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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
SOCHRYS.COM INC.
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(Name of Small Business Issuer in its charter)
Nevada APPLIED FOR
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(State or other jurisdiction (I.R.S. Employer ID No.)
of incorporation or organization)
Route de Jussy 29, CH 1226 Thonex-Geneva, Switzerland
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number 41-22-869-2070
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Securities to be registered under Section 12(b) of the Act. None
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Title of each class Name of each exchange on which
to be so registered each class is to be registered
Not applicable Not Applicable
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Securities to be registered under Section 12(g) of the Act.
Common Stock, $.001 par value
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Title of Class
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SOCHRYS.COM INC.
Form 10-SB
Table of Contents
PART I
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Page
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ITEM 1. Description of Business 4
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ITEM 2. Management's Discussion and Analysis
- ------- of Financial Conditions and Results of Operation 22
ITEM 3. Description of Property 28
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ITEM 4. Security Ownership of Certain Beneficial 29
- ------- Owners and Management
ITEM 5. Directors and Executive Officers, Promoters
- ------- and Control Persons 30
ITEM 6. Executive Compensation 31
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ITEM 7. Certain Relationships and Related Transactions 32
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ITEM 8. Description of Securities 32
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PART II
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ITEM 1. Market Price of and Dividends on the Registrant's
- ------- Common Equity and Related Shareholder Matters 33
ITEM 2. Legal Proceedings 34
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ITEM 3. Changes in and Disagreements with Accountants 34
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ITEM 4. Recent Sales of Unregistered Securities 34
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ITEM 5. Indemnification of Directors and Officers 35
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PART F/S
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Financial Statements
F-1
PART III
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ITEM 1. Index to Exhibits 36
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ITEM 2. Description of Exhibits 36
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Signature Page 37
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PART I
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
SOCHRYS.Com Inc. (the "Company") cautions readers that certain
important factors may affect the Company's actual results and could cause such
results to differ materially from any forward-looking statements that may be
deemed to have been made in this Registration Statement or that are otherwise
made by or on behalf of the Company. For this purpose, any statements contained
in the Registration Statement that are not statements of historical fact may be
deemed to be forward-looking statements. This Registration Statement contains
statements that constitute "forward-looking statements." These forward-looking
statements can be identified by the use of predictive, future-tense or
forward-looking terminology, such as "believes," "anticipates," "expects,"
"estimates," "plans," "may," "will," or similar terms. These statements appear
in a number of places in this Registration Statement and include statements
regarding the intent, belief or current expectations of the Company, its
directors or its officers with respect to, among other things: (i) trends
affecting the Company's financial condition or results of operations for its
limited history; (ii) the Company's business and growth strategies; (iii) the
Company's technology; (iv) the Internet; and, (v) the Company's financing
plans. Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may differ materially from those
projected in the forward-looking statements as a result of various factors.
Factors that could adversely affect actual results and performance include,
among others, the Company's limited operating history, dependence on continued
growth in the use of the Internet, security risks of transmitting information
over the Internet, government regulation, technological change and competition.
The information contained in this Registration Statement, including,
without limitation, the information set forth in "Part I. Item 1. Description
of Business" including, but not limited to, that set out under the heading
"Risk Factors" and the information set forth in "Part 1. Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations"
identify important additional factors that could materially adversely affect
actual results and performance. All of these factors should be carefully
considered and evaluated. All forward-looking statements attributable to the
Company are expressly qualified in their entirety by the foregoing cautionary
statement. Any forward-looking statements in this Registration Statement should
be evaluated in light of these important risk factors. In addition, the Company
does not undertake to update forward-looking statements after the effectiveness
of this Registration Statement, even if new information, future events or other
circumstances have made them incorrect or misleading.
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Item 1. DESCRIPTION OF BUSINESS
GENERAL
The Company, through its wholly-owned subsidiaries, Graph-O-Logic,
S.A., a Swiss corporation (the "Subsidiary"), SOCHRYS Technologies S.A., a
Swiss corporation and SOCHRYS Technologies Inc., a Canadian corporation,
(collectively the "Subsidiaries"), is an Internet software company that
develops and markets Web technologies (the "SOCHRYS(TM) Technology"). Management
believes that SOCHRYS(TM) Technology based products have been developed to the
stage of being saleable, but the Company has yet to make a commercial sale.
Products based on the SOCHRYS(TM) Technology will allow the
implementation of integrated software solutions for providers of goods and
services and will be able to be utilized on most current operating systems
linked to the Internet or any other communication network. SOCHRYS(TM)
Technology offers a user-friendly, software-only environment that supports most
electronic services for distributed operations, including e-banking, e-commerce,
and e-business. In addition, SOCHRYS(TM) Technology provides security over the
Internet through a three-level Master/Agents/Clients architecture. This
three-level approach places one or more Agents as an insulating level between
the two parties to a transaction, the Master and the Client, so that no Client
can directly communicate to the Master, and the Agents can only act upon the
Master's instructions.
Unless the context indicates otherwise, reference to the "Company"
herein includes the "Subsidiaries."
THE INTERNET MARKET
The rapid growth of business over the Internet is propelled by large
and small businesses alike, as they consider the Web as a media to offer their
products and services. Using this distribution channel, entrepreneurs start new
businesses more easily and with smaller up-front inves(TM)ents. They can readily
access a worldwide network of customers and develop their business activity
through Internet-based operations.
Many products and services are available for purchase over the
Internet, including computer hardware, software, entertainment products (books,
motion pictures, videos, games, CDs and DVDs), information services (databases,
online newspapers), product licenses, financial services and professional
services. While the value of electronic trade is already in the billions of
dollars, electronic trade is still a very small fraction of the total trade for
goods and services.
Commerce on the Internet is still at the very beginning of the growth
curve. Management believes that significant growth of commerce on the Internet
will require that more vendors go
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on-line; and that consumers feel secure about using the Internet to complete
financial transactions.
Many vendors are deterred from selling over the Internet by the
difficulties encountered in setting up an efficient e-commerce facility and the
amount of human and financial resources required to set up such a facility. As
a result, management believes that there is a need for an integrated e-commerce
software package that facilitates the use of the Internet as a main-line
distribution channel, linking large corporations, small businesses and
individuals.
Management believes that consumer confidence in the security of
financial transactions is also a major deterrent to more rapid growth of
commerce over the Internet. Hacking, cracking, viruses, e-mail break-ins and
theft of confidential information over the Internet are ongoing problems.
As discussed below, management believes that SOCHRYS(TM) Technology
addresses both of these issues.
SOCHRYS(TM) Technology
SOCHRYS(TM) Technology is based upon a distributed, dynamic component
architecture that operates on a three-level Master-Agents-Clients model. The
Master level is the system supervisor; the Agent level contains the corporate
software services; and the Client level provides controlled access to the
system. It operates indifferently on any user's media (computer or digital
devices like palmtops, cellular phones, set top boxes for televisions).
SOCHRYS Technology implements a "Virtual Operating System" ("VOS").
The Company's VOS ('SVOS') software is installed directly on the host computer
processor, memory and disk storage unit and coexists with the host computer's
operating system.
As a software-only solution, SOCHRYS(TM) Technology provides the following
benefits:
- - Compatibility
The SVOS works with most versions of the Microsoft, MacIntosh and Unix
operating systems. Individual computers using SOCHRYS(TM) Technology through
the Internet, Intranet or Extranet automatically become compatible with each
other, regardless of their individual operating systems because once 'inside'
the SVOS, the SOCHRYS(TM) Technology ensures compatibility and interoperability
between all computers linked to the SVOS at that point in time.
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- - Mobility
The SVOS works with all main communication protocols (TCP/IP, IPX, SNA,
Netbios, X25). It uses both modes of communication: synchronous (local, remote,
parallel) or asynchronous (local, remote, parallel, massively parallel,
engine). It also encapsulates the main set of standards, like DCOM/COM or CORBA
and proprietary systems.
- - Portability
The SVOS uses its own executable code file standards (where all
instructions are subsets of one general instruction format) to generate
assembled executable files that run on the SVOS. This ensures that the
applications will operate on the different users' platforms. The Company plans
to implement future evolutions in the host environment technologies in
SOCHRYS(TM) Technology by upgrading the SVOS.
The SVOS does not require any dedicated hardware. It can make use of any
type of peripherals connected to SOCHRYS(TM) Technology.
- - Security
SOCHRYS(TM) Technology is based on a three-level architecture of Master -
Agents - Clients that prevents any data or software from being hacked, cracked
or disassembled. A number of specific procedures ensure full security:
- The Client software can only initiate a transaction once access to the
SVOS has been recognized and authorized by a "Provider Agent" for whom
this is its only function and which is entirely separate from all
other Agents.
- A query can only be made by a Query Agent to the Master through
various encryption, access recognition and password verification
protocols and is only processed using a user-specified executable
code.
- The Master forwards authorized requests directly and exclusively to
the specialized Agent that will deliver the software, component or
data to the user's Client and does so, through a separate channel,
using different software codes and encryption protocols. Thus, no
Client can directly communicate to the Master, and Agents can only act
upon the Master's instructions.
The SOCHRYS UNIVERSAL COMPUTER(TM)
To access SOCHRYS(TM) Technology, SOCHRYS CLIENT(TM) software must
first be downloaded to a computer. This software controls the access to the
SVOS and its services. Once SOCHRYS CLIENT(TM) software is installed, the
SOCHRYS(TM) Technology provides
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compatibility and interoperability between all computers also linked to the
SVOS at that point in time. Together, they form the "SOCHRYS Universal
Computer(TM)." This brings all users in to the same computing environment where
they may share the resources of any computer or device connected to the
Universal Computer.
THE TARGET MARKET
The Company intends to target the following three types of customers
for SOCHRYS(TM) Technology:
Large Organizations
The Company plans to license its technology to large organizations
that develop, market, sell or distribute software products where interaction
with a distributed client base is of the essence. Potential clients will
include, among others, telecommunication firms, banks, large Internet Service
Providers, international distribution services, government agencies,
international retailers and hotel chains. These potential clients' applications
may run on Microsoft, Unix or MacIntosh technologies.
Smaller Organizations
The Company plans to market a range of SOCHRYS(TM) Technology based
Internet software products for easy customization by smaller organizations that
wish to interact with their client base over the Internet. These products will
be aimed at the numerous entrepreneurs and corporations that are developing new
services to profit from the Internet and that desire to be compatible with all
major operating systems. Services developed by such customers may cover the
whole range of electronic commerce, be it for the business-to-business segment
or the business-to-consumer segment.
Organizations With Special Needs
The Company also plans to target organizations that have extensive
computing needs and wish to resort to a technology that may be as efficient but
less expensive than super computers or an array of workstations.
MARKETING STRATEGY
The Company plans to initiate a marketing campaign to bring its
technology and products to the marketplace. This campaign will be based on a
direct sales approach, where experienced marketing representatives make
high-level contacts within corporations to present the competitive advantage
that the use of SOCHRYS(TM) Technology can bring to the corporation.
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Leads to such presentations will be generated through personal contacts and
through attendance at and participation in specialized e-commerce and security
trade shows, where the Company's presence will reflect its high-level approach.
A Web site will be designed to attract technical personnel where the
Company will stress its multi-level architecture and its inherent security as
well as the ease with which applications can be developed and integrated into
existing systems.
The marketing representatives will target early adopters of technology
in order to generate testimonials from clients and implementation sites in the
earliest timeframe possible. These early clients will have an impact on the
SOCHRYS Technology development schedule, as interfaces with current systems
will need to be developed for the first few clients before being generalized to
other sites.
The representatives will be supported by a series of technical
literature on specific topics such as security, integration into current
systems, openness of our architecture, future developments and implementation
procedures.
The main expense factors for this marketing campaign are expected to
be for personnel, participation in trade shows, travel and living expenses, Web
site development and maintenance and literature preparation and distribution,
roughly in this descending order of importance.
The Company expects the sales cycle to be from four to eight months in
duration. The territory where most potential clients will reside is expected to
be in the northeastern, southeastern and central US. Marketing representatives
could be based in the Atlanta and Boston area to minimize travel. Some three to
five representatives could be hired during the next year.
Marketing in Europe could start in the months after the first few
successful implementations in North America.
For more information, please see: "Part I. Item 2. Management
Discussion and Analysis; Plan of Operations".
SOCHRYS(TM) PRODUCTS
The Company plans to offer specific products for each type of customer (as
described in "Part 1. Item 1. Description of Business; The Target Market"):
- For large organizations, the Company plans to propose customized
versions of the SOCHRYS Universal Computer(TM). This suite of products
will contain the elements of SOCHRYS(TM) Technology required to build
an Internet Domain where a Provider can implement its services.
Business and commercial applications can be built on
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SOCHRYS(TM) Technology and delivered in a secure manner by using the
SOCHRYS Universal Computer(TM) software.
- - For mid-size organizations, the product frameworks will include
various extensions of the SOCHRYS Universal Computer(TM) that can
interact with each other.
- - For organizations requiring computer power, the Company plans to offer
Massively Parallel Virtual Computation which will operate over the
Internet and will be based upon the SVOS. It will enable any host
computer or media to have the power and resources of a more powerful
computer by accessing and sharing the power of any hardware or
software resource from any and all computers networked via the
Company, regardless of geographical location.
Competition
For Security Features
The competition for SOCHRYS(TM) Technology security features comes
from a host of suppliers of security measures products and from internal
systems developed by potential clients to prevent unauthorized access.
Security measures suppliers include:
- Private Key Encryption algorithms such as DES
- Public Key encryption algorithms such as RSA, Entrust
- Browser Level Protection such as Secure Socket Layer offered by
Netscape and Microsoft
- System Level Protection such as the Secure Electronic
Transaction developed by Visa and MasterCard offered by the
credit card industry and the banking system
- Network Level Protection such as the Private Networks Virtual
Private Networks.
SOCHRYS(TM) Technology will provide security features for the
transmission of data over the Internet, extranet or intranet as well as on
private and public networks. Typically, the potential clients of SOCHRYS(TM)
Technology do not use the Internet to exchange data. They use various systems
developed by them for their private purpose to circulate data on private
networks. Alternatively, they circulate data on public data-only networks like
the AT&T World Net.
SOCHRYS(TM) Technology will offer a different approach to security, by
installing its virtual computer on any Client Site which will makes the
information managed by the SVOS
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inaccessible by any other party. Once inside the SVOS, a number of the
above-mentioned security measures may also be used to interface with the
customers internal systems, although they do not contribute to the inherent
security of SOCRYS Technology.
The Company knows of no other supplier who has implemented this
approach on PC environments but no assurances can be given that competitive
products do not exist or will not be developed or that the Company's products
will be saleable in the marketplace.
For the Virtual Operating System
Competitors for "Virtual Operating Systems" all have a common type of
implementation, using a "layer" approach that relies on the host normal
operating system. While these "Virtual Operating Systems" have success in
making applications more host-independent, they all share the difficulty and
security threats of the underlying operating systems. The SVOS will be
implemented directly on the host processor and memory and coexists with the
host operating system but the SVOS operations will be entirely separate from
that of the host system.
We know of no other supplier who has implemented this approach but no
assurance can be given that competitive products do not exist or will not be
developed or that the Company's products will be saleable in the marketplace.
RESEARCH AND DEVELOPMENT
The Company spent $202,000 and $270,000 during the nine months ended September
30, 1999 and the year ended December 31, 1998 respectively, on research and
development activities. See: "Part I. Item 2. Management Discussion and
Analysis; Plan of Operations".
INTELLECTUAL PROPERTY PROTECTION
The Company is taking the following steps to protect its intellectual
property. The Company relies on trade secrets and confidentiality agreements.
Trademarks are being registered in North America and in Europe to cover
specific products described herein, as well as the SOCHRYS name itself. The
Company claims copyright in specific software products and various elements of
the core SOCHRYS(TM) Technology.
Although no assurances can be given, the Company believes that the
SOCHRYS(TM) Technology and its implementation are patentable. The Company is
taking steps to prepare a patent application covering its approach and
preferred implementation. The initial patent applications will cover the U.S.
and be expanded to other countries as and when the Company penetrates new
markets. The Company is in the process of defining migration paths for the
various products and developing schedules for that migration. This will define
the requirement
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for additional patent, trademarks and copyright protection, which will be
applied for as required in order to prevent unauthorized use of the SOCHRYS(TM)
Technology.
No assurances can be given that the Company will be able to obtain or
maintain the foregoing intellectual property protection nor that the
SOCHRYS(TM) Technology does not infringe upon the intellectual property rights
of others. In the event that the Company is unable to obtain the foregoing
protection or SOCHRYS(TM) Technology infringes intellectual property rights of
others, the Company's business and results of operations could be materially
and adversely affected. For more information see: "Risk Factors; Proprietary
Rights" below.
EMPLOYEES
As of November 30 1999 the Company had thirteen full-time employees
including three executive officers, six software developers and programmers,
two in marketing and sales and two administrative staff. Twelve of the
employees are located in the Geneva, Switzerland office and one is located in
Ottawa, Canada. In addition, the Company regularly engages technical
consultants and independent contractors to provide specific advice or to
perform certain administrative or technical functions.
HISTORY OF THE COMPANY
The Company was incorporated in the State of Nevada on April 12, 1989
as CCC Funding Corp. to seek out one or more potential business ventures. It
has changed its name on four subsequent occasions to: American Gold Group Inc.
(February 3, 1992); American Group, Inc. (August 26, 1992); Global Science
Corp. (December 23, 1993); and SOCHRYS.com Inc. (August 9, 1999).
The Company's Articles of Incorporation were revoked by the State of
Nevada effective January 1, 1996 for failure to file a list of Officers and
Directors and pay the requisite filing fees. The State of Nevada reinstated the
Company's Articles of Incorporation on February 10, 1999.
On February 24, 1999, the Company acquired certain mining property
located in Fresno, California (the "Jack Thorn Property") from Western
Continental, Inc. for $27,500 worth of Company Common Stock (91,667 post
reverse split shares).
On April 6, 1999, the Company effected a reverse split of its issued
and outstanding shares of Common Stock on a one-for-300 basis. All references
to shares of the Company's Common Stock herein retroactively give effect to
this reverse split unless the text specifically indicates otherwise.
The Company undertook the sale of 3,000,000 shares of its Common Stock
for an aggregate of $30,000 pursuant to an offer conducted under Rule 504 of
Regulation D of the
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Securities Act of 1933, as amended (the "Act"). The sale was completed on
April 6, 1999. See "Part II. Item 4. Recent Sales of Unregistered Securities."
On June 23, 1999, the Board of Directors and Company Shareholders
owning a majority of the issued and outstanding shares of the Company's Common
Stock, determined not to maintain the Jack Thorn Property and to write off the
costs of acquiring the property.
On August 3, 1999, the Board of Directors and Company Shareholders
owning a majority of the issued and outstanding shares of the Company's Common
Stock, approved the acquisition of 100% of the issued and outstanding shares of
stock of Graph-O-Logic, S.A., a Swiss corporation (the "Subsidiary"), for
8,459,000 shares of the Company's Common Stock and warrants to purchase an
aggregate of 2,000,000 shares over a four year period. 1,000,000 of the
warrants are exercisable at $2.00 per share and the other 1,000,000 warrants
are exercisable at $5.00 per share. In addition, Jean Pierre Hofman and Andre
Hensler, two Executive Officers of the Subsidiary, were elected Directors of
the Company.
The Company's acquisition of the Subsidiary was consummated on August
30, 1999 at which time the Company's former executive officers and directors
other than Messrs. Hofman and Hensler resigned and were replaced by a slate
chosen by the Subsidiary.
In August 1999 the Company incorporated SOCHRYS Technologies S.A. in
Switzerland as a wholly owned subsidiary to conduct research and development
and marketing in Europe. In December 1999 the Company incorporated SOCHRYS
Technologies Inc. in Canada as a wholly owned subsidiary to conduct research
and development and marketing in North America.
RISK FACTORS
The Company's operations and its securities are subject to a number of
risks, including those described below. If any of the following risks actually
occur, the business, financial condition and/or operating results of the
Company and the trading price or value of its securities could be materially
adversely affected.
Limited Operating History
The Company's limited operating history makes it difficult to evaluate
its current business and prospects or to accurately predict its future revenue
or results of operations. The Company's revenue and income potential are
unproven, and its business plan is constantly evolving. Management believes
that SOCHRYS(TM) Technology based products have been developed to the stage of
being saleable, but the Company has yet to make a commercial sale. Because the
Internet is constantly changing and software technology is constantly
improving, the Company may need to modify its business plan to adapt to these
changes. Companies in early stages of development, particularly companies in
new and rapidly evolving computer technology and
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Internet industry segments, are generally more vulnerable to risks,
uncertainties, expenses and difficulties than more established companies.
History of Operating Losses and Anticipated Losses and Negative Cash
Flow for the Foreseeable Future
The Company incurred operating losses and negative cash flow during
the nine months ended September 30, 1999. During the year ended December 31,
1998 the Company generated operating income and positive cash flow. However,
the Company expects operating losses and negative cash flow to continue for the
foreseeable future and to increase significantly from current levels as the
Company significantly increases its expenditures for sales and marketing,
technology, infrastructure research and development and to enhance its
business. With increased on-going operating expenses, the Company will need to
generate significant revenue to achieve profitability. Consequently, it is
possible that the Company may never achieve profitability, and even if it does
achieve profitability, the Company may not sustain or increase profitability on
a quarterly or annual basis in the future. If the Company does not achieve or
sustain profitability in the future, the Company may be unable to continue its
operations.
Immediate Need for Additional Capital
The Company has an immediate need for additional working capital in
order to maintain its current operations and to proceed with its business plan.
See "Part I. Item 2. Management Discussion and Analysis; Plan of Operations."
The Company does not currently have any commitment from any third party to
provide financing and may be unable to obtain financing on reasonable terms or
at all. Furthermore, if the Company raises additional working capital through
equity, its shareholders will experience dilution. If the Company is unable to
raise additional financing when needed, it may be unable to grow or maintain
its then current level of business operations.
Dependence On Key Personnel
The future success of the Company depends to a significant extent on
the continued services of senior management, including Jean Pierre Hofman,
Andre Hensler, and Paul Claverie. The loss of any of these senior managers
would likely have an adverse effect on the Company's business. At present, the
Company does not have any employment agreements with these personnel nor does
it have key man life insurance on them. In addition, competition for personnel
throughout the industry is intense and the Company may be unable to retain its
current key employees or attract, integrate or retain other highly qualified
employees in the future. If the Company does not succeed in attracting new
personnel or retaining and motivating its current personnel, its business could
be materially adversely affected.
