GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER THE 1934 ACT
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A
Amendment No. 2
FILE NO.: 000-30337
CIK: 0001100190
PARADE HOLDINGS, INC.
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(Name of Small Business Issuer)
Delaware 13-4079328
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(State or Other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
39 Broadway, Suite 2250, New York, NY 10006
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(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number (212) 425-8200
Securities to be registered under Section 12(b) of the Act:
NONE
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Securities to be Registered Under Section 12(g) of the Act:
Common Stock, $.0001 Par Value
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(Title of Class)
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TABLE OF CONTENTS
PART I.
ITEM 1. DESCRIPTION OF BUSINESS
ITEM 2. PLAN OF OPERATION
ITEM 3. DESCRIPTION OF PROPERTY
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
ITEM 6. EXECUTIVE COMPENSATION
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 8. DESCRIPTION OF SECURITIES
PART II.
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCK-HOLDER MATTERS
ITEM 2. LEGAL PROCEEDINGS
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
PART F/S.
FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
BALANCE SHEET AS OF MARCH 31, 2000
NOTES TO BALANCE SHEET AS OF MARCH 31, 2000
PART III.
ITEM 1. INDEX TO EXHIBITS
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Parade Holdings, Inc. (the "Company"), was incorporated on July 27, 1999,
under the laws of the State of Delaware. The Company was formed in order to seek
business opportunities and is currently a "shell" company with no commercial
operations. To date its activities have been organizational in nature and as a
result it must be considered to be in its developmental stage. The Company has
no full time employees, owns no real estate and since inception has been
primarily concerned with developing its business plan and raising its initial
capital.
The Company is one of ten shells created by Mark Elenowitz and Louis Taubman,
who are shareholders in all ten shells. Each shell has the same business plan.
The Company and the other shells seek to find private companies that wish to
become reporting companies, with which to merge. Mr. Elenowitz and Mr. Taubman
engage in the business of creating public shells and finding merger partners for
these shells.
The Company's current business plan is to seek out business opportunities and
to pursue other related activities intended to enhance shareholder value.
Because the Company has no capital, it is unlikely that the Company will be able
to take advantage of more than one such business opportunity. The Company
intends to seek opportunities demonstrating the potential of long-term growth as
opposed to short-term earnings.
The Company currently intends to generate revenue for its shareholders
through the acquisition of stock of potential merger partners with whom the
shell may be merged. In addition to the revenue generated from anticipated
capital gains from the sale of such stock, Mr. Elenowitz and Mr. Taubman also
derive revenue indirectly from TM Capital Partners, LLC, the majority
shareholder in the shells, which acts as a consultant to companies seeking to
merge with a public vehicle.
The acquisition of a business opportunity will probably be in the form of a
merger with a foreign or domestic private issuer that wishes to become a
reporting issuer. However, the Company is not limiting its search to such an
opportunity and as a result the business opportunity may also take the form of a
purchase, exchange of stock, or otherwise, and may encompass assets or a
business entity, such as a corporation, joint venture, or partnership.
Neither does the Company intend to restrict its search for business
opportunities to any particular geographical area or industry, and may,
therefore, engage in essentially any business, to the extent of its limited
resources. This includes industries such as service, finance, natural resources,
manufacturing, high technology, product development, medical, communications and
others. The Company's discretion in the
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selection of business opportunities is unrestricted, subject to the availability
of such opportunities, economic conditions, and other factors.
To date, the Company has not identified any business opportunity that it
plans to pursue, nor has the Company reached any agreement or definitive
understanding with any person concerning an acquisition. The Company is filing
this Form 10-SB on a voluntary basis in order to become a 12(g) registered
company under the Securities Exchange Act of 1934. As a "reporting company," the
Company may be more attractive to a private acquisition target because it may be
listed to trade its shares on the OTCBB.
As a consequence of this registration of its securities, any entity which has
an interest in being acquired by, or merging into, the Company is expected to be
an entity that desires to become a public company and establish a public trading
market for its securities. There are various reasons why an entity would wish to
become a public company including (i) the ability to use registered securities
as currency in acquisitions of assets or businesses; (ii) increased visibility
in the financial community; (iii) the facilitation of borrowing from financial
institutions; (iv) increased liquidity to investors; (v) greater ease in
subsequently raising capital (vi) compensation of key employees through stock
options; (vii) enhanced corporate image; and (viii) a presence in the United
States capital markets.
Management believes that the business opportunity will likely be a business
entity with the goal of becoming a public company in order to use its securities
for the acquisition of assets or businesses; a company which is unable to find
an underwriter of its securities or is unable to find an underwriter of its
securities on terms acceptable to it; a company that wishes to become public
with less dilution of its common stock than would occur upon an underwriting; a
company that believes that it will be able to obtain investment capital on more
favorable terms after it has become public; or a foreign company that wishes to
make an initial entry into the United States securities market.
A business combination with a target company will normally involve the
transfer to the target company of the majority of the issued and outstanding
common stock of the Company, and the substitution by the target company of its
own management and board of directors.
The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals and
the selection of a business opportunity may take several months or more. No
assurances can be given that the Company will be able to enter into a business
combination, as to the terms of a business combination, or as to the nature of
the target company.
In all probability, however, upon completion of an acquisition or merger,
there will be a change in control through issuance of substantially more shares
of common stock. Further, in conjunction with an acquisition or merger, it is
likely that management may offer to sell a controlling interest at a price not
relative to or reflective of any value of the
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shares sold by management, and at a price which could not be achieved by
individual shareholders at the time.
The Company is voluntarily filing this Registration Statement with the
Securities and Exchange Commission and is under no obligation to do so under the
Securities Exchange Act of 1934.
RISK FACTORS
The Company's business is subject to numerous risk factors, including the
following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The Company has had no
operating history nor any revenues or earnings from operations. The Company has
no significant assets or financial resources. The Company will, in all
likelihood, sustain operating expenses without corresponding revenues, at least
until the consummation of a business combination. This may result in the Company
incurring a net operating loss which will increase continuously until the
Company can consummate a business combination with a target company. There is no
assurance that the Company can identify such a target company and consummate
such a business combination.
SPECULATIVE NATURE OF THE COMPANY'S PROPOSED OPERATIONS. The success of
the Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified target company.
While management will prefer business combinations with entities having
established operating histories, there can be no assurance that the Company will
be successful in locating candidates meeting such criteria. In the event the
Company completes a business combination, of which there can be no assurance,
the success of the Company's operations will be dependent upon management of the
target company and numerous other factors beyond the Company's control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with and acquisitions of business entities. A large
number of established and well-financed entities, including venture capital
firms, are active in mergers and acquisitions of companies which may be merger
or acquisition target candidates for the Company. Nearly all such entities have
significantly greater financial resources, technical expertise and managerial
capabilities than the Company and, consequently, the Company will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, the Company will also
compete with numerous other small public companies in seeking merger or
acquisition candidates.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION--NO STANDARDS
FOR BUSINESS COMBINATION. The Company has no current arrangement, agreement or
understanding with respect to engaging in a merger with or acquisition of a
specific business entity. There can be no
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assurance that the Company will be successful in identifying and evaluating
suitable business opportunities or in concluding a business combination.
Management has not identified any particular industry or specific business
within an industry for evaluation by the Company. There is no assurance that the
Company will be able to negotiate a business combination on terms favorable to
the Company. The Company has not established a specific length of operating
history or a specified level of earnings, assets, net worth or other criteria
which it will require a target company to have achieved, or without which the
Company would not consider a business combination with such business entity.
Accordingly, the Company may enter into a business combination with a business
entity having no significant operating history, losses, limited or no potential
for immediate earnings, limited assets, negative net worth or other negative
characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While seeking a
business combination, management anticipates devoting only a limited amount of
time per month to the business of the Company. The Company's officers have not
entered into a written employment agreement with the Company and they are not
expected to do so in the foreseeable future. The Company has not obtained key
man life insurance on its officers and directors. Notwithstanding the combined
limited experience and time commitment of management, loss of the services of
these individuals would adversely affect development of the Company's business
and its likelihood of continuing operations.
CONFLICTS OF INTEREST--GENERAL. Certain conflicts of interest may exist
between the Company and its officers and directors. They have other business
interests to which they devote their attention, and may be expected to continue
to do so although management time should be devoted to the business of the
Company. As a result, conflicts of interest may arise that can be resolved only
through exercise of such judgment as is consistent with fiduciary duties to the
Company. See "Management," and "Conflicts of Interest."
Mark Elenowitz and Louis Taubman have created and are beneficial owners of
ten shells. It is presumed that these shells will be sold in chronological order
by date of incorporation. However, a target company may be more suited or prefer
a certain shell formed subsequent to the Company. Thus, Mark Elenowitz and Louis
Taubman may attempt to merge a target company with one of their shells
incorporated subsequent to the Company, regardless of chronological order. Mark
Elenowitz and Louis Taubman will profit if any of the shells are merged,
regardless of chronological order of incorporation. Thus, finding a target
company to merge with this Company may not necessarily be a priority for Mark
Elenowitz and Louis Taubman who will gain financially if any of the shells are
sold.
Mark Elenowitz and Louis Taubman will each receive stock, indirectly and
directly as a result of any merger that occurs. In addition, Mr. Elenowitz, Mr.
Taubman and their other partners may also receive cash as a result of any
consulting agreement between TM Capital Partners, LLC and any potential merger
candidates.
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REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Section 13 of
the Securities Exchange Act of 1934 (the "Exchange Act") requires companies
subject thereto to provide certain information about significant acquisitions
including certified financial statements for the company acquired covering one
or two years, depending on the relative size of the acquisition. The time and
additional costs that may be incurred by some target companies to prepare such
financial statements may significantly delay or essentially preclude
consummation of an otherwise desirable acquisition by the Company. Acquisition
prospects that do not have or are unable to obtain the required audited
statements may not be appropriate for acquisition so long as the reporting
requirements of the Exchange Act are applicable.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has neither
conducted, nor have others made available to it, market research indicating that
demand exists for the transactions contemplated by the Company. Even in the
event demand exists for a merger or acquisition of the type contemplated by the
Company, there is no assurance the Company will be successful in completing any
such business combination.
LACK OF DIVERSIFICATION. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a business
combination with only one business entity. Consequently, the Company's
activities will be limited to those engaged in by the business entity that the
Company merges with or acquires. The Company's inability to diversify its
activities into a number of areas may subject the Company to economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.
REGULATION UNDER INVESTMENT COMPANY ACT. Although the Company will be
subject to regulation under the Exchange Act, management believes the Company
will not be subject to regulation under the Investment Company Act of 1940,
insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business combinations
which result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, any violation of such Act
could subject the Company to material adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination involving
the issuance of the Company's common stock will, in all likelihood, result in
shareholders of a target company obtaining a controlling interest in the
Company. Any such business combination may require shareholders of the Company
to sell or transfer all or a portion of the Company's common stock held by them.
The resulting change in control of the Company will likely result in removal of
the present
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officers and directors of the Company and a corresponding reduction in or
elimination of their participation in the future affairs of the Company.
REGULATION OF PENNY STOCKS. The Company's securities, when available for
trading, will be subject to a Securities and Exchange Commission rule that
imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors.
For purposes of the rule, the phrase "accredited investors" means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess of $1,000,000 or having an annual income that exceeds
$200,000 (or that, when combined with a spouse's income, exceeds $300,000). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell the Company's securities and also
may affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefore.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act
of 1934, as amended. Because the securities of the Company may constitute "penny
stocks" within the meaning of the rules, the rules would apply to the Company
and to its securities. The rules may further affect the ability of owners of
Shares to sell the securities of the Company in any market that might develop
for them.
Shareholders should be aware that the market for penny stocks has suffered in
recent years from patterns of fraud and abuse (see www.sec.gov; Press Releases:
"SEC Proposes Several Measures to Combat Securities Fraud, and Issues Status
Report on Commission-wide Microcap Fraud Efforts"). Such patterns include (i)
control of the market for the security by one or a few broker-dealers that are
often related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and
(v) the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to the
Company's securities.
TAXATION. Federal and state tax consequences will, in all likelihood, be
major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both
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companies, pursuant to various federal and state tax provisions. The Company
intends to structure any business combination so as to minimize the federal and
state tax consequences to both the Company and the target company; however,
there can be no assurance that such business combination will meet the statutory
requirements of a tax-free reorganization or that the parties will obtain the
intended tax-free treatment upon a transfer of stock or assets. A non-qualifying
reorganization could result in the imposition of both federal and state taxes
that may have an adverse effect on both parties to the transaction.
NO PUBLIC MARKET EXISTS. There is no public market for the Company's Common
stock, and no assurance can be given that a market will develop or that a
shareholder ever will be able to liquidate his investment without considerable
delay, if at all. If a market should develop, the price may be highly volatile.
Factors such as those discussed in this "Risk Factors" section may have a
significant impact upon the market price of the securities offered hereby. Owing
to the low price of the securities, many brokerage firms may not be willing to
effect transactions in the securities. Even if a purchaser finds a broker
willing to effect a transaction in these securities, the combination of
brokerage commissions, state transfer taxes, if any, and any other selling costs
may exceed the selling price. Further, many lending institutions will not permit
the use of such securities as collateral for any loans.
RULE 144 SALES. All of the outstanding shares of Common Stock held by present
officers, directors, and stockholders are "restricted securities" within the
meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted
shares, these shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Act and as required under applicable state
securities laws. Rule 144 provides in essence that a person who has held
restricted securities for one year may, under certain conditions, sell every
three months, in brokerage transactions, a number of shares that does not exceed
the greater of 1.0% of a company's outstanding common stock or the average
weekly trading volume during the four calendar weeks prior to the sale. There is
no limit on the amount of restricted securities that may be sold by a
nonaffiliate after the restricted securities have been held by the owner for a
period of two years. A sale under Rule 144 or under any other exemption from the
Act, if available, or pursuant to subsequent registration of shares of Common
Stock of present stockholders, may have a depressive effect upon the price of
the Common Stock in any market that may develop.
BLUE SKY RESTRICTIONS. Many states have enacted statutes or rules that
restrict or prohibit the sale of securities of "shell" companies to residents so
long as they remain without specific business plans. To the extent any current
shareholders or subsequent purchaser from a shareholder may reside in a state
that restricts or prohibits resale of shares in a "shell" company, warning is
hereby given that the shares may be "restricted" from resale as long as the
company is a shell.
At the date of this registration statement, the Company has no intention of
offering further shares in a private offering to anyone. Further, the policy of
the Board of
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Directors is that any future offering of shares will only be made after an
acquisition has been made and can be disclosed in appropriate 8-K filings.
In the event of a violation of state laws regarding resale of "shell" shares
the Company could be liable for civil and criminal penalties which would be a
substantial impairment to the Company. At date of this registration statement,
all shareholders' shares bear a "restrictive legend," and the Company will
examine each shareholders' resident state laws at the time of any proposed
resale of shares now outstanding to attempt to avoid any inadvertent breach of
state laws.
ITEM 2. PLAN OF OPERATION
The Company intends to merge with or acquire a business entity in exchange
for the Company's securities. The Company has no particular acquisition in mind
and has not entered into any negotiations regarding such an acquisition. Neither
the Company's officers and directors nor any affiliate have engaged in any
negotiations with any representative of any company regarding the possibility of
an acquisition or merger between the Company and such other company.
Management anticipates seeking out a target company through solicitation.
Such solicitation may include newspaper or magazine advertisements, mailings and
other distributions to law firms, accounting firms, investment bankers,
financial advisors and similar persons, the use of one or more World Wide Web
sites and similar methods. No estimate can be made as to the number of persons
who will be contacted or solicited. Management may engage in such solicitation
directly or may employ one or more other entities to conduct or assist in such
solicitation. Management and its affiliates pay referral fees to consultants and
others who refer target businesses for mergers into public companies in which
management and its affiliates have an interest. Payments are made if a business
combination occurs, and may consist of cash or a portion of the stock in the
Company retained by management and its affiliates, or both. In the past a cash
referral fee was paid to finders in relation to the Solomon Alliance Group, Inc.
and Madison Holdings, Inc. business combination and the Reagan Holdings, Inc.
and FindEx.com, Inc. business combination. The referral fee paid to the finder,
which was not affiliated with Madison Holdings, was $50,000 in cash plus 100,000
shares of Solomon Alliance Group, Inc. A referral fee of $50,000 in cash plus
100,000 shares of FindEx.com, Inc. was paid to TM Capital Partners, an entity
affiliated with MHE Projix, LLC, the majority shareholder of Reagan Holdings,
Inc. in relation to its business combination with FindEx.com, Inc.
The Company has no full time employees. The Company's officers have agreed to
allocate a portion of their time to the activities of the Company, without
compensation. The officers anticipate that the business plan of the Company can
be implemented by their devoting no more than 10 hours each per month to the
business affairs of the Company and, consequently, conflicts of interest may
arise with respect to the limited time commitment by such officer.
