amount of 1,064,721 shares will be
placed in escrow with an escrow agent as designated by I-ROCK .
In accordance with the Agreement I agree that the certificate in the amount of
191,625 shares will be placed in escrow with John Lowey and subject to the terms
and conditions contained in Section 4.5 of the Agreement.
In regard to the certificate in the amount of 1,064,721 shares, I agree that on
the date of closing of the proposed transactions with Innovative Research
Corporation and MTAE that is defined in Section 1.8 of the Agreement, the shares
represented by this certificate will be returned to the treasury of I-ROCK. In
any event, I agree that these shares will be returned to the treasury of I-ROCK
on the six month anniversary date of the closing with Atlantic.
Agreed To:
/s/ Anthony Conte
- - ---------------------------------
Anthony Conte
- - ---------------------------------
Print Name
<PAGE>
SHAREHOLDER AGREEMENT
FOX GROUP ENTERPRISES, INC.
DATED MARCH 18, 1999
Pursuant to the Agreement and Plan of Reorganization date March 29, 1999,
whereby Atlantic Medical Corporation ("Atlantic"). a publically traded Delaware
corporation is acquiring 100% common and preferred shares outstanding of Fox
Group Enterprises, Inc. ("Fox"), and pursuant to the above Agreement will be
changing its name to I-ROCK Industries, Inc. ("I-ROCK"). I hereby acknowledge
that I approve this exchange, that I have received and personably reviewed a
copy of the financial statements of Atlantic and, I represent and warrant that I
have sufficient knowledge and experience to understand the nature of the
exchange and am fully capable of bearing the economic risk of the loss of my
entire cost basis.
I further understand that Atlantic the time of closing with Fox will not have
any assets of any measurable value; and that the exchange dilutes my interest in
Fox.
I am not relying on any particular representation made by any person concerning
Fox or I-ROCK in connection with the exchange of these shares, and I understand
that I must bear the economic risk of ownership of any of these shares for a
long period of time as these are unregistered shares.
I acknowledge that I have been advised that the Shares are not being registered
under the Securities Act of 1933 (the "Act"), that the Shares will be issued to
me pursuant to the statutory exemption contained in Section 4(2) of the Act, and
that the Shares are "restricted securities" within the meaning of Rule 144
promulgated by the Securities and Exchange Commission (the "SEC") under the Act.
I represent that I will not sell the Shares without registration under the act
and any applicable state securities laws (unless exempted therefrom).
I hereby represent to you that I am acquiring the Shares for investment purposes
for my own account and not with a view to or for resale in connection with any
distribution of Shares within the meaning of the Act, and that I do not intend
to dispose of all or any part of the Shares for any reason within the near
future.
I further acknowledge that I have been advised that a legend will be placed on
the certificate or other document evidencing the Shares stating that the Shares
have not been registered under the Act or any state securities laws and setting
forth the restriction on transferability and resale of the Shares. In addition,
stop transfer restriction instructions will be issued to the Corporations's
transfer agent, making a notation in the appropriate records of the Corporation.
<PAGE>
Therefore in accordance with the Agreement I will be receiving a total of
893,004 shares of I-ROCK in return for my shares of Fox. I further understand
that I will receive these shares in the form of three certificates of 302,940,
500,064 and 90,000 shares respectively.
I further agree that the certificate in the amount of 500,069 shares will be
placed in escrow with an escrow agent as designated by I-ROCK .
In accordance with the Agreement I agree that the certificate in the amount of
90,000 shares will be placed in escrow with John Lowey and subject to the terms
and conditions contained in Section 4.5 of the Agreement.
In regard to the certificate in the amount of 500,064 shares, I agree that on
the date of closing of the proposed transactions with Innovative Research
Corporation and MTAE that is defined in Section 1.8 of the Agreement, the shares
represented by this certificate will be returned to the treasury of I-ROCK. In
any event, I agree that these shares will be returned to the treasury of I-ROCK
on the six month anniversary date of the closing with Atlantic.
Agreed To:
/s/ David Katz
- - -------------------------
David Katz
- - -------------------------
Print Name