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The Market is Highly Competitive and the Company May Not Be Able to
Compete Successfully Against Its Current and Future Competitors
The market for the Company's products and technology is highly
competitive and subject to rapid change. The Company faces competitive
pressures from numerous actual and potential competitors. Competition is likely
to increase significantly as new companies enter the market and current
competitors expand their services. Many of the Company's current and potential
competitors have substantial competitive advantages, including:
- longer operating histories;
- significantly greater financial, technical and marketing
resources;
- greater brand name recognition; and
- larger existing customer bases.
These competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements and devote greater
resources to develop, promote and sell their products or services. Services
offered by existing and potential competitors may be perceived by users or
advertisers as being superior to the Company's. No assurance can be given that
the Company will be able to compete.
Brand Recognition
To attract customers the Company may have to develop a brand identity
and increase public awareness of its technology, and products. To increase
brand awareness, the Company may advertise to the extent that it has adequate
financial and other resources to do so. These activities may, however, not
result in significant revenue and, even if they do, any revenue may not offset
the expenses incurred in building brand recognition. Moreover, despite these
efforts the Company may be unable to increase public awareness of its brands,
which would have an adverse effect on the results of operations of the Company.
RAPID TECHNOLOGICAL CHANGE
The market for Internet solutions and software products and services
is characterized by rapid change, evolving industry standards and frequent
introductions of new technological developments. These new standards and
developments could make the Company's existing or future products or technology
obsolete. Keeping pace with introduction of new standards and technological
developments could result in significant additional costs or prove difficult or
impossible. The failure to keep pace with these changes and to continue to
enhance and improve the responsiveness, functionality and features of the
Company's technology and products could harm the Company's ability to attract
and retain customers. No assurance can be given that the Company will be able
to improve and expand its technology and products to keep them state-of-the-art
or that current competitors or new market entrants will not succeed in
developing and
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introducing new or enhanced technology and/or products superior to, or more
effective than, those of the Company.
Proprietary Rights
The Company's success and ability to compete depend, to a large
degree, on its current technology and, in the future, technology that the
Company might develop or license from third parties. Others may develop
technologies that are similar or superior to that of the Company, which could
impair the Company's ability to compete. For the technology developed by the
Company, the Company relies on the technological and creative skills of its
employees. To establish and maintain a technology leadership position, new
product developments, frequent product enhancements, name recognition, and
reliable product maintenance are essential. If the Company were unable to
continually update the SOCHRYS(TM) Technology, develop new technology and
deliver new products and enhancements, its financial condition and business
prospects would be impaired. In the future, the Company may also rely on
technology licensed from third parties, including software integrated with
internally developed software and used in its products to perform key
functions. If implemented as a component of the Company's business, these
third-party technology licenses may not continue to be available to the Company
on commercially reasonable terms. The loss of any technology licenses could
delay, impede or prevent the Company from selling and delivering products
unless and until equivalent technology could be identified, licensed, and
integrated. Any such delays or halt could have a materially adverse effect on
the Company's finances and business.
To protect its technology, the Company plans to rely on patent,
trademark, trade secret, and copyright law and generally enters into
confidentiality and/or license agreements with its employees, consultants, and
suppliers. Despite these precautions, it may be possible for unauthorized third
parties to copy or otherwise obtain and use the Company's products, technology
or proprietary information. In addition, effective patent, trademark, trade
secret, and copyright protection may be unavailable or limited in certain
foreign countries. The Company is in the process of registering trademarks and
preparing patent applications. Litigation may be necessary in the future to
enforce the Company's intellectual property rights, to defend the validity of
its patents, to protect its trade secrets, or to determine the validity and
scope of the proprietary rights of others. Such misappropriation or litigation
could result in substantial costs and diversion of resources and the potential
loss of intellectual property rights, which could impair the Company's
financial and business condition. Although not currently engaged in any form of
litigation proceedings, in the future, the Company may receive notice of claims
of infringement of other parties' proprietary rights. Such claims may involve
internally developed technology or technology and enhancements that the Company
may license from third parties. Moreover, although the Company sometimes may be
indemnified by third parties against claims that licensed third-party
technology infringes the proprietary rights of others, indemnity may be
limited, unavailable, or, where the third party lacks sufficient assets or
insurance, ineffectual. Any such claims could require the Company to spend time
and money defending against them, and, if they were decided adversely to the
Company, could cause the Company to pay damages,
Pg. 15
<PAGE> 16
to be subject to injunctions, or to halt distribution of its products while the
Company re-engineers them or seeks licenses to necessary technology (which
might not be available on reasonable terms). Moreover, the Company could also
be subject to claims for indemnification resulting from infringement claims
made against Company customers, which could increase defense costs and
potential damages. The Company does not currently have liability insurance to
protect against the risk that its technology or licensed third-party technology
infringes the proprietary rights of others. Any of these factors could have a
materially adverse effect on the Company's financial condition and business.
Year 2000 Risks
The "Year 2000 Issue" refers generally to the problems that some
software may have in determining the correct century for the year 2000. For
example, software with date-sensitive functions that are not Year 2000
compliant may not be able to distinguish whether "00" means 1900 or 2000, which
may result in failures or the creation of erroneous results. The Company has
defined "Year 2000 Compliant" to mean that the product will accurately receive,
process, and provide date data from, into, and between the twentieth and
twenty-first centuries, including the years 1999 and 2000, and make leap year
calculations, provided that all other products (whether hardware, software, or
firmware) used in or in combination with the product properly exchange data
with it. The Company has developed a Year 2000 readiness plan. The plan
includes assessment, implementation, validation testing, and contingency
planning. The Company has largely completed all phases of its plan, except for
contingency planning, with respect to the SOCHRYS(TM) Technology and current
versions of its products. Management believes that its products are Year 2000
Compliant, provided that the underlying operating system of the host machines
and any other software used with or in the host machines are also Year 2000
Compliant. The Company has not tested its products on all platforms or all
versions of operating systems that the Company currently supports and will
advise its future customers to verify that their platforms and operating
systems support the transition to the year 2000. The Company continues to test
its software for compliance and may yet find errors or defects associated with
Year 2000 date functions. The Company has not specifically tested software
obtained from third parties (licensed software, shareware, and freeware) that
may be incorporated into its products but the Company is seeking assurances
from its vendors that licensed software is Year 2000 Compliant. Despite the
Company's testing, future testing by the Company's potential customers, and
whatever assurances the Company may receive from developers of products
incorporated into or used with its products, the Company's products may contain
undetected errors or defects associated with Year 2000 date functions. Known or
unknown errors or defects in the Company's products could result in delay or
loss of revenue, diversion of development resources, damage to the Company's
reputation, or increased service and warranty costs, any of which could impair
the Company's finances or business prospects.
Some commentators have predicted significant litigation regarding Year
2000 compliance issues. Because of the unprecedented nature of such litigation,
it is uncertain whether or to what extent the Company may be affected by it.
Pg. 16
<PAGE> 17
The Company does not currently have any information concerning the
Year 2000 compliance status of its potential customers. As is the case with
other similarly situated companies, if the Company's potential customers fail
to achieve Year 2000 compliance or if they divert technology expenditures to
address Year 2000 compliance problems, the Company's own finances or business
prospects could be impaired. The Company may experience material problems and
costs with Year 2000 compliance that could impair the Company's finances and
business prospects. The Company has not yet fully developed a comprehensive
contingency plan to address situations that may result if it will not be able
to achieve Year 2000 readiness of its critical operations. The cost of
developing and implementing such a plan may itself be material.
Failure of Online Security Measures
A key element of the SOCHRYS(TM) Technology and the Company's products
is its state-of-the-art Internet security feature. If anyone is able to
circumvent the Company's security measures, they could misappropriate
proprietary information or cause interruptions or problems with hardware and
software of customers using the Company's products. Any such security breaches
could damage the reputation of the Company. In addition, the Company could be
liable to its customers for the damages caused by such breaches or it could
incur substantial costs as a result of defending claims for those damages. The
Company may need to expend significant capital and other resources to protect
against such security breaches or to address problems caused by such breaches.
Security measures taken by the Company may not prevent disruptions or security
breaches. Management believes that the three-level architecture of the
Company's security system totally prevents security breaches. In the event that
management is incorrect or future events or developments result in a compromise
or breach of the technology the Company uses to protect a customer's personal
information, the Company's financial condition and business could be materially
adversely affected.
The Company May Need to Change the Manner in Which it Conducts its
Business if Government Regulation Increases or Changes
There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. Laws and regulations may be adopted
in the future, however, that address issues such as user privacy, pricing,
taxation, content, copyrights, distribution, security, and the quality of
products and services. For example, the Telecommunications Act of 1996 sought
to prohibit transmitting certain types of information and content over the Web.
Several telecommunications companies have petitioned the Federal Communications
Commission to regulate Internet service providers and online services providers
in a manner similar to long distance telephone carriers and to impose access
fees on these companies. Any imposition of access fees could increase the cost
of transmitting data over the Internet. In addition, the growth and development
of the market for online commerce may lead to more stringent consumer
protection laws, both in the United States and abroad, that may impose
additional burdens on the
Pg. 17
<PAGE> 18
Company. The United States Congress recently enacted Internet laws regarding
children's privacy, copyrights, taxation and the transmission of sexually
explicit material. The law of the Internet, however, remains largely unsettled,
even in areas where there has been some legislative action. Moreover, it may
take years to determine the extent to which existing laws relating to issues
such as property ownership, libel and personal privacy are applicable to the
Web. Any new, or modifications to, existing laws or regulations relating to the
Web could adversely affect the Company's business. If one or more states or any
foreign country successfully asserts that the Company should collect sales or
other taxes on the provision of its technology or products, the Company's net
sales and results of operations could be harmed. One or more states may seek to
impose sales tax collection obligations on companies which engage in or
facilitate the provision of services on the Internet. A number of proposals
have been made at the state and local level that would impose additional taxes
on the sale of products and services through the Internet. Such proposals, if
adopted, could substantially impair the growth of electronic commerce and could
adversely affect the Company's opportunity to derive financial benefit from the
provision of its products and technology. Legislation limiting the ability of
the states to impose taxes on Internet-based transactions has been enacted by
Congress. However, this legislation, known as the Internet Tax Freedom Act of
1998, imposes only a three-year moratorium ending on October 21, 2001 on state
and local taxes on electronic commerce where such taxes are discriminatory and
on Internet access unless such taxes were generally imposed and actually
enforced before October 1, 1998. Failure to renew this legislation would allow
various states to impose taxes on Internet-based commerce.
Operating Results May Prove Unpredictable, and May Fluctuate
Significantly
The Company's operating results are likely to fluctuate significantly
in the future due to a variety of factors, many of which are outside of the
Company's control. Because the Company's operating results may be volatile and
difficult to predict, future operating results may fall below the expectations
of securities analysts and investors. In this event, the trading price of the
Common Stock may fall significantly. Factors that may cause operating results
to fluctuate significantly include the following:
- new technology or products introduced by the Company or by its
competitors;
- the timing and uncertainty of advertising sales cycles and
seasonal declines in advertising sales; and
- general economic conditions, as well as economic conditions
specific to users of the Company's products and technology.
Common Stock Price May Be Volatile
The market prices of securities of Internet and technology companies
are extremely volatile and sometimes reach unsustainable levels that bear no
relationship to the past or present operating performance of such companies.
Factors that may contribute to the volatility of the trading price of the
Common Stock include, among others:
Pg. 18
<PAGE> 19
- the Company's quarterly results of operations;
- the variance between the Company's actual quarterly results of
operations and predictions by stock analysts;
- financial predictions and recommendations by stock analysts
concerning Internet companies and companies competing in the
Company's market in general, and concerning the Company in
particular;
- public announcements of technical innovations relating to the
Company's business, new products or technology by the Company or
its competitors, or acquisitions or strategic alliances by the
Company or its competitors;
- public reports concerning the Company's products or technology
or those of its competitors; and
- the operating and stock price performance of other companies
that investors or stock analysts may deem comparable to the
Company.
In addition to the foregoing factors, the trading prices for equity
securities in the stock market in general, and of Internet-related companies in
particular, have been subject to wide fluctuations that may be unrelated to the
operating performance of the particular company affected by such fluctuations.
Consequently, broad market fluctuations may have an adverse effect on the
trading price of the Common Stock, regardless of the Company's results of
operations.
Limited Market for the Common Stock
The Common Stock is tradeable in the over-the-counter market and is
quoted on the "Pink Sheets". The Common Stock was quoted on the OTC Electronic
Bulletin Board until December 1, 1999. There is only a limited market for the
Common Stock and there can be no assurance that this market will be maintained
or broadened. The market price for shares of Common Stock is likely to be very
volatile, and numerous factors beyond the Company's control may have a
significant effect. On January 4, 1999, the Securities and Exchange Commission
approved NASD rule amendments requiring companies to report their current
financial information to the Securities and Exchange Commission as a condition
to continuing to have their securities quoted on the OTC Electronic Bulletin
Board. To do this, a company quoted on the OTC Electronic Bulletin Board needs
to register its securities under the Securities Exchange Act of 1934 (the
"Exchange Act") within the NASD's phase-in schedule. Pursuant to the NASD's
phase-in schedule, the Company needed to be a reporting company by no later
than December 1999. The Company has filed this Registration Statement to
register its Common Stock under the Exchange Act. Management anticipates that
once the Company is a "Reporting Company" under the Exchange Act and provided a
broker-dealer is willing to list the Company's Common Stock on the OTC
Electronic Bulletin Board (as to which there can be no assurance), the
Company's Common Stock will be quoted on the OTC Electronic Bulletin Board
again.
Pg. 19
<PAGE> 20
Substantial Sales of Common Stock Could Cause Stock Price to Fall
As of November 19, 1999, the Company had outstanding 11,612,924 shares
of Common Stock of which approximately 8,564,001 shares were "restricted
securities" (as that term is defined under Rule 144 promulgated under the Act).
These restricted shares are eligible for sale under Rule 144 at various times.
No prediction can be made as to the effect, if any, that sales of shares of
Common Stock or the availability of such shares for sale will have on the
market prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of Common Stock may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital through the sale of its equity
securities.
No Dividends
The payment of dividends on the shares of the Company is within the
discretion of the Board of Directors and will depend upon the Company's future
earnings, its capital requirements, its financial condition, and other relevant
factors. The Company does not currently intend to declare any dividends on its
Shares for the foreseeable future.
The Common Stock May Be Deemed "Penny Stock" and Therefore Subject to
Special Requirements
As of November 30, 1999, the Company's Common Stock is not a "penny
stock" as that term is defined in Rule 3a51-1 of the Securities and Exchange
Commission because it is selling at a price above five dollars per share. In
the future, the Company's Common Stock may be deemed to be a "penny stock" if
the per share sale price drops below five dollars. Penny stocks are stocks (i)
with a price of less than five dollars per share; (ii) that are not traded on a
"recognized" national exchange; (iii) whose prices are not quoted on the NASDAQ
automated quotation system (NASDAQ-listed stocks must still meet requirement
(i) above); or (iv) in issuers with net tangible assets less than $2,000,000
(if the issuer has been in continuous operation for at least three years) or
$5,000,000 (if in continuous operation for less than three years), or with
average revenues of less than $6,000,000 for the last three years. Section
15(g) of the Exchange Act, and Rule 15g-2 of the Securities and Exchange
Commission, require broker-dealers dealing in penny stocks to provide potential
investors with a document disclosing the risks of penny stocks and to obtain a
manually signed and dated written receipt of the document before effecting any
transaction in a penny stock for the investor's account. Moreover, Rule 15g-9
of the Securities and Exchange Commission requires broker-dealers in penny
stocks to approve the account of any investor for transactions in such stocks
before selling any penny stock to that investor. This procedure requires the
broker-dealer (i) to obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
to determine reasonably, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably
Pg. 20
<PAGE> 21
capable of evaluating the risks of penny stock transactions; (iii) to provide
the investor with a written statement setting forth the basis on which the
broker-dealer made the determination in (ii) above; and (iv) to receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it
more difficult for investors in the Common Stock to resell their shares to
third parties or to otherwise dispose of them.
Executive Officers, Directors and Major Stockholders Exercise
Significant Control
As of November 30, 1999, the executive officers, Directors and holders
of 5% or more of the outstanding Common Stock together beneficially owned
approximately 49.9% (a majority of the outstanding Common Stock assuming
exercise of all warrants held by them). These stockholders are able to
significantly influence all matters requiring approval by stockholders,
including the election of Directors and the approval of significant corporate
transactions. This concentration of ownership may also have the effect of
delaying, deterring or preventing a change in control and may make some
transactions more difficult or impossible to complete without the support of
these stockholders.
Exchange Rate Risk
The Company expects some portion of its revenues to be based on sales
provided outside of the United States. In addition, the Company expects that a
significant portion of its operating expenses will be incurred outside of the
United States. As a result, the financial performance of the Company will be
affected by fluctuations in the value of the U.S. dollar to foreign currency.
At the present time, the Company has no plan or policy to utilize forward
contracts or currency options to minimize this exposure, and even if these
measures are implemented there can be no assurance that such arrangements will
be available, be cost effective or be able to fully offset such future currency
risks.
Other Risks Associated With International Operations
There are certain risks inherent in doing business on an international
level, such as unexpected changes in regulatory requirements, export and import
restrictions, export and import controls relating to encryption technology that
may limit sales sometime in the future. Tariffs and other trade barriers,
difficulties in staffing and managing foreign operations, longer payment
cycles, problems in collecting accounts receivable, political instability,
fluctuations in currency exchange rates, software piracy, seasonal reductions
in business activity during the summer months in Europe and elsewhere, and
potentially adverse tax consequences could adversely impact the success of the
Company's international operations. One or more of such factors may impair the
Company's future international operations and its overall financial condition
and business prospects.
Pg. 21
<PAGE> 22
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Until the Company's acquisition of the Subsidiary, it had no Material
or substantive business operations. Since the acquisition of the Subsidiary,
the Company's business has been the business of the Subsidiary. Accordingly,
the discussion in this section focuses solely on the historical business
operations of the Subsidiary and the Company's current business plan and
operations.
PLAN OF OPERATIONS
The Company is still in its start up phase. As such, the historic
results of operations are unlikely to provide a meaningful understanding of the
activities expected to take place during the year ended December 31, 2000. The
Company believes that SOCHRYS(TM) Technology based products have been developed
to the stage of being saleable, but the Company has yet to make a commercial
sale. The major initiatives of the Company are now marketing the product and
developing and improving product agents to perform specialized functions common
to many e-commerce sites. See: "Part 1. Item 1: Description of Business;
Technology".
Marketing Plans: The Company has started the marketing process, with
its primary focus being potential customers located in the northeast and
southeast sectors of the United States. The potential customers are more fully
described in "Part 1. Item 1: Description of Business; The Target Market".
Marketing activities will be multi-faceted.
Marketing leads will be developed by direct identification of
potential customers, through trade shows and through personal contacts of the
marketing representatives. The Company expects to spend $100,000 in attending
and exhibiting at trade shows during 2000. Promotional literature, including
technical evaluations of the product and testimonials from users of the
product, expected to cost a further $50,000, will be distributed at the trade
shows and by direct mailings to the individuals identified as the decision
makers and decision influencers.
Marketing representatives, who will be compensated on a salary and
commission basis, will then follow up these leads, with the objective of more
fully explaining the product and its benefits to the potential customer. The
Company estimates the cost of this initiative, including travel and sales
support, to be $750,000 during 2000.
Pilot projects to demonstrate the utility and benefits of the product
to the customer are expected to be funded at a break even level by the
customer.
Pg. 22
<PAGE> 23
In summary, the marketing program is expected to cost between $900,000
and $1,000,000 during 2000.
Developing and Improving Product Agents: While the Company directs a
considerable portion of its activities and budget to the marketing of the
product, work will continue in developing the core functions of the products
and additional product agents and improving existing ones. See "Part I. Item
1. Description of Business; SOCHRYS(TM) Technology".
Product improvements and developments will be in reaction to the
responses we get from potential customers. The cost of developing these is
primarily a function of the activity currently planned and thus will be subject
to a high degree of control. Initial estimates of the cost of this continued
research and development effort are $1,000,000 during 2000. The Company plans
to raise funds through the private placement of debt and/or equity. In the event
that the Company is not able to raise sufficient funds to fund the proposed
research and development activities it will scale back the level of activities
it does undertake to match the funds available. See "Risk Factors; Immediate
need for Additional Capital".
SELECTED FINANCIAL DATA
The following table sets forth selected pro forma financial data for
the Company. The financial data was derived from the consolidated financial
statements of the Company and should be read in conjunction with the
Consolidated Financial Statements and related Notes thereto included herein.
The consolidated financial statements for the nine month periods ended
September 30, 1999 and 1998 reflect all adjustments which, in the opinion of
the Company, are necessary for a fair presentation of the results of operations
and the financial position of the Company. The results of operations for the
nine months ended September 30, 1999 will not necessarily be indicative of the
operating results for the full fiscal year ending December 31, 1999.
<TABLE>
<CAPTION>
Nine Months Nine Months
----------- -----------
Ended Ended Year Ended Year Ended
----- ----- ---------- ----------
September 30, September 30, December 31, December 31,
------------- ------------- ------------ -----------
1999 1998 1998 1997
---- ---- ---- ----
OPERATIONS DATA
<S> <C> <C> <C> <C>
Revenues $170,000 $269,000 $311,000 $207,000
Salaries 130,000 83,000 115,000 --
Research and development 72,000 150,000 155,000 182,000
General and administrative 9,000 1,000 1,000 9,000
Depreciation and amortization 17,000 4,000 5,000 12,000
------ ----- ----- ------
Operating income (loss) (58,000) 31,000 35,000 4,000
CASH FLOWS DATA
Net cash from (used in)
operations $(2,000) $56,000 $56,000 $(75,000)
Net cash used in investing
Activities (71,000) (71,000) --
</TABLE>
Pg. 23
<PAGE> 24
<TABLE>
<S> <C> <C> <C> <C>
Net cash from financing
Activities 30,000 -- -- 97,000
Net increase (decrease) in
cash $(28,000) $(15,000) $(15,000) $22,000
BALANCE SHEET DATA
Cash $35,000 $3,000 $7,000 $22,000
Total current assets 35,000 37,000 47,000 76,000
Equipment (net) 55,000 71,000 71,000 4,000
Total assets 90,000 112,000 119,000 83,000
Total current liabilities 19,000 13,000 14,000 5,000
Stockholders' equity 72,000 99,000 105,000 78,000
</TABLE>
THE NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
The Company operates in Switzerland. Its revenues are earned in Swiss
francs ("CH") and its expenses are incurred in CH. The financial statements
have been conformed to US GAAP and presented in US dollars for purposes of this
registration statement on Form 10-SB. The average rate of exchange between the
Swiss franc and the US dollar for the nine months ended September 30, 1999
approximated CH1.49:$1. The rate of exchange between the Swiss franc and the US
dollar on September 30, 1999 approximated CH1.50:$1. The average rate of
exchange between the Swiss franc and the US dollar for the nine months ended
September 30, 1998 approximated CH1.39:$1. The rate of exchange between the
Swiss franc and the US dollar on September 30, 1998 approximated CH1.48:$1. The
rates of exchange between the Swiss franc and US dollar set out above were used
to convert the various financial statement balances from Swiss francs to US
dollars.