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Management is currently involved with other shells, and is involved in
creating additional shells similar to this one. A conflict may arise in the
event that another shell with which management is affiliated is formed and
actively seeks a target company. Management anticipates that target companies
will be located for the Company and other shells in chronological order of the
date of incorporation of such shells or by lot. However, other shells that may
be formed may differ from the Company in certain items such as place of
incorporation, number of shares and shareholders, working capital, types of
authorized securities, or other items. It may be that a target company may be
more suitable for or may prefer a certain shell formed after the Company. In
such case, a business combination might be negotiated on behalf of the more
suitable or preferred shell regardless of date of formation or choice by lot. To
Date, Management has successfully completed business combinations, in the form
of share exchanges, between three target companies and three of their shells in
chronological order by date of incorporation of the shells.
The Certificate of Incorporation of the Company provides that the Company may
indemnify officers and/or directors of the Company for liabilities, which can
include liabilities arising under the securities laws. Therefore, assets of the
Company could be used or attached to satisfy any liabilities subject to such
indemnification.
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in a business entity which desires to seek the
perceived advantages of a corporation which has a class of securities registered
under the Exchange Act. The Company will not restrict its search to any specific
business, industry, or geographical location and the Company may participate in
a business venture of virtually any kind or nature. Management anticipates that
it will be able to participate in only one potential business venture because
the Company has nominal assets and limited financial resources. See item F/S,
"Financial Statements." This lack of diversification should be considered a
substantial risk to the shareholders of the Company because it will not permit
the Company to offset potential losses from one venture against gains from
another.
The Company may seek a business opportunity with entities which have recently
commenced operations, or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes. The Company
may acquire assets and establish wholly-owned subsidiaries in various businesses
or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in which
to participate will be complex and extremely risky. Management believes (but has
not conducted any research to confirm) that there are business entities seeking
the perceived benefits of a publicly registered corporation. Such perceived
benefits may include
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facilitating or improving the terms on which additional equity financing may be
sought, providing liquidity for incentive stock options or similar benefits to
key employees, increasing the opportunity to use securities for acquisitions,
providing liquidity for shareholders and other factors. Business opportunities
may be available in many different industries and at various stages of
development, all of which will make the task of comparative investigation and
analysis of such business opportunities difficult and complex.
The Company has, and will continue to have, no capital with which to provide
the owners of business entities with any cash or other assets. However,
management believes the Company will be able to offer owners of acquisition
candidates the opportunity to acquire a controlling ownership interest in a
public company without incurring the cost and time required to conduct an
initial public offering. Management has not conducted market research and is not
aware of statistical data to support the perceived benefits of a merger or
acquisition transaction for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or under
the supervision of, the officers and directors of the Company, who are not
professional business analysts. In analyzing prospective business opportunities,
management will consider such matters as the available technical, financial and
managerial resources; working capital and other financial requirements; history
of operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development, or exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition or acceptance of products, services, or trades; name
identification; and other relevant factors. This discussion of the proposed
criteria is not meant to be restrictive of the Company's virtually unlimited
discretion to search for and enter into potential business opportunities.
The Exchange Act requires that any merger or acquisition candidate comply
with certain reporting requirements, which include providing audited financial
statements to be included in the reporting filings made under the Exchange Act.
The Company will not acquire or merge with any company for which audited
financial statements cannot be obtained at or within a reasonable period of time
after closing of the proposed transaction.
The Company may enter into a business combination with a business entity that
desires to establish a public trading market for its shares. A target company
may attempt to avoid what it deems to be adverse consequences of undertaking its
own public offering by seeking a business combination with the Company. Such
consequences may include, but are not limited to, time delays of the
registration process, significant expenses to be incurred in such an offering,
loss of voting control to public shareholders or the inability to obtain an
underwriter or to obtain an underwriter on satisfactory terms.
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The Company will not restrict its search for any specific kind of business
entity, but may acquire a venture which is in its preliminary or development
stage, which is already in operation, or in essentially any stage of its
business life. It is impossible to predict at this time the status of any
business in which the Company may become engaged, in that such business may need
to seek additional capital, may desire to have its shares publicly traded, or
may seek other perceived advantages which the Company may offer.
Management of the Company, which in all likelihood will not be experienced in
matters relating to the business of a target company, will rely upon its own
efforts in accomplishing the business purposes of the Company. Outside
consultants or advisors may be utilized by the Company to assist in the search
for qualified target companies. If the Company does retain such an outside
consultant or advisor, any cash fee earned by such person will need to be
assumed by the target company, as the Company has limited cash assets with which
to pay such obligation.
Following a business combination the Company may benefit from the services of
others in regard to accounting, legal services, underwritings and corporate
public relations. If requested by a target company, management may recommend one
or more underwriters, financial advisors, accountants, public relations firms or
other consultants to provide such services.
A potential target company may have an agreement with a consultant or advisor
providing that the services of the consultant or advisor be continued after any
business combination. Additionally, a target company may be presented to the
Company only on the condition that the services of a consultant or advisor be
continued after a merger or acquisition. Such preexisting agreements of target
companies for the continuation of the services of attorneys, accountants,
advisors or consultants could be a factor in the selection of a target company.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the consummation of a
transaction, it is likely that the present management and shareholders of the
Company will no longer be in control of the Company. In addition, it is likely
that the Company's officers and directors will, as part of the terms of the
acquisition transaction, resign and be replaced by one or more new officers and
directors.
It is anticipated that any securities issued in any such reorganization would
be issued in reliance upon exemption from registration under applicable federal
and state securities laws. In some circumstances, however, as a negotiated
element of its transaction, the Company may agree to register all or a part of
such securities immediately after the transaction is consummated or at specified
times thereafter. If such registration occurs,
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<PAGE>
of which there can be no assurance, it will be undertaken by the surviving
entity after the Company has entered into an agreement for a business
combination or has consummated a business combination and the Company is no
longer considered a shell company. Until such time as this occurs, the Company
will not register any additional securities. The issuance of additional
securities and their potential sale into any trading market which may develop in
the Company's securities may depress the market value of the Company's
securities in the future if such a market develops, of which there is no
assurance.
While the terms of a business transaction to which the Company may be a party
cannot be predicted, it is expected that the parties to the business transaction
will desire to avoid the creation of a taxable event and thereby structure the
acquisition in a "tax-free" reorganization under Sections 351 or 368 of the
Internal Revenue Code of 1986, as amended (the "Code").
With respect to any merger or acquisition negotiations with a target company,
management expects to focus on the percentage of the Company which target
company shareholders would acquire in exchange for their shareholdings in the
target company. Depending upon, among other things, the target company's assets
and liabilities, the Company's shareholders will in all likelihood hold a
substantially lesser percentage ownership interest in the Company following any
merger or acquisition. The percentage of ownership may be subject to significant
reduction in the event the Company acquires a target company with substantial
assets. Any merger or acquisition effected by the Company can be expected to
have a significant dilutive effect on the percentage of shares held by the
Company's shareholders at such time.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require certain
representations and warranties of the parties thereto, will specify certain
events of default, will detail the terms of closing and the conditions which
must be satisfied by the parties prior to and after such closing, will outline
the manner of bearing costs, including costs associated with the Company's
attorneys and accountants, and will include miscellaneous other terms.
The Company will not acquire or merge with any entity that cannot provide
audited financial statements at or within a reasonable period of time after
closing of the proposed transaction. The Company is subject to all of the
reporting requirements included in the Exchange Act. Included in these
requirements is the duty of the Company to file audited financial statements as
part of or within 60 days following its Form 8-K to be filed with the Securities
and Exchange Commission upon consummation of a merger or acquisition, as well as
the Company's audited financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial statements are not
available at closing, or within time parameters necessary to insure the
Company's compliance with the requirements of the Exchange Act, or if the
audited financial statements provided do not conform to the representations made
by the target company, the closing documents may provide that the proposed
transaction will be voidable at the discretion of the present management of the
Company.
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<PAGE>
TM Capital Partners, L.L.C., the principal shareholder of the Company, has
informally agreed that it will advance to the Company any additional funds which
the Company needs for operating capital and for costs in connection with
searching for or completing an acquisition or merger. Such advances will be made
without expectation of repayment unless the owners of the business which the
Company acquires or merges with agree to repay all or a portion of such
advances. There is no minimum or maximum amount TM Capital Partners, L.L.C. will
advance to the Company. The Company will not borrow any funds to make any
payments to the Company's promoters, management or their affiliates or
associates.
COMPETITION
The Company expects to encounter substantial competition in its efforts to
locate attractive business opportunities, primarily from business development
companies, venture capital partnerships and corporations, venture capital
affiliates of large industrial and financial companies, small investment
companies, and wealthy individuals. Many of these entities have significantly
greater financial and personnel resources and technical expertise than the
Company. The Company may also experience competition from other public "shell"
companies, some of which may have more funds available than the Company. As a
result of the Company's combined extremely limited financial resources and
limited management availability, the Company will continue to be at a
significant competitive disadvantage compared to the Company's competitors.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no property. The Company does not currently maintain an
office or any other facilities. It does currently maintain a mailing address at
39 Broadway, Suite 2250, which is the office address of its Secretary, Louis
Taubman. The Company pays no rent for the use of this mailing address. The
Company does not believe that it will need to maintain an office at any time in
the foreseeable future in order to carry out its plan of operations described
herein.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of the date of this registration
statement, each person known by the Company to be the beneficial owner of five
percent or more of the Company's Common Stock, all directors individually and
all directors and officers of the Company as a group. Except as noted, each
person has sole voting and investment power with respect to the shares shown.
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<PAGE>
Name and Address Amount of Beneficial Percentage
of Beneficial Owner Ownership of Class
------------------- ------------------- ----------
TM Capital Partners, L.L.C. (1) 4,750,000 95%
15425 Shady Grove Road
Suite 400
Rockville, MD 20850
Mark Elenowitz 125,000 2.5%
(President, Treasurer
and Director)
15425 Shady Grove Road
Suite 400
Rockville, MD 20850
Louis Taubman 125,000 2.5%
(Secretary and Director)
39 Broadway, Suite 2250
New York, NY 10006
All Executive Officers and
Directors as a Group 5,000,000 100%
(1) Two of the Company's officers and directors--Louis Taubman and Mark
Elenowitz are indirect beneficial owners of TM Capital Partners, L.L.C. TM
Capital provides services for such persons, particularly in regard to locating
private companies that may wish to go public, and acts as an initial shareholder
in certain companies formed by such parties. Since TM Capital has fewer than 100
shareholders and is not making and does not intend to make a public offering of
its securities, management believes that it is not deemed to be an investment
company by virtue of an exemption provided under the Investment Company Act of
1940, as amended.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The Company has two Directors and two Officers as follows:
Name Age Positions and Offices Held
---- --- --------------------------
Mark Elenowitz 30 President, Treasurer and Director
Louis Taubman 31 Secretary and Director
There are no agreements or understandings for the officers or directors to
resign at the request of another person and the above-named officers and
directors are not acting on behalf of nor will act at the direction of any other
person.
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<PAGE>
Set forth below is the name of the directors and officers of the Company, all
positions and offices with the Company held, the period during which he has
served as such, and the business experience during at least the last five years:
Mark Elenowitz, 30, has served as President, Treasurer and as a Director of the
Company since its inception, and has extensive financial experience within the
marketplace, including experience in corporate finance, mergers and
acquisitions, and marketing. Mr. Elenowitz earned his Series 7 and 63 broker
licenses and held a Series 24 license while employed as branch manager at
Tamaron Investments. Mr. Elenowitz is also Co-Chairman Managing Director of
VentureNow, Inc., a private venture capital company, a Managing Director of
Invoke Distribution, an international direct marketing company, and President of
Investor Communications Company, LLC, an investor relations firm. Mr. Elenowitz
has also served as Vice President of Investor Relations for Quest International
Resources Corporation, a public natural resource exploration company.
Previously, Mr. Elenowitz was Vice President of Sales at Josephthal, Lyon &
Ross, Inc., a NYSE member firm. Mr. Elenowitz is a graduate of the University of
Maryland College of Business and Management, with a Bachelor of Science in
Finance.
Louis E. Taubman, 31, has served as Secretary and as a Director of the Company
since its inception. Mr. Taubman is a partner in the New York law firm of Kogan
Taubman & Neville, LLC, a boutique securities firm. Before joining Kogan Taubman
& Neville, Mr. Taubman maintained a private practice wherein he provided general
corporate and securities counsel to various developmental stage businesses.
Prior to that, Mr. Taubman served as an attorney in the legal department of
Prudential Securities, Inc. Mr. Taubman provides counsel to both issuers and
underwriters with regard to public and private finance, mergers and
acquisitions. Additionally, Mr. Taubman has litigated matters in various federal
and state courts, as well as before such self-regulatory bodies as the NASD, NFA
and NYSE. Mr. Taubman graduated cum laude from New York Law School in 1993 and
holds a Bachelor of Science degree in Political Science from Syracuse
University.
TOTAL CURRENT SHELL COMPANIES
Mr. Elenowitz, as president and a director of the Company, and Mr. Taubman,
as secretary and a director of the Company, are currently involved with other
shells, and are involved in creating additional companies similar to this one.
The initial business purpose of each of these companies was or is to engage in a
business combination with an unidentified company or companies and each were or
will be classified as a shell until completion of a business combination.
Generally target companies will be located for the Company and other
identical shells in chronological order of the date of formation of such shells
or, in the case of shells formed on the same date, alphabetically. However,
certain shells may differ from the Company in certain items such as place of
incorporation, number of shares and shareholders, working capital, types of
authorized securities, preference of a certain shell name by management of the
target company, or other items. It may be that a target
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<PAGE>
company may be more suitable for or may prefer a certain shell formed after the
Company. In such case, a business combination might be negotiated on behalf of
the more suitable or preferred shell regardless of date of formation.
The following chart summarizes certain information concerning recent shells
with which Mr. Elenowitz and Mr. Taubman are or have been involved, which have
filed or will be filing a registration statement on Form 10-SB. In most
instances that a business combination is transacted with one of these companies,
it is required to file a Current Report on Form 8-K describing the transaction.
Reference is made to the Form 8-K filed for any company listed below for
detailed information concerning the business combination entered into by that
company.
<TABLE>
<CAPTION>
Registration Form/
Date of Effectiveness Date of
Corporation File Number Incorporation Status
----------- --------------------- ------------- ------
<S> <C> <C> <C>
Hancock Holdings, Inc. Form 10-SB 5/18/99 Merged with Orion
1/15/00 Technologies, Inc., a
000-29673 Nevada corporation on
February 17, 2000. Orion
filed its Form 8-K on
February 24, 2000.
Madison Holdings, Inc. Form 10-SB 5/18/99 Merged with Solomon
1/15/00 Alliance Group, an
000-29973 Arizona corporation on
March 16, 2000. Solomon
filed its Form 8-K on
March 10, 2000.
Reagan Holdings, Inc. Form 10-SB 7/27/99 Merged with FindEx.com,
1/15/00 Inc., a Nevada
000-29963 Corporation on March 7,
2000. FindEx filed its
Form 8-K on March 15,
2000.
Aries Holdings, Inc. Form 10-SB 9/7/99 Seeking merger with
4/10/00 unidentified company.
000-29411 Form 8-K will be filed if
business combination
occurs.
Parade Holdings, Inc. Form 10-SB 9/7/99 Seeking merger with
4/10/00 unidentified company.
000-30337 Form 8-K will be filed if
business combination
occurs.
Pepper Capital, Corp. Form 10-SB 9/8/99 Seeking merger with
4/10/00 unidentified company.
000-29408 Form 8-K will be filed if
business combination
occurs.
</TABLE>
17
<PAGE>
<TABLE>
<S> <C> <C> <C>
Irving Capital, Corp. Form 10-SB 9/8/99 Seeking merger with
6/12/00 unidentified company.
000-30343 Form 8-K will be filed if
business combination
occurs.
Parc Capital, Corp. Form 10-SB 9/8/99 Seeking merger with
6/12/00 unidentified company.
000-30339 Form 8-K will be filed if
business combination
occurs.
Model Capital, Corp. Form 10-SB 9/8/99 Seeking merger with
6/12/00 unidentified company.
000-30341 Form 8-K will be filed if
business combination
occurs.
Charm Capital, Corp. Form 10-SB 9/8/99 Seeking merger with
6/12/00 unidentified company.
000-30345 Form 8-K will be filed if
business combination
occurs.
</TABLE>
RECENT TRANSACTIONS BY SHELL COMPANIES
Share Exchange between Hancock Holdings, Inc. and Orion Technologies, Inc.