RESULTS OF OPERATIONS
Revenues: Revenues for the nine months ended September 30, 1999 were
$170,000 (CH253,000), down 37% from the $269,000(CH400,000) generated during
the nine months ended September 30, 1998. The Company had only one contract
from which it derived revenues in each of those periods. Pursuant to this
contract the Company provided various software solutions to its customer. This
contract was not related to the development of the Sochrys products. The
decrease in revenues is a result of reduced funds being available from the
contractor to fund the research and development activities under the contract.
Salaries and Research and Development Costs: During the nine months
ended September 30, 1999 the Company spent $130,000 (CH193,000) on salaries to
employees working on research and development projects. A further $72,000
(CH107,000) was paid to a related company for research and development
activities. During the nine months ended September 30, 1998 the Company spent
$83,000 on salaries to employees working on research and development projects.
In addition, the Company paid a related company $150,000 (CH223,000) for
research and development activities. The 8% decrease in total research and
Pg. 24
<PAGE> 25
development spending is a result of the 37% decrease in revenues. The Company
limited the amount spent on salaries and research and development activities to
the funds available.
General and Administrative Expenses: General and administrative
expenses consist of such items as salaries that have not been allocated to
research and development activities and office related expenses. During the
nine months ended September 30, 1999 the Company incurred $9,000 (CH13,000),
compared to $300 (CH500) for the nine months ended September 30, 1998. The
Company's general and administrative costs were low because it shared its
facilities with related companies until the September 1999. Management
anticipates that general and administrative expenses will increase
significantly commencing in the fourth quarter of 1999 because the Company will
be paying rent on its Geneva facility. See: "Part I. Item 2. Management
Discussion and Analysis; Description of Properties".
Depreciation and Amortization Depreciation and amortization expense of
$17,000 (CH22,000) during the nine months ended September 30, 1999 was higher
than during the nine months ended September 30, 1998, when the Company recorded
depreciation and amortization expense of $12,000 (CH16,000). This was due to
the acquisition of computer equipment during 1998 that was subject to
depreciation for only a portion of the period.
Gains and Losses from Changes in Foreign Exchange Rates: During the
nine months ended September 30, 1999 the Company recorded unrealized losses of
$6,300 related to changes in the rates of exchange between the Swiss franc and
the US dollar. This is compared to an unrealized gain of $1,300 for the nine
months ended September 30, 1998. These gains and losses are the result of
translating the operating results and balance sheet accounts from Swiss francs
to US dollars. Since the Company has earned its revenues and paid its expenses
in Swiss francs, there have not been any realized gains or losses arising from
changes in the rates of exchange between the Swiss franc and the US dollar.
Income Taxes: The Company is taxable on income earned in Switzerland
at a rate of approximately 40%.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999 the Company had working capital of $16,000,
compared to a deficit of $10,000 at September 30, 1998. In addition, accounts
receivable are down $40,000 from December 31, 1998 as a result of the
collection of an outstanding invoice during January 1999.
Net Cash Flow from Operations: During the nine months ended September
30, 1999 the Company used $2,000 in operations, compared to generating $56,000
during the nine months ended September 30, 1998. This decrease in funds from
operations during the nine months
Pg. 25
<PAGE> 26
ended September 30, 1999 is a result of the availability of surplus funds
accumulated from prior periods and the investment of additional capital
during the period.
Net Cash Used in Investing Activities: During the nine months ended
September 30, 1999 the Company had no investing activities.
Net Cash From Financing Activities: During the nine months ended
September 30, 1999 the Company issued 3,000,000 shares of its common stock for
$30,000.
For information concerning the Company's capital requirements see
"Plan of Operations" above.
THE YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1997
As noted above, the Company operates in Switzerland during fiscal 1998 and
1997. Its revenues are earned in Swiss francs ("CH") and its expenses are
incurred in CH. The financial statements have been conformed to US GAAP and
presented in US dollars for purposes of this registration statement on Form
10-SB. The average rate of exchange between the Swiss franc and the US dollar
for 1998 approximated CH1.45:$1. The rate of exchange between the Swiss franc
and the US dollar on December 31, 1998 approximated CH1.37:$1. The average rate
of exchange between the Swiss franc and the US dollar for 1997 approximated
CH1.45:$1. The rate of exchange between the Swiss franc and the US dollar on
December 31, 1997 approximated CH1.45:$1. The rates of exchange between the
Swiss franc and US dollar set out above were used to convert the various
financial statement balances from Swiss francs to US dollars.
RESULTS OF OPERATIONS
Revenues: Revenues for the year ended December 31, 1998 were $311,000
(CH450,000), up 50% from the $207,000(CH300,000) generated during the year
ended December 31, 1997. The Company had only one contract from which it
derived revenues in each of those years. The contract amount was increased
during 1998 over the 1997 amount as a result of additional funds being
available to the contractor to fund the research and development activities
under the contract. This contract was not related to the development of the
Sochrys products.
Salaries and Research and Development Costs: During the year ended
December 31, 1998 the Company spent $115,000 (CH167,000) on salaries to
employees working on research and development projects. A further $155,000
(CH225,000) was paid to unrelated companies for research and development
activities. During the year ended December 31, 1997 the Company
Pg. 26
<PAGE> 27
paid unrelated companies $182,000 (CH277,000) for research and development
activities. The 50% increase in total research and development spending is a
result of the increased available funds resulting from the 50% increase in
revenues in the period.
General and Administrative Expenses: General and administrative
expenses consist of such items as salaries that have not been allocated to
research and development activities and office related expenses. During the
year ended December 31, 1998 the Company incurred $500 (CH700), compared to
$8,500 (CH12,400) for the year ended December 31, 1997. The Company's general
and administrative costs were low because it shared its facilities with related
companies until the September 1999.
Depreciation and Amortization: During 1998 the Company purchased
$71,000 (CH107,000) of computer equipment to support its research and
development activities. As such, depreciation and amortization expense during
1998 was significantly higher than during the year ended December 31, 1997,
when the Company recorded depreciation and amortization expense of $12,000
(CH16,000).
Gains and Losses from Changes in Foreign Exchange Rates: During the
year ended December 31, 1998 the Company recorded unrealized gains of $6,300
related to changes in the rates of exchange between the Swiss franc and the US
dollar. This is compared to an unrealized loss of $4,500 for the year ended
December 31, 1997. These gains and losses are the result of translating the
operating results and balance sheet accounts from Swiss francs to US dollars.
Since the Company earned its revenues and paid its expenses in Swiss francs,
there have not been any realized gains or losses arising from changes in the
rates of exchange between the Swiss franc and the US dollar.
Income Taxes: The Company is taxable on income earned in Switzerland
at a rate of approximately 40%.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1998 the Company had working capital of $33,000,
compared to $71,000 at December 31, 1997. This decrease in working capital is
primarily the result of the acquisition of $71,000 of computer equipment during
1998 that was funded from working capital. In addition, accounts receivable
were $40,000 at December 31, 1998, down $14,000 from the $54,000 outstanding at
December 31, 1997.
Net Cash Flow from Operations: During the year ended December 31, 1998
the Company generated $52,000 from operations, compared to utilizing $75,000
during the year ended December 31, 1997. This increase of $127,000 is primarily
the result of increased net income plus depreciation and amortization and gains
and losses on changes in foreign exchange rates, $26,000 in 1998 compared to
$13,000 in 1997, and a $102,000 reduction in accounts payable that took place
during 1997 as compared to 1996. This reduction in accounts payable
Pg. 27
<PAGE> 28
was the result of significant expenditures that were incurred during the last
few months of 1996 that were paid in 1997.
Net Cash Used in Investing Activities: During the year ended December
31, 1998 the Company acquired $71,000 of computer equipment. There were no
computer equipment purchases during 1997.
Net Cash From Financing Activities: During the year ended December 31,
1998 the Company had no financing activities. During the year ended December
31, 1997 the Company liquidated $98,000 of marketable securities.
For information concerning the Company's capital requirements see
"Plan of Operations" above.
ITEM 3. DESCRIPTION OF PROPERTIES
The Company maintains two offices. Its principal executive office is
located at Route de Jussy 29, CH 1226 Thonex-Geneva, Switzerland and its
telephone number is 41-22-869-2070. Its United States office is located at 4651
Roswell Road, Suite B-106, Atlanta, Georgia 30342 and its telephone number is
(404) 256-1963.
The Company's Geneva offices are leased from a non-affiliated party
for a period of three years beginning November 1, 1999 through October 31,
2002. The lease covers two separate floors and 10 spaces in the parking garage.
The applicable annual charges are provided separately for each space rented:
<TABLE>
<CAPTION>
ANNUAL APPROX. APPROX.
RENTAL US DOLLAR LEASE US DOLLAR
SPACE SPACE RENT UTILITIES COST EQUIVALENT DEPOSIT EQUIVALENT
(Square (Square (Swiss (Swiss (Swiss (Swiss
Meters) Footage) Francs) Francs) Francs) (USD) Francs)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2nd Floor 230 2,476 88,008 7,200 95,208 63,472 14,380 9,587
4th Floor 352 3,789 57,504 5,160 62,664 41,776 22 000 14,667
Garage 10 Not 21,000 Not 21,000 14,000
spaces applicable applicable
------------- -------------
119,248 24,253
============= =============
</TABLE>
Providing the terms and conditions of the lease have been met, the
lease may be renewed yearly by written request six months prior to expiration.
The termination of the lease may be considered with six-months' notice but
subject to the regular fulfillment of the terms of the lease.
Pg. 28
<PAGE> 29
The Company's Atlanta office is leased from a non-affiliated party per
oral arrangement on a month by month basis. The lease provides shared access to
and usage of 1,000 square feet.
ITEM 4. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth information as of November 30, 1999,
with respect to (1) any person known by the Company to own beneficially more
than 5% of the Company's Common Stock; (2) the Company's Common Stock
beneficially owned by each officer and director of the Company, and; (3) the
total of the Company's Common Stock beneficially owned by the Company's
officers, directors and owners of 5% or more of the Company common stock as a
group.
<TABLE>
<CAPTION>
Name & Address of Number of Shares Approximate Percent
Beneficial Owner Beneficially Owned of Common Stock
- ---------------- ------------------ Outstanding (1)
------------------
- ---------------------------------------------------------------------------------------------------
OFFICERS, DIRECTORS AND EMPLOYEES
<S> <C> <C>
Jean Pierre Hofman (4)(6) 3,400,000 29%
Andre Hensler (4)(6) 3,500,000 (2) 30%
Paul Claverie (4)(6) 3,500,000 (2) 30%
Suzette Cousineau (5)(6) 3,420,000 (3) 29%
Antoine Veit (5)(6) 3,500,000 (2) 30%
Waycross Corp. (6) 3,400,000 (2)(3) 29%
29 Rue des Deux Communes
1226 Thonex-Geneva
Switzerland
All Officers, Directors and Employees
As a Group (five Persons) 3,720,000 (2)(3) 31%
FIVE PERCENT STOCKHOLDERS
Valdosta Corp. (7) 2,400,000 21%
P.O. Box 30592
Cayside, 2nd Floor, Harbour Drive
Georgetown, Grand Cayman
Cayman Islands, BWI
</TABLE>
(1) Based upon 11,612,924 shares of Common Stock issued and outstanding as
of November 30, 1999 and includes for each person the shares of Common
Stock issuable upon exercise of the warrants owned by them.
Pg. 29
<PAGE> 30
(2) Includes 100,000 shares of Common Stock issuable to each of Messrs.
Hensler, Claverie and Veit upon exercise of the warrants owned by
them.
(3) Includes 20,000 shares of Common Stock issuable upon exercise of the
warrants owned by Ms. Cousineau.
(4) Executive Officer and/or Director of the Company with an address at
the Company's Geneva, Switzerland office.
(5) An employee of the Company with an address at the Company's Geneva,
Switzerland office.
(6) Waycross Corporation is a corporation incorporated under the laws of
the Cayman Islands. Jean Pierre Hofman, Andre Hensler, Paul Claverie,
Suzette Cousineau and Antoine Veit have beneficial interests in
Waycross Corporation. Accordingly, the 3,400,000 Shares owned of
record by Waycross Corporation have been included as beneficially
owned by each of the foregoing individuals, and by all Officers,
Directors and employees as a group.
(7) A portfolio management corporation incorporated under the laws of the
Cayman Islands.
ITEM 5. Directors and Executive Officers, Promoters and Control Persons
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Jean Pierre Hofman 53 Chairman, President, Chief Executive Officer and Director
Andre Hensler 56 Chief Financial Officer and Director
Paul Claverie 59 Secretary/Treasuer and Director
</TABLE>
JEAN PIERRE HOFMAN has been a Director of the Company since August 3,
1999 and the Chairman, President and Chief Executive Officer of the Company
since October 12, 1999 and of the Subsidiary (and its predecessors) since 1984.
He overseas key management and strategic decisions at the Company and plays an
important role in new product development strategy. Since 1996, he focused the
research and development on creating the SOCHRYS Universal Computer(TM).
Previously, he managed the development and marketing of software, which used
multi-thread, interoperable objects interfaced in a multi-windows environment.
From 1970 to 1984, Mr. Hofman developed software as a consultant for such
companies as L'Oreal, Volkswagen and the Diamond Stock Exchange of Antwerp. Mr.
Hofman is a professional engineer from the INSEE Institute in Belgium.
ANDRE HENSLER has been a Director of the Company since August 3, 1999
and the Chief Financial Officer of the Company since October 12, 1999 and of
the Subsidiary since April 1995. He has experience in finance and strategic
planning, developing and implementing financial and management control systems,
and enhancing the reliability and timing of information for decision making. He
also has had direct responsibility for mergers and
Pg. 30
<PAGE> 31
acquisitions, cash management and foreign exchange operations, handling of
commercial credits, capital markets and trade finance business. Since 1991, he
has also been the managing director of a Swiss finance company. Earlier, he was
First Vice-president of SBP Finance S.A., Vice President of Banque Paribas
(Suisse) S.A. and held various positions of increasing responsibility with the
Union Bank of Switzerland. He holds a bachelor's degree of commercial and
business administration from Ecole Superieure de Commerce, Switzerland and a
language degree from Cambridge University.
PAUL CLAVERIE has been the Secretary/Treasurer and a Director of the
Company since October 12, 1999 and Secretary/Treasurer of the Subsidiary since
1996. He has experience in corporate administration and finance. He is
responsible for administrative management, human resources, planning,
information systems and accounting operations. From 1995 to 1996 he was
President of Minicom France S.A., a French software company. Previously, he
held financial management positions of increasing responsibility at Tissus
Lauer - Manufacture des Tapis de Cogolin S.A., where he was elected to the
Board and was named manager of its holding company, SEDI. Earlier, he was the
chief financial officer at Cooperative Vinicole de Grimaud. Mr. Claverie holds
a bachelors degree in commerce from the Ecole Superieure de Commerce et
d'Administration in Marseille.
ITEM 6. Executive Compensation
The following table shows all the cash compensation paid or to be paid
by the Company or its Subsidiary, as well as certain other compensation paid or
accrued, during the fiscal years indicated, to the Chief Executive Officer for
such period in all capacities in which he served. No other Executive Officer
received total annual salary and bonus in excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ----------- --------- ------------ ------------ ------------ ---------------------------------------------------
Long Term Compensation
- ----------- --------- ------------ ------------ ------------ ---------------------------------------------------
Annual Compensation
- ----------- --------- -------------------------------------- ------------ ------------ ------------ ------------
(a) (b) ( c) (d) (e) (f) (g) (h) (i)
- ----------- --------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Other Securities All
Name and Annual Restricted Underlying LTIP Other
Principal Compensa- Stock Options/ Payouts Compensa-
Position Year Salary($) Bonus($) tion ($) Award ($) SARs ($) Tion
- ----------- --------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
- ----------- --------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
Hofman, Jean 1999 $69,000* 0 0 0 0 0 0
Pierre 1998 $51,000 0 0 0 0 0 0
Chairman, 1997 $51,000 0 0 0 0 0 0
CEO & Pres.
- ----------- --------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
*for the period January 1 to November 30, 1999.
Pg. 31
<PAGE> 32
Directors are not compensated for acting in their capacity as
Directors. Directors are reimbursed for their accountable expenses incurred in
attending meetings and conducting their duties.
There are no employment agreements between the Company and any of its
Executive Officers (see "Part I. Item 1. Description of Business; Risk Factors
- - Dependence On Key Personnel").
For further information concerning warrants owned by executive
officers, directors and employees See: "Part II. Item 4. Recent Sales of
Unregistered Securities".
ITEM 7. Certain Relationships and Related Transactions
During the year ended December 31, 1998 the Company incurred $148,000
of research and development costs under a contract with Sochrys B.V., a company
controlled by Jean Pierre Hofman, an Executive officer, director and a
prncipal shareholder of the Company.
ITEM 8. Description of Securities
Common Stock
The Company is authorized to issue fifty million (50,000,000) Shares
of Common Stock, $.001 par value per Share. Each outstanding Share of Common
Stock is entitled to one vote, either in person or by proxy, on all matters
that may be voted upon by the owners thereof at meetings of the stockholders.
At present, the holders of Common Stock (i) have equal ratable rights
to dividends from funds legally available therefor, when, and if declared by
the Board of Directors of the Company; (ii) are entitled to Share ratably in
all of the assets of the Company available for distribution to holders of
Common Stock upon liquidation, dissolution or winding up of the affairs of the
Company; (iii) do not have preemptive, subscription or conversion rights, or
redemption or sinking fund provisions applicable thereto; and (iv) are entitled
to one non-cumulative vote per Share on all matters on which stockholders may
vote at all meetings of stockholders.
Preferred Stock
The Company is authorized to issue five million (5,000,000) Shares of
Preferred Stock, none of which have been issued as of the date of this
Registration Statement. The relative rights, privileges and obligations (e.g.,
voting rights, dividend rights, conversion features, liquidation
Pg. 32
<PAGE> 33
preferences) of holders of the Preferred Stock may be determined by the
Company's Board of Directors without Shareholder approval.
PART II
ITEM 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Shareholder Matters
(a) Marketing Information -- The principal U.S. market in which the
Company's Common Stock (all of which are of one class) are traded or will trade
is in the over-the-counter market. The stock was quoted on the OTC Bulletin
Board (Symbol: "SOCH") until December 1, 1999, after which it became quotable
on the Pink Sheets. The Company's stock is not traded or quoted on any
Automated Quotation System.
The following table sets forth the range of high and low bid quotes of
the Company's Common Stock per quarter during the fiscal years ended December
31, 1997 and 1998 and the first three quarters of fiscal 1999 as reported by
the OTC Bulletin Board (which reflect inter-dealer prices without retail
mark-up, mark-down or commission and may not necessary represent actual
transactions).
MARKET PRICE OF COMMON STOCK
<TABLE>
<CAPTION>
BID ASK
QUARTER ENDING High Low High Low
<S> <C> <C> <C> <C>
1997
January 1 to March 31* n/b n/b 0.625 0.625
April 1 to June 30* n/b n/b 0.625 0.625
July 1 to September 30* n/b n/b 0.625 0.625
October 1 to December 31* n/b n/b 0.625 0.625
1998
January 1 to March 31* n/b n/b 0.625 0.625
April 1 to June 30* n/b n/b 0.625 0.625
July 1 to September 30* n/b n/b 0.625 0.625
October 1 to December 31* n/b n/b 0.625 0.625
1999
January 1 to March 31* 0.01 0.001 1.00 0.25
April 1 to April 6* 0.01 0.01 1.00 1.00
April 7 to June 30 0.125 0.125 10.125 10.125
</TABLE>
Pg. 33
<PAGE> 34
<TABLE>
<S> <C> <C> <C> <C>
July 1 to September 30 5.625 0.125 10.125 3.375
</TABLE>
* Prior to the one-for-300 reverse split of the issued and outstanding
shares of Common Stock effected on April 6, 1999.
(b) Holders -- There were approximately 96 holders of record of the
Company's Common Stock as of November 19, 1999 inclusive of those
brokerage firms and/or clearing houses holding the Company's
securities for their clientele (with each such brokerage house and/or
clearing house being considered as one holder). The aggregate number
of shares of common stock outstanding as of November 19, 1999 was
11,612,924 shares.
(c) Dividends - The Company has not paid or declared any dividends upon
its Common Stock since its inception and, by reason of its present
financial status and its contemplated financial requirements, does not
contemplate or anticipate paying any dividends upon its Common Stock
in the foreseeable future.
ITEM 2. Legal Proceedings.
The Company is not presently a party to any material litigation.
ITEM 3. Changes in and Disagreements with Accountants.
None.
ITEM 4. Recent Sales of Unregistered Securities.
In April 1999, the Company issued 3,000,000 shares of its Common Stock
for an aggregate of $30,000 pursuant to Rule 504 of Regulation D under the Act.
In August 1999, the Company issued an aggregate of 8,459,000 shares of
Common Stock and 2,000,000 Common Stock Purchase Warrants to purchase 100% of
the issued and outstanding shares of the Subsidiary's Common Stock pursuant to
Section 4(2) of the Act.
In August 1999 the Company issued warrants to purchase an aggregate of
730,000 shares of Common Stock to certain directors, executive officers,
employees and consultants in consideration for services rendered and to be
rendered. These warrants may be exercised at any time within 4 years from the
date of issue at an exercise price of $3.00 and also carry cashless exercise
provisions. The warrants were issued pursuant to Regulation S under the Act.
The following table lists the warrants issued to directors, executive
officers and employees:
Pg. 34
<PAGE> 35
<TABLE>
<CAPTION>
Exercise EXPIRATION
NAME YEAR OF ISSUE NUMBER PRICE DATE
<S> <C> <C> <C> <C>
Andre Hensler 1999 100,000 $3.00 08/31/03
Paul Claverie 1999 100,000 $3.00 08/31/03
Antoine Veit 1999 100,000 $3.00 08/31/03
Andre Maisonneuve 1999 20,000 $3.00 08/31/03
Suzette Cousineau 1999 20,000 $3.00 08/31/03
</TABLE>
In February 1999, the Company issued 91,667 Shares of Common Stock in
exchange for certain mining rights pursuant to Section 4(2) of the Act.
ITEM 5. Indemnification of Directors and Officers.
Section 78.7502 of the Nevada Revised Statutes ("NRS") contains
various provisions entitling directors, officers, employees or agents of the
Company to indemnification from judgments, fines, amounts paid in settlement
and reasonable expenses, including attorney's fees, as the result of an action
or proceeding (whether civil, criminal, administrative or investigative) in
which they may be involved by reason of being or having been a director,
officer, employee or agent of the Company provided said persons acted in good
faith and in a manner reasonably believed to be in or not opposed to the best
interests of the Company (and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that the conduct complained of
was unlawful).
PART F/S
See the Company's Financial Statements at the end of this Registration
Statement.
Pg. 35
<PAGE> 36
PART III
ITEMS 1 & 2. Index to Exhibits and Description of Exhibits.
Exhibits
<TABLE>
<S> <C>
2.a. The Company's Articles of Incorporation
2.b. Amendments to the Company's Articles of Incorporation
2.c. The Company's By-Laws
2.d. Translation summary of material terms of Articles of Incorporation for
Graph-O-Logic S.A.
2.e.* Articles of Incorporation of Sochrys Technologies Inc.
2.f.* By-Laws of Sochrys Technologies Inc.
2.g.* Translation summary of material terms of Articles of Incorporation for
Sochrys Technologies S.A.
3.a.* Text of Common Stock Certificate
4.a. Text of Class A Warrants
4.b. Text of Class B Warrants
4.c. Text of Class C Warrants
6.a. Translation summary of Lease Agreement for Geneva Offices
6.b. Consulting Agreement dated August 30, 1999 between the Company and
Capital House A Finance and Investment Corporation.
* To be filed by amendment.
</TABLE>
Pg. 36
<PAGE> 37
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
SOCHRYS.COM INC
Dated: December 7, 1999 By: /s/ Jean Pierre Hofman
------------------------------
Jean Pierre Hofman
Chief Executive Officer
Pg. 37
<PAGE> 38
SOCHRYS.COM INC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 34,799 $ 7,056
Accounts Receivable -- 39,800
-------- --------
Total current assets 34,799 46,856
-------- --------
Office equipment 106,980 106,980
Less accumulated depreciation and
amortization (51,893) (35,900)
-------- --------
Net property and equipment 55,087 71,080
-------- --------
Other assets 256 1,022
-------- --------
$ 90,142 $118,958
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,598 $ 14,096
Stockholders' Equity:
Common stock, no par value 11,612 80,619
Additional paid in capital 146,547
Retained earnings (86,615) 24,243
-------- --------
Total stockholders' equity 71,544 104,862
-------- --------
Total liabilities and stockholders'
equity $ 90,142 $118,958
======== ========
</TABLE>
See accompanying notes.
F-1
<PAGE> 39
SOCHRYS.COM INC
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1999 1998
-------- --------
<S> <C> <C>
Revenues $169,753 $268,637
Expenses:
Salaries 129,552 83,259
Research and development 72,169 149,884
General and administrative 9,071 317
Depreciation and amortization 16,759 3,812
-------- --------
227,551 237,272
-------- --------
Operating income (loss) (57,798) 31,364
(Gain) loss on changes in foreign exchange rates 5,521 (1,292)
Income tax expense -- 11,515
-------- --------
Net income (loss) $(63,319) $ 21,142
======== ========
Net income (loss) per common share (undiluted
and fully diluted) $(0.01) $(211.42)
Weighted average common shares outstanding 5,681,046 100
</TABLE>
See accompanying notes.
F-2
<PAGE> 40
SOCHRYS.COM INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) $(63,319) $ 21,142
Adjustment to reconcile net loss to net cash
provide by operating activities:
Depreciation and amortization 16,759 3,812
Unrealized gains (losses) in foreign currency
exchange rate changes -- 5,754
Changes in operating assets and liabilities:
Accounts receivable 39,802 16,815
Accounts payable and accrued liabilities 4,501 8,235
-------- --------
Net Cash provided by (used in) operating activities (2,257) 55,758
INVESTING ACTIVITIES
Additions to office equipment -- (68,080)
FINANCING ACTIVITIES
Cash on hand at date of acquisition 30,000 --
Net increase (decrease) in cash 27,743 (12,322)
Cash at beginning of year 7,056 22,378
-------- --------
Cash at end of year $ 34,799 $ 10,056
======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 41
SOCHRYS.COM INC.
Notes to Unaudited Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying financial statements are unaudited for the interim periods,
but include all adjustments (consisting only of normal recurring accruals)
which management considers necessary for the fair presentation of results for
the nine months ended September 30, 1999.
Moreover, these financial statements do not purport to contain complete
disclosure in conformity with generally accepted accounting principles and
shoud be read in conjunction with the other financial statements included
herein.
The results reflected for the nine months ended September 30, 1999 are not
necessarily indicative of the results for the entire fiscal year.
2. BUSINESS COMBINATION
On August 3, 1999 the Company acquired 100% of the outstanding shares of
Graph-O-Logic S.A., a corporation incorporated under the laws of Switzerland.
The financial statements reflect the activities of Graph-O-Logic S.A. with the
exception of $30,000 of cash on hand at the time of the acquisition.
F-4
<PAGE> 42
REPORT OF FIDICIAIRE BUJARD, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Graph-O-Logic S.A.
We have audited the accompanying balance sheets of Graph-O-Logic S.A. as of
December 31, 1998 and 1997, and the related statements of operations,
stockholders' and cash flows for each of the three years in the period ended
December 31, 1998, 1997, 1996. 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 United States 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 Graph-O-Logic S.A. as of
December 31, 1998, 1995 and 1996, in conformity with United States generally
accepted accounting principles.
/s/ Fidiciaire Bujard
Geneva, Switzerland
July 27, 1999
Pg. 39
F-5
<PAGE> 43
GRAPH-O-LOGIC S.A.
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------------
1998 1997
---------------------- ----------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $7,056 $22,378
Marketable securities -- --
Accounts Receivable 39,800 53,631
-------- -------
Total current assets 46,856 76,009
-------- -------
Office equipment (Note 2) 106,980 35,900
Less accumulated depreciation and amortization (Note 2) (35,900) (31,406)
--------- --------
Net property and equipment 71,080 4,494
-------- -------
Other assets (Note 3) 1,022 2,043
-------- -------
$118,958 $82,546
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $14,096 $4,986
Stockholders' Equity: (Note 5)
Common stock, no par value:
Authorized shares - 100 a December 31, 1998 and 1997
Issued and outstanding shares - l00 at December 31, 1998
and 1997. 80,619 80,619
Retained earnings 24,243 (3,059)
-------- --------
Total stockholders' equity 104,862 77,560
-------- -------
Total liabilities and stockholders' equity $118,958 $82,546
======== =======
</TABLE>
See accompanying notes.
Pg. 40
F-6
<PAGE> 44
GRAPH-O-LOGIC S.A.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues $310,666 $206,754 $20,245
Expenses:
Salaries 115,298 -- --
Research and development 154,864 182,134 4,211
General and administrative 487 8,560 546
Depreciation and amortization (Notes 2, 3) 5,516 11,792 8,561
---------- -------- --------
276,165 202,486 13,318
---------- -------- --------
Operating income 34,501 4,268 6,927
(Gain) loss on changes in foreign exchange rates (6,326) 4,493 4,605
Income tax expense 13,525 2,818 1,731
------ ----- -----
Net income (loss) $27,302 ($3,043) $ 591
======= ======= ======
Net income (loss) per common share (undiluted
and fully diluted) $273.02 ($30.43) $5.91
Weighted average common shares outstanding
(undiluted and fully diluted) 100 100 100
</TABLE>
See accompanying notes.
Pg. 41
F-7
<PAGE> 45
GRAPH-O-LOGIC S.A.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $27,302 ($3,043) $591
Adjustment to reconcile net loss to net cash
provide by operating activities:
Depreciation and amortization 5,516 11,792 8,561
Unrealized gains (losses) in foreign currency
exchange rate changes (3,560) 7,317 --
Changes in operating assets and liabilities:
Accounts receivable 13,829 10,948 (27,536)
Accounts payable and accrued liabilities (Note 4) 9,110 (102,346) 17,653
-------- --------- -------
Net Cash provided by operating activities 52,197 (75,332) (731)
INVESTING ACTIVITIES
Additions to office equipment (67,518) -- --
FINANCING ACTIVITIES
Proceeds from marketable securities -- 97,595 --
-------- -------- --------
Net increase (decrease) in cash (15,321) 22,263 (731)
Cash at beginning of year 22,377 114 845
-------- -------- -------
Cash at end of year $7,056 $22,377 $114
======== ======== ======
</TABLE>
See accompanying notes.
Pg. 43
F-8
<PAGE> 46
GRAPH-O-LOGIC S.A.
Statement of Stockholders' Equity
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
<TABLE>
<CAPTION>
TOTAL
COMMON STOCK RETAINED SHAREHOLDERS'
SHARES AMOUNT EARNINGS EQUITY
<S> <C> <C> <C> <C>
Balance at December 31, 1995 100 $80,619 $ (608) $ 80,011
Net income for the year ended December 31, 1996 591 591
------ ------- ------- --------
Balance at December 31, 1996 100 80,619 (17) 80,602
Net income for the year ended December 31, 1997 (3,043) (3,043)
------ ------- ------- --------
Balance at December 31, 1997 100 80,619 (3,060) 77,559
Net income for the year ended December 31, 1998 27,302 27,302
------ ------- ------- --------
Balance at December 31, 1998 100 $80,619 $24,242 $104,862
====== ======= ======= ========
</TABLE>
See accompanying notes.
F-9
<PAGE> 47
GRAPH-O-LOGIC S.A.
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The Company was incorporated February 15, 1995 under Swiss jurisdiction in the
Canton of Geneva.
Mr. Jean-Pierre Hofman holds title to 99 of 100 shares, accounting for 99% of
the voting stock. Mr. Andre Hensler holds the remaining 1 share.
The company is devoted to software development, web site implementation,
multimedia CD design and computer graphic publications. The professional
services provided to its clientele included system analyses, strategic advice
and the implementation of software dedicated solutions with respect to the
French Minitel and the Internet. In addition, the company is involved in the
design and sale of customized computer equipment and software.
PROPERTY AND EQUIPMENT
The company owns office furniture and equipment. The carrying value on the
balance sheet was calculated using the historic cost of the tangible assets
less depreciation and amortization calculated at a rate of 30% per annum.
The carrying value of the incorporation costs (classified as deferred assets)
was calculated using the original outlay less depreciation and amortization was
calculated at the rate of 20% per annum.
REVENUE RECOGNITION
The accounting policy for recognizing revenue is at the point at which the
services are delivered and invoiced.
INCOME TAXES
Income taxes are accounted for under the asset and liability method, under
which deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. The measurement of deferred tax
assets is adjusted by a valuation allowance, if necessary, to recognize the
extent to which based on available evidence, the future tax benefits more
likely than not will be realized.
Pg. 44
F-10
<PAGE> 48
GRAPH-O-LOGIC S.A.
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STATEMENT OF CASH FLOWS
The Company considers all highly liquid investments purchase with an original
maturity of three months or less to be cash equivalents.
NET INCOME PER COMMON SHARE
Net income per common share is presented in accordance with Statement of
Financial Accounting Standards No. 128, Earnings per Share. As the Company
incurred net income during each of the years ended December 31, 1998, 1997 and
1996, the net income per common share data is based on the weighted average
common shares outstanding on an undiluted basis. The company has issued no
securities that might result in a dilution of earnings per share.
CONCENTRATIONS OF CREDIT RISK
Since the company's inception, its revenues are derived from a single source.
The single client project is on-going and its disappearance may impede the
ability of the Company to carry on business.
FOREIGN CURRENCY
The revenues and expenses are in Swiss Francs.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenue and expenses during the reporting period.
Because of the use of estimates inherent in the financial reporting process,
actual results could differ from these estimates.
Pg. 45
F-11
<PAGE> 49
GRAPH-O-LOGIC S.A.
Notes to Consolidated Financial Statements (continued)
2. OFFICE EQUIPMENT
Office and computer equipment expenses of 48,548 CHF (42,100 US$) was amortized
at a rate of 30% per annum.
NOTE 2: Office Equipment
<TABLE>
<CAPTION>
CHF USD
--- ----
<S> <C> <C>
Net book value, January 1, 1997 20,754 $18,031
Depreciation Expense 14,565 12,654
------ -------
Net book value, December 31, 1997 6,189 5,377
Additions, at historic cost 97,800 84,970
Depreciation Expense 6,189 5,377
------ ------
Net book value, December 31, 1998 97,800 $84,970
====== =======
</TABLE>
3. DEFERRED ASSETS
Incorporation costs of 6,895 CHF (5,990 US$) was amortized at a rate of 20% per
annum.
<TABLE>
<CAPTION>
CHF USD
--- ----
<S> <C> <C>
Net book value, January 1, 1997 6,895 $5,990
Depreciation Expense 1,379 1,587
----- -----
Net book value, December 31, 1997 5,516 4,792
Depreciation Expense 2,758 2,396
----- -----
Net book value, December 31, 1998 1,379 $1,198
===== ======
</TABLE>
4. CURRENT AND LONG-TERM DEBT
The company reported a short-term debt in the form of an unsecured demand note
in the amount of 67,096 CHF which was retired during 1997. The proceeds from
the liquidation of the financial instrument were used to repay the demand note.
5. STOCKHOLDERS' EQUITY
There is a single class of common stock with no par value and no limitation of
the number of shares of common stock that may be issued.
Pg. 46
F-12
<PAGE> 50
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
FINANCIAL STATEMENTS
March 31, 1999, December 31, 1998 and 1997
Page 1
F-13
<PAGE> 51
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Global Science Corporation
We have audited the accompanying balance sheets of Global Science Corporation
(a Development Stage Company) as of March 31, 1999, December 31, 1998 and 1997
and the related statements of operations, stockholders' equity and cash flows
for the three months ended March 31, 1999 and the years ended December 31,
1998, 1997 and 1996 and from inception on April 12, 1989 through March 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide 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 Global Science Corporation (a
Development Stage Company) as of March 31, 1999, December 31, 1998 and 1997 and
the results of its operations and cash flows for the three months ended March
31, 1999 and the years ended December 31, 1998, 1997 and 1996 and from
inception on April 12, 1989 through March 31, 1999 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has minimal assets and no operations and is
dependent upon financing to continue operations. These factors raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in the Note 2.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
April 30, 1999
Pg. 3
F-14
<PAGE> 52
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
March 31, 1999 December 31st,
Current Assets 1999 1998 1997
<S> <C> <C> <C>
Cash $ -- $ -- $ --
----------- ----------- ----------
Total Current Assets
Unpatented Mining Claims (Note 3) 27,500 -- --
------------ ------------ ----------
Total Assets $ 27,500 $ -- $ --
============ ============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ -- $ -- $ --
----------- ----------- ----------
Total Current Liabilities $ -- $ -- $ --
----------- ----------- ----------
Stockholders' Equity
Preferred Stock, 5,000,000 shares of
$.001 par value authorized, no shares
issued and outstanding. -- -- --
Common Stock, authorized 50,000,000
shares of $.001 par value, 153,000,
61,333 and 61,333 shares issued and
outstanding, respectively. 153 61 61
Additional Paid in Capital 47,387 19,979 19,979
Deficit Accumulated During the
Development Stage (20,040) (20,040) (20,040)
------------- ---------- -----------
Total Stockholders' Equity 27,500 -- --
------------ ------ ---------
Total Liabilities and Stockholders' Equity $ 27,500 $ -- $ --
------------ ---------- ---------
</TABLE>
Pg. 4 The accompanying notes are an integral part of these financial statements
F-15
<PAGE> 53
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
For the Deficit
Three Months Accumulated
Ended During the
March 31, For the years ended December 31, development
--------------------------------
1999 1998 1997 1996 Stage
------ --------- --------- --------- ----------
<S> <C>
Revenues: $ -- $ -- $ -- $ -- $ --
------------- ------------- ------------- ------------- ------------
Expenses:
Amortization -- -- -- -- --
General &
Administrative -- -- -- -- 340
(19,700)
Total Expenses -- -- -- -- (20,040)
------------- ------------- ------------- ------------- --------
Net (Loss) $ -- $ -- $ -- $ -- $ (20,040)
============= ============= ============= ============= ==========
Net Loss Per Share $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.35)
========== ========== ========== ========== =========
Weighted Average shares
Outstanding 98,412 61,333 61,333 61,333 57,887
========== ========== ========= ========= =========
</TABLE>
Pg. 5 The accompanying notes are an integral part of these financial statements
F-16
<PAGE> 54
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Additional Deficit
Paid-in Accumulated
Capital During the
Common Stock (Discount on Development
Shares Amount Stock) Stage
------ ------ ------ -----
<S> <C> <C> <C> <C>
Balance at inception on April 12, 1999 -- $ -- $ -- $ --
Common stock issued for organizational
costs, April 1989 26,667 27 313 --
Common stock issued for cash, July 1990 34,666 34 19,666 --
Net loss from inception through
December 31, 1993 -- -- -- (20,040)
-------- -------- --------- ----------
Balance, December 31, 1993 61,333 61 19,979 (20,040)
Net loss December 31, 1994 -- -- -- --
-------- -------- --------- ---------
Balance, December 31, 1994 61,333 61 19,979 (20,040)
Net loss December 31, 1995 -- -- -- --
-------- -------- --------- ---------
Balance, December 31, 1995 61,333 61 19,979 (20,040)
Net loss December 31, 1996 -- -- -- --
-------- -------- --------- ---------
Balance, December 31, 1996 61,333 61 19,979 (20,040)
Net loss December 31, 1997 -- -- -- --
-------- -------- --------- ---------
Balance, December 31, 1997 61,333 61 19,979 (20,040)
Net loss December 31, 1998 -- -- -- --
-------- -------- --------- ---------
Balance, December 31, 1998 61,333 61 19,979 (20,040)
Common stock issued for mining
Claims, February 1999 91,667 92 27,408 --
Net loss for the three months ended
March 31, 1999 -- -- -- --
-------- -------- --------- --------
Balance, March 31, 1999 153,000 $ 153 $ 47,387 $ (20,040)
======== ========= ========== ===========
</TABLE>
Pg. 6 The accompanying notes are an integral part of these financial statements
F-17
<PAGE> 55
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
Statement of Cash flows
<TABLE>
<CAPTION>
For the From inception
Three Months on April 12,
Ended For the years ended December 31, 1999 Through
March 31, March 31,
1999 1998 1997 1996 1999
-------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating
Activities
Net Loss $ -- $ -- $ -- $ -- $ (20,040)
Adjustments to reconcile
net loss to net cash
provided by operations
Amortization -- -- -- -- 340
----------- ------------ ------------ ----------- -----------
Net Cash flows used in
Operating Activities -- -- -- -- (19,700)
----------- ------------ ------------ ----------- -----------
Cash flows from Investment
Activities: -- -- -- -- --
----------- ------------ ------------ ----------- -----------
Cash Flows from Financing
Activities:
Stock issued for cash -- -- -- -- (19,700)
----------- ------------ ------------ ----------- -----------
Net increase (decrease) in -- -- -- -- --
cash
Cash, beginning of year -- -- -- -- --
----------- ----------- ----------- ---------- -----------
Cash, end of year $ -- $ -- $ -- $ -- $ --
=========== =========== =========== ========== ===========
Supplemental Cash Flow Information
Cash Paid for:
Interest $ -- $ -- $ -- $ -- $ --
Taxes $ -- $ -- $ -- $ -- $ --
</TABLE>
Pg. 7 The accompanying notes are an integral part of these financial statements
F-18
<PAGE> 56
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
Notes to The Financial Statements
March 31, 1999, December 31, 1998 and 1997
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
Global Science Corporation is a Nevada corporation organized on
April 12, 1989 under the name of CCC Funding Corporation, for the purpose
of seeking out one or more potential business ventures. The Company
changed its name to American Gold Group, Inc. on February 2, 1992. On
August 26, 1992, the Company changed its name to American Group, Inc. On
December 23, 1993, the Company changed its name to Global Science
Corporation.
b. Accounting Method
The Company recognizes income and expenses on the accrual basis
of accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based
on the weighted average number of shares outstanding at the date of the
financial statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with
maturities of three months or less to be cash equivalents.
e. Organizational Costs
Organizational costs are amortized on a straight line method over
five years.
f. Provision for Income Taxes
No provision for income taxes has been recorded due to net
operating loss carryforwards totaling approximately $20,040 that will
be offset against future taxable income. Since the Company is in the
development stage, no provision for income taxes has been made.
Deferred tax assets and the valuation account is as follows at
March 31, 1999 and December 31, 1998 and 1997.
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998 1997
------- -------- -------
<S> <C> <C> <C>
Deferred tax asset:
NOL carryforward $ 6,814 $ 6,814 $ 6,814
Valuation allowance (6,814) (6,814) (6,814)
------- ------- -------
Total $ -- $ -- $ --
======== ======== ========
</TABLE>
F-19
<PAGE> 57
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
Notes to the Financial Statements
March 31, 1999, December 31, 1998 and 1997
NOTE 2 - Going Concern
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The
Company is dependent upon raising capital to continue operations. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty. It is management's plan to raise
additional funds to begin its intended operations, or find an
operating company to merge with.
NOTE 3 - Mining Claims
In February 1999, the Company issued 91,667 shares of common
stock for unpatented mining claims located in Fresno, California. The
claims are valued at $27,500.
NOTE 4 - Development Stage Company
The Company is a development stage company as defined in
Financial Accounting Standards Board Statement No. 7. It is
concentrating substantially all of its efforts in raising capital and
developing its business operations in order to generate significant
revenues.
NOTE 5 - Stockholders' Equity
In April 1989, 26,667 shares of common stock were issued to
officers and directors in exchange for organizational costs valued at
$340.
In July 1990, 34,666 shares of common stock were issued for
cash of $19,700.
In February 1999, 91,667 shares of common stock were issued
for unpatented mining claims valued at $27,500.
NOTE 6 - Stock Splits
In January 1992, the board of directors authorized a four for
one forward stock split. In March 1999, the board of directors
authorized a one for three hundred reverse stock split. These
financial statements have been retroactively restated to reflect these
splits.
NOTE 7 - Subsequent Events
In April 1999, the Company issued 3,000,000 shares of common
stock for cash of $30,000, pursuant to an exempt 504 Offering.
F-20
<PAGE> 58
EXHIBIT INDEX
Exhibit Description
No.
2.a. The Company's Articles of Incorporation
2.b. Amendments to the Company's Articles of Incorporation
2.c. The Company's By-Laws
2.d. Translation summary of material terms of Articles of Incorporation for
Graph-O-Logic S.A.
2.e.* Articles of Incorporation of Sochrys Technologies Inc.
2.f.* By-Laws of Sochrys Technologies Inc.
2.g.* Translation summary of material terms of Articles of Incorporation for
Sochrys Technologies S.A.