On February 22, 2000, Orion Technologies, Inc., a Nevada corporation,
purchased all of the issued and outstanding shares of Hancock Holdings, Inc.
pursuant to a share exchange agreement. Hancock Holdings, Inc. was formed on May
18, 1999 to engage in a merger or acquisition with an unidentified company or
companies and was structured substantially similar to the Company, including
similar management and beneficial shareholders. Pursuant to a Share Exchange
Agreement (the "Agreement") dated February 22, 2000, Orion Technologies, Inc., a
Nevada corporation ("Orion" or the "Company"), acquired all of the issued and
outstanding capital stock of Hancock Holdings, Inc. ("Hancock") from the
shareholders of Hancock in a pro rata exchange for an aggregate of 150,000
shares of Orion's common stock, par value $0.001 per share (the "Share
Exchange"). There were seven shareholders of Hancock immediately prior to the
Share Exchange. They were MHE Projix LLC, a Florida limited liability company,
Mark Elenowitz, Louis Taubman, David Simonetti, Thomas Bostic Smith, William
Quigley, Jr., and Barry Labell, who held 5,000,000 shares of Hancock common
stock in the aggregate. As a result of the Share Exchange, 100% of the
outstanding capital stock of Hancock is owned by Orion and Hancock became a
wholly-owned subsidiary of Orion. MHE Projix LLC, Mark Elenowitz, Louis Taubman,
David Simonetti, Thomas Bostic Smith, William Quigley, Jr. and Barry Labell
owned 4,750,000, 87,500, 87,500, 25,000, 25,000, 12,500 and 12,500 shares of
Hancock,
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<PAGE>
respectively. They exchanged their shares of Hancock for 142,500, 2,625, 2,625,
750, 750, 375 and 375 shares of Orion, respectively. Mark Elenowitz, Louis
Taubman, David Simonetti, Thomas Bostic Smith, William Quigley, Jr., and Barry
Labell were all either officers or directors of Hancock Holdings at the time of
the share exchange. Additionally, Lou Taubman, Mark Elenowtiz, Tom Bostic Smith,
and David Simonetti are owners (either directly or indirectly) of MHE Projix,
LLC. At the time of the transaction, Orion Technologies' shares traded at an
average bid price of $3.63 per share during the month of the share exchange.
However, because the securities issued in the share exchange are restricted and
because Orion Technologies is a relatively new company, it is impossible to
accurately gauge the value of the shares at this time. At the time of the
merger, Orion Technologies, Inc. was an international holding company
concentrating on Internet and telecommunications-based technologies and services
for e-commerce and business-to-business markets. Orion Technologies, Inc. has
three wholly-owned subsidiaries: Globalinx Corp., a Delaware Company; EZ
Elektronische Zahlungssysteme GmbH, a German Limited Liability Company; and EPS
Elektronische Processing Systeme GmbH, a German Limited Liability Company.
Following the share exchange, Hancock Holdings, Inc. became a wholly owned
subsidiary of Orion Technologies, Inc., and Orion Technologies, Inc. filed a
Form 8-K on February 24, 2000 with the Securities and Exchange Commission
describing the transaction. The common stock of Orion Technologies, Inc. trades
on the NASD OTC Bulletin Board under the symbol ORTG. Detailed information
concerning this business combination may be obtained from its filings under the
Exchange Act which are found in the EDGAR archives page of the Securities and
Exchange Commission's Website at www.sec.gov.
Share Exchange Between Madison Holdings, Inc. and Solomon Alliance Group,
Inc.
On March 8, 2000, Solomon Alliance Group, Inc., an Arizona corporation,
purchased all of the issued and outstanding shares of Madison Holdings, Inc.
pursuant to a share exchange agreement ("Agreement"). Madison Holdings, Inc. was
formed on May 18, 1999 to engage in a merger or acquisition with an unidentified
company or companies and was structured substantially similar to the Company,
including similar management and beneficial shareholders. Pursuant to the
Agreement Solomon Alliance Group, Inc., ("Solomon" or the "Company"), acquired
all of the issued and outstanding capital stock of Madison Holdings, Inc.
("Madison") from the shareholders of Madison in a pro rata exchange for an
aggregate of 300,000 shares of Sage's common stock, par value $0.001 per share
(the "Share Exchange"). There were seven shareholders of Madison immediately
prior to the Share Exchange. They were MHE Projix LLC, a Florida limited
liability company, Mark Elenowitz, Louis Taubman, David Simonetti, Thomas Bostic
Smith, William Quigley, Jr., and Barry Labell, who held 5,000,000 shares of
Madison common stock in the aggregate. As a result of the Share Exchange, 100%
of the outstanding capital stock of Madison is owned by Solomon and Madison
became a wholly-owned subsidiary of Solomon. MHE Projix LLC, Mark Elenowitz,
Louis Taubman, David Simonetti, Thomas Bostic Smith, William Quigley, Jr. and
Barry Labell owned 4,750,000, 87,500, 87,500, 25,000, 25,000, 12,500 and 12,500
shares of Madison, respectively. They exchanged their shares of Madison for
285,000, 5,250, 5,250, 1,500, 1,500, 750 and 750 shares of Solomon,
respectively. Mark Elenowitz, Louis Taubman,
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<PAGE>
David Simonetti, Thomas Bostic Smith, William Quigley, Jr., and Barry Labell
were all either officers or directors of Madison Holdings at the time of the
share exchange. Additionally, Lou Taubman, Mark Elenowtiz, Tom Bostic Smith, and
David Simonetti are owners (either directly or indirectly) of MHE Projix, LLC.
At the time of the transaction, Solomon Alliance shares traded at an average bid
price of $4.50 per share during the month of the share exchange. However,
because the securities issued in the share exchange are restricted and because
Solomon Alliance is a relatively new company, it is impossible to accurately
gauge the value of the shares at this time. At the time of the merger, Solomon
Alliance Group, Inc. was a development stage company with plans to become a
leading provider of customized wireless data communications solutions for
individual and business needs. Solomon Alliance Group, Inc. has one wholly-owned
subsidiary, Visual Link Wireless, Inc. Following the share exchange, Madison
Holdings, Inc. became a wholly owned subsidiary of Solomon Alliance Group, Inc.,
and Solomon Alliance Group, Inc. filed a Form 8-K on March 16, 2000 with the
Securities and Exchange Commission describing the transaction. The common stock
of Solomon Alliance Group, Inc. trades on the NASD OTC Bulletin Board under the
symbol SAGE. Detailed information concerning this business combination may be
obtained from its filings under the Exchange Act which are found in the EDGAR
archives page of the Securities and Exchange Commission's Website at
www.sec.gov.
Share Exchange between Reagan Holdings, Inc. and FindEx.com, Inc.
March 7, 2000, FindEx.com, Inc., a Nevada corporation, purchased all of the
issued and outstanding shares of Reagan Holdings, Inc pursuant to a Share
Exchange Agreement ("Agreement"). Reagan Holdings, Inc. was formed on July 27,
1999 to engage in a merger or acquisition with an unidentified company or and
was structured substantially similar to the Company, including similar
management and beneficial shareholders. Pursuant to the Agreement, FindEx.com,
Inc., ("FindEx" or the "Company"), acquired all of the issued and outstanding
capital stock of Reagan Holdings, Inc. ("Reagan") from the shareholders of
Reagan in a pro rata exchange for an aggregate of 150,000 shares of FindEx.com's
common stock, par value $0.001 per share (the "Share Exchange"). There were
seven shareholders of Reagan immediately prior to the Share Exchange. They were
MHE Projix LLC, a Florida limited liability company, Mark Elenowitz, Louis
Taubman, David Simonetti, Thomas Bostic Smith, William Quigley, Jr., and Barry
Labell, who held 5,000,000 shares of Reagan common stock in the aggregate. As a
result of the Share Exchange, 100% of the outstanding capital stock of Reagan is
owned by FindEx.com and Reagan became a wholly-owned subsidiary of FindEx. MHE
Projix LLC, Mark Elenowitz, Louis Taubman, David Simonetti, Thomas Bostic Smith,
William Quigley, Jr. and Barry Labell owned 4,750,000, 87,500, 87,500, 25,000,
25,000, 12,500 and 12,500 shares of Reagan, respectively. They exchanged their
shares of Reagan 142,500, 2,625, 2,625, 750, 750, 375 and 375 shares of FindEx,
respectively. Mark Elenowitz, Louis Taubman, David Simonetti, Thomas Bostic
Smith, William Quigley, Jr., and Barry Labell were all either officers or
directors of Reagan Holdings at the time of the share exchange. Additionally,
Louis Taubman, Mark Elenowitz, Tom Bostic Smith, and David Simonetti are owners
(either directly or indirectly) of MHE Projix, LLC. At the time of the
transaction, FindEx.com shares traded at an average bid price of $8.75 per share
20
<PAGE>
during the month of the share exchange. However, because the securities issued
in the share exchange are restricted and because FindEx.com is a relatively new
company, it is impossible to accurately gauge the value of the shares at this
time. Additionally, FindEx.com retained Investor Communications Company, LLC,
through IC Capital, LLC (collectively "ICC") for investor relations services.
ICC, which is wholly-owned by Mr. Elenowitz, received 120,000 restricted shares
of FindEx.com in exchange for ICC's services. Of the 120,000 shares received,
30% (36,000 shares) vested immediately, with the balance vesting over a twelve
month period. Furthermore, ICC receives $7,500 per month in cash, plus expenses,
for these services. The contract term is twelve months. FindEx.com also retained
MHE, Inc., which is wholly-owned by Mr. Elenowitz, to provide consulting
services related to business development and finance. MHE, Inc. received 250,000
restricted shares of FindEx.com in exchange for its services. At the time of the
merger, FindEx.com, Inc. was a retail, wholesale, and Internet supplier of
software products to business and religious organizations and individuals.
Following the transaction, Reagan Holdings, Inc. became a wholly owned
subsidiary of FindEx.com, Inc., and FindEx.com, Inc. filed a Form 8-K on March
15, 2000 with the Securities and Exchange Commission describing the transaction.
The common stock of FindEx.com, Inc. trades on the NASD OTC Bulletin Board under
the symbol FIND. Detailed information concerning this business combination may
be obtained from its filings under the Exchange Act which are found in the EDGAR
archives page of the Securities and Exchange Commission's Website at
www.sec.gov.
CONFLICTS OF INTEREST
The Company's officers and directors have organized nine other shells, and
expect to organize other companies of a similar nature and with a similar
purpose as the Company. Consequently, there are potential inherent conflicts of
interest in acting as an officer and director of the Company. Insofar as the
officers and directors are engaged in other business activities, management
anticipates that it will devote only a minor amount of time to the Company's
affairs. The Company does not have a right of first refusal pertaining to
opportunities that come to management's attention insofar as such opportunities
may relate to the Company's proposed business operations.
A conflict may arise in the event that another shell with which management is
affiliated is formed and actively seeks a target company. It is anticipated that
target companies will be located for the Company and other shells in
chronological order of the date of incorporation of such shell companies or by
lot. However, any shells that may be formed may differ from the Company in
certain items such as place of incorporation, number of shares and shareholders,
working capital, types of authorized securities, or other items. It may be that
a target company may be more suitable for or may prefer a certain shell formed
after the Company. In such case, a business combination might be negotiated on
behalf of the more suitable or preferred shell regardless of date of
incorporation or choice by lot. As such, Mr. Elenowitz and Mr. Taubman may, at
the time of a merger negotiation with a target company, be more inclined to
enter into a business combination involving another shells regardless of
chronological order of the date of incorporation.
21
<PAGE>
Management are principals of other businesses with operations which require
greater time commitments than the Company. As such, demands may be placed on the
time of Management that will detract from the amount of time they are able to
devote to the Company. Management intends to devote as much time to the
activities of the Company as required. However, should such a conflict arise,
there is no assurance that Management would not attend to other matters prior to
those of the Company. Management projects that initially up to ten hours each
per month of their time may be spent locating a target company which amount of
time would increase when the analysis of, and negotiations and consummation
with, a target company are conducted.
In addition to the foregoing, Louis Taubman, the Company's secretary and
director, is a partner in the law firm of Kogan Taubman & Neville, LLC, the
Company's current attorneys. In addition, other partners of Kogan Taubman &
Neville, LLC hold an indirect interest in TM Capital Partners, LLC, the
Company's majority shareholder.
No other securities, or rights to securities, of the Company will be issued
to management or promoters, or their affiliates or associates, prior to the
completion of a business combination. At the time of a business combination,
management expects that some or all of the shares of Common Stock owned by TM
Capital Partners, L.L.C, Mark Elenowitz and Louis Taubman will be purchased by
the target company. The amount of Common Stock sold or continued to be owned by
such parties cannot be determined at this time.
The terms of a business combination may include such terms as some or all of
the current officers or directors remaining as directors or officers of the
Company and/or the continuing services or other legal work of the Company being
handled by the law firm of which Mr. Taubman is a principal. Additionally, the
terms of a business combination may provide for a payment by cash or otherwise
(i.e. stock of the target company) to TM Capital Partners, L.L.C. or the
officers or directors of the Company for the purchase of all or part of their
common stock of the Company by a target company. Certain of the Company's
principals would directly benefit from such employment or payments. Such
benefits may influence Management's choice of a target company.
The Company may agree to pay finder's fees, as appropriate and allowed, to
unaffiliated persons who may bring a target company to the Company where that
reference results in a business combination. The amount of any finder's fee will
be subject to negotiation, and cannot be estimated at this time. No finder's fee
of any kind will be paid to management or promoters of the Company or to their
associates or affiliates. No loans of any type have, or will be, made to
management or promoters of the Company or to any of their associates or
affiliates.
The Company's officers and directors, and their affiliates or associates have
not had any negotiations with and there are no present arrangements or
understandings with any representatives of the owners of any business or company
regarding the possibility of a business combination with the Company.
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<PAGE>
The Company will not enter into a business combination, or acquire any assets
of any kind for its securities, in which management or promoters of the Company
or any affiliates or associates have any interest, direct or indirect.
Management has adopted certain policies involving possible conflicts of
interest, including prohibiting any of the following transactions involving
management, promoters, shareholders or their affiliates:
(i) Any lending by the Company to such persons;
(ii) The issuance of any additional securities to such persons prior to
a business combination;
(iii) The entering into any business combination or acquisition of
assets in which such persons have any interest, direct or
indirect; or
(iv) The payment of any finder's fees to such persons.
These policies have been adopted by the Board of Directors of the Company,
and any changes in these provisions require the approval of the Board of
Directors. Management does not intend to propose any such action and does not
anticipate that any such action will occur.
Other than the policies listed above, there are no binding guidelines or
procedures for resolving potential conflicts of interest. Failure by management
to resolve conflicts of interest in favor of the Company could result in
liability of management to the Company. However, any attempt by shareholders to
enforce a liability of management to the Company would most likely be
prohibitively expensive and time consuming.
INVESTMENT COMPANY ACT OF 1940
Although the Company may participate in a business opportunity by purchasing,
trading or selling the securities of such business, the Company does not intend
to engage primarily in such activities. Specifically, the Company intends to
conduct its activities so as to avoid being classified as an "investment
company" under the Investment Company Act of 1940 (the "Investment Act"), and
therefore to avoid application of the costly and restrictive registration and
other provisions of the Investment Act, and the regulations promulgated
thereunder. In the event, however, that the Company engages in business
combinations which result in the Company holding passive investment interests in
a number of entities the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required to
register as an investment company and could be expected to incur significant
registration and compliance costs. The Company has obtained no formal
determination from the Securities and Exchange Commission as to the status of
the Company under the
23
<PAGE>
Investment Company Act of 1940. Any violation of such Act would subject the
Company to material adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION.
The Company's officers and directors do not receive any compensation for
their services rendered to the Company, have not received such compensation in
the past, and are not accruing any compensation pursuant to any agreement with
the Company.
The officers and directors of the Company will not receive any finder's fee,
either directly or indirectly, as a result of their efforts to implement the
Company's business plan outlined herein. However, the officers and directors of
the Company anticipate receiving benefits as beneficial shareholders of the
Company. See "Item 4. Security Ownership of Certain Beneficial Owners and
Management."
The Company also has a stock option plan in which its present officers and
directors may participate. See "1999 Incentive and Nonstatutory Stock Option
Plan" annexed hereto. To date, only Mr. Taubman and Mr. Elenowitz have been
eligible for the grant of stock options under the Plan, as officers and
directors of the Company.
Under the Plan, the maximum number of shares of Common Stock that could be
subject to stock options could not exceed an aggregate of 1,000,000 shares, par
value $0.001. Payment for shares purchased by exercising a stock option is to be
made by cash or check to the Company. An optionee does not have any rights as a
stockholder with respect to the shares covered by the option until the option is
exercised and the shares of common stock are issued and effective. An Optionee
does not have any rights to dividends, distributions, or other rights. Upon the
termination of the employment by the Optionee, the Optionee will have a limited
period of time in which to exercise any outstanding option to the extent
exercisable for vested shares. Stock options are not transferable by the
Optionee except by will or by the laws of descent and distribution.