3.a.* Text of Common Stock Certificate
4.a. Text of Class A Warrants
4.b. Text of Class B Warrants
4.c. Text of Class C Warrants
6.a. Translation summary of Lease Agreement for Geneva Offices
6.b. Consulting Agreement dated August 30, 1999 between the Company and
Capital House A Finance and Investment Corporation.
- ---------------------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 2.A
SECRETARY OF STATE
[SEAL OF THE STATE OF NEVADA]
STATE OF NEVADA
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that SOCHRYS.COM INC. did on April 12, 1989 file in this office
the original Articles of Incorporation; that said Articles are now on file and
of record in the office of the Secretary of State of the State of Nevada, and
further, that said Articles contain all the provisions required by the law of
said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my
hand and affixed the Great Seal of State, at
my office, in Carson City, Nevada, on August
18, 1999.
[SEAL OF THE STATE OF NEVADA]
/s/ Dean Heller
Secretary of State
By /s/ Jacqueline Curry
Certification Clerk
<PAGE> 2
FILIN GFEE-100.00 TS
LEWIS & LEHMAN
136 S. MAIN ST # 721
KEARNS BLDG.
SALT LAKE CITY, UT 84101
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
APR 18 1989
[ILLEGIBLE]
No. 3107-89
----------------------
ARTICLES OF INCORPORATION
OF
CCC FUNDING CORP.
The undersigned incorporators being natural persons more than eighteen
(18) years of age acting as all of the incorporators of the above-named
corporation (the "Corporation") hereby adopt the following articles of
incorporation for the Corporation:
ARTICLE I
NAME
The name of the Corporation shall be: CCC FUNDING CORP.
ARTICLE II
PERIOD OF DURATION
The Corporation shall continue in existence perpetually unless sooner
dissolved according to law.
ARTICLE III
PURPOSES AND POWERS
The purposes for which the Corporation is organized are:
(a) To acquire by purchase or otherwise, own, hold, lease, rent,
mortgage or otherwise, to trade with and deal in real estate, lands and
interests in lands and all other property of every kind and nature;
(b) To manufacture, use, work, sell and deal in chemicals,
biologicals, pharmaceuticals, electronics and products of all types owned
or hereafter owned by it for manufacturing, using and vending any devices
or devices, machine or machines or manufacturing, working or producing any
or all products;
(c) To borrow money and to execute notes and obligations and
security contracts therefor, to lend any of the monies or funds of the
Corporation and to take evidence on a general mercantile and merchandise
business and to purchase, sell and deal in such goods, supplies and
merchandise of every kind and nature;
(d) To guarantee the payment of dividends or interest on any other
contract or obligation of any corporation whenever proper or necessary for
the business of the Corporation in the judgment of its directors;
(e) To do all and everything necessary, suitable, convenient, or
proper for the accomplishment of any or the purposes or the attainment
<PAGE> 3
of any one or more of the objects herein enumerated or incidental to the
powers therein named or which shall at any time appear conclusive or
expedient for the protection or benefit of the Corporation, with all the
powers hereafter conferred by the laws under which this Corporation is
organized; and
(f) to conduct any lawful business for which a corporation may be
organized under the laws of Nevada.
ARTICLE IV
AUTHORIZED SHARES
The Corporation is authorized to issue a total of 55,000,000 shares
consisting of 5,000,000 shares of preferred stock having a par value of $.00l
per share (hereinafter the "Preferred Stock"), and 50,000,000 shares of common
stock, par value $.001 per share (hereinafter the "Common Stock"). The powers,
preferences, rights, qualifications, limitations, or restrictions of the shares
of stock of each class and series which the Corporation is authorized to issue,
is as follows:
(a) Preferred Stock. Shares of Preferred Stock may be issued from
time to time in one or more series as may from time to time be determined
by the board of directors. Each series shall be distinctly designated. All
shares of any one series of the Preferred Stock shall be alike in every
particular, except that there may be different dates from which dividends
thereon, if any, shall be cumulative, if made cumulative. The powers,
preferences, participating, optional and other rights of each such series
and the qualifications, limitations, or restrictions thereof, if any, may
differ from those of any and all other series at any time outstanding.
Except as hereinafter provided, the board of directors of this Corporation
is hereby expressly granted authority to fix by resolution or resolutions
adopted prior to the issuance of any shares of each particular series of
Preferred Stock, the designation, powers preferences and relative
participating, optional and other rights, and the qualifications,
limitations and restrictions thereof, if any, of such series, including,
without limiting the generality of the foregoing, the following:
(i) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute, each series, which number
may be increased (except as otherwise fixed by the board of
directors) or decreased (but not below the number of shares thereof
outstanding) from time to time by action of the board of directors;
(ii) The rate and times at which, and the terms and conditions
upon which, dividends, if any, on shares of the series shall be
paid, the extent of preferences or relations, if any, of such
dividends to the dividends payable on any other class or classes of
stock of the Corporation or on any series of Preferred Stock and
whether such dividends shall be cumulative or non-cumulative,
2
<PAGE> 4
(iii) The right, if any, of the holders of shares of the same
series to convert the same into, or exchange the same for, any other
class or classes of stock of the Corporation and the terms and
conditions of such conversion or exchange;
(iv) Whether shares of the series shall be subject to
redemption, and the redemption price or prices including, without
limitation, a redemption price or prices payable in shares of any
class or classes of stock of the Corporation, cash, or other
property and the time or times at which, and the terms and
conditions on which, shares of the series may be redeemed;
(v) The rights, if any, of the holders of shares of the series
upon voluntary or involuntary liquidation, merger, consolidation,
distribution or sale of assets, dissolution, or winding up of the
Corporation;
(vi) The terms of any sinking fund or redemption or purchase
account, if any, to be provided for shares of the series; and
(vii) The voting powers, if any, of the holders of shares of
the series which may, without limiting the generality of the
foregoing, include (A) the right to more or less than one vote per
share on any or all matters voted on by the shareholders and (B) the
right to vote as a series by itself or together with other series of
Preferred Stock or together with all series of Preferred Stock as a
class, on such matters, under such circumstances, and on such
conditions as the board of directors may fix, including, without
limitation, the right, voting as a series by itself or together with
other series of Preferred Stock or together with all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation in the event there shall have been a default in the
payment of dividends on any one or more series of Preferred Stock or
under such other circumstances and on such conditions as the board
of directors may determine.
(b) Common Stock. The Common Stock shall have the following powers,
rights, qualifications, limitations, and restrictions:
(i) After the requirements with respect to preferential
dividends of Preferred Stock, if any, shall have been met and after
the Corporation shall comply with all the requirements, if any, with
respect to the setting aside of funds as sinking funds or redemption
or purchase accounts and subject further to any other conditions
which may be required by the laws of the state of Nevada, then, but
not otherwise, the holders of Common Stock shall be entitled to
receive such dividends, if any, as may be declared from time to time
by the board of directors;
(ii) After distribution in full of the preferential amount to
be distributed to the holders of Preferred Stock, if any, in the
event of voluntary or involuntary liquidation, distribution or sale
of
3
<PAGE> 5
assets, dissolution or winding up of the Corporation, the holders of
the Common Stock shall be entitled to receive all the remaining
assets of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders, ratably in proportion to
the number of shares of the Common Stock held by each; and
(iii) Except as may otherwise be required by law or these
articles of incorporation, in all matters as to which the vote or
consent of stockholders of the Corporation shall be required or be
taken, including, any vote to amend the articles of incorporation,
to increase or decrease the par value of any class of stock, effect
a stock split or combination of shares, or later or change the
powers, preferences, or special rights of any class or series of
stock, the holders of the Common Stock shall have one vote per share
of Common Stock on all such matters and shall not have the right to
cumulate their votes for any purpose.
(c) Other Provisions.
(i) The board of directors of the Corporation shall have
authority to authorize the issuance, from time to time without any
vote or other action by the stockholders, of any or all shares of
the Corporation of any class at any time authorized, and any
securities convertible into or exchangeable for such shares, in each
case to such persons and for such consideration and on such terms as
the board of directors from time to time in its discretion lawfully
may determine; provided, however, that the consideration for the
issuance of shares of stock of the Corporation having par value
shall not be less than such par value. Shares so issued, for which
the full consideration determined by the board of directors has been
paid to the Corporation, shall be fully paid stock, and the holders
of such stock shall not be liable for any further call or assessment
thereon.
(ii) Unless otherwise provided in the resolution of the board
of directors providing for the issue of any series of Preferred
Stock, no holder of shares of any class of the Corporation or of any
security of obligation convertible into, or of any warrant, option,
or right to purchase, subscribe for, or otherwise acquire, shares of
any class of the Corporation, whether now or hereafter authorized,
shall, as such holder, have any pre-emptive right whatsoever to
purchase, subscribe for, or otherwise acquire shares of any class of
the Corporation, whether now or hereafter authorized.
(iii) Anything herein contained to the contrary
notwithstanding, any and all right, title, interest, and claim in
and to any dividends declared or other distributions made by the
Corporation, whether in cash, stock, or otherwise, which are
unclaimed by the stockholder entitled thereto for a period of six
years after the close of business on the payment date, shall be and
be deemed to be extinguished and abandoned; and such unclaimed
4
<PAGE> 6
dividends or other distributions in the possession of the
Corporation, its transfer agents, or other agents or depositories,
shall at such time become the absolute property of the Corporation,
free and clear of any and all claims of any person whatsoever.
ARTICLE V
LIMITATION ON LIABILITY
A director or officer of the Corporation shall have no personal liability
to the Corporation or its stockholders for damages for breach of fiduciary duty
as a director or officer, except for damages for breach of fiduciary duty
resulting from (a) acts or omissions which involve intentional misconduct,
fraud, or a knowing violation of law, or (b) the payment of dividends in
violation of section 78,300 of the Nevada Revised Statutes as it may from time
to time be amended or any successor provision thereto
ARTICLE VI
PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the Corporation's principal office in the state of Nevada
in One East First Street, town of Reno, county of Washoe, state of Nevada. The
name of its initial resident agent in the state of Nevada is The Corporation
Trust Company of Nevada. Either the registered office of the resident agent may
be changed in the manner provided by law.
ARTICLE VII
AMENDMENTS
The Corporation reserves the right to amend, alter, change, or repeal all
or any portion of the provisions contained in these articles of incorporation
from time to time in accordance with the laws of the state of Nevada, and all
rights conferred on stockholders herein are granted subject to this reservation.
ARTICLE VIII
ADOPTION AND AMENDMENT OF BYLAWS
The initial bylaws of the Corporation shall be adopted by the board of
directors. The power to alter, amend, or repeal the bylaws or adopt new bylaws
shall be vested in the board of directors, but the stockholders of the
Corporation may also alter, amend, or repeal the bylaws or adopt new bylaws. the
bylaws may contain any provisions for the regulation or management of the
affairs of the Corporation not inconsistent with the laws of the state of Nevada
now or hereafter existing.
5
<PAGE> 7
ARTICLE IX
DIRECTORS
The governing board of the Corporation shall be known as the board of
directors. The number of directors comprising the board of directors shall be
fixed and may be increased or decreased from time to time in the manner provided
in the bylaws of the Corporation, except that at no time shall there be less
than three nor more than nine directors. The original board of directors shall
consist of three persons. The name and address of each person who is to serve as
a director until the first annual meeting of stockholders and until his or her
successor is elected and shall qualify is as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
York Chandler 935 Northcliffe Drive
Salt Lake City, Utah 84103
Hal (Pete) Chandler 430 4th Street
Ogden, Utah 84404
Gale Chandler 935 Northcliffe Drive
Salt Lake City, Utah 84103
</TABLE>
ARTICLE X
INCORPORATOR
The name and mailing address of the sole incorporator signing these
articles of incorporation is as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
York Chandler 935 Northcliffe Drive
Salt Lake City, Utah 84103
</TABLE>
The undersigned, being the incorporator of the Corporation herein before
named, hereby make and file these articles of incorporation, declaring that the
facts herein are true.
DATED this 4 day of April, 1989.
/s/ York Chandler
------------------------------
York Chandler
6
<PAGE> 8
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE) )
On this 4th day of April, 1989, before me, a notary public, personally
appeared York Chandler, who on being first duly sworn, acknowledged to me that
he executed the foregoing articles of incorporation.
/s/ Clark Jackson
--------------------------------
NOTARY PUBLIC
Residing in Salt Lake City, Utah
--------------------
My Commission Expires:
8-13-89
- ----------------------
RECEIVED
APR - 7 1999
------------------
SECRETARY OF STATE
7
<PAGE> 1
EXHIBIT 2.B
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
GLOBAL SCIENCE CORP.
The undersigned, being the President and Secretary of Global Science
Corp., a Nevada Corporation, hereby certify that by majority vote of the Board
of Directors and majority vote of the stockholders at a meeting held on August
3, 1999, it was agreed by unanimous vote that this CERTIFICATE AMENDING ARTICLES
OF INCORPORATION be filed.
The undersigned further certify that the original Articles of
Incorporation of Global Science Corp. were filed with the Secretary of State of
Nevada on the 12th day of April, 1989. The undersigned further certify that
ARTICLES FIRST of the original Articles of Incorporation filed on the 12th day
of April, 1989, herein is amended to read as follows:
ARTICLE FIRST
FIRST. The name shall be:
Sochrys.com Inc.
1
<PAGE> 2
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
GLOBAL SCIENCE CORP.
CONTINUED
The undersigned hereby certify that they have on the 3rd day of August,
1999, executed this Certificate Amending the original Articles of Incorporation
heretofore filed with the Secretary of State of Nevada.
/s/ [ILLEGIBLE]
---------------------------------
President
/s/ Fred [ILLEGIBLE]
---------------------------------
Secretary
2
<PAGE> 3
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 09 1999
No. C 3107 - 89
----------------------
Dean Heller
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
GLOBAL SCIENCE CORP.
The undersigned, being the President and Secretary of Global Science
Corp., a Nevada Corporation, hereby certify that by majority vote of the Board
of Directors and majority vote of the stockholders at a meeting held on August
3, 1999, it was agreed by unanimous that this CERTIFICATE AMENDING ARTICLES OF
INCORPORATION be filed.
The undersigned further certify that the original Articles of
Incorporation of Global Science Corp. were filed with the Secretary of State of
Nevada on the 12th day of April, 1989. The undersigned further certify that
ARTICLES FIRST of the original Articles of Incorporation filed on the 12th day
of April, 1989, herein is amended to read as follows:
ARTICLE FIRST
FIRST. The name shall be:
Sochrys.com Inc.
1
<PAGE> 4
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
GLOBAL SCIENCE CORP.
CONTINUED
The undersigned hereby certify that they have on the 3rd day of August,
1999, executed this Certificate Amending the original Articles of Incorporation
heretofore filed with the Secretary of State of Nevada.
/s/ [ILLEGIBLE]
---------------------------------
President
/s/ Fred [ILLEGIBLE]
---------------------------------
Secretary
2
<PAGE> 5
STATE OF NEVADA
SECRETARY OF STATE
CERTIFICATE OF REINSTATEMENT
I, DEAN HELLER, the duly elected Secretary of State of the State of
Nevada, do hereby certify that GLOBAL SCIENCE CORP. a corporation formed under
the laws of the State of NEVADA having paid all filing fees, licenses, penalties
and costs, in accordance with the provisions of Title 7 of the Nevada Revised
Statutes as amended, for the years and in the amounts as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1995-1996 List of Officers + penalty $100.00
1996-1997 List of Officers + penalty $100.00
1997-1998 List of Officers + penalty $100.00
1998-1999 List of Officers + penalty $100.00
Reinstatement $50.00
total $450.00
</TABLE>
and otherwise complied with the provisions of said section, the said corporation
has been reinstated, and that by virtue of such reinstatement it is authorized
to transact its business in the same manner as if the aforesaid filing fees,
licenses, penalties and costs had been paid when due.
IN WITNESS WHEREOF, I have hereunto set my
hand and affixed the Great Seal of State, at
my office in Carson City, Nevada, on
February 10, 1999.
[SEAL OF THE STATE OF NEVADA]
/s/ Dean Heller
Secretary of State
By: /s/ [ILLEGIBLE]
Deputy
<PAGE> 6
FILING FEE: $75.00 DF C00136 EXPEDITE #E55120
GEORGE A. J. MONTEITH
AMERICAN GROUP, INC.
2450 NORTH WEST SHORE BLVD., #212, TAMPA, FL 33607-5715
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
DEC 23 1993
CHERYL A LAU SECRETARY OF STATE
/s/ Cheryl A Lau
No. 3107-89
----------------------------
CERTIFICATE OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
AMERICAN GROUP, INC.
THE UNDERSIGNED President and Secretary of AMERICAN GROUP, INC., a Nevada
Corporation, pursuant to the provisions of Sections 78.385 and 78.390 of the
Nevada Revised Statutes, for the purpose of amending the Articles of
Incorporation of said Corporation, do hereby certify as follows:
That the Board of Directors of said corporation at a meeting duly convened
and held on the 10th day of December, 1993, adopted a resolution to amend the
Articles of Incorporation of the Corporation as follows:
FIRST: Article I shall be amended to read as follows:
"ARTICLE I
The name of the Corporation shall be: Global Science Corp."
The foregoing amendment to the Articles of Incorporation was duly adopted
by written consent of the shareholders of the Corporation pursuant to Section
78.320 of the Nevada Revised Statutes on the 10th day of December, 1993.
The number of shares of the corporation outstanding and entitled to vote
on the foregoing amendment to the Articles of Incorporation is 18,550,000; and
that said amendment was approved and consented to by 10,000,000 shares which
represents more than a 50% majority of the issued and outstanding shares of the
Corporation's common stock.
DATED this 10th day of December, 1993.
The undersigned President and Secretary of the Corporation hereby declare
that the foregoing Certificate of Amendment to the Articles of Incorporation are
true and correct to the best of their knowledge and belief.
/s/ George A. J. Monteith
------------------------------
President
------------------------------
Secretary
<PAGE> 7
FILING FEE: $75.00 C56155 PI
GEORGE I. NORMAN III
AMERICAN GROUP, INC.
%GIN/FINANCIAL SERVICES
P.O BOX 2894
SALT LAKE CITY, UT 84110
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 26 1992
3107-89
CHERYL A LAU SECRETARY OF STATE
/s/ Cheryl A Lau
- --------------------------------
CERTIFICATE OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
AMERICAN GOLD GROUP, INC.
THE UNDERSIGNED President and Secretary of AMERICAN GOLD GROUP, INC., a
Nevada corporation, pursuant to the provisions of Sections 78.385 and 78.390 of
the Nevada Revised Statutes, for the purpose of amending the Articles of
Incorporation of said Corporation, do hereby certify as follows:
That the Board of Directors of said corporation at a meeting duly convened
and held on the 15th day of May, 1992, adopted a resolution to amend the
Articles of Incorporation of the Corporation as follows:
FIRST: Article I shall be amended to read as follows:
"ARTICLE I
The name of the Corporation shall be: AMERICAN GROUP, INC."
The foregoing amendment to the Articles of Incorporation was duly adopted
by written consent of the shareholders of the Corporation pursuant to Section
78.320 of the Nevada Revised Statutes on the 15th day of May, 1992.
The number of shares of the corporation outstanding and entitled to vote
on the foregoing amendment to the Articles of Incorporation is 18,400,000; and
that said amendment was approved and consented to by 10,000,000 shares which
represents more than a 50% majority of the issued and outstanding shares of the
Corporations common stock.
DATED this 16TH day of JULY, 1992.
The undersigned President and Secretary of the Corporation hereby declare
that the foregoing Certificate Of Amendment To The Articles of Incorporation are
true and correct to the best of their knowledge and belief.
/s/ George A. J. Monteith
---------------------------------
GEORGE A. J. MONTEITH, President
/s/ George S. Cross
---------------------------------
GEORGE S. CROSS, Secretary
<PAGE> 8
FILING FEE: $75.00 DF C33564 EXPEDITE #E020279
GEORGE I. NORMAN III
GIN/FINANCIAL SERVICES
149 EAST 900 SOUTH
SALT LAKE CITY, UT 84111
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE FEB 03 1992
STATE OF NEVADA
FEB 03 PAID
CHERYL A LAU SECRETARY OF STATE
/s/ Cheryl A Lau
No. 3107-89
----------------------------
CERTIFICATE OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
CCC FUNDING CORP.
THE UNDERSIGNED President and Secretary of CCC FUNDING CORP., a Nevada
corporation, pursuant to the provisions of Sections 78.385 and 78.390 of the
Nevada Revised Statutes, for the purpose of amending the Articles of
Incorporation of said Corporation, do hereby certify as follows:
That the Board of Directors of said corporation at a meeting duly convened
and held on the 31st day of January, 1992, adopted a resolution to amend the
Articles of Incorporation of the Corporation as follows:
FIRST: Article I shall be amended to read as follows:
"ARTICLE I
The name of the Corporation shall be: AMERICAN GOLD GROUP INC."
The foregoing amendment to the Articles of Incorporation was duly adopted
by written consent of the shareholders of the Corporation pursuant to Section
78.320 of the Nevada Revised Statutes on the 31st day of JANUARY, 1992.
The number of shares of the corporation outstanding and entitled to vote
on the foregoing amendment to the Articles of Incorporation is 4,600,000; and
that said amendment was approved and consented to by 2,500,000 shares which
represents more than a 50% majority of the issued and outstanding shares of the
Corporation's common stock.
DATED this 1st day of FEBRUARY, 1992.
The undersigned President and Secretary of the Corporation hereby declare
that the foregoing Certificate Of Amendment To The Articles of Incorporation are
true and correct to the best of their knowledge and belief.
---------------------------------
YORK CHANDLER, President
/s/ Gayle G. Chandler
---------------------------------
GAYLE G. CHANDLER, Secretary
<PAGE> 1
EXHIBIT 2.C
TABLE OF CONTENTS
Section Title Page
CORPORATE OFFICES
1.1 Nevada Office ...................................... 1
1.2 Other Offices ...................................... 1
MEETINGS OF THE STOCKHOLDERS
2.1 Place .............................................. 1
2.2 Annual Meetings .................................... 1
2.3 Special Meetings ................................... 1
2.4 Notice ............................................. 1
2.5 Quorum ............................................. 2
2.6 Majority ........................................... 2
2.7 Proxies and Voting ................................. 2
2.8 Holder of Record ................................... 2
2.9 Written Consent .................................... 3
2.10 Registered Stockholders ............................ 3
DIRECTORS
3.1 Number and Election ................................ 3
3.2 Vacancies .......................................... 4
3.3 Authority .......................................... 4
3.4 Removal ............................................ 4
3.5 Meetings ........................................... 4
3.5 Regular Meetings ................................... 4
3.7 Special Meetings ................................... 4
3.8 Written Consent .................................... 5
-i-
<PAGE> 2
3.9 Conference Telephone ............................... 5
3.10 Quorum Majority .................................... 5
3.11 No Statement of Purpose
of Meeting Required .............................. 5
3.12 Committees of Directors ............................ 5
3.13 Compensation of Directors .......................... 5
3.14 Interested Directors/Officers or
Stockholders ..................................... 6
OFFICERS
4.1 Designation ........................................ 7
4.2 Chairman ........................................... 7
4.3 President .......................................... 7
4.4 Vice Presidents .................................... 7
4.5 Secretary .......................................... 7
4.6 Assistant Secretaries .............................. 7
4.7 Treasurer .......................................... 7
4.3 Assistant Treasurers ............................... 8
4.9 Delegation ......................................... 8
4.10 Vacancies .......................................... 8
4.11 Term/Removal ....................................... 8
4.12 Bonds .............................................. 8
4.13 Indemnification .................................... 8
4.14 Indemnification Insurance .......................... 10
4.15 Loans .............................................. 10
SHARE CERTIFICATES
5.1 Certificates ....................................... 10
-ii-
<PAGE> 3
5.2 Lost Certificates .................................. 11
5.3 Transfer of Shares ................................. 11
GENERAL PROVISIONS
6.1 Dividends .......................................... 11
6.2 Reserves ........................................... 11
6.3 Checks ............................................. 11
6.4 Fiscal Year ........................................ 12
6.5 Seal ............................................... 12
6.6 Notices ............................................ 12
6.7 Securities of Other Corporations ................... 12
6.3 Resignation ........................................ 12
6.9 Construction ....................................... 12
6.10 Invalid Provisions ................................. 12
5.12 Table of Contents - Headings ....................... 12
AMENDMENTS
7.1 .................................................... 13
-iii-
<PAGE> 4
SOCHRYS.com Inc.
--oo0oo--
BYLAWS
No. 1
--oo0oo--
CORPORATE OFFICES
1.1: Nevada Office. The office of the Corporation in the State of Nevada
shall be at the office of The Corporation Trust Company of Nevada, One East
First Street, Reno, Washoe County, Nevada 89501 or at such other address of The
Corporation Trust Company of Nevada as it may hereafter maintain in Nevada.
1.2: Other Offices. The Corporation may also have offices at such other
places both within and without the State of Nevada as the Corporation's Board of
Directors (the "Board") may from time to time determine or the business of the
Corporation may require.
MEETINGS OF THE STOCKHOLDERS
2.1: Place. All meetings of the stockholders, may be held at such place,
within or without the State of Nevada, as shall be determined by the Board and
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
2.2: Annual Meetings. An annual meeting of the stockholders shall be held
at such time and date during the third month following the last month in the
Corporation's fiscal year at which the stockholders shall elect by a plurality
vote the members of the Board, and transact such other business as may properly
be brought before the meeting. The Board shall establish the day and time within
such third month for said meeting.
2.3: Special Meetings. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the Articles
of Incorporation, may be called by the President and shall be called by the
President or Secretary at the request in writing of a majority of the members of
the Board, or at the request in writing of stockholders owning a majority in
amount of the entire common shares of the Corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
2.4: Notice. Written notice of each annual and special meeting of the
stockholders shall be delivered personally or mailed to each stockholder of
record entitled to vote thereat at such address as appears on the books of the
Corporation, at least 10 days, but not more than 60 days, prior to the meeting.
Each such notice shall state the purpose or purposes for which the meeting is
called and the time and place where it is to be held.
<PAGE> 5
2.5: Quorum. The holders of a majority of the shares issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy shall be requisite and shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute, by the Articles of Incorporation or by these Bylaws. If, however, such
quorum shall not be present or represented at a meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or by proxy, shall have
power to adjourn the meeting from time to time, without notice other than an
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at the meeting as
originally called.
2.6: Majority. When a quorum is present at a meeting, the vote of the
holders of a majority of the shares having voting power present or represented
in person or by proxy shall decide any question brought before such meeting,
unless the question is one upon which express provision of the statutes or of
the Articles of Incorporation or of these Bylaws, a different vote is required,
in which case such express provision shall govern and control the decision of
such question.
2.7: Proxies and Voting. At any meeting of the stockholders every
stockholder having the right to vote shall be entitled to vote in person or by
proxy duly appointed by an instrument in writing subscribed by such stockholder
and bearing a date not more than 6 months prior to said meeting, unless said
instrument expressly provides for a longer period, which in no event shall
exceed 7 years from the date of its execution. Each stockholder shall have one
vote for each share having voting power, registered in his name on the books of
the Corporation.
2.8: Holder of Record.
2.8.1: Closing of Transfer Books. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive a distribution by the
Corporation (other than a distribution involving a purchase or redemption by the
Corporation of any of its own shares) or a share dividend, or in order to make a
determination of stockholders for any other proper purpose, the Board may
provide that the share transfer books shall be closed for a stated period but
not to exceed, in any case, 60 days. If the share transfer books shall be closed
for the purpose of determining stockholders entitled to notice of or to vote at
a meeting of stockholders, such books shall be closed for at least 10 days
immediately preceding such meeting.
2
<PAGE> 6
2.8.2: Record Date. In lieu of closing the share transfer books as
aforesaid, the Board may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more than 60 days
and, in case of a meeting of stockholders, not less than 10 days prior to the
date on which the particular action requiring such determination of stockholders
is to be taken.
2.8.3: Alternative. If the share transfer books are not closed and
no record date is fixed for the determination of stockholders entitled to notice
of or to vote at a meeting of the stockholders, or stockholders entitled to
receive a distribution by the Corporation (other than a purchase or redemption
by the Corporation of any of its own shares) or a share dividend, the date on
which notice of the meeting is mailed or the date stated in the resolution of
the Board declaring such distribution or share dividend, as the case may be,
shall be the record date for such determination of stockholders.
2.9: Written Consent. Whenever the vote of the stockholders at a meeting
thereof is required or permitted to be taken in connection with any corporate
action, other than the election of directors, such action may be taken without a
meeting if authorized by written consent of stockholders holding at least a
majority of the voting power, provided that if any greater proportion of voting
power is required by these Bylaws for such action at a meeting, then such
greater proportion of written consents shall be required, and this provision for
action by written consent shall not supersede any specific provision for action
by written consent otherwise provided by the laws of the State of Nevada.
2.10: Registered Stockholders. The Corporation shall be entitled to treat
the holder of record of any share or shares as the holder in fact thereof, and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of the State of Nevada.
DIRECTORS
3.1: Number and Election. The number of Directors which shall constitute
the entire Board shall be not less than three nor more than nine. The number of
initial Directors shall be the number fixed in the Articles of Incorporation,
and thereafter, within the limits above specified, the number of Directors shall
be determined by resolution of the entire Board. The Directors shall be elected
at the annual meeting of the stockholders, except as provided in Section 3.2 of
these Bylaws, and each Director elected shall hold office until his successor
shall be elected and shall qualify. Directors need not be stockholders nor
residents of the State of Nevada.
3
<PAGE> 7
3.2: Vacancies. If any vacancies occur in the Board cause by death,
resignation, retirement, disqualification or removal from office of any
Directors or otherwise, or any new directorship is created by any increase in
the authorized number of Directors, a majority of the remaining Directors may
choose a successor or successors, or fill the newly created directorship, and
the Directors so chosen shall hold office until the next annual election of
Directors and until their successors shall be duly elected and qualified, unless
sooner displaced. If, after any vacancy occurs, there are no Directors
remaining, then the President shall immediately call a special meeting of
stockholders to fill such vacancy.
3.3: Authority. The property and business of the Corporation shall be
managed by its Board which may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the stockholders.
3.4: Removal. Any Director may be removed from his position as Director,
either with or without cause, by the vote or written consent of stockholders
representing not less than two-thirds of the issued and outstanding stock of the
Corporation entitled to voting power.
3.5: Meetings. The Board may hold its meetings, both regular and special,
either within or without the State of Nevada. The first meeting of each newly
elected Board shall immediately follow the annual stockholders' meeting, or in
the President's discretion, may be held within 30 days of such meeting upon
giving 2 days' notice to each Director, either personally, by telephone, or by
prepaid telex or telegram, or upon giving 4 days' notice to each Director by
prepaid registered or certified mail, return receipt requested, addressed to the
respective address of each Director last known to the Corporation. Upon the
President's failure to call such meeting within 30 days after such annual
stockholders meeting, such meeting may be called by any 2 Directors in a like
manner and on like notice. Such notice shall be deemed to be given at the time
when the same shall be thus communicated, transmitted or mailed, as the case may
be.
3.6: Regular Meetings. Regular meetings of the Board shall be held without
notice at such time and place as shall from time to time be determined by the
Board pursuant to a duly adopted resolution.
3.7: Special Meetings. Special meetings of the Board may be called by the
President on 2 days' notice to each Director, either personally, or by mail or
by telegram; special meetings may be
4
<PAGE> 8
called by the President or Secretary in like manner and on like notice on the
written request of 2 Directors.
3.8: Written Consent. Any action required or permitted to be taken at any
meeting of the Board, or a committee thereof, may be taken without a meeting if
a consent in writing, setting forth the action so taken, is signed by all the
members of the Board or committee thereof, as the case may be.
3.9: Conference Telephone. Members of the Board or any committee thereof
may participate in a meeting of the Board or such committee by means of a
conference telephone network or a similar communications method by which all
persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this Section constitutes presence in person at such meeting.
Each person participating in the meeting shall sign the minutes thereof. The
minutes may be signed in counterparts.
3.10: Quorum Majority. At all meetings of the Board the presence of 50
percent or more of the Directors shall be necessary and sufficient to constitute
a quorum for the transaction of business, and the act of a majority of the
Directors present at any meeting at which there is a quorum shall be the act of
the Board, except as may be otherwise specifically provided by statute or by the
Articles of Incorporation or by these Bylaws. If a quorum shall not be present
at any meeting of the Board, the Directors present thereat may adjourn the
meeting from time to time, without notice other than an announcement to such
effect at the meeting, until a quorum shall be present.
3.11: No Statement of Purpose of Meeting Required. Neither the business
proposed to be transacted nor the purpose of any regular or special meeting of
the Board need be specified in the notice or waiver of notice of such meeting.
3.12: Committees of Directors. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees; each committee
shall consist of 2 or more of the members of the Board, which to the extent
provided in said resolution, shall have and may exercise the powers of the Board
in the management of the business and affairs of the Corporation and may have
power to authorize the seal of the Corporation to be affixed to all papers on
which the Corporation desires to place a seal. Such committee or committees
shall have such name or names as may be determined from time to time by a
resolution adopted by the Board. The committees shall keep regular minutes of
their proceedings and report the same to the Board when required.
3.13: Compensation of Directors. Directors, as such, shall not receive any
stated salary for their services, but by resolution of the Board a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of the
5
<PAGE> 9
Board; provided that nothing herein contained shall be construed to preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
3.14: Interested Directors/Officers or Stockholders.
3.14.1 Directors and officers shall exercise their powers in good
faith and with a view to the interests of the Corporation. No contract or other
transaction between the Corporation and one or more of its Directors or
Officers, or between the Corporation any corporation, firm or association in
which one or more of its directors or officers are Directors or Officers or are
financially interested, is either void or voidable solely for this reason or
solely because any such Director or Officer is present at the meeting of the
Board or a committee thereof which authorizes or approves the contract or
transaction, or because the vote or votes of common or interested Directors are
counted for such purpose, if the circumstances specified in any of the following
paragraphs exist:
(a) The fact of the common directorship or financial interest
is disclosed or known to the Board or committee and noted in the minutes, and
the Board or committee authorizes, approves or ratifies the contract or
transaction in good faith by a vote sufficient for the purpose without counting
the vote or votes of such Director or Directors.
(b) The fact of the common directorship or financial interest
is disclosed or known to the stockholders, and they approve or ratify the
contract or transaction in good faith by a majority vote or written consent of
stockholders holding a majority of the shares entitled to vote; the votes of the
common or interested Directors or Officers shall be counted in any such vote of
stockholders.
(c) The contract or transaction is fair as to the Corporation
at the time it is authorized or approved.
3.14.2: Common or interested Directors may be counted in determining
the presence of a quorum at a meeting of the Board or a committee thereof which
authorized, approves or ratifies a contract or transaction, and if the votes of
the common or interested Directors are not counted at such meeting, then a
majority of the disinterested Directors may authorize, approve or ratify a
contract or transaction.
3.14.3: Unless otherwise provided in the Articles of Incorporation
or the Bylaws, the Board may fix the compensation of Directors for services in
any capacity.
6
<PAGE> 10
3.14.4: Nothing in this section or subsection hereafter shall be
construed to invalidate any contract or transaction which would be valid in the
absence of this section.
OFFICERS
4.1: Designation. The Officers of the Corporation shall be elected by the
Directors and shall be a President, a Secretary and a Treasurer who shall be
elected for one year by the Directors at their first meeting after the annual
meeting of stockholders and who shall hold office until their successors are
duly elected and qualified. The Board may also choose a Chairman of the Board,
Vice Presidents, Assistant Secretaries and Assistant Treasurers and such other
officers and agents as may be deemed necessary. Any two or more offices may be
held by the same person.
4.2: Chairman. The Chairman, if there shall be such an officer, shall, if
present, preside at all meetings of the Board and exercise such other powers and
duties as may from time to time be assigned to the Chairman or prescribed by
these Bylaws.
4.3: President. The President shall be the Corporation's chief executive
officer, shall have general supervision of the affairs of the Corporation and
shall exercise all powers as are incident to the offices of chief executive
officer under applicable laws and other duties required of him by the Board.
4.4: Vice Presidents. The Vice Presidents in the order designated by the
Board shall exercise all the functions of the President during the absence or
disability of the President. Each Vice President shall have such powers and
discharge such duties as may be assigned him from time to time by the Board. The
Board may designate one or more Vice Presidents as Executive Vice Presidents or
Senior Vice Presidents or may assign such other designations as the Board deems
appropriate from time to time.
4.5: Secretary. The Secretary shall issue notices for all meetings, shall
keep minutes of all meetings, shall have charge of the seal and the corporate
books, and shall make such reports and perform such other duties as are incident
to his office or are properly required of him by the Board.
4.5: Assistant Secretaries. The Assistant Secretaries in the order of
their seniority shall, in the absence or disability of the Secretary, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties as the Board shall prescribe.
4.7: Treasurer. The Treasurer shall have the custody of all monies and
securities of the Corporation and shall keep regular books of account. He shall
disburse the funds of the Corporation as directed by the Board, taking proper
vouchers for such
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<PAGE> 11
disbursements and shall render to the Board from time to time as may be required
of him an account of all his transactions as Treasurer and of the financial
condition of the Corporation. He shall perform all duties incident to his office
or that are properly required of him by the Board.
4.8: Assistant Treasurers. The Assistant Treasurers in the order of their
relative seniority shall, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer and shall perform such other
duties as the Board shall prescribe.
4.9: Delegation. In the case of absence or inability to act of any Officer
of the Corporation, and of any person herein authorized to act in his place, the
Board may from time to time delegate the powers or duties of such Officer to any
other Officer or any Director or other person whom it may select.
4.10: Vacancies. Vacancies in any office arising from any cause may be
filled by the Board or any authorized committee thereof at any regular or
special meeting.
4.11: Term/Removal. The Officers of the Corporation shall hold office
until their successors are duly elected and qualified. Any Officer elected or
appointed by the Board may be removed at any time with or without cause by the
affirmative vote of a majority of the entire Board.
4.12: Bonds. The Board may by resolution require any and all of the
Officers to give bonds to the Corporation with sufficient surety or sureties,
conditioned for the faithful performance of the duties of their respective
offices and to comply with such other conditions as may from time to time be
required by the Board.
4.13: Indemnification.
4.13.1: The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was a Director, Officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
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<PAGE> 12
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful. The
indemnification set forth in this paragraph is intended to apply to any such
action, suit or proceeding even though same results from, or in any way relates
to, the negligence of the indemnified person, but not to any matters as to which
such indemnified person shall be adjudged in such action, suit or proceeding to
be guilty of gross negligence or willful misconduct.
4.13.2: The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a Director,
Officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Corporation unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses as
the court shall deem proper.
4.13.3: To the extent that a Director, Officer, employee or agent of
the Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 4.13.1 or 4.13.2 or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
4.13.4: Any indemnification under Section 4.13.1 or 4.13.2 (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Sections 4.13.1 or 4.13.2. Such
determination shall be made by the Board by a majority vote of a quorum
consisting of directors who were not parties to such action,
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<PAGE> 13
suit or proceeding, or if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or by the stockholders.
4.13.5: Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board in the
specific case upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in Sections 4.13.1 through 4.13.5.
4.13.6: The indemnification provided by Sections 4.13.1 through
4.13.5 shall not be deemed exclusive of any other rights to which one seeking
indemnification may be entitled under any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, any 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 a person. If the scope of any indemnification set forth in Sections
4.13.1 through 4.13.5 is judicially determined to be too broad to permit
accomplishment of such indemnification to its full extent, then such
indemnification shall be accomplished to the maximum extent permitted by
applicable law, and, if necessary, the scope of any such indemnification may be
judicially modified (to the minimum extent necessary to comply with applicable
law) and thereafter fully accomplished.
4.14: Indemnification Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, Officer, agent or
employee of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, agent or employee of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under these Bylaws or applicable law.
4.15: Loans. No loans shall be contracted on behalf of the Corporation and
no evidence of indebtedness shall be issued in its name unless authorized by a
resolution by the Board. Such authority may be general or confined to specific
instances.
SHARE CERTIFICATES
5.1: Certificates. The certificates of shares of the Corporation shall be
numbered and shall be entered in the books of the Corporation as they are
issued. They shall exhibit the
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<PAGE> 14
holder's name and number of shares and shall be signed by the President or Vice
President and the Secretary or Assistant Secretary. If any certificate is signed
by a Transfer Agent or an Assistant Transfer Agent or by a Transfer Clerk acting
on behalf of the Corporation and a Registrar, the signature of any such Officer
of the Corporation may be a facsimile.
5.2: Lost Certificates. The Board may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost or destroyed
upon the making of an affidavit of that fact by the person claiming the
certificate to be lost or destroyed. When authorizing such issuance of a new
certificate or certificates, the Board may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or give the Corporation bond in such sum
as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost or
destroyed.
5.3: Transfer of Shares. Upon surrender to the Corporation or the Transfer
Agent of the Corporation of a share certificate duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, the
Corporation or its Transfer Agent shall issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon the
books of the Corporation.
GENERAL PROVISIONS
6.1: Dividends. Dividends may be declared by the Board and paid out of the
annual net profits of the Corporation or out of its net assets in excess of its
capital represented by the issued and outstanding stock of all classes having a
preference upon the distribution of the Corporation's assets.
5.2: Reserves. Before payment of any distribution there may be set aside
out of any funds of the Corporation available for distributions such sum as the
Board from time to time, in its absolute discretion, thinks proper as a reserve
fund to meet contingencies, or for equalizing distributions, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
Board shall determine to be in the best interest of the Corporation, and the
Board may modify or abolish any such reserve in the same manner in which it was
created.
6.3: Checks. The monies of the Corporation shall be deposited in the name
of the Corporation in such bank or banks or trust companies, brokerage firms or
other financial entities as the
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Board shall designate and shall be drawn out only by checks or drafts signed by
persons designated by resolution of the Board.
6.4: Fiscal Year. The fiscal year of the Corporation shall be fixed by
resolution of the Board.
6.5: Seal. The corporate seal of the Corporation shall have inscribed
thereon the name of the Corporation. The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
6.6: Notices. Whenever under the provisions of the statutes or of the
Articles of Incorporation or of these Bylaws, notice is required to be given to
any Director or stockholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such Director or
stockholder at such address as appears on the books of the Corporation, and such
notice shall be deemed to be given at the time when the same shall be thus
mailed.
6.7: Securities of Other Corporations. Whenever the Corporation is the
holder of any securities (including without limitation, shares, debentures,
notes and convertible securities of any kind) of any other corporation, any
right or power of the Corporation as a holder of any such securities (including
without limitation, the attendance, acting and voting at any meeting of the
holders of such securities and the execution of waivers, consents, proxies and
other instruments relating thereto) may be exercised on behalf of the
Corporation by the President or any Vice President of the Corporation or by such
other person as the Board may authorize.
6.8: Resignation. Any Director, Officer, or agent may resign by giving
written notice to the President or the Secretary. The resignation shall take
effect at the time specified therein, or immediately if no time is so specified.
The acceptance of such resignation shall not be necessary to make it effective
unless such resignation is so conditioned.
6.9: Construction. Whenever the context so requires, the masculine shall
include the feminine and neuter, and the singular shall include the plural and
vice versa.
6.10: Invalid Provisions. If any part of these Bylaws shall be held
invalid or inoperative for any reason, then so far as possible and reasonable,
the remaining part shall be valid and operative, and effect shall be given so
far as possible to the intent manifested by the part held invalid or
inoperative.
6.11: Table of Contents - Headings. The Table of Contents and headings
used in these Bylaws have been inserted for convenience
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only and do not constitute matter to be construed in interpretation and
construction.
AMENDMENTS
7.1: Alterations, amendments or repeals of these Bylaws may be made by a
majority of the stockholders entitled to vote at any regular or special meeting
if the notice of such meeting contains a statement of the proposed alteration,
amendment or repeal, or by the Board by a majority vote of the entire Board at
any regular or special meeting provided notice of such alteration, amendment or
repeal has been given to each Director in writing at lease 2 days prior to said
meeting.
Dated October 12, 1999
/s/ Andre Hensler
-----------------
Andre Hensler
/s/ Paul Claverie
-----------------
Paul Claverie
<PAGE> 1
EXHIBIT 2.D
Summary Translation of
Articles of Incorporation
GRAPH-O-LOGIC SA
(the "Company")
The Articles relate to the following subjects:
Title I NAME OF THE COMPANY/HEADQUARTERS/GOALS/LIFETIME
Title II SHARE CAPITAL
Title III GENERAL ASSEMBLY
Title IV COUNSEL OF DIRECTORS
Title V AUDITORS
Title VI ANNUAL ACCOUNTS/RESERVES/DIVIDENDS
Title VII DISSOLUTION AND LIQUIDATION OF COMPANY
Title VIII PUBLICATION / JURISDICTION
The Company was constituted on February 14, 1995 as a joint-stock company under
Articles 620 to 761 of the Swiss Law of General Obligations with headquarters in
Geneva, Switzerland with the following objects:
o purchase and sale of hardware and software,
o development and distribution of software,
o engineering and development relating to the foregoing,
o participation in other companies of any kind except in Swiss real
estate companies.
o management tasks relating to the foregoing
The Company is authorized to effect any commercial or financial transactions
relating directly or indirectly to the any of the objects.