Mr. Taubman and Mr. Elenowitz were each granted options to purchase 125,000
shares of the Common Stock issuable under the plan with an exercise price of
$0.001 per share, all of which have been exercised.
No retirement, pension, profit sharing, stock option or insurance programs or
other similar programs have been adopted by the Company for the benefit of its
employees.
24
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has issued a total of 5,000,000 shares of Common Stock to the
following persons for a total of $725 in cash:
Name Number of Total Shares Consideration
--------------------------------------------------------------------------------
TM Capital Partners, L.L.C. (1) 4,750,000 $475.00
Mark Elenowitz 125,000 $125.00
Louis Taubman 125,000 $125.00
(1) TM Capital Partners, LLC is owned by MHE, Inc., which is wholly-owned by
Mark Elenowitz; and by KT Ventures, LLC, which is owned by Louis Taubman, Simon
Kogan and Brian Neville. Mr. Taubman owns 36% of KT Ventures, LLC. The remaining
percentage is owned by Simon Kogan and Brian Neville.
The proposed business activities described herein classify the Company as a
shell company. The Securities and Exchange Commission and many states have
enacted statutes, rules and regulations limiting the sale of securities of
shells. Management does not intend to undertake any efforts to cause a market to
develop in the Company's securities until such time as the Company has
successfully implemented its business plan described herein. Accordingly, the
shareholders of the Company have executed and delivered a "lock-up" letter
agreement, affirming that such shareholders shall not sell their shares of the
Company's common stock except in connection with or following completion of a
merger or acquisition resulting in the Company no longer being classified as a
shell. The shareholders have deposited their stock certificates with the
Company's management, and will not release the certificates except in connection
with or following the completion of a merger or acquisition.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company consists of 120,000,000 shares of
Common Stock, par value $.0001 per share. The following statements relating to
the capital stock are summaries and do not purport to be complete. Reference is
made to the more detailed provisions of, and such statements are qualified in
their entirety by reference to, the Certificate of Incorporation and the
By-laws, copies of which are filed as exhibits to this registration statement.
COMMON STOCK
Holders of shares of Common Stock are entitled to one vote for each share on
all matters to be voted on by the stockholders. Holders of Common Stock do not
have cumulative voting rights. Holders of Common Stock are entitled to share
ratably in dividends, if any, as may be declared from time to time by the Board
of Directors in its discretion from funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities. All of the outstanding shares of Common Stock are
fully paid and non-assessable.
Holders of Common Stock have no preemptive rights to purchase the Company's
Common Stock. There are no conversion or redemption rights or sinking fund
provisions with respect to the Common Stock.
25
<PAGE>
PREFERRED STOCK
The Company is not presently authorized to issue preferred shares.
DIVIDENDS
Dividends, if any, will be contingent upon the Company's revenues and
earnings, if any, capital requirements and financial conditions. The payment of
dividends, if any, will be within the discretion of the Company's Board of
Directors. The Company presently intends to retain all earnings, if any, for use
in its business operations and accordingly, the Board of Directors does not
anticipate declaring any dividends prior to a business combination.
The Company: Parade Holdings, Inc., the company whose Common Stock is the
subject of this registration statement.
Exchange Act: The Securities Exchange Act of 1934, as amended.
"Penny Stock" Security: As defined in Rule 3a51-1 of the Exchange Act, a
"penny stock" security is any equity security other than a security (i) that is
a reported security (ii) that is issued by an investment company (iii) that is a
put or call issued by the Option Clearing Corporation (iv) that has a price of
$5.00 or more (except for purposes of Rule 419 of the Securities Act) (v) that
is registered on a national securities exchange (vi) that is authorized for
quotation on the Nasdaq Stock Market, unless other provisions of Rule 3a51-1 are
not satisfied, or (vii) that is issued by an issuer with (a) net tangible assets
in excess of $2,000,000, if in continuous operation for more than three years or
$5,000,000 if in operation for less than three years or (b) average revenue of
at least $6,000,000 for the last three years.
Securities Act: The Securities Act of 1933, as amended.
Small Business Issuer: As defined in Rule 12b-2 of the Exchange Act, a "Small
Business Issuer" is an entity (i) which has revenues of less than $25,000,000
(ii) whose public float (the outstanding securities not held by affiliates) has
a value of less than $25,000,000 (iii) which is a United States or Canadian
issuer (iv) which is not an Investment Company and (v) if a majority-owned
subsidiary, whose parent corporation is also a small business issuer.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
26
<PAGE>
(A) MARKET PRICE. There is no trading market for the Company's Common Stock
at present and there has been no trading market to date. There is no assurance
that a trading market will ever develop or, if such a market does develop, that
it will continue.
The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stocks in both public offerings and
in secondary trading, and about commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
In order to qualify for listing on the Nasdaq SmallCap Market, a company must
have at least (i) net tangible assets of $4,000,000 or market capitalization of
$50,000,000 or net income for two of the last three years of $750,000; (ii)
public float of 1,000,000 shares with a market value of $5,000,000; (iii) a bid
price of $4.00; (iv) three market makers; (v) 300 shareholders and (vi) an
operating history of one year or, if less than one year, $50,000,000 in market
capitalization. For continued listing on the Nasdaq SmallCap Market, a company
must have at least (i) net tangible assets of $2,000,000 or market
capitalization of $35,000,000 or net income for two of the last three years of
$500,000; (ii) a public float of 500,000 shares with a market value of
$1,000,000; (iii) a bid price of $1.00; (iv) two market makers; and (v) 300
shareholders.
If, after a merger or acquisition, the Company does not meet the
qualifications for listing on the Nasdaq SmallCap Market, the Company's
securities may be traded in the over-the-counter ("OTC") market. The OTC market
differs from national and regional stock exchanges in that it (1) is not sited
in a single location but operates through communication of bids, offers and
confirmations between broker-dealers and (2) securities admitted to quotation
are offered by one or more broker-dealers rather than the
27
<PAGE>
"specialist" common to stock exchanges. The Company may apply for listing on the
NASD OTC Bulletin Board or may offer its securities in what are commonly
referred to as the "pink sheets" of the National Quotation Bureau, Inc. To
qualify for listing on the NASD OTC Bulletin Board, an equity security must have
one registered broker-dealer, known as the market maker, willing to list bid or
sale quotations and to sponsor the company for listing on the Bulletin Board.
If the Company is unable initially to satisfy the requirements for quotation
on the Nasdaq SmallCap Market or becomes unable to satisfy the requirements for
continued quotation thereon, and trading, if any, is conducted in the OTC
market, a shareholder may find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Company's securities.
(B) HOLDERS. There are three holders of the Company's Common Stock. On March
7, 2000, the Company issued 5,000,000 of its Common Shares to these shareholders
for cash at $.0001 per share for a total price of $725. The issued and
outstanding shares of the Company's Common Stock were issued in accordance with
the exemptions from registration afforded by Sections 3(b) and 4(2) of the
Securities Act of 1933 and Rules 506 and 701 promulgated thereunder.
(C) DIVIDENDS. The Company has not paid any dividends to date, and has no
plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there are no
disagreements with the findings of its accountants.
28
<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has sold securities that were not
registered as follows:
Date Name Number of Shares Consideration
---- ---- ---------------- -------------
Nov. 26, 1999 TM Capital 4,750,000 $475.00
Partners, L.L.C. (1)
Nov. 26, 1999 Mark Elenowitz (1) 125,000 $125.00
Nov. 26, 1999 Louis Taubman (1) 125,000 $125.00
--------
(1) Mark Elenowitz and Louis Taubman are the indirect owners of TM Capital
Partners, L.L.C. and therefore may be considered to be indirect beneficial
owners of the common stock of the Company issued to TM Capital. With respect to
the sales made to TM Capital, the Company relied on the exemption from the
registration requirements set forth in Section 4(2) of the Securities Act of
1933, as amended. Shares issued to Louis Taubman and Mark Elenowitz were issued
pursuant Rule 701.
The shareholders of the Company have executed and delivered a "lock-up"
letter agreement which provides that such shareholders shall not sell the
securities except in connection with or following the consummation of a merger
or acquisition. Further, each shareholder has placed its stock certificates with
the Company until such time. Any liquidation by the current shareholders after
the release from the "lock-up" selling limitation period may have a depressive
effect upon the trading price of the Company's securities in any future market
that may develop.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware provides
that a Delaware corporation has the power, under specified circumstances, to
indemnify its directors, officers, employees and agents, against expenses
incurred in any action, suit or proceeding. The Certificate of Incorporation and
the By-laws of the Company provide for indemnification of directors and officers
to the fullest extent permitted by the General Corporation Law of the State of
Delaware.
The General Corporation Law of the State of Delaware provides that a
certificate of incorporation may contain a provision eliminating the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 (relating to liability for
unauthorized acquisitions or redemptions of, or dividends on, capital stock) of
the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit. The
Company's Certificate of Incorporation contains such a provision.
29
<PAGE>
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE
SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC
POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
30
<PAGE>
PART F/S
FINANCIAL STATEMENTS.
Attached are audited financial statements for the Company for the period
ending March 31, 2000. The following financial statements are attached to this
report and filed as a part thereof.
1) Table of Contents - Financial Statements
2) Independent Auditors' Report
3) Balance Sheet as of March 31, 2000
4) Notes to Balance Sheet as of March 31, 2000
INDEX TO FINANCIAL STATEMENTS
PARADE HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
Independent Auditors' Report
Balance Sheet as of March 31, 2000
Notes to Balance Sheet as of March 31, 2000
31
<PAGE>
PARADE HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2000
<PAGE>
PARADE HOLDINGS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION TO MARCH 31, 2000
(See Independent Auditors' Report)
CONTENTS
--------
PAGE(S)
-------
Independent Auditors' Report 1.
Financial Statements:
Balance Sheet 2.
Statement of Loss and Accumulated Deficit 3.
Statement of Changes in Stockholders' Equity 4.
Statement of Cash Flows 5.
Notes to Financial Statements 6-7.
<PAGE>
TO THE BOARD OF DIRECTORS
PARADE HOLDINGS, INC.
We have audited the accompanying balance sheet of Parade Holdings, Inc. (a
Delaware development stage corporation) as of March 31, 2000, and the related
statements of loss and accumulated deficit, stockholders' equity, and cash flows
for the period from inception (July 27, 1999) to March 31, 2000. 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 Parade Holdings, Inc. as of
March 31, 2000, and the results of its operations and its cash flows for the
initial period then ended in conformity with generally accepted accounting
principles.
__________________________
COHEN & KAMENY CPA'S PLLC
RIVERDALE, NEW YORK
APRIL 7, 2000
33
<PAGE>
PARADE HOLDINGS, INC.
(A Development Stage Company)
BALANCE SHEET
AS OF MARCH 31, 2000
(See Independent Auditors' Report)
ASSETS
CURRENT ASSETS:
Cash $ 211.
Stock subscription receivable 475.
TOTAL CURRENT ASSETS: 686.
-------
TOTAL ASSETS $ 686.
-------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
$ --
-------
TOTAL LIABILITIES: --
-------
STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value, 120,000,000
shares authorized, 5,000,000 issued and outstanding 500.
Additional paid in capital 225.
Accumulated deficit (39).
-------
TOTAL STOCKHOLDERS' EQUITY: 686.
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 686.
=======
The accompanying notes are an integral part of these financial statements.
Page 2.
<PAGE>
PARADE HOLDINGS, INC.
(A Development Stage Company)
STATEMENT OF LOSS AND ACCUMULATED DEFICIT
FOR THE PERIOD FROM INCEPTION TO MARCH 31, 2000
(See Independent Auditors' Report)
NET SALES $ --
COST OF SALES --
GROSS PROFIT --
------------
OPERATING EXPENSES --
Bank charges 39.
------------
(LOSS) FROM OPERATIONS (39).
NET (LOSS) (39).
ACCUMULATED DEFICIT - BEGINNING OF PERIOD --
ACCUMULATED DEFICIT - END OF PERIOD $ (39).
============
BASIC NET (LOSS) PER SHARE: $ (0.0000078).
============
FULLY DILUTED NET (LOSS) PER SHARE: $ (0.0000068).
============
The accompanying notes are an integral part of these financial statements.
Page 3.
<PAGE>
PARADE HOLDINGS, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION TO MARCH 31, 2000
(See Independent Auditors' Report)
Additional
Common Paid-in Accumulated
Stock Capital Deficit
----------------------------------
Balances at inception - July 27, 1999 -- -- --
Common stock subscribed 475.
Stock options exercised 25. 225. --
Net (Loss) -- -- (39).
-----------------------------
Balances at March 31, 2000 500. 225. (39).
=============================
The accompanying notes are an integral part of these financial statements.
Page 4.
<PAGE>
PARADE HOLDINGS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION TO MARCH 31, 2000
(See Independent Auditors' Report)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss from operations $ (39).
------
NET CASH (USED) BY OPERATING ACTIVITIES (39).
------
CASH FLOWS FROM INVESTING ACTIVITIES:
--
------
NET CASH PROVIDED BY INVESTING ACTIVITIES --
------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock upon exercise of options 250.
------
NET CASH PROVIDED BY FINANCING ACTIVITIES 250.
------
NET INCREASE IN CASH & CASH EQUIVALENTS 211.
Cash - at beginning of period --
------
CASH & CASH EQUIVALENTS - AT END OF PERIOD $ 211.
======
The accompanying notes are an integral part of these financial statements.
Page 5.
<PAGE>
PARADE HOLDINGS, INC.
NOTES TO THE FINANCIAL STATEMENTS
FROM INCEPTION TO THE PERIOD ENDED MARCH 31, 2000
NOTE 1 - DESCRIPTION OF THE COMPANY'S BUSINESS:
Parade Holdings, Inc. (the Company) was incorporated on July 27,
1999 in the state of Delaware. The Company was formed in order to
seek business opportunities and is currently a "shell" company with
no business operations. As of the date of these financial statements
all of the Company's operations have been organizational in nature
and as a result it must be considered in its developmental stage.
The Company's current business plan is to seek out business
opportunities and to pursue other related activities intended to
enhance shareholder value. The Company will be seeking
opportunities, which will probably be in the form of a merger with a
foreign or domestic private issuer that wishes to become a reporting
issuer. However, the Company will explore opportunities, which may
take the form of a purchase, exchange of stock, or encompass
entities such as a corporation, joint venture or partnership. This
includes industries such as service, finance, natural resources,
manufacturing, high technology, product development, medical,
communications and others.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company's accounting policies are in accordance with generally
accepted accounting principles. Outlined below are those policies
considered significant.
(A) STATEMENT OF CASH FLOWS:
For purposes of the statement of cash flows, the company considers
all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.
NOTE 3 - CAPITAL STOCK:
As part of the Company's initial organization the Company was
authorized to issue 120,000,000 shares of it's $.0001 par value
common stock. Subsequent to its formation the Company entered into
subscription agreement authorizing the issuance of 4,750,000 shares
of it's $.0001 par value common stock. The subscription agreement
was completed on April 6, 2000 when the Company received payment for
the shares. On November 26, 1999 the Company authorized a stock
option plan reserving 1,000,000 shares of it's common stock, and
pursuant to the plan granted stock options to it's officers and
directors in the amount of 250,000 shares exercisable as defined by
the terms of the stock option agreements. As of March 31, 2000, all
of the stock options granted were exercised.
Page 6.
38
<PAGE>
PARADE HOLDINGS, INC.
NOTES TO THE FINANCIAL STATEMENTS
FROM INCEPTION TO THE PERIOD ENDED MARCH 31, 2000
NOTE 4 - LOSS PER SHARE:
For the period from inception to March 31, 2000 the Company had a
loss of $39. The total number of shares outstanding as of March 31,
2000 were 5,000,000 in addition the Company has reserved an
additional 750,000 shares of it's $ .0001 par value common stock in
connection with its stock option plan that have not been issued as
of March 31, 2000. As a result the number of shares outstanding on a
fully diluted basis are 5,750,000. The basic loss per share was
approximately $0.0000078 per share and the fully diluted loss per
share was approximately $0.0000068 for the period from inception to
March 31, 2000.
Page 7.
39
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
(2) Articles of Incorporation and By-laws:
2.1** Certificate of Incorporation
2.2** By-Laws
(3) Instruments Defining the Rights of Holders
3.1** Lock-Up Agreement with TM Capital Partners, L.L.C.
3.2** Lock-Up Agreement with Mark Elenowitz
3.3** Lock-Up Agreement with Louis Taubman
(4) Consents
4.1** Consent of Independent Certified Public Accountant
(10) Stock Option Plan
10.1** 1999 Incentive and Nonstatutory Stock Option Plan
------------
** Filed herewith
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this registration statement to be signed on its behalf by the
undersigned thereunto duly authorized.
PARADE HOLDINGS, INC.
By: /s/ MARK ELENOWITZ
-------------------------------------
Mark Elenowitz, President and Director
By: /s/ LOUIS TAUBMAN
-------------------------------------
Louis Taubman, Secretary and Director
40
<PAGE>
CERTIFICATE OF INCORPORATION
OF
PARADE HOLDINGS, INC.
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts mandatory thereof and supplemental thereto, and known, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name of the corporation (hereinafter called the
corporation") is PARADE HOLDINGS, INC.
SECOND: The address, including street, number, city, and county, of
the registered office of the corporation in the State of Delaware is 1013
Centre Road, City of Wilmington 19805, County of New Castle; and the name
of the registered agent of the corporation at such address is Corporation
Service Company.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
corporation shall have the authority to issue is 120,000,000, shares of
Common Stock of a par value of .0001 each.
FIFTH: The name and mailing address of the incorporator are as
follows:
NAME MAILING ADDRESS
---- ---------------
Merryl Wiener Two World Trade Center
Suite 8746
New York, New York 10048-8798
SIXTH: The corporation is to have perpetual existence.
SEVENTH: 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 shareholders or any class of them, any court of
equitable jurisdiction within the State 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
41
<PAGE>
or receivers appointed for this corporation under ss. 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 ss. 279 of Title
8 of the Delaware Code order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the 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 corporation, as the case may be, agree to any
compromise or arrangements and to any reorganization of this corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, of 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 this corporation, as the case may be, and also on this
corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further
provided:
1. The management of the business and the conduct of the affairs
of the corporation shall be vested in its Board of Directors. The
number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the Bylaws.
The phrase "whole Board" and the phrase "total number of directors"
shall be deemed to have the same meaning, to wit, the total number of
directors which the corporation would have of there were no vacancies.
No election of directors need be by written ballot.
2. After the original or other Bylaws of the corporation have
been adopted, amended, or repealed, as the case may be, in accordance
with the provision of ss. 109 of the General Corporation Law of the
State of Delaware, and, after the corporation has received any payment
for its stock, the power to adopt, amend, or repeal the Bylaws of the
corporation may be exercised by the Board of Directors of the
corporation; provided, however, that any provision for the
classification of directors of the corporation for staggered terms
pursuant to the provisions of subsection (d) of ss. 141 of the General
Corporation Law of the State of Delaware shall be set forth in an
initial Bylaw or in a Bylaw adopted by the stockholders entitled to
vote of the corporation unless provisions for such classification
shall be set forth in this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
shareholders. Whenever the corporation shall be authorized to issue
more than one class of stock, no outstanding share of any class of
stock which is denied voting power under the provisions of the
certificate or incorporation shall entitle the holder thereof to the
right to vote at any meeting of stockholders except as the provisions
of paragraph (2) of
42
<PAGE>
subsection (b) of ss. 242 of the General Corporation Law of the State
of Delaware shall otherwise require; provided, that no share of any
such class which is otherwise denied voting power shall entitle the
holder thereof to vote upon the increase or decrease in the number of
authorized shares of said class.
NINTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provision of
paragraph (7) of subsection (b) of ss. 102 of the General Corporation Law
of the State of Delaware, as the same may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted by the
provisions of ss. 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and
all persons whom it shall have power to indemnify under said section from
and against any and all of the expenses, liabilities, or other matters
referred to in or covered by said section, and the indemnification provided
for herein shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
such person's official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be
a director, officer, employee, or agent and shall inure to the benefit of
the heirs, executors, and administrators of such person.
ELEVENTH: From time to time any of the provisions of this certificate
of incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the
corporation by this certificate of incorporation are granted subject to the
provisions of this Article ELEVENTH.
Signed on September 1, 1999.
/s/ MERRYL WIENER
---------------------------
Merryl Wiener, Incorporator
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PARADE HOLDINGS, INC.
BY-LAWS
ARTICLE I
THE STOCKHOLDERS
SECTION 1.1. ANNUAL MEETING. The annual meeting of the stockholders of
Parade Holdings, Inc. (the "Corporation") shall be held on the third Thursday in
May of each year at 10:30 a.m. local time, or at such other date or time as
shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting, for the election of directors and for the transaction
of such other business as may come before the meeting.
SECTION 1.2. SPECIAL MEETINGS. A special meeting of the stockholders may
be called at any time by the written resolution or request of two-thirds or more
of the members of the Board of Directors, the president, or any executive vice
president and shall be called upon the written request of the holders of
two-thirds or more in amount, of each class or series of the capital stock of
the Corporation entitled to vote at such meeting on the matters(s) that are the
subject of the proposed meeting, such written request in each case to specify
the purpose or purposes for which such meeting shall be called, and with respect
to stockholder proposals, shall further comply with the requirements of this
Article.
SECTION 1.3. NOTICE OF MEETINGS. Written notice of each meeting of
stockholders, whether annual or special, stating the date, hour and place where
it is to be held, shall be served either personally or by mail, not less than
fifteen nor more than sixty days before the meeting, upon each stockholder of
record entitled to vote at such meeting, and to any other stockholder to whom
the giving of notice may be required by law. Notice of a special meeting shall
also state the purpose or purposes for which the meeting is called and shall
indicate that it is being issued by, or at the direction of, the person or
persons calling the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle stockholders to receive payment for their stock,
the notice of such meeting shall include a statement of that purpose and to that
effect. If mailed, notice shall be deemed to be delivered when deposited in the
United States mail or with any private express mail service, postage or delivery
fee prepaid, and shall be directed to each such stockholder at his address, as
it appears on the records of the stockholders of the Corporation, unless he
shall have previously filed with the secretary of the Corporation a written
request that notices intended for him be mailed to some other address, in which
case, it shall be mailed to the address designated in such request.
SECTION 1.4. FIXING DATE OF RECORD. (a) In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
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stockholders, or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the Board of Directors, the
record date for determining stockholders entitled to notice of, or to vote at, a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or if notice is waived, at the close
of business on the day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of, or to vote at, a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
(b) In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting (to the extent that
such action by written consent is permitted by law, the Certificate of
Incorporation or these By-Laws), the Board of Directors may fix a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which date shall not
be more than ten days after the date upon which the resolution fixing the record
date is adopted by the Board of Directors. If no record date has been fixed by
the Board of Directors, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is required by law, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in its state
of incorporation, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
SECTION 1.5. INSPECTORS. At each meeting of the stockholders, the polls
shall be opened and closed and the proxies and ballots shall be received and be
taken in charge. All questions touching on the qualification of voters and the
validity of proxies
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and the acceptance or rejection of votes, shall be decided by one or more
inspectors. Such inspectors shall be appointed by the Board of Directors before
or at the meeting, or, if no such appointment shall have been made, then by the
presiding officer at the meeting. If for any reason any of the inspectors
previously appointed shall fail to attend or refuse or be unable to serve,
inspectors in place of any so failing to attend or refusing or unable to serve
shall be appointed in like manner.
SECTION 1.6. QUORUM. At any meeting of the stockholders, the holders of a
majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum of the stockholders for all purposes, unless the
representation of a larger number shall be required by law, and, in that case,
the representation of the number so required shall constitute a quorum.
If the holders of the amount of stock necessary to constitute a quorum
shall fail to attend in person or by proxy at the time and place fixed in
accordance with these By-Laws for an annual or special meeting, a majority in
interest of the stockholders present in person or by proxy may adjourn, from
time to time, without notice other than by announcement at the meeting, until
holders of the amount of stock requisite to constitute a quorum shall attend. At
any such adjourned meeting at which a quorum shall be present, any business may
be transacted which might have been transacted at the meeting as originally
notified.
SECTION 1.7. BUSINESS. The chairman of the Board, if any, the president,
or in his absence the vice-chairman, if any, or an executive vice president, in
the order named, shall call meetings of the stockholders to order, and shall act
as chairman of such meeting; provided, however, that the Board of Directors or
executive committee may appoint any stockholder to act as chairman of any
meeting in the absence of the chairman of the Board. The secretary of the
Corporation shall act as secretary at all meetings of the stockholders, but in
the absence of the secretary at any meeting of the stockholders, the presiding
officer may appoint any person to act as secretary of the meeting.
SECTION 1.8. STOCKHOLDER PROPOSALS. No proposal by a stockholder shall be
presented for vote at a special or annual meeting of stockholders unless such
stockholder shall, not later than the close of business on the fifth day
following the date on which notice of the meeting is first given to
stockholders, provide the Board of Directors or the secretary of the Corporation
with written notice of intention to present a proposal for action at the
forthcoming meeting of stockholders, which notice shall include the name and
address of such stockholder, the number of voting securities that he holds of
record and that he holds beneficially, the text of the proposal to be presented
to the meeting and a statement in support of the proposal.
Any stockholder who was a stockholder of record on the applicable record
date may make any other proposal at an annual meeting or special meeting of
stockholders and the same may be discussed and considered, but unless stated in
writing and filed with the Board of Directors or the secretary prior to the date
set forth herein above, such proposal
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shall be laid over for action at an adjourned, special, or annual meeting of the
stockholders taking place sixty days or more thereafter. This provision shall
not prevent the consideration and approval or disapproval at the annual meeting
of reports of officers, directors, and committees, but in connection with such
reports, no new business proposed by a stockholder, qua stockholder, shall be
acted upon at such annual meeting unless stated and filed as herein provided.
Notwithstanding any other provision of these By-Laws, the Corporation
shall be under no obligation to include any stockholder proposal in its proxy
statement materials or otherwise present any such proposal to stockholders at a
special or annual meeting of stockholders if the Board of Directors reasonably
believes the proponents thereof have not complied with Sections 13 or 14 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder; nor shall the Corporation be required to include any stockholder
proposal not required to be included in its proxy materials to stockholders in
accordance with any such section, rule or regulation.
SECTION 1.9. PROXIES. At all meetings of stockholders, a stockholder
entitled to vote may vote either in person or by proxy executed in writing by
the stockholder or by his duly authorized attorney-in-fact. Such proxy shall be
filed with the secretary before or at the time of the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy.
SECTION 1.10. VOTING BY BALLOT. The votes for directors, and upon the
demand of any stockholder or when required by law, the votes upon any question
before the meeting, shall be by ballot.
SECTION 1.11. VOTING LISTS. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares of stock registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof and may be inspected by any stockholder
who is present.
SECTION 1.12. PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the state of incorporation, as the place of
meeting for any annual meeting or any special meeting called by the Board of
Directors. If no designation is made or if a special meeting is otherwise
called, the place of meeting shall be the principal office of the Corporation.
SECTION 1.13. VOTING OF STOCK OF CERTAIN HOLDERS. Shares of
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capital stock of the Corporation standing in the name of another corporation,
domestic or foreign, may be voted by such officer, agent, or proxy as the
by-laws of such corporation may prescribe, or in the absence of such provision,
as the board of directors of such corporation may determine.
Shares of capital stock of the Corporation standing in the name of a
deceased person, a minor ward or an incompetent person may be voted by his
administrator, executor, court-appointed guardian or conservator, either in
person or by proxy, without a transfer of such stock into the name of such
administrator, executor, court-appointed guardian or conservator. Shares of
capital stock of the Corporation standing in the name of a trustee may be voted
by him, either in person or by proxy.
Shares of capital stock of the Corporation standing in the name of a
receiver may be voted, either in person or by proxy, by such receiver, and stock
held by or under the control of a receiver may be voted by such receiver without
the transfer thereof into his name if authority to do so is contained in any
appropriate order of the court by which such receiver was appointed.
A stockholder whose stock is pledged shall be entitled to vote such
stock, either in person or by proxy, until the stock has been transferred into
the name of the pledgee, and thereafter the pledgee shall be entitled to vote,
either in person or by proxy, the stock so transferred.
Shares of its own capital stock belonging to this Corporation shall not
be voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding stock at any given time, but shares
of its own stock held by it in a fiduciary capacity may be voted and shall be
counted in determining the total number of outstanding stock at any given time.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1. GENERAL POWERS. The business, affairs, and the property of
the Corporation shall be managed and controlled by the Board of Directors (the
"Board"), and, except as otherwise expressly provided by law, the Certificate of
Incorporation or these By-Laws, all of the powers of the Corporation shall be
vested in the Board.
SECTION 2.2. NUMBER OF DIRECTORS. The number of directors which shall
constitute the whole Board shall be not fewer than one nor more than five.
Within the limits above specified, the number of directors shall be determined
by the Board of Directors pursuant to a resolution adopted by a majority of the
directors then in office.
SECTION 2.3. ELECTION, TERM AND REMOVAL. Directors shall be elected at
the annual meeting of stockholders to succeed those directors whose terms have
expired.
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Each director shall hold office for the term for which elected and until his or
her successor shall be elected and qualified. Directors need not be
stockholders. A director may be removed from office at a meeting expressly
called for that purpose by the vote of not less than a majority of the
outstanding capital stock entitled to vote at an election of directors.
SECTION 2.4. VACANCIES. Vacancies in the Board of Directors, including
vacancies resulting from an increase in the number of directors, may be filled
by the affirmative vote of a majority of the remaining directors then in office,
though less than a quorum; except that vacancies resulting from removal from
office by a vote of the stockholders may be filled by the stockholders at the
same meeting at which such removal occurs provided that the holders of not less
than a majority of the outstanding capital stock of the Corporation (assessed
upon the basis of votes and not on the basis of number of shares) entitled to
vote for the election of directors, voting together as a single class, shall
vote for each replacement director. All directors elected to fill vacancies
shall hold office for a term expiring at the time of the next annual meeting of
stockholders and upon election and qualification of his successor. No decrease
in the number of directors constituting the Board of Directors shall shorten the
term of an incumbent director.
SECTION 2.5. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice to the president or to the secretary of the
Corporation. The resignation of any director shall take effect at the time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 2.6. PLACE OF MEETINGS, ETC. The Board of Directors may hold its
meetings, and may have an office and keep the books of the Corporation (except
as otherwise may be provided for by law), in such place or places in or outside
the state of incorporation as the Board from time to time may determine.
SECTION 2.7. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held as soon as practicable after adjournment of the annual meeting of
stockholders at such time and place as the Board of Directors may fix. No notice
shall be required for any such regular meeting of the Board.
SECTION 2.8. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held at places and times fixed by resolution of the Board of Directors,
or upon call of the chairman of the Board, if any, or vice-chairman of the
Board, if any, the president, an executive vice president or two-thirds of the
directors then in office.
The secretary or officer performing the secretary's duties shall give not
less than twenty-four hours' notice by letter, telegraph or telephone (or in
person) of all special meetings of the Board of Directors, provided that notice
need not given of the
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annual meeting or of regular meetings held at times and places fixed by
resolution of the Board. Meetings may be held at any time without notice if all
of the directors are present, or if those not present waive notice in writing
either before or after the meeting. The notice of meetings of the Board need not
state the purpose of the meeting.
SECTION 2.9. PARTICIPATION BY CONFERENCE TELEPHONE. Members
of the Board of Directors of the Corporation, or any committee thereof, may
participate in a regular or special or any other meeting of the Board or
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation shall constitute presence in person at such meeting.
SECTION 2.10. ACTION BY WRITTEN CONSENT. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if prior or subsequent to such action
all the members of the Board or such committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of the Board or committee.
SECTION 2.11. QUORUM. A majority of the total number of directors then in
office shall constitute a quorum for the transaction of business; but if at any
meeting of the Board there be less than a quorum present, a majority of those
present may adjourn the meeting from time to time.
SECTION 2.12. BUSINESS. Business shall be transacted at meetings of the
Board of Directors in such order as the Board may determine. At all meetings of
the Board of Directors, the chairman of the Board, if any, the president, or in
his absence the vice-chairman, if any, or an executive vice president, in the
order named, shall preside.
SECTION 2.13. INTEREST OF DIRECTORS IN CONTRACTS. (a) No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of the Corporation's
directors or officers, are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board or
committee which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or
(2) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and
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the contract or transaction is specifically approved in good faith by vote of
the stockholders; or
(3) The contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee of the Board of Directors or the stockholders.
(b) Interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
SECTION 2.14. COMPENSATION OF DIRECTORS. Each director of the Corporation
who is not a salaried officer or employee of the Corporation, or of a subsidiary
of the Corporation, shall receive such allowances for serving as a director and
such fees for attendance at meetings of the Board of Directors or the executive
committee or any other committee appointed by the Board as the Board may from
time to time determine.