The life of the company is indefinite.
Share capital of the Company is CH 100'000, divided in 100 shares of CH 1,000
each.
The share capital is fully paid-up.
Shares issued to the bearer.
Some extracts of the different titles of importance:
Title III GENERAL ASSEMBLY
(aka General Meeting of Shareholders) can adopt and modify the articles elect
and discharge the members of the counsel of directors and the auditors; approve
the annual accounts; decide about the distribution of profit;
The General Assembly is to take place within 6 months after closing of annual
accounts.
10% of shareholders can ask for General Assembly.
The president of the counsel of directors acts as chairman of the General
Assembly.
Title IV COUNSEL OF DIRECTORS
May have one or more members, a majority of whom must be Swiss nationals.
If one only one member, he must be a Swiss national and a Swiss resident.
Members are elected for one year, indefinitely re-eligible.
Tasks: Management of company and issuing of necessary instructions; Fixing of
organisation of company; fixing of basis for book-keeping, financial control,
business-plan; name and withdraw members of management; issue of annual accounts
and reporting to GA; to inform the justice in case of debts in excess.
Title V AUDITORS
Elected for one year, re-eligible. The auditors must be qualified and
independent from the company.
Title VI ANNUAL ACCOUNTS, GENERAL
Fiscal year starts 1st January and ends 31st of December. 5% of annual profit
must be allocated to the general reserve until such time as the reserve reaches
20% of share capital. In case of payment of dividend of 5% or more, 10% of
distribution must be paid in to the general reserve in addition to the 5% profit
allocation. Withholding tax of 35% to be paid on dividends.
<PAGE> 1
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (THE "ACT") OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR
SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN
OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY,
THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SAID
ACT.
SOCHRYS.COM INC.
WARRANT TO PURCHASE COMMON STOCK
WARRANT NO.: NUMBER OF WARRANT SHARES:
SERIES A
DATE OF ISSUANCE: AUGUST 31, 1999
Sochrys.com Inc. a Nevada corporation (the "COMPANY"), hereby certifies that,
for value received, [NAME], (the "HOLDER") is entitled, subject to the terms set
forth below, to purchase from the Company upon surrender of this Warrant, at any
time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time
on the Expiration Date (as defined herein) [NO. OF SHARES] fully paid
nonassessable shares of Common Stock (as defined in Section 1(b)) of the Company
(the "WARRANT SHARES") at the purchase price per share provided in Section 1(b)
below (the "EXERCISE PRICE"); provided, however, that in no event shall the
Holder be entitled to exercise this Warrant for a number of Warrant Shares in
excess of that number of Warrant Shares which, upon giving effect to such
exercise, would cause the aggregate number of shares of Common Stock
beneficially owned by the Holder and its affiliates to exceed 4.99% of the
outstanding shares of the Common Stock following such exercise. For purposes of
the foregoing proviso, the aggregate number of shares of Common Stock
beneficially owned by the Holder and its affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which the determination of such proviso is being made, but shall exclude shares
of Common Stock which would be issuable upon (i) exercise of the remaining,
unexercised Warrants beneficially owned by the Holder and its affiliates and
(ii) exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company beneficially owned by the Holder and its
affiliates (including, without limitation, any convertible notes, convertible
preferred stock, warrants or rights to receive shares of Common Stock) subject
to a limitation on conversion or exercise
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<PAGE> 2
analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. The Holder may waive the foregoing limitations by written
notice to the Company upon not less than 61 days prior notice (with such waiver
taking effect only upon the expiration of such 61 day notice period).
Section 1.
(a) Definitions. The following words and terms as used in
this Warrant shall have the following meanings:
"BUSINESS DAY" means any day except Saturday, Sunday and any
day which is designated in the State of New York as a legal holiday or a day on
which banking institutions are authorized or legally required or other
government action to close.
"CLOSING BID PRICE" means, for any security as of any date,
the last closing bid price for such security on The Nasdaq SmallCap Market as
reported by Bloomberg Financial Markets ("BLOOMBERG"), or, if The Nasdaq
SmallCap Market is not the principal trading market for such security, the last
closing bid price of such security on a Subsequent Market (as defined below) on
which such security is listed or traded as reported by Bloomberg, or if the
foregoing do not apply, the last closing bid price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing bid price is reported for such security
by Bloomberg, the last closing trade price of such security as reported by
Bloomberg, or, if no last closing trade price is reported for such security by
Bloomberg, the average of the bid prices of any market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the
Closing Bid Price cannot be calculated for such security on such date on any of
the foregoing bases, the Closing Bid Price of such security on such date shall
be the fair market value as mutually determined by the Company and the Holders
the Common Stock Warrants. If the Company and the Holders of the Common Stock
Warrants are unable to agree upon the fair market value of the Common Stock,
then such dispute shall be resolved pursuant to Section 2(a) of this Warrant
with the term "Closing Bid Price" being substituted for the term "Market Price."
(All such determinations to be appropriately adjusted for any stock dividend,
stock split or other similar transaction during such period).
"COMMON STOCK" means the Company's common stock, par value
$.001 per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any capital stock resulting from a reclassification of such
Common Stock.
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Section
8 or
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<PAGE> 3
Convertible Securities (as defined in Section 8) are actually exercisable or
convertible at such time, but excluding any shares of Common Stock issuable upon
exercise of the Common Stock Warrants.
"ESCROW AGENT" means Alan R. Turem, P.C. having an office at
4651 Roswell Road, Suite B-105 Atlanta, Georgia 30342.
"EXERCISE PRICE" shall be $2.00, subject to adjustment as
hereinafter provided.
"EXPIRATION DATE" means December 31, 2004.
"OTHER SECURITIES" means (i) those securities, convertible
securities, options and warrants of the Company issued prior to, and outstanding
on, the date of issuance of this Warrant, (ii) shares of Common Stock, and
warrants or other securities that are convertible into or exchangeable for
shares of Common Stock, issuable in connection with the subsequent acquisitions
by the Company.
"PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, a government or any department or agency thereof, or any other
entity or organization.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
"WARRANT" means this Warrant and all Warrants issued in
exchange, transfer or replacement thereof.
"WARRANT SHARES" means the shares of Common Stock issuable
upon the exercise of this Warrant.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references
herein (A) to the Company shall be deemed to include the Company's successors
and (B) to any applicable law defined or referred to herein, shall be deemed
references to such applicable law as the same may have been or may be amended or
supplemented from time to time.
(ii) When used in this Warrant, the words "HEREIN,"
"HEREOF," and "HEREUNDER," and words of similar import, shall refer to this
Warrant as a whole and not to any provision of this Warrant, and the words
"SECTION," "SCHEDULE," and "EXHIBIT" shall refer to Sections of, and Schedules
and Exhibits to, this Warrant unless otherwise specified.
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<PAGE> 4
(iii) Whenever the context so requires, the neuter gender
includes the masculine or feminine, and the singular number includes the plural,
and vice versa.
Section 2. Exercise of Warrant.
(a) Exercise may be done at any time during normal business
hours on any business day on or after the opening of business on the date hereof
and prior to 11:59 P.M. Eastern Time on the Expiration Date by delivery to the
Escrow Agent and the Company in the manner specified below of (i) a written
notice of such Holder's election to exercise this Warrant which notice shall be
in the form attached as Exhibit A hereto, (the "EXERCISE NOTICE"), and shall
specify the number of Warrant Shares to be purchased and the other information
set out therein, (ii) payment to the Company of an amount equal to the Exercise
Price multiplied by the number of Warrant Shares as to which the Warrant is
being exercised (the "AGGREGATE EXERCISE PRICE") in cash or by check or wire
transfer payable to the Company in immediately available funds, and (iii) the
surrender of this Warrant. Provided, that if such Warrant Shares are to be
issued in any name other than that of the registered Holder of this Warrant,
such issuance shall be deemed a transfer and the provisions of Section 7 shall
be applicable and the Exercise Notice shall be accompanied by such additional
documentation as may be required by that Section. Such Exercise Notice, payment,
Warrant and other documentation required for exercise shall be delivered to the
Escrow Agent at the address set out in Section 1 with a copy of the Exercise
Notice being delivered simultaneously to the Company.
(b) In the event of any exercise of the rights represented by
this Warrant in compliance with this Section 2(a), a certificate or certificates
for the Warrant Shares so purchased, in such denominations as may be requested
by the Holder hereof and registered in the name of, or as directed by, the
Holder, shall be delivered at the Company's expense to, or as directed by, such
Holder as soon as practicable after such rights shall have been so exercised,
and in any event no later than five (5) business days after delivery of the
Exercise Notice to the Escrow Agent. In the case of a dispute as to the
determination of the Exercise Price of a security or the arithmetic calculation
of the Warrant Shares, the Company shall promptly issue to the Holder the number
of shares of Common Stock that is not disputed and shall submit the disputed
determinations or arithmetic calculations to the Holder via facsimile within one
business day of receipt of the Holder's subscription notice. If the Holder and
the Company are unable to agree upon the determination of the Exercise Price or
arithmetic calculation of the Warrant Shares within one day of such disputed
determination or arithmetic calculation being submitted to the Holder, then the
Company shall immediately submit via facsimile (i) the disputed determination of
the Exercise Price to an independent, reputable investment banking firm or (ii)
the disputed arithmetic calculation of the Warrant Shares to its independent,
outside accountant. The Company shall cause the investment banking firm or the
accountant, as
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<PAGE> 5
the case may be, to perform the determinations or calculations and notify the
Company and the Holder of the results no later than two (2) Business Days from
receipt of the disputed determinations or calculations. Such investment banking
firm's or accountant's determination or calculation, as the case may be, shall
be deemed conclusive absent manifest error.
(c) Unless the rights represented by this Warrant shall have
expired or shall have been fully exercised, the Company shall, as soon as
practicable and in no event later than five business days after any exercise and
at its own expense, issue a new Warrant identical in all respects to the Warrant
exercised except (i) it shall represent rights to purchase the number of Warrant
Shares purchasable immediately prior to such exercise under the Warrant
exercised, less the number of Warrant Shares with respect to which such Warrant
is exercised, and (ii) the Holder thereof shall be deemed for all corporate
purposes to have become the Holder of record of such Warrant Shares immediately
prior to the close of business on the date on which the Warrant is surrendered
and payment of the amount due in respect of such exercise and any applicable
taxes is made, irrespective of the date of delivery of certificates evidencing
such Warrant Shares, except that, if the date of such surrender and payment is a
date when the stock transfer books of the Company are properly closed, such
person shall be deemed to have become the Holder of such Warrant Shares at the
opening of business on the next succeeding date on which the stock transfer
books are open.
(d) No fractional shares of Common Stock are to be issued upon
the exercise of this Warrant, but rather the number of shares of Common Stock
issued upon exercise of this Warrant shall be rounded up or down to the nearest
whole number.
Section 3. Covenants as to Common Stock; Certain Registrations. The
Company hereby covenants and agrees as follows:
(a) This Warrant is, and any Common Stock Warrants issued in
substitution for or replacement of this Warrant will upon issuance be, duly
authorized and validly issued.
(b) All Warrant Shares which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof.
(c) During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved at least 100% of the number of shares of Common Stock needed to provide
for the exercise of the rights then represented by this Warrant and the par
value of said shares will at all times be less than or equal to the applicable
Exercise Price.
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<PAGE> 6
(d) The Company will not, by amendment of its charter or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed by it hereunder, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any shares of Common Stock receivable upon the exercise of this Warrant above
the Exercise Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the exercise of this
Warrant.
(e) This Warrant will be binding upon any entity succeeding to
the Company by merger, consolidation or acquisition of all or substantially all
of the Company's assets.
Section 4. Taxes. The Company shall pay any and all taxes which may be
payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant.
Section 5. Warrant Holder Deemed Not a StockHolder. Except as otherwise
specifically provided herein, no Holder, as such, of this Warrant shall be
entitled to vote or receive dividends or be deemed the Holder of shares of the
Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of this Warrant of the Warrant Shares which he or she is
then entitled to receive upon the due exercise of this Warrant. In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities
on such Holder to purchase any securities or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, the Company will provide the Holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. Representations of Holder. The holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment and not with a view to, or for sale in
connection with, any distribution hereof or of any of the shares of Common Stock
or other securities issuable upon the exercise thereof, and not with any present
intention of distributing any of the same. The holder of this Warrant further
represents, by acceptance hereof, that, as of this date,
6
<PAGE> 7
such holder is an accredited investor as such term is defined in Rule 501(a) of
Regulation D promulgated by the Securities and Exchange Commission under the
Securities Act (an "ACCREDITED INVESTOR"). Upon exercise of this Warrant, the
holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares so purchased are being
acquired solely for the holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale other
than pursuant to an effective registration statement or an exemption under the
Securities Act and that such holder is an Accredited Investor. Notwithstanding
the foregoing, by making the representations herein, the holder does not agree
to hold the Warrant or the Warrant Shares for any minimum or other specified
term and reserves the right to dispose of the Warrant and the Warrant Shares at
any time in accordance with or pursuant to a registration statement or an
exemption under the Securities Act. If such holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such holder's exercise of the Warrant that the Company receive such
other representations as the Company considers reasonably necessary to assure
the Company that the issuance of its securities upon exercise of the Warrant
shall not violate any United States or state securities laws.
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to the Holder hereof), a register for this Warrant, in which the Company
shall record the name and address of the person in whose name this Warrant has
been issued, as well as the name and address of each transferee. The Company may
treat the person in whose name any Warrant is registered on the register as the
owner and Holder thereof for all purposes, notwithstanding any notice to the
contrary, but in all events recognizing any transfers made in accordance with
the terms of this Warrant.
(b) The Holder of this Warrant understands that this Warrant has
not been and is not expected to be, registered under the Securities Act or any
state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (a) subsequently registered thereunder, or (b) such Holder
shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration; provided that (i)
any sale of such securities made in reliance on Rule 144 promulgated under the
Securities Act may be made only in accordance with the terms of said Rule and
further, if said Rule is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the Securities and Exchange Commission
thereunder; and (ii) except as provided below, neither the Company nor any other
person
7
<PAGE> 8
is under any obligation to register the Common Stock Warrants under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder except as may be expressly set out
herein.
(c) The Company is obligated to register the Warrant Shares
for resale under the Securities Act and the Holder of this Warrant is not
entitled to the registration rights in respect of the Warrant Shares, unless and
until the Company enters into a Registration Rights Agreement with the Holder of
these Warrants, at the sole discretion of the Company.
Section 8. Adjustment of Exercise Price and Number of Shares. In order
to prevent dilution of the rights granted under this Warrant, the Exercise Price
and the number of shares of Common Stock issuable upon exercise of this Warrant
shall be adjusted from time to time as follows:
(a) Adjustment of Exercise Price upon Subdivision or
Combination of Common Stock. If the Company at any time after the date of
issuance of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced and the
number of shares of Common Stock obtainable upon exercise of this Warrant will
be proportionately increased. If the Company at any time after the date of
issuance of this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination will be proportionately increased and the number of shares of Common
Stock obtainable upon exercise of this Warrant will be proportionately
decreased.
(b) Reorganization, Reclassification, Consolidation, Merger or
Sale. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company's assets to another
Person (as defined below) or other transaction which is effected in such a way
that Holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as "ORGANIC CHANGE." Prior to
the consummation of any Organic Change, the Company will make appropriate
provision (in form and substance satisfactory to the Holders of the Common Stock
Warrants representing a majority of the shares of Common Stock issuable upon
exercise of such Common Stock Warrants then outstanding) to ensure that each of
the Holders of the Common Stock Warrants will thereafter have the right to
acquire and receive in lieu of or addition to (as the case may be) the shares of
Common Stock
8
<PAGE> 9
immediately theretofore acquirable and receivable upon the exercise of such
Holder's Common Stock Warrants, such shares of stock, securities or assets as
may be issued or payable in the Organic Change with respect to or in exchange
for the number of shares of Common Stock immediately theretofore acquirable and
receivable upon the exercise of such Holder's Common Stock Warrants had such
Organic Change not taken place (without taking into account any limitations or
restrictions on exercise). In any such case, the Company will make appropriate
provision (in form and substance satisfactory to the Holders of the Common Stock
Warrants representing a majority of the shares of Common Stock issuable upon
exercise of such Common Stock Warrants then outstanding) with respect to such
Holders' rights and interests to insure that the provisions of this Section 8
and Section 9 will thereafter be applicable to the Common Stock Warrants
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Company, an immediate
adjustment of the Exercise Price to the value for the Common Stock reflected by
the terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of shares of Common Stock acquirable and
receivable upon exercise of the Common Stock Warrants, if the value so reflected
is less than the Exercise Price in effect immediately prior to such
consolidation, merger or sale). The terms of any documents evidencing an Organic
Change shall include such terms as to give effect to the tenor of this provision
and evidencing the obligation to deliver to each Holder of Common Stock Warrants
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to acquire.
(c) Distribution of Assets. If the Company shall declare or make any
distribution of its assets (or rights to acquire its assets) to Holders of
Common Stock as a partial liquidating dividend, by way or return of capital or
otherwise (including any dividend or distribution to the Company's stockholders
of cash or shares (or rights to acquire shares) of capital stock of a
subsidiary) (a "DISTRIBUTION"), at any time after the issuance of this Warrant,
then the Holder of this Warrant shall be entitled upon exercise of this Warrant
for the purchase of any or all of the shares of Common Stock subject hereto,
after the record date for determining shareholders entitled to receive such
Distribution, to receive the amount of such assets (or rights) which would have
been payable to the Holder had such Holder been the Holder of such shares of
Common Stock on the record date for determination of stockholders entitled to
such Distribution.
(d) Notices.
(i) Immediately upon any adjustment of the Exercise Price, the
Company will give written notice thereof to the Holder of this Warrant, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company will give written notice to the Holder of this
Warrant at least twenty (20) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or distribution
upon the Common Stock, (B) with respect to any pro rata subscription offer to
Holders of Common Stock or (C) for determining rights to vote with respect to
any Organic Change, dissolution or
9
<PAGE> 10
liquidation and in no event shall such notice be provided to such Holder prior
to such information being made known to the public.
(iii) The Company will also give written notice to the Holder of
this Warrant at least twenty (20) days prior to the date on which any Organic
Change, dissolution or liquidation will take place and in no event shall such
notice be provided to such Holder prior to such information being made known to
the public.
Section 9. Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated or destroyed, the Company shall, on receipt
of an indemnification undertaking, issue a new Warrant of like denomination and
tenor as the Warrant so lost, stolen, mutilated or destroyed.
Section 10. Notice. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this Warrant
must be in writing and will be deemed to have been delivered (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) upon receipt, when delivered by a
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
Sochrys.com Inc.
4651 Roswell Road
suite B-106
Atlanta, Georgia 30342
Telephone: (404) 256-1963
Telefax: (404) 256-2500
Attention: Jean Pierre Hoffman, President
If to a Holder of this Warrant, to it at the address set forth
below such Holder's signature on the signature page hereof.
Each party shall provide five days' prior written notice to the other party of
any change in address or facsimile number.
Section 11. Miscellaneous.
(a) No Voting Rights; Limitation of Liability - Prior to exercise, this
Warrant will not entitle the Holder to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Holder to
10
<PAGE> 11
exercise this Warrant, and no enumeration herein of the rights or privileges of
the Holder, shall give rise to any liability of the Holder for the purchase
price of the Warrant Shares pursuant to the exercise hereof.
(b) Waiver and Modification This Warrant and any term hereof may
be changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or Holder hereof against which enforcement of such change,
waiver, discharge or termination is sought.
(c) Headings - The headings in this Warrant are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(d) Governing Law - THIS WARRANT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA. The Holder hereby
submits to the jurisdiction of the State of Georgia and agrees that service of
all writs, process and summonses in any such suit, action or proceeding brought
in the United States against the Company may be made upon the Escrow Agent and
shall be governed by and interpreted under the laws of the State of Georgia
without regard to principles of conflicts of law thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its duly authorized officer as of the date first indicated
above.
SOCHRYS.COM INC.
By: /s/JEAN PIERRE HOFMAN
-------------------------
Name: Jean Pierre Hofman
Title: President
By: /s/ PAUL CLAVERIE
-------------------------
Name: Paul Claverie
Title: Vice President
11
<PAGE> 1
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE THEREOF (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY OTHER
UNITED STATES FEDERAL OR STATE SECURITIES OR BLUE SKY LAWS OR APPLICABLE
NON-UNITED STATES SECURITIES LAWS, AND HAVE BEEN ISSUED IN A MANNER INTENDED TO
COMPLY WITH THE CONDITIONS CONTAINED IN REGULATION S UNDER THE ACT. NO OFFER,
SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION (COLLECTIVELY, A "DISPOSAL") OR
EXERCISE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY BE MADE (A) IN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF ANY "U.S. PERSON" (AS
DEFINED IN REGULATION S) UNLESS (i ) REGISTERED UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES OR BLUE SKY LAWS OR (ii) SOCHRYS.COM INC. (THE "COMPANY")
RECEIVES A WRITTEN OPINION OF UNITED STATES LEGAL COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO IT TO THE EFFECT THAT SUCH DISPOSAL IS EXEMPT FROM SUCH
REGISTRATION REQUIREMENTS OR (B) OUTSIDE THE UNITED STATES TO, OR FOR THE
ACCOUNT OR BENEFIT OF ANY PERSON WHO IS NOT A "U.S. PERSON" UNLESS PRIOR TO SUCH
DISPOSAL ( i ) THE BENEFICIAL OWNER OF SUCH SECURITIES AND THE PROPOSED
TRANSFEREE SUBMIT CERTAIN CERTIFICATIONS TO THE COMPANY (FORMS OF WHICH ARE
AVAILABLE FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES) AND ( ii ) THE
COMPANY RECEIVES THE LEGAL OPINION DESCRIBED IN (A) (ii) ABOVE. THE SECURITIES
ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THIS
WARRANT.
SOCHRYS.COM INC.