SECTION 2.15. LOANS TO OFFICERS OR EMPLOYEES. The Board of
Directors may lend money to, guarantee any obligation of, or otherwise assist,
any officer or other employee of the Corporation or of any subsidiary, whether
or not such officer or employee is also a director of the Corporation, whenever,
in the judgment of the directors, such loan, guarantee, or assistance may
reasonably be expected to benefit the Corporation; provided, however, that any
such loan, guarantee, or other assistance given to an officer or employee who is
also a director of the Corporation must be authorized by a majority of the
entire Board of Directors. Any such loan, guarantee, or other assistance may be
made with or without interest and may be unsecured or secured in such manner as
the Board of Directors shall approve, including, but not limited to, a pledge of
shares of the Corporation, and may be made upon such other terms and conditions
as the Board of Directors may determine.
SECTION 2.16. NOMINATION. Subject to the rights of holders of any class
or series of stock having a preference over the common stock as to dividends or
upon liquidation, nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote in the election of
directors generally. However, any stockholder entitled to vote in the election
of directors generally may nominate one or more persons for election as
directors at a meeting only if written notice of such stockholder's intent to
make such nomination or nominations has been given, either by personal delivery
or by United States mail, postage prepaid, to the secretary of the Corporation
not later than (i) with respect to an election to be held at an annual meeting
of stockholders, the close of business on the last day of the eighth month after
the immediately preceding annual meeting of stockholders, and (ii) with respect
to an election to be held at a special meeting of stockholders for the election
of directors, the close of business on the fifth day following the date on which
notice of such meeting is first given to stockholders. Each such notice shall
set forth: (a) the name and
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address of the stockholder who intends to make the nomination and of the person
or persons to be nominated; (b) a representation that the stockholder is a
holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all arrangements
or understandings between the stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, had the nominee been nominated, or intended
to be nominated, by the Board of Directors, and; (e) the consent of each nominee
to serve as a director of the Corporation if so elected. The presiding officer
at the meeting may refuse to acknowledge the nomination of any person not made
in compliance with the foregoing procedure.
ARTICLE III
COMMITTEES
SECTION 3.1. COMMITTEES. The Board of Directors, by resolution adopted by
a majority of the number of directors then fixed by these By-Laws or resolution
thereto, may establish such standing or special committees of the Board as it
may deem advisable, and the members, terms, and authority of such committees
shall be set forth in the resolutions establishing such committee.
SECTION 3.2. EXECUTIVE COMMITTEE NUMBER AND TERM OF OFFICE. The Board of
Directors may, at any meeting, by majority vote of the Board of Directors, elect
from the directors an executive committee. The executive committee shall consist
of such number of members as may be fixed from time to time by resolution of the
Board of Directors. The Board of Directors may designate a chairman of the
committee who shall preside at all meetings thereof, and the committee shall
designate a member thereof to preside in the absence of the chairman.
SECTION 3.3. EXECUTIVE COMMITTEE POWERS. The executive committee may,
while the Board of Directors is not in session, exercise all or any of the
powers of the Board of Directors in all cases in which specific directions shall
not have been given by the Board of Directors; except that the executive
committee shall not have the power or authority of the Board of Directors to (i)
amend the Certificate of Incorporation or the By-Laws of the Corporation, (ii)
fill vacancies on the Board of Directors, (iii) adopt an agreement or
certification of ownership, merger or consolidation, (iv) recommend to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, or a dissolution of the Corporation or a
revocation of a dissolution, (v) declare a dividend, or (vi) authorize the
issuance of stock.
SECTION 3.4. EXECUTIVE COMMITTEE MEETINGS. Regular and special meetings
of the executive committee may be called and held subject to the same
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requirements with respect to time, place and notice as are specified in these
By-Laws for regular and special meetings of the Board of Directors. Special
meetings of the executive committee may be called by any member thereof. Unless
otherwise indicated in the notice thereof, any and all business may be
transacted at a special or regular meeting of the executive meeting if a quorum
is present. At any meeting at which every member of the executive committee
shall be present, in person or by telephone, even though without any notice, any
business may be transacted. All action by the executive committee shall be
reported to the Board of Directors at its meeting next succeeding such action.
The executive committee shall fix its own rules of procedure, and shall
meet where and as provided by such rules or by resolution of the Board of
Directors, but in every case the presence of a majority of the total number of
members of the executive committee shall be necessary to constitute a quorum. In
every case, the affirmative vote of a quorum shall be necessary for the adoption
of any resolution.
SECTION 3.5. EXECUTIVE COMMITTEE VACANCIES. The Board of Directors, by
majority vote of the Board of Directors then in office, shall fill vacancies in
the executive committee by election from the directors.
ARTICLE IV
THE OFFICERS
SECTION 4.1. NUMBER AND TERM OF OFFICE. The officers of the Corporation
shall consist of, as the Board of Directors may determine and appoint from time
to time, a chief executive officer, a president, one or more executive
vice-presidents, a secretary, a treasurer, a controller, and/or such other
officers as may from time to time be elected or appointed by the Board of
Directors, including such additional vice-presidents with such designations, if
any, as may be determined by the Board of Directors and such assistant
secretaries and assistant treasurers. In addition, the Board of Directors may
elect a chairman of the Board and may also elect a vice-chairman as officers of
the Corporation. Any two or more offices may be held by the same person. In its
discretion, the Board of Directors may leave unfilled any office except as may
be required by law.
The officers of the Corporation shall be elected or appointed from time
to time by the Board of Directors. Each officer shall hold office until his
successor shall have been duly elected or appointed or until his death or until
he shall resign or shall have been removed by the Board of Directors.
Each of the salaried officers of the Corporation shall devote his entire
time, skill and energy to the business of the Corporation, unless the contrary
is expressly consented to by the Board of Directors or the executive committee.
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SECTION 4.2. REMOVAL. Any officer may be removed by the Board of
Directors whenever, in its judgment, the best interests of the Corporation would
be served thereby.
SECTION 4.3. THE CHAIRMAN OF THE BOARD. The chairman of the Board, if
any, shall preside at all meetings of stockholders and of the Board of Directors
and shall have such other authority and perform such other duties as are
prescribed by law, by these By-Laws and by the Board of Directors. The Board of
Directors may designate the chairman of the Board as chief executive officer, in
which case he shall have such authority and perform such duties as are
prescribed by these By-Laws and the Board of Directors for the chief executive
officer.
SECTION 4.4. THE VICE-CHAIRMAN. The vice-chairman, if any, shall have
such authority and perform such other duties as are prescribed by these By-Laws
and by the Board of Directors. In the absence or inability to act of the
chairman of the Board and the president, he shall preside at the meetings of the
stockholders and of the Board of Directors and shall have and exercise all of
the powers and duties of the chairman of the Board. The Board of Directors may
designate the vice-chairman as chief executive officer, in which case he shall
have such authority and perform such duties as are prescribed by these By-Laws
and the Board of Directors for the chief executive officer.
SECTION 4.5. THE PRESIDENT. The president shall have such authority and
perform such duties as are prescribed by law, by these By-Laws, by the Board of
Directors and by the chief executive officer (if the president is not the chief
executive officer). The president, if there is no chairman of the Board, or in
the absence or the inability to act of the chairman of the Board, shall preside
at all meetings of stockholders and of the Board of Directors. Unless the Board
of Directors designates the chairman of the Board or the vice-chairman as chief
executive officer, the president shall be the chief executive officer, in which
case he shall have such authority and perform such duties as are prescribed by
these By-Laws and the Board of Directors for the chief executive officer.
SECTION 4.6. THE CHIEF EXECUTIVE OFFICER. Unless the Board of Directors
designates the chairman of the Board or the vice-chairman as chief executive
officer, the president shall be the chief executive officer. The chief executive
officer of the Corporation shall have, subject to the supervision and direction
of the Board of Directors, general supervision of the business, property and
affairs of the Corporation, including the power to appoint and discharge agents
and employees, and the powers vested in him by the Board of Directors, by law or
by these By-Laws or which usually attach or pertain to such office.
SECTION 4.7. THE EXECUTIVE VICE-PRESIDENTS. In the absence of the
chairman of the Board, if any, the president and the vice-chairman, if any, or
in the event of their inability or refusal to act, the executive vice-president
(or in the event there is more than one executive vice-president, the executive
vice-presidents in the order designated, or in the absence of any designation,
then in the order of their election) shall
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perform the duties of the chairman of the Board, of the president and of the
vice-chairman, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the chairman of the Board, the president and the
vice-chairman. Any executive vice-president may sign, with the secretary or an
authorized assistant secretary, certificates for stock of the Corporation and
shall perform such other duties as from time to time may be assigned to him by
the chairman of the Board, the president, the vice-chairman, the Board of
Directors or these By-Laws.
SECTION 4.8. THE VICE-PRESIDENTS. The vice-presidents, if any, shall
perform such duties as may be assigned to them from time to time by the chairman
of the Board, the president, the vice-chairman, the Board of Directors, or these
By-Laws.
SECTION 4.9. THE TREASURER. Subject to the direction of chief executive
officer and the Board of Directors, the treasurer shall have charge and custody
of all the funds and securities of the Corporation; when necessary or proper he
shall endorse for collection, or cause to be endorsed, on behalf of the
Corporation, checks, notes and other obligations, and shall cause the deposit of
the same to the credit of the Corporation in such bank or banks or depository as
the Board of Directors may designate or as the Board of Directors by resolution
may authorize; he shall sign all receipts and vouchers for payments made to the
Corporation other than routine receipts and vouchers, the signing of which he
may delegate; he shall sign all checks made by the Corporation (provided,
however, that the Board of Directors may authorize and prescribe by resolution
the manner in which checks drawn on banks or depositories shall be signed,
including the use of facsimile signatures, and the manner in which officers,
agents or employees shall be authorized to sign); unless otherwise provided by
resolution of the Board of Directors, he shall sign with an officer-director all
bills of exchange and promissory notes of the Corporation; whenever required by
the Board of Directors, he shall render a statement of his cash account; he
shall enter regularly full and accurate account of the Corporation in books of
the Corporation to be kept by him for that purpose; he shall, at all reasonable
times, exhibit his books and accounts to any director of the Corporation upon
application at his office during business hours; and he shall perform all acts
incident to the position of treasurer. If required by the Board of Directors,
the treasurer shall give a bond for the faithful discharge of his duties in such
sum and with such sure ties as the Board of Directors may require.
SECTION 4.10. THE SECRETARY. The secretary shall keep the minutes of all
meetings of the Board of Directors, the minutes of all meetings of the
stockholders and (unless otherwise directed by the Board of Directors) the
minutes of all committees, in books provided for that purpose; he shall attend
to the giving and serving of all notices of the Corporation; he may sign with an
officer-director or any other duly authorized person, in the name of the
Corporation, all contracts authorized by the Board of Directors or by the
executive committee, and, when so ordered by the Board of Directors or the
executive committee, he shall affix the seal of the Corporation thereto; he may
sign with the president or an executive vice-president all certificates of
shares of the capital stock; he shall have charge of the certificate books,
transfer books and stock ledgers, and such other books and papers as the Board
of Directors or the executive committee may direct,
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all of which shall, at all reasonable times, be open to the examination of any
director, upon application at the secretary's office during business hours; and
he shall in general perform all the duties incident to the office of the
secretary, subject to the control of the chief executive officer and the Board
of Directors.
SECTION 4.11. THE CONTROLLER. The controller shall be the chief
accounting officer of the Corporation. Subject to the supervision of the Board
of Directors, the chief executive officer and the treasurer, the controller
shall provide for and maintain adequate records of all assets, liabilities and
transactions of the Corporation, shall see that accurate audits of the
Corporation's affairs are currently and adequately made and shall perform such
other duties as from time to time may be assigned to him.
SECTION 4.12. THE ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers shall respectively, if required by the Board of Directors,
give bonds for the faithful discharge of their duties in such sums and with such
sureties as the Board of Directors may determine. The assistant secretaries as
thereunto authorized by the Board of Directors may sign with the chairman of the
Board, the president, the vice-chairman or an executive vice-president,
certificates for stock of the Corporation, the issue of which shall have been
authorized by a resolution of the Board of Directors. The assistant treasurers
and assistant secretaries, in general, shall perform such duties as shall be
assigned to them by the treasurer or the secretary, respectively, or chief
executive officer, the Board of Directors, or these By-Laws.
SECTION 4.13. SALARIES. The salaries of the officers shall be fixed from
time to time by the Board of Directors, and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
Corporation.
SECTION 4.14. VOTING UPON STOCKS. Unless otherwise ordered by the Board
of Directors or by the executive committee, any officer, director or any person
or persons appointed in writing by any of them, shall have full power and
authority in behalf of the Corporation to attend and to act and to vote at any
meetings of stockholders of any corporation in which the Corporation may hold
stock, and at any such meeting shall possess and may exercise any and all the
rights and powers incident to the ownership of such stock, and which, as the
owner thereof, the Corporation might have possessed and exercised if present.
The Board of Directors may confer like powers upon any other person or persons.
ARTICLE V
CONTRACTS AND LOANS
SECTION 5.1. CONTRACTS. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
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SECTION 5.2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
ARTICLE VI
CERTIFICATES FOR STOCK AND THEIR TRANSFER
SECTION 6.1. CERTIFICATES FOR STOCK. Certificates representing stock of
the Corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by the chairman of the Board, the
president, the vice-chairman or an executive vice-president and/or by the
secretary or an authorized assistant secretary and shall be sealed with the seal
of the Corporation. The seal may be a facsimile. If a stock certificate is
countersigned (i) by a transfer agent other than the Corporation or its
employee, or (ii) by a registrar other than the Corporation or its employee, any
other signature on the certificate may be a facsimile. In the event that any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent, or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue. All certificates for stock shall be
consecutively numbered or otherwise identified. The name of the person to whom
the shares of stock represented thereby are issued, with the number of shares of
stock and date of issue, shall be entered on the books of the Corporation.
All certificates surrendered to the Corporation for transfer shall be
canceled and no new certificates shall be issued until the former certificate
for a like number of shares of stock shall have been surrendered and canceled,
except that, in the event of a lost, destroyed or mutilated certificate, a new
one may be issued therefor upon such terms and indemnity to the Corporation as
the Board of Directors may prescribe.
SECTION 6.2. TRANSFERS OF STOCK. Transfers of stock of the Corporation
shall be made only on the books of the Corporation by the holder of record
thereof or by his legal representative, who shall furnish proper evidence of
authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the secretary of the Corporation, and on
surrender for cancellation of the certificate for such stock. The person in
whose name stock stands on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation.
ARTICLE VII
FISCAL YEAR
SECTION 7.1. FISCAL YEAR. The fiscal year of the Corporation shall begin
on the first day of October in each year and end on the last day of September in
each year.
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ARTICLE VIII
SEAL
SECTION 8.1. SEAL. The Board of Directors shall approve a corporate seal
which shall be in the form of a circle and shall have inscribed thereon the name
of the Corporation.
ARTICLE IX
WAIVER OF NOTICE
SECTION 9.1. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of these By-Laws or under the provisions of the
Certificate of Incorporation or under the provisions of the corporation law of
the state of incorporation, waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Attendance of
any person at a meeting for which any notice is required to be given under the
provisions of these By-Laws, the Certificate of Incorporation or the corporation
law of the state of incorporation shall constitute a waiver of notice of such
meeting except when the person attends for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE X
AMENDMENTS
SECTION 10.1. AMENDMENTS. These By-Laws may be altered, amended or
repealed and new By-Laws may be adopted at any meeting of the Board of Directors
of the Corporation by the affirmative vote of a majority of the members of the
Board, or by the affirmative vote of a majority of the outstanding capital stock
of the Corporation (assessed upon the basis of votes and not on the basis of
number of shares) entitled to vote generally in the election of directors,
voting together as a single class.
ARTICLE XI
INDEMNIFICATION
SECTION 11.1. INDEMNIFICATION. The Corporation shall indemnify its
officers, directors, employees and agents to the fullest extent permitted by the
General Corporation Law of Delaware, as amended from time to time.
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COHEN & KAMENY CPA'S PLLC
3530 Henry Hudson Parkway, Suite B
Riverdale, New York 10463
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in the Form 10 Registration Statement of our report
as of March 31, 2000, dated April 7, 2000, relating to the financial statements
of Parade Holdings, Inc. that appear in such Form 10.
Cohen & Kameny CPA'S PLLC
Certified Public Accountants
Riverdale, New York
April 12, 2000
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TM Capital Partners, L.L.C.
15425 Shady Grove Road, Suite 400
Rockville, Maryland 20850
March 7, 2000
Parade Holdings, Inc.
39 Broadway
Suite 2250
New York, NY 10006
Re: Lock Up Agreement with Parade Holdings, Inc.
Gentlemen:
As part of the sale of the shares of Common Stock of Parade Holdings, Inc.
(the "Company") to the undersigned (the "Holder"), the Holder hereby represents,
warrants, covenants and agrees, for the benefit of the Company and the holders
of record (the "third party beneficiaries") of the Company's outstanding
securities, including the Company's Common Stock, $.0001 par value (the "Stock")
at the date hereof and during the pendency of this letter agreement that the
Holder will not transfer, sell, contract to sell, devise, gift, assign, pledge,
hypothecate, distribute or grant any option to purchase or otherwise dispose of,
directly or indirectly, its shares of Stock of the Company owned beneficially or
otherwise by the Holder except in connection with or following completion of a
merger, acquisition or other transaction by the Company resulting in the Company
no longer being classified as a shell as defined in Section 7(b)(3) of the
Securities Act of 1933, as amended.
Any attempted sale, transfer or other disposition in violation of this
letter agreement shall be null and void.
The Holder further agrees that the Company (i) may instruct its transfer
agent not to transfer such securities (ii) may provide a copy of this letter
agreement to the Company's transfer agent for the purpose of instructing the
Company's transfer agent to place a legend on the certificate(s) evidencing the
securities subject hereto and disclosing that any transfer, sale, contract for
sale, devise, gift, assignment, pledge or hypothecation of such securities is
subject to the terms of this letter agreement and (iii) may issue stop-transfer
instructions to its transfer agent for the period contemplated by this letter
agreement for such securities.
This letter agreement shall be binding upon the Holder, its agents, heirs,
successors, assigns and beneficiaries.
Any waiver by the Company of any of the terms and conditions of this letter
agreement in any instance must be in writing and must be duly executed by the
Company
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and the Holder and shall not be deemed or construed to be a waiver of such term
or condition for the future, or of any subsequent breach thereof.
The Holder agrees that any breach of this letter agreement will cause the
Company and the third party beneficiaries irreparable damage for which there is
no adequate remedy at law. If there is a breach or threatened breach of this
letter agreement by the Holder, the Holder hereby agrees that the Company and
the third party beneficiaries shall be entitled to the issuance of an immediate
injunction without notice to restrain the breach or threatened breach. The
Holder also agrees that the Company and all third party beneficiaries shall be
entitled to pursue any other remedies for such a breach or threatened breach,
including a claim for money damages.
Agreed and accepted this 7th day of March, 2000.
THE HOLDER
By: /s/ MARK ELENOWITZ
---------------------------------------
Mark Elenowitz
President, TM Capital Partners, L.L.C.
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Mark Elenowitz
15425 Shady Grove Road, Suite 400
Rockville, Maryland 20850
March 7, 2000
Parade Holdings, Inc.
39 Broadway
Suite 2250
New York, NY 10006
Re: Lock Up Agreement with Parade Holdings, Inc.
Gentlemen:
As part of the sale of the shares of Common Stock of Parade Holdings, Inc.
(the "Company") to the undersigned (the "Holder"), the Holder hereby represents,
warrants, covenants and agrees, for the benefit of the Company and the holders
of record (the "third party beneficiaries") of the Company's outstanding
securities, including the Company's Common Stock, $.0001 par value (the "Stock")
at the date hereof and during the pendency of this letter agreement that the
Holder will not transfer, sell, contract to sell, devise, gift, assign, pledge,
hypothecate, distribute or grant any option to purchase or otherwise dispose of,
directly or indirectly, its shares of Stock of the Company owned beneficially or
otherwise by the Holder except in connection with or following completion of a
merger, acquisition or other transaction by the Company resulting in the Company
no longer being classified as a shell as defined in Section 7(b)(3) of the
Securities Act of 1933, as amended.
Any attempted sale, transfer or other disposition in violation of this
letter agreement shall be null and void.
The Holder further agrees that the Company (i) may instruct its transfer
agent not to transfer such securities (ii) may provide a copy of this letter
agreement to the Company's transfer agent for the purpose of instructing the
Company's transfer agent to place a legend on the certificate(s) evidencing the
securities subject hereto and disclosing that any transfer, sale, contract for
sale, devise, gift, assignment, pledge or hypothecation of such securities is
subject to the terms of this letter agreement and (iii) may issue stop-transfer
instructions to its transfer agent for the period contemplated by this letter
agreement for such securities.
This letter agreement shall be binding upon the Holder, its agents, heirs,
successors, assigns and beneficiaries.
Any waiver by the Company of any of the terms and conditions of this letter
agreement in any instance must be in writing and must be duly executed by the
Company
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and the Holder and shall not be deemed or construed to be a waiver of such term
or condition for the future, or of any subsequent breach thereof.
The Holder agrees that any breach of this letter agreement will cause the
Company and the third party beneficiaries irreparable damage for which there is
no adequate remedy at law. If there is a breach or threatened breach of this
letter agreement by the Holder, the Holder hereby agrees that the Company and
the third party beneficiaries shall be entitled to the issuance of an immediate
injunction without notice to restrain the breach or threatened breach. The
Holder also agrees that the Company and all third party beneficiaries shall be
entitled to pursue any other remedies for such a breach or threatened breach,
including a claim for money damages.
Agreed and accepted this 7th day of March, 2000.
THE HOLDER
By: /s/ MARK ELENOWITZ
------------------
Mark Elenowitz
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Louis Taubman
39 Broadway
Suite 2250
New York, NY 10006
March 7, 2000
Parade Holdings, Inc.
39 Broadway
Suite 2250
New York, NY
Re: Lock Up Agreement with Parade Holdings, Inc.
Gentlemen:
As part of the sale of the shares of Common Stock of Parade Holdings, Inc.
(the "Company") to the undersigned (the "Holder"), the Holder hereby represents,
warrants, covenants and agrees, for the benefit of the Company and the holders
of record (the "third party beneficiaries") of the Company's outstanding
securities, including the Company's Common Stock, $.0001 par value (the "Stock")
at the date hereof and during the pendency of this letter agreement that the
Holder will not transfer, sell, contract to sell, devise, gift, assign, pledge,
hypothecate, distribute or grant any option to purchase or otherwise dispose of,
directly or indirectly, its shares of Stock of the Company owned beneficially or
otherwise by the Holder except in connection with or following completion of a
merger, acquisition or other transaction by the Company resulting in the Company
no longer being classified as a shell as defined in Section 7(b)(3) of the
Securities Act of 1933, as amended.
Any attempted sale, transfer or other disposition in violation of this
letter agreement shall be null and void.
The Holder further agrees that the Company (i) may instruct its transfer
agent not to transfer such securities (ii) may provide a copy of this letter
agreement to the Company's transfer agent for the purpose of instructing the
Company's transfer agent to place a legend on the certificate(s) evidencing the
securities subject hereto and disclosing that any transfer, sale, contract for
sale, devise, gift, assignment, pledge or hypothecation of such securities is
subject to the terms of this letter agreement and (iii) may issue stop-transfer
instructions to its transfer agent for the period contemplated by this letter
agreement for such securities.
This letter agreement shall be binding upon the Holder, its agents, heirs,
successors, assigns and beneficiaries.
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Any waiver by the Company of any of the terms and conditions of this letter
agreement in any instance must be in writing and must be duly executed by the
Company and the Holder and shall not be deemed or construed to be a waiver of
such term or condition for the future, or of any subsequent breach thereof.
The Holder agrees that any breach of this letter agreement will cause the
Company and the third party beneficiaries irreparable damage for which there is
no adequate remedy at law. If there is a breach or threatened breach of this
letter agreement by the Holder, the Holder hereby agrees that the Company and
the third party beneficiaries shall be entitled to the issuance of an immediate
injunction without notice to restrain the breach or threatened breach. The
Holder also agrees that the Company and all third party beneficiaries shall be
entitled to pursue any other remedies for such a breach or threatened breach,
including a claim for money damages.
Agreed and accepted this 7th day of March, 2000.
THE HOLDER
By: /s/ LOUIS TAUBMAN
-----------------
Louis Taubman
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PARADE HOLDINGS, INC.
1999 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN
1. PURPOSE
This Incentive and Nonstatutory Stock Option Plan (the "Plan") is intended to
further the growth and financial success of Parade Holdings, Inc. (the
"Corporation") by providing additional incentives to directors, executives and
selected employees of and consultants to the Corporation so that such
participants may acquire or increase their proprietary interest in the
Corporation. The term "Corporation" shall include any parent corporation or
subsidiary corporation of the Corporation as those terms are defined in Section
424(e) and (f) of the Internal Revenue Code of 1986, as amended (the "Code").
Stock options granted under the Plan ("Options") may be either "Incentive Stock
Options", as defined in Code section 422 and any regulations promulgated under
that Section, or "Nonstatutory Options" at the discretion of the Board of
Directors of the Corporation (the "Board") and as reflected in the respective
written stock option agreements granted pursuant to this Plan.
2. ADMINISTRATION
The Plan shall be administered by the Board; provided however, that the Board
may delegate such administration to a committee of not fewer than two members
(the "Committee"), each of whom is a member of the Board and all of whom are
disinterested persons, as contemplated by Rule 16b-3 ("Rule 16b-3") promulgated
under the Securities Exchange Act of 1934, as amended ("Exchange Act").
Subject to the provisions of the Plan, the Board and/or the Committee shall have
authority to (a) grant, in its discretion, Incentive Stock Options in accordance
with Code section 422 or Nonstatutory Options; (b) determine in good faith the
fair market value of the stock covered by an Option; (c) determine which
eligible persons shall be granted Options, the number of shares to be covered by
the Options and the restrictions, terms and conditions thereof; (d) construe and
interpret the Plan; (e) promulgate, amend and rescind rules and regulations
relating to its administration, and correct defects, omissions and
inconsistencies in the Plan or any Option; (f) consistent with the Plan and with
the consent of the Optionee, as appropriate, amend any outstanding Option or
amend the exercise date or dates; (g) determine the duration and purpose of
leaves of absence which may be granted to Optionees without constituting
termination of their employment for the purpose of the Plan; and (h) make all
other determinations necessary or advisable for the Plan's administration. The
interpretation and construction by the Board of any provisions of the Plan or of
any Option it shall be conclusive and final. No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option.
3. ELIGIBILITY
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The persons who shall be eligible to receive Options shall be directors,
officers and employees of the Corporation and consultants to the Corporation
("Optionees"). The term consultant shall mean any person, other than an
employee, who is engaged by the Corporation to render services and is
compensated for such services, and any director of the Corporation whether or
not compensated for such services; provided that, if the Corporation registers
any of its securities pursuant to the Exchange Act, the term consultant shall
thereafter not include directors who are not compensated for their services or
are paid only a director fee by the Corporation.
(a) Incentive Stock Options. Incentive Stock Options may only be issued to
employees of the Corporation. Incentive Stock Options may be granted to officers
or directors, provided they are also employees of the Corporation. Payment of a
director's fee shall not be sufficient to constitute employment by the
Corporation. Any grant of option, subsequent to the first registration of any of
the securities of the Corporation under the Securities Act, may at the
discretion of the Board be made subject to certain conditions, including,
without limitation, condition which are intended to avoid the imposition of
liability under Section 16(b) of the 1934 Act. An Optionee may hold more than
one Option.
The Corporation shall not grant an Incentive Stock Option under the Plan to any
employee if the grant would result in the employee holding the right to exercise
for the first time in any one calendar year, under all Incentive Stock Options
granted under the Plan or any other plan maintained by the Corporation, Options
with respect to shares of stock having an aggregate fair market value,
determined as of the date the Option is granted, in excess of $100,000. Should
it be determined that an Incentive Stock Option granted under the Plan exceeds
such maximum for any reason other than a failure in good faith to value the
stock subject to such Option, the excess portion of the Option shall be
considered a Nonstatutory Option. To the extent the employee holds two or more
such Options which become exercisable for the first time in the same calendar
year, the foregoing limitation on the exercisability of such Option as Incentive
Stock Options under the Federal tax laws shall be applied on the basis of the
order in which the Options are granted. If, for any reason, an entire option
does not qualify as an Incentive Stock Option by reason of exceeding such
maximum, that option shall be considered a Nonstatutory Option.
(b) Nonstatutory Option. The provisions of Section 3(a) shall not apply to any
Option designated as a "Nonstatutory Stock Option Agreement" or which sets forth
the intention of the parties that the option be a Nonstatutory Option.
4. STOCK
The stock subject to Options shall be shares of the Corporation's authorized but
unissued or reacquired common stock (the "Stock").
(a) Number of Shares. Subject to adjustment as provided in Paragraph 5(i) of
this Plan, the total number of shares of Stock which may be purchased through
exercise of
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Options granted under this Plan shall not exceed 1,000,000. If any Option shall
for any reason terminate or expire, any shares allocated thereto but remaining
unpurchased upon such expiration or termination shall again be available for the
grant of Options with respect to that Option under the Plan as though no Option
had been granted with respect to such shares. Any shares of Stock issued
pursuant to an Option and repurchased pursuant to the terms of the Option shall
be available for future Options as though not previously covered by an Option.
(b) Reservation of Shares. The Corporation shall reserve and keep available at
all times during the term of the Plan such number of shares as shall be
sufficient to satisfy the requirements of the Plan. If, after reasonable
efforts, which efforts shall not include the registration of the Plan or Options
under the Securities Act, the Corporation is unable to obtain authority from any
applicable regulatory body, which authorization is deemed necessary by legal
counsel for the Corporation for the lawful issuance of shares hereunder, the
Corporation shall be relieved of any liability with respect to its failure to
issue and sell the shares for which such requisite authority was deemed
necessary unless and until the authority is obtained.
(c) Application of Funds. The proceeds received by the Corporation from the sale
of Stock pursuant to the exercise of Options will be used for general corporate
purposes.
(d) No Obligation to Exercise Option. The granting of an Option shall impose no
obligation upon the Optionee to exercise such Option.
(e) Adjustment of Shares. In the event of any change in the outstanding Stock by
reason of a stock split, stock dividend, combination, subdivision or
reclassification of shares, recapitalization, merger, or similar event, the
Board or the Committee may adjust proportionately (a) the number of shares of
Stock reserved under the Plan and available for Incentive Stock Options and
Nonstatutory Options; and (b) the exercise prices related to outstanding
Options. In the event of any other change affecting the Stock or any
distribution (other than normal cash dividends) to holders of Stock, such
adjustments as may be deemed equitable by the Board or the Committee, including
adjustments to avoid fractional shares, shall be made to give proper effect to
such event. In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Board or the
Committee shall be authorized to issue or assume Options, whether or not in a
transaction to which Code section 424(a) applies, by means of substitution of
new Options for previously issued Options or an assumption of previously issued
Options.
5. TERMS AND CONDITIONS OF OPTIONS
Options granted hereunder shall be evidenced by agreements between the
Corporation and the respective Optionees, in such form and substance as the
Board or Committee shall from time to time approve. Such agreements need not be
identical, and in each case may include such provisions as the Board or
Committee may determine, but all such agreements shall be subject to and limited
by the following terms and conditions:
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(a) Number of Shares. Each Option shall state the number of shares to which it
pertains.
(b) Option Price. Each Option shall state the exercise price, which shall be
determined as follows:
(i) Any Stock Option granted to a person who at the time the Option is granted
owns (or is deemed to own pursuant to Code section 424(d)) stock possessing more
than ten percent (10%) of the total combined voting power or value of all
classes of stock of the Corporation, ("Ten Percent Holder") shall have an
exercise price of no less than one hundred ten percent (110%) of the fair market
value of the common stock as of the date of grant; and
(ii) Incentive Stock Options granted to a person who at the time the Option is
granted is not a Ten Percent Holder shall have an exercise price of no less than
one hundred percent (100%) of the fair market value of the common stock as of
the date of grant.
(iii) Nonstatutory Options granted to a person who at the time the Option is
granted is not a Ten Percent Holder shall have an exercise price of no less than
eighty-five percent (85%) of the fair market value of the common stock as of the
date of grant. For the purposes of this Paragraph 5(b), the fair market value
shall be as determined by the Board, in good faith, which determination shall be
conclusive and binding; provided however, that if there is a public market for
the Stock, the fair market value per share shall be the average of the bid and
asked prices (or the closing price if the stock is listed on the NASDAQ National
Market System) on the date of grant of the Option, or if listed on a stock
exchange, the closing price on such exchange on the date of grant.
(c) Medium and Time of Payment. The Option exercise price shall become
immediately due upon exercise of the Option and shall be paid in cash or check
made payable to the Corporation. Should the Corporation's outstanding common
stock be registered under Section 12(g) of the Exchange Act at the time the
Option is exercised, then the exercise price may also be paid as follows:
(i) in shares of Stock held by the Optionee for the requisite period necessary
to avoid a charge to the Corporation's earnings for financial reporting purposes
and valued at fair market value on the exercise date, or
(ii) through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable written instructions (a) to a
Corporation designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such purchase, and (b) to the Corporation to deliver
the
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certificates for the purchased shares directly to such brokerage firm in order
to complete the sale transaction.