WARRANT TO PURCHASE COMMON STOCK
WARRANT NO.: NUMBER OF WARRANT SHARES:
SERIES B
DATE OF ISSUANCE: AUGUST 31, 1999
Sochrys.com Inc. a Nevada corporation (the "COMPANY"), hereby certifies that,
for value received, [NAME], (the "HOLDER") is entitled, subject to the terms set
forth below, to purchase from the Company upon surrender of this Warrant, at any
time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time
on the Expiration Date (as defined herein) [NO. OF SHARES] fully paid
nonassessable shares of Common Stock (as
<PAGE> 2
defined in Section 1(b)) of the Company (the "WARRANT SHARES") at the purchase
price per share provided in Section 1(b) below (the "EXERCISE PRICE");
provided, however, that in no event shall the Holder be entitled to exercise
this Warrant for a number of Warrant Shares in excess of that number of Warrant
Shares which, upon giving effect to such exercise, would cause the aggregate
number of shares of Common Stock beneficially owned by the Holder and its
affiliates to exceed 4.99% of the outstanding shares of the Common Stock
following such exercise. For purposes of the foregoing proviso, the aggregate
number of shares of Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which the determination of such proviso
is being made, but shall exclude shares of Common Stock which would be issuable
upon (i) exercise of the remaining, unexercised Warrants beneficially owned by
the Holder and its affiliates and (ii) exercise or conversion of the unexercised
or unconverted portion of any other securities of the Company beneficially owned
by the Holder and its affiliates (including, without limitation, any convertible
notes, convertible preferred stock, warrants or rights to receive shares of
Common Stock) subject to a limitation on conversion or exercise analogous to the
limitation contained herein. Except as set forth in the preceding sentence, for
purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. The Holder may waive the foregoing limitations by written notice to the
Company upon not less than 61 days prior notice (with such waiver taking effect
only upon the expiration of such 61 day notice period).
Section 1.
(a) Definitions. The following words and terms as used in this
Warrant shall have the following meanings:
"BUSINESS DAY" means any day except Saturday, Sunday and any
day which is designated in the State of New York as a legal holiday or a day on
which banking institutions are authorized or legally required or other
government action to close.
"CLOSING BID PRICE" means, for any security as of any date, the
last closing bid price for such security on The Nasdaq SmallCap Market as
reported by Bloomberg Financial Markets ("BLOOMBERG"), or, if The Nasdaq
SmallCap Market is not the principal trading market for such security, the last
closing bid price of such security on a Subsequent Market (as defined below) on
which such security is listed or traded as reported by Bloomberg, or if the
foregoing do not apply, the last closing bid price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing bid price is reported for such security
by Bloomberg, the last closing trade price of such security as reported by
Bloomberg, or, if no last closing trade price is reported for such security by
Bloomberg, the average of the bid prices of any market makers for such security
as reported in the "pink sheets" by the
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<PAGE> 3
National Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated
for such security on such date on any of the foregoing bases, the Closing Bid
Price of such security on such date shall be the fair market value as mutually
determined by the Company and the Holders the Common Stock Warrants. If the
Company and the Holders of the Common Stock Warrants are unable to agree upon
the fair market value of the Common Stock, then such dispute shall be resolved
pursuant to Section 2(a) of this Warrant with the term "Closing Bid Price" being
substituted for the term "Market Price." (All such determinations to be
appropriately adjusted for any stock dividend, stock split or other similar
transaction during such period).
"COMMON STOCK" means the Company's common stock, par value
$.001 per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any capital stock resulting from a reclassification of such
Common Stock.
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time, the
number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Section 8
or Convertible Securities (as defined in Section 8) are actually exercisable or
convertible at such time, but excluding any shares of Common Stock issuable upon
exercise of the Common Stock Warrants.
"ESCROW AGENT" means Alan R. Turem, P.C. having an office at
4651 Roswell Road, Suite B-105 Atlanta, Georgia 30342.
"EXERCISE PRICE" shall be $3.00, subject to adjustment as
hereinafter provided.
"EXPIRATION DATE" means December 31, 2004.
"DEEMED MAXIMUM MARKET PRICE" means, with respect to any
security for any date, the amount of $6.00.
"OTHER SECURITIES" means (i) those securities, convertible
securities, options and warrants of the Company issued prior to, and outstanding
on, the date of issuance of this Warrant, (ii) shares of Common Stock, and
warrants or other securities that are convertible into or exchangeable for
shares of Common Stock, issuable in connection with the subsequent acquisitions
by the Company.
"PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, a government or any department or agency thereof, or any other
entity or organization.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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<PAGE> 4
"SUBSEQUENT MARKET" means any of the New York Stock Exchange,
American Stock Exchange or Nasdaq National Market, Nasdaq SmallCap Market or any
other public stock exchange on which the Company's Securities are listed for
trading.
"TRADING DAY" means (a) a day on which the Common Stock is
quoted on the OTC BB or listed for trading on a Subsequent Market or (b) if the
Common Stock is not quoted on the OTC BB or is not listed on a Subsequent
Market, a day on which the Common Stock is quoted in the over-the-counter
market, as reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding its functions of reporting prices);
provided, however, that in the event that the Common Stock is not listed or
quoted as set forth in (a) and (b) hereof, then a Trading Day shall be a
Business Day.
"WARRANT" means this Warrant and all Warrants issued in
exchange, transfer or replacement thereof.
"WARRANT SHARES" means the shares of Common Stock issuable upon
the exercise of this Warrant.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all
references herein (A) to the Company shall be deemed to include the Company's
successors and (B) to any applicable law defined or referred to herein, shall be
deemed references to such applicable law as the same may have been or may be
amended or supplemented from time to time.
(ii) When used in this Warrant, the words "HEREIN,"
"HEREOF," and "HEREUNDER," and words of similar import, shall refer to this
Warrant as a whole and not to any provision of this Warrant, and the words
"SECTION," "SCHEDULE," and "EXHIBIT" shall refer to Sections of, and Schedules
and Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the neuter
gender includes the masculine or feminine, and the singular number includes the
plural, and vice versa.
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<PAGE> 5
Section 2. Exercise of Warrant.
(a) Exercise may be done at any time during normal business hours on
any business day on or after the opening of business on the date hereof and
prior to 11:59 P.M. Eastern Time on the Expiration Date by delivery to the
Escrow Agent and the Company in the manner specified below of (i) a written
notice of such Holder's election to exercise this Warrant which notice shall be
in the form attached as Exhibit A hereto, (the "EXERCISE NOTICE"), and shall
specify the number of Warrant Shares to be purchased and the other information
set out therein, (ii) payment to the Company of an amount equal to the Exercise
Price multiplied by the number of Warrant Shares as to which the Warrant is
being exercised (the "AGGREGATE EXERCISE PRICE") in cash or by check or wire
transfer payable to the Company in immediately available funds, and (iii) the
surrender of this Warrant. Provided, that if such Warrant Shares are to be
issued in any name other than that of the registered Holder of this Warrant,
such issuance shall be deemed a transfer and the provisions of Section 7 shall
be applicable and the Exercise Notice shall be accompanied by such additional
documentation as may be required by that Section. Such Exercise Notice, payment,
Warrant and other documentation required for exercise shall be delivered to the
Escrow Agent at the address set out in Section 1 with a copy of the Exercise
Notice being delivered simultaneously to the Company.
(b) In the event of any exercise of the rights represented by this
Warrant in compliance with this Section 2(a), a certificate or certificates for
the Warrant Shares so purchased, in such denominations as may be requested by
the Holder hereof and registered in the name of, or as directed by, the Holder,
shall be delivered at the Company's expense to, or as directed by, such Holder
as soon as practicable after such rights shall have been so exercised, and in
any event no later than five (5) business days after delivery of the Exercise
Notice to the Escrow Agent. In the case of a dispute as to the determination of
the Exercise Price of a security or the arithmetic calculation of the Warrant
Shares, the Company shall promptly issue to the Holder the number of shares of
Common Stock that is not disputed and shall submit the disputed determinations
or arithmetic calculations to the Holder via facsimile within one business day
of receipt of the Holder's subscription notice. If the Holder and the Company
are unable to agree upon the determination of the Exercise Price or arithmetic
calculation of the Warrant Shares within one day of such disputed determination
or arithmetic calculation being submitted to the Holder, then the Company shall
immediately submit via facsimile (i) the disputed determination of the Exercise
Price to an independent, reputable investment banking firm or (ii) the disputed
arithmetic calculation of the Warrant Shares to its independent, outside
accountant. The Company shall cause the investment banking firm or the
accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the Holder of the results no later than two (2)
Business Days from receipt of the disputed determinations or calculations. Such
investment banking firm's or accountant's determination or calculation, as the
case may be, shall be deemed conclusive absent manifest error.
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<PAGE> 6
(c) Unless the rights represented by this Warrant shall have expired
or shall have been fully exercised, the Company shall, as soon as practicable
and in no event later than five business days after any exercise and at its own
expense, issue a new Warrant identical in all respects to the Warrant exercised
except (i) it shall represent rights to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under the Warrant exercised, less
the number of Warrant Shares with respect to which such Warrant is exercised,
and (ii) the Holder thereof shall be deemed for all corporate purposes to have
become the Holder of record of such Warrant Shares immediately prior to the
close of business on the date on which the Warrant is surrendered and payment of
the amount due in respect of such exercise and any applicable taxes is made,
irrespective of the date of delivery of certificates evidencing such Warrant
Shares, except that, if the date of such surrender and payment is a date when
the stock transfer books of the Company are properly closed, such person shall
be deemed to have become the Holder of such Warrant Shares at the opening of
business on the next succeeding date on which the stock transfer books are open.
(d) No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock issued
upon exercise of this Warrant shall be rounded up or down to the nearest whole
number.
(e) Notwithstanding anything contained herein to the contrary, the
Holder of this Warrant may, at its election exercised in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making the cash
payment otherwise contemplated to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the "Net Number" of shares of Common Stock determined according to the
following formula:
Net Number = Y x (A - B)/B
For purposes of the foregoing formula:
Y = the total number shares with respect to which this Warrant is
then being exercised.
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<PAGE> 7
A = is the lesser of (i) the Deemed Maximum Market Price and (ii)
the average of the closing bid prices of the common stock for 5
trading days immediately prior to but not including
the Exercise Date.
B = the Exercise Price then in effect at the time of such
exercise.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder hereof,
and the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.
Section 3. Covenants as to Common Stock; Certain Registrations. The
Company hereby covenants and agrees as follows:
(a) This Warrant is, and any Common Stock Warrants issued in
substitution for or replacement of this Warrant will upon issuance be, duly
authorized and validly issued.
(b) All Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof.
(c) During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved at least 100% of the number of shares of Common Stock needed to provide
for the exercise of the rights then represented by this Warrant and the par
value of said shares will at all times be less than or equal to the applicable
Exercise Price.
(d) The Company will not, by amendment of its charter or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed by it
hereunder, but will at all times in good faith assist in the carrying out of all
the provisions of this Warrant. Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise
Price then in effect, and (ii) will take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant.
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<PAGE> 8
(e) This Warrant will be binding upon any entity succeeding to the
Company by merger, consolidation or acquisition of all or substantially all of
the Company's assets.
Section 4. Taxes. The Company shall pay any and all taxes which may be
payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant.
Section 5. Warrant Holder Deemed Not a StockHolder. Except as otherwise
specifically provided herein, no Holder, as such, of this Warrant shall be
entitled to vote or receive dividends or be deemed the Holder of shares of the
Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of this Warrant of the Warrant Shares which he or she is
then entitled to receive upon the due exercise of this Warrant. In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities
on such Holder to purchase any securities or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, the Company will provide the Holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. Representations of Holder. The Holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment and not as a nominee or with a view
to, or for sale in connection with, any distribution hereof or of any of the
shares of Common Stock or other securities issuable upon the exercise thereof,
and not with any present intention of distributing any of the same. The Holder
of this Warrant further represents, by acceptance of this Warrant, that, as of
this date, such Holder is not a "U.S. Person" and acknowledges that this warrant
is being acquired by it in an "offshore transaction" and not pursuant to any
"directed selling efforts" having occurred in the United States (as the
captioned terms are defined in Regulation S of the Act). Upon exercise or
transfer of this Warrant, the Holder shall upon request by the Company and as a
condition of such transfer or being issued any Warrant Shares as the case may
be, provide the foregoing representations again and in writing as of the date of
such exercise. Notwithstanding the foregoing, by making the representations
herein, the Holder does not agree to hold the Warrant or the Warrant Shares for
any minimum or other specified term and reserves the right to dispose of the
Warrant and the Warrant Shares at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act. If such Holder
cannot make such representations because they would be factually incorrect, it
shall be a condition
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<PAGE> 9
to such Holder's exercise of the Warrant that the Company receive such other
representations as the Company considers reasonably necessary to assure the
Company that the issuance of its securities upon exercise of the Warrant shall
not violate any United States or state securities laws.
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive offices
(or such other office or agency of the Company as it may designate by notice to
the Holder hereof), a register for this Warrant, in which the Company shall
record the name and address of the person in whose name this Warrant has been
issued, as well as the name and address of each transferee. The Company may
treat the person in whose name any Warrant is registered on the register as the
owner and Holder thereof for all purposes, notwithstanding any notice to the
contrary, but in all events recognizing any transfers made in accordance with
the terms of this Warrant.
(b) The Holder of this Warrant understands that this Warrant has not
been and is not expected to be, registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (a) subsequently registered thereunder, or (b) such Holder shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the securities to be
sold, assigned or transferred may be sold, assigned or transferred pursuant to
an exemption from such registration; provided that (i) any sale of such
securities made in reliance on Rule 144 promulgated under the Securities Act may
be made only in accordance with the terms of said Rule and further, if said Rule
is not applicable, any resale of such securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the Securities and Exchange Commission thereunder; and (ii)
except as provided below, neither the Company nor any other person is under any
obligation to register the Common Stock Warrants under the Securities Act or any
state securities laws or to comply with the terms and conditions of any
exemption thereunder except as may be expressly set out herein.
(c) The Company is obligated to register the Warrant Shares for
resale under the Securities Act and the Holder of this Warrant is not entitled
to the registration rights in respect of the Warrant Shares, unless and until
the Company enters into a Registration Rights Agreement with the Holder of these
Warrants, at the sole discretion of the Company.
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Section 8. Adjustment of Exercise Price and Number of Shares. In order to
prevent dilution of the rights granted under this Warrant, the Exercise Price
and the number of shares of Common Stock issuable upon exercise of this Warrant
shall be adjusted from time to time as follows:
(a) Adjustment of Exercise Price upon Subdivision or Combination of
Common Stock. If the Company at any time after the date of issuance of this
Warrant subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of shares of Common
Stock obtainable upon exercise of this Warrant will be proportionately
increased. If the Company at any time after the date of issuance of this Warrant
combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of shares of Common Stock obtainable
upon exercise of this Warrant will be proportionately decreased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets to another Person (as
defined below) or other transaction which is effected in such a way that Holders
of Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as "ORGANIC CHANGE." Prior to the
consummation of any Organic Change, the Company will make appropriate provision
(in form and substance satisfactory to the Holders of the Common Stock Warrants
representing a majority of the shares of Common Stock issuable upon exercise of
such Common Stock Warrants then outstanding) to ensure that each of the Holders
of the Common Stock Warrants will thereafter have the right to acquire and
receive in lieu of or addition to (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the exercise of
such Holder's Common Stock Warrants, such shares of stock, securities or assets
as may be issued or payable in the Organic Change with respect to or in exchange
for the number of shares of Common Stock immediately theretofore acquirable and
receivable upon the exercise of such Holder's Common Stock Warrants had such
Organic Change not taken place (without taking into account any limitations or
restrictions on exercise). In any such case, the Company will make appropriate
provision (in form and substance satisfactory to the Holders of the Common Stock
Warrants representing a majority of the shares of Common Stock issuable upon
exercise of such Common Stock Warrants then outstanding) with respect to such
Holders' rights and interests to insure that the provisions of this Section 8
and Section 9 will thereafter be applicable to the Common Stock Warrants
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Company, an immediate
adjustment of the Exercise Price to the value for
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<PAGE> 11
the Common Stock reflected by the terms of such consolidation, merger or sale,
and a corresponding immediate adjustment in the number of shares of shares of
Common Stock acquirable and receivable upon exercise of the Common Stock
Warrants, if the value so reflected is less than the Exercise Price in effect
immediately prior to such consolidation, merger or sale). The terms of any
documents evidencing an Organic Change shall include such terms as to give
effect to the tenor of this provision and evidencing the obligation to deliver
to each Holder of Common Stock Warrants such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such Holder may be
entitled to acquire.
(c) Distribution of Assets. If the Company shall declare or make any
distribution of its assets (or rights to acquire its assets) to Holders of
Common Stock as a partial liquidating dividend, by way or return of capital or
otherwise (including any dividend or distribution to the Company's stockholders
of cash or shares (or rights to acquire shares) of capital stock of a
subsidiary) (a "DISTRIBUTION"), at any time after the issuance of this Warrant,
then the Holder of this Warrant shall be entitled upon exercise of this Warrant
for the purchase of any or all of the shares of Common Stock subject hereto,
after the record date for determining shareholders entitled to receive such
Distribution, to receive the amount of such assets (or rights) which would have
been payable to the Holder had such Holder been the Holder of such shares of
Common Stock on the record date for determination of stockholders entitled to
such Distribution.
(d) Notices.
(i) Immediately upon any adjustment of the Exercise Price, the
Company will give written notice thereof to the Holder of this Warrant, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company will give written notice to the Holder of
this Warrant at least twenty (20) days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to Holders of Common Stock or (C) for determining rights to
vote with respect to any Organic Change, dissolution or liquidation and in no
event shall such notice be provided to such Holder prior to such information
being made known to the public.
(iii) The Company will also give written notice to the Holder
of this Warrant at least twenty (20) days prior to the date on which any Organic
Change, dissolution or liquidation will take place and in no event shall such
notice be provided to such Holder prior to such information being made known to
the public.
Section 9. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen, mutilated or destroyed, the Company shall, on receipt of an
indemnification
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undertaking, issue a new Warrant of like denomination and tenor as the Warrant
so lost, stolen, mutilated or destroyed.
Section 10. Notice. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Warrant must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) upon receipt, when delivered by a
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
Sochrys.com Inc.
4651 Roswell Road
suite B-106
Atlanta, Georgia 30342
Telephone: (404) 256-1963
Telefax: (404) 256-2500
Attention: Jean Pierre Hoffman, President
If to a Holder of this Warrant, to it at the address set forth below
such Holder's signature on the signature page hereof.
Each party shall provide five days' prior written notice to the other party of
any change in address or facsimile number.
Section 11. Miscellaneous.
(a) No Voting Rights; Limitation of Liability - Prior to exercise,
this Warrant will not entitle the Holder to any voting rights or other rights as
a stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Holder to exercise this Warrant, and no enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of the
Holder for the purchase price of the Warrant Shares pursuant to the exercise
hereof.
(b) Waiver and Modification. This Warrant and any term hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or Holder hereof against which enforcement of such change,
waiver, discharge or termination is sought.
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<PAGE> 13
(c) Headings - The headings in this Warrant are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(d) Governing Law - THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA. The Holder hereby submits
to the jurisdiction of the State of Georgia and agrees that service of all
writs, process and summonses in any such suit, action or proceeding brought in
the United States against the Company may be made upon the Escrow Agent and
shall be governed by and interpreted under the laws of the State of Georgia
without regard to principles of conflicts of law thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its duly authorized officer as of the date first indicated above.
SOCHRYS.COM INC.
By: /s/ JEAN PIERRE HOFMAN
---------------------------
Name: Jean Pierre Hofman
Title: President
By: /s/ PAUL CLAVERIE
----------------------
Name: Paul Claverie
Title: Vice President
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<PAGE> 1
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (THE "ACT") OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR
SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN
OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY,
THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SAID
ACT.
SOCHRYS.COM INC.
WARRANT TO PURCHASE COMMON STOCK
WARRANT NO.: NUMBER OF WARRANT SHARES:
SERIES C
DATE OF ISSUANCE: AUGUST 31, 1999
Sochrys.com Inc. a Nevada corporation (the "COMPANY"), hereby certifies that,
for value received, [NAME], (the "HOLDER") is entitled, subject to the terms set
forth below, to purchase from the Company upon surrender of this Warrant, at any
time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time
on the Expiration Date (as defined herein) [NO. OF SHARES] fully paid
nonassessable shares of Common Stock (as defined in Section 1(b)) of the Company
(the "WARRANT SHARES") at the purchase price per share provided in Section 1(b)
below (the "EXERCISE PRICE"); provided, however, that in no event shall the
Holder be entitled to exercise this Warrant for a number of Warrant Shares in
excess of that number of Warrant Shares which, upon giving effect to such
exercise, would cause the aggregate number of shares of Common Stock
beneficially owned by the Holder and its affiliates to exceed 4.99% of the
outstanding shares of the Common Stock following such exercise. For purposes of
the foregoing proviso, the aggregate number of shares of Common Stock
beneficially owned by the Holder and its affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which the determination of such proviso is being made, but shall exclude shares
of Common Stock which would be issuable upon (i) exercise of the remaining,
unexercised Warrants beneficially owned by the Holder and its affiliates and
(ii) exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company beneficially owned by the Holder and its
affiliates (including, without limitation, any convertible notes, convertible
preferred stock, warrants or rights to receive shares of Common Stock) subject
to a limitation on conversion or exercise
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<PAGE> 2
analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. The Holder may waive the foregoing limitations by written
notice to the Company upon not less than 61 days prior notice (with such waiver
taking effect only upon the expiration of such 61 day notice period).
Section 1.
(a) Definitions. The following words and terms as used in this
Warrant shall have the following meanings:
"BUSINESS DAY" means any day except Saturday, Sunday and any
day which is designated in the State of New York as a legal holiday or a day on
which banking institutions are authorized or legally required or other
government action to close.
"CLOSING BID PRICE" means, for any security as of any date,
the last closing bid price for such security on The Nasdaq SmallCap Market as
reported by Bloomberg Financial Markets ("BLOOMBERG"), or, if The Nasdaq
SmallCap Market is not the principal trading market for such security, the last
closing bid price of such security on a Subsequent Market (as defined below) on
which such security is listed or traded as reported by Bloomberg, or if the
foregoing do not apply, the last closing bid price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing bid price is reported for such security
by Bloomberg, the last closing trade price of such security as reported by
Bloomberg, or, if no last closing trade price is reported for such security by
Bloomberg, the average of the bid prices of any market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the
Closing Bid Price cannot be calculated for such security on such date on any of
the foregoing bases, the Closing Bid Price of such security on such date shall
be the fair market value as mutually determined by the Company and the Holders
the Common Stock Warrants. If the Company and the Holders of the Common Stock
Warrants are unable to agree upon the fair market value of the Common Stock,
then such dispute shall be resolved pursuant to Section 2(a) of this Warrant
with the term "Closing Bid Price" being substituted for the term "Market Price."
(All such determinations to be appropriately adjusted for any stock dividend,
stock split or other similar transaction during such period).
"COMMON STOCK" means the Company's common stock, par value
$.001 per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any capital stock resulting from a reclassification of such
Common Stock.
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Section 8
or
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<PAGE> 3
Convertible Securities (as defined in Section 8) are actually exercisable or
convertible at such time, but excluding any shares of Common Stock issuable upon
exercise of the Common Stock Warrants.
"ESCROW AGENT" means Alan R. Turem