At the discretion of the Board, exercisable either at the time of Option grant
or of Option exercise, the exercise price may also be paid (i) by Optionee's
delivery of a promissory note in form and substance satisfactory to the
Corporation and permissible under the Delaware Securities Regulations and
bearing interest at a rate determined by the Board in its sole discretion, but
in no event less than the minimum rate of interest required to avoid the
imputation of compensation income to the Optionee under the Federal tax laws, or
(ii) in such other form of consideration permitted by the Delaware Corporation
Laws as may be acceptable to the Board.
(d) Term and Exercise of Options. Any Option granted to an Employee of the
Corporation shall become exercisable over a period of no longer than 5 years,
and no less than twenty percent (20%) of the shares covered thereby shall become
exercisable annually. No Option shall be exercisable, in whole or in part, prior
to one (1) year from the date it is granted unless the Board shall specifically
determine otherwise, as provided herein. In no event shall any Option be
exercisable after the expiration of 10 years from the date it is granted, and no
Incentive Stock Option granted to a Ten Percent Holder shall, by its terms, be
exercisable after the expiration of 5 years from the date of the Option. Unless
otherwise specified by the Board or the Committee in the resolution authorizing
such Option, the date of grant of an Option shall be deemed to be the date upon
which the Board or the Committee authorizes the granting of the Option.
Each Option shall be exercisable to the nearest whole share, in installments or
otherwise, as the respective Option agreements may provide. During the lifetime
of an Optionee, the Option shall be exercisable only by the Optionee and shall
not be assignable or transferable by the Optionee, and no other person shall
acquire any rights therein. To the extent not exercised, installments (if more
than one) shall accumulate, but shall be exercisable, in whole or in part, only
during the period for exercise as stated in the Option agreement, whether or not
other installments are then exercisable.
(e) Termination of Status as Employee, Consultant or Director. If Optionee's
status as an employee shall terminate for any reason other than Optionee's
disability or death, then Optionee (or if the Optionee shall die after such
termination, but prior to exercise, Optionee's personal representative or the
person entitled to succeed to the Option) shall have the right to exercise the
portions of any of Optionee's Incentive Stock Options which were exercisable as
of the date of such termination, in whole or in part, not less than 30 days nor
more than three (3) months after such termination, or, in the event of
"termination for cause" (as that term is defined in Delaware Labor Code and case
law related thereto) or by the terms of the Plan or the Option Agreement or an
employment agreement, the Option shall automatically terminate as of the
termination of employment as to all shares covered by the Option.
With respect to Nonstatutory Options granted to employees, directors or
consultants, the Board may specify such period for exercise, not less than 30
days except that in the case
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of "termination for cause" or removal of a director pursuant to the Delaware
Corporation Laws, the Option shall automatically terminate as of the termination
of employment or services as to shares covered by the Option, following
termination of employment or services as the Board deems reasonable and
appropriate. The Option may be exercised only with respect to installments that
the Optionee could have exercised at the date of termination of employment or
services. Nothing contained herein or in any Option granted pursuant hereto
shall be construed to affect or restrict in any way the right of the Corporation
to terminate the employment or services of an Optionee with or without cause.
(f) Disability of Optionee. If an Optionee is disabled (within the meaning of
Code section 22(e)(3)) at the time of termination, the three (3) month period
set forth in Paragraph 5(e) shall be a period, as determined by the Board and
set forth in the Option, of not less than 6 months nor more than one year.
(g) Death of Optionee. If an Optionee dies while employed by, engaged as a
consultant to or serving as a Director of the Corporation, the portion of the
Optionee's Option which was exercisable at the date of death may be exercised,
in whole or in part, by the estate of the decedent or by a person succeeding to
the right to exercise the Option at any time within (i) a period, as determined
by the Board and set forth in the Option, of not less than three months nor more
than ten year after Optionee's death, which period shall not be more, in the
case of a Nonstatutory Option, than the period for exercise following
termination of employment or services, or (ii) during the remaining term of the
Option, whichever is the lesser. The Option may be so exercised only with
respect to installments exercisable at the time of Optionee's death and not
previously exercised by the Optionee.
(h) Nontransferability of Option. No Option shall be transferable by the
Optionee, except by will or by the laws of descent and distribution.
(i) Recapitalization. Subject to any required action of shareholders, the number
of shares covered by each outstanding Option, and the exercise price per share
set forth in each Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend, or any other
increase or decrease in the number of such shares affected without receipt of
consideration by the Corporation; provided, however, the conversion of any
convertible securities of the Corporation shall not be deemed to have been
effected without receipt of consideration by the Corporation.
In the event a proposed dissolution or liquidation of the Corporation, a merger
or consolidation in which the Corporation is not the surviving entity, or a sale
of all or substantially all of the assets or capital stock of the Corporation
(collectively, a "Reorganization"), unless otherwise provided by the Board, this
Option shall terminate immediately prior to such date as is determined by the
Board, which date shall be no later than the consummation of the Reorganization.
In such event, if the entity which shall be the surviving entity does not tender
to Optionee an offer, having no obligation to do so, to
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substitute for any unexercised Option a stock option or capital stock of the
surviving entity, as applicable, which on an equitable basis shall provide the
Optionee with substantially the same economic benefit as the unexercised Option,
then the Board may grant to the Optionee, in its sole and absolute discretion
and without obligation, the right for a period commencing 30 days prior to and
ending immediately prior to the date determined by the Board pursuant hereto for
termination of the Option or during the remaining term of the Option, whichever
is the lesser, to exercise any unexpired Option or Options without regard to the
installment provisions of Paragraph 5(d) of the Plan; provided, that any such
right granted shall be granted to all Optionees not receiving an offer to
receive substitute options on a consistent basis, and provided further, that any
such exercise shall be subject to the consummation of the Reorganization.
Subject to any required action of stockholders, if the Corporation shall be the
surviving entity in any merger or consolidation, each outstanding Option
thereafter shall pertain to and apply to the securities to which a holder of
shares of Stock equal to the shares subject to the Option would have been
entitled by reason of the merger or consolidation.
In the event of a change in the Stock as presently constituted, which is
limited to a change of all of its authorized shares without par value into the
same number of shares with a par value, the shares resulting from any such
change shall be deemed to be the Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities of
the Corporation, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided in this Paragraph 5(i), the Optionee shall have no rights by
reason of any subdivision or consolidation of shares of stock of any class or
the payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class, and the number or price of shares of
Stock subject to any Option shall not be affected by, and no adjustment shall be
made by reason of, any dissolution, liquidation, merger, consolidation or sale
of assets or capital stock, or any issue by the Corporation of shares of stock
of any class or securities convertible into shares of stock of any class.
The grant of an Option pursuant to the Plan shall not affect in any way the
right or power of the Corporation to make any adjustments, reclassifications,
reorganizations or changes in its capital or business structure or to merge,
consolidate, dissolve, or liquidate or to sell or transfer all or any part of
its business or assets.
(j) Rights as a Stockholder. An Optionee shall have no rights as a stockholder
with respect to any shares covered by an Option until the effective date of the
issuance of the shares following exercise of this Option by Optionee. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
expressly provided in Paragraph 5(i) of this Plan.
(k) Modification, Acceleration, Extension, and Renewal of Options. Subject to
the terms and conditions and within the limitations of the Plan, the Board may
modify an
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Option, or once an Option is exercisable, accelerate the rate at which it may be
exercised, and may extend or renew outstanding Options granted under the Plan or
accept the surrender of outstanding Options (to the extent not yet exercised)
and authorize the granting of new Options in substitution for such Options,
provided such action is permissible under Code and under the Corporate
Securities Rules of the Delaware Corporations Commissioner. Notwithstanding the
provisions of this Paragraph 5(k), however, no modification of an Option shall,
without the consent of the Optionee, alter to the Optionee's detriment or impair
any rights or obligations under any Option theretofore granted under the Plan.
(l) Exercise Before Exercise Date. At the discretion of the Board, the Option
may, but need not, include a provision whereby the Optionee may elect to
exercise all or any portion of the Option prior to the stated exercise date of
the Option or any installment thereof. Any shares so purchased prior to the
stated exercise date shall be subject to repurchase by the Corporation upon
termination of Optionee's employment as contemplated by Paragraphs 5(n) of this
Plan prior to the exercise date stated in the Option and such other restrictions
and conditions as the Board or Committee may deem advisable.
(m) Reacquisition, Replacement and Reissuance of Options. (a) The Board or the
Committee, with or without the consent of the Optionee, may at any time cause
the Corporation to reacquire and cancel any outstanding and unexercised Option,
or any portion therefor. In such event, the Corporation shall pay to such
Optionee an amount in cash equal to the excess (if any) of (i) the fair market
value of the shares of Stock subject to such Option, or portion thereof, at the
time of reacquisition, over (ii) the option price of such Option, or portion
thereof. The Corporation may withhold from any such payment applicable taxes and
other amounts. The shares of Stock subject to such Option, or portion thereof,
reacquired and canceled in consideration for a cash payment to an Optionee shall
not again be available for option under the Plan. In the event that the exercise
price of such Option, or portion thereof, exceeds the fair market value of the
shares of Stock subject to such Option, or portion thereof, at the time of
reacquisition, such Option may be reacquired and canceled by the Company without
payment therefor. The shares of Stock subject to such Option, or portion
thereof, reacquired and canceled without payment therefor to the Optionee, may
again be subject to an Option under the Plan.
(n) Other Provisions. The Option agreements authorized under this Plan shall
contain such other provisions, including, without limitation, restrictions upon
the exercise of the Options, as the Board or the Committee shall deem advisable.
Shares shall not be issued pursuant to the exercise of an Option, if the
exercise of such Option or the issuance of shares thereunder would violate, in
the opinion of legal counsel for the Corporation, the provisions of any
applicable law or the rules or regulations of any applicable governmental or
administrative agency or body, such as the Code, the Securities Act, the
Exchange Act, the Delaware Securities Rules, and the rules promulgated under the
foregoing or the rules and regulations of any exchange upon which the shares of
the Corporation are listed. Without limiting the generality of the
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foregoing, the exercise of each Option shall be subject to the condition that if
at any time the Corporation shall determine that (i) the satisfaction of
withholding tax or other similar liabilities, or (ii) the listing, registration
or qualification of any shares covered by such exercise upon any securities
exchange or under any state or federal law, or (iii) the consent or approval of
any regulatory body, or (iv) the perfection of any exemption from any such
withholding, listing, registration, qualification, consent or approval is
necessary or desirable in connection with such exercise or the issuance of
shares thereunder, then in any such event, such exercise shall not be effective
unless the withholding, listing registration, qualification, consent, approval
or exemption shall have been effected, obtained or perfected free of any
conditions not acceptable to the Corporation.
(o) Repurchase Agreement. The Board may, in its discretion, require as a
condition to the grant of an Option under this Plan, that an Optionee execute an
agreement with the Corporation, in form and substance satisfactory to the Board
in its discretion ("Repurchase Agreement"), (i) restricting the Optionee's right
to transfer shares purchased under the Option without first offering the shares
to the Corporation or another stockholder of the Corporation upon the same terms
and conditions as provided therein; and (ii) providing that upon termination of
Optionee's employment with the Corporation, for any reason, the Corporation (or
another stockholder of the Corporation, as provided in the Repurchase Agreement)
shall have the right at its discretion (or the discretion of such other
shareholders) to purchase and/or redeem all such shares owned by the Optionee on
the date of termination of his or her employment at a price equal to (A) the
fair value of the shares as of such date of termination, or (B) if such
repurchase right lapses at twenty percent (20%) of the number of shares per
year, the original purchase price of such shares, and upon terms of payment
permissible under the Delaware Securities Rules; provided that in the case of
Options or Stock Awards granted to officers, directors, consultants or
affiliates of the Company, such repurchase provisions may be subject to
additional or greater restrictions as determined by the Board or Committee.
(p) Investment Intent. Unless and until the issuance and sale of the shares
subject to the Plan are registered under the Securities Act or shall be exempt
pursuant to the rules promulgated thereunder, each Option under the Plan shall
provide that the purchases of shares thereunder shall be for investment purposes
and not with a view to, or for resale in connection with, any distribution
thereof. Further, unless the issuance and sale of the stock have been registered
under the Securities Act, each Option shall provide that no shares shall be
purchased upon the exercise of such Option unless and until (i) any then
applicable requirements of state and federal laws and regulatory agencies shall
have been fully complied with to the satisfaction of the Corporation and its
counsel, and (ii) if requested to do so by the Corporation, the person
exercising the Option shall (i) give written assurances as to knowledge and
experience of such person (or a representative employed by such person) in
financial and business matters and the ability of such person (or
representative) to evaluate the merits and risks of exercising the Option, and
(ii) execute and deliver to the Corporation a letter of investment intent and/or
such other form related to applicable exemptions from registration, all in such
form and substance as the Corporation may require. If shares are issued upon
exercise of an Option without
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registration under the Securities Act, subsequent registration of the shares
shall relieve the purchaser of any investment restrictions or representations
made upon the exercise of such Options.
(q) Tax Withholding. The Company shall have the right to deduct applicable taxes
from any Option payment and withhold, at the time of delivery or exercise of
Options or vesting of shares under such Options, an appropriate number of shares
for payment of taxes required by law or to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. If Stock is used to satisfy tax withholding, the
Stock shall be valued based on the fair market value of the Stock when the tax
withholding is required to be made.
6. AMENDMENT AND TERMINATION OF PLAN
The Board may, insofar as permitted by law, from time to time, with respect to
any shares at the time not subject to Options, suspend or terminate the Plan or
revise or amend it in any respect whatsoever, except that without the approval
of the shareholders of the Corporation, no such revision or amendment shall (i)
increase the number of shares subject to the Plan, (ii) decrease the price at
which Options may be granted, (iii) materially increase the benefits to
Optionees, or (iv) change the class of persons eligible to receive Options under
the Plan; provided, however, no such action shall alter or impair the rights and
obligations under any Option outstanding as of the date thereof without the
written consent of the Optionee thereunder. No Option may be granted while the
Plan is suspended or after it is terminated, but the rights and obligations
under any Option granted while the Plan is in effect shall not be impaired by
suspension or termination of the Plan.
7. AVAILABILITY OF INFORMATION
During the term of the Plan and any additional period during which an Option
granted pursuant to the Plan shall be exercisable, the Corporation shall make
available, not later than 90 days following the close of each of its fiscal
years, such financial and other information regarding the Corporation as is
required by the bylaws of the Corporation and applicable law to be furnished in
an annual report to the stockholders of the Corporation.
8. NOTICES
All notices, requests, demands, and other communications pursuant to this Plan
shall be in writing and shall be deemed to have been duly given on the date of
service if served personally on the party to whom notice is to be given, or on
the third day following mailing to the party to whom notice is to be given, by
first class mail, registered or certified, postage prepaid.
9. INDEMNIFICATION OF BOARD
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In addition to such other rights or indemnifications as they may have as
directors or otherwise, and to the extent allowed by applicable law, the members
of the Board and the Committee shall be indemnified by the Corporation against
the reasonable expenses, including attorney fees, actually and necessarily
incurred in connection with the defense of any claim, action, suit or
proceeding, or in connection with any appeal thereof, to which they or any of
them may be a party by reason of any action taken, or failure to act, under or
in connection with the Plan or any Option granted under the Plan, and against
all amounts paid by them in settlement thereof (provided the settlement is
approved by independent legal counsel selected by the Corporation) or paid by
them in satisfaction of a judgment in any such claim, action, suit or
proceeding, except in any case in relation to matters as to which it shall be
adjudged in such claim, action, suit or proceeding that the Board or Committee
member is liable for negligence or misconduct in the performance of his or her
duties; provided that within seven days after institution of any such action,
suit or Board proceeding the member involved shall offer the Corporation, in
writing, the opportunity, at its own expense, to handle and defend the same.
10. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant to it, to the
extent not otherwise governed by the Code or the securities laws of the United
States, shall be governed by the laws of the State of Delaware and construed
accordingly.
11. EFFECTIVENESS OF PLAN; EXPIRATION
Subject to approval of the Plan by the shareholders of the Corporation prior to
12 months following the date of grant of the first Option hereunder, this Plan
shall be deemed effective as of the date it is adopted by the Board. The Plan
shall expire on the tenth anniversary of such effective date, subject to earlier
termination by the Board pursuant to Section 6, but such expiration shall not
affect the validity of outstanding Options.
The foregoing 1999 Incentive and Nonstatutory Stock Option Plan was duly adopted
and approved by the Board of Directors November 29, 1999 and approved by the
shareholders of the Corporation effective November 29, 1999.
Parade Holdings, Inc.
By: /S/ LOUIS TAUBMAN
------------------
Louis Taubman,
Secretary
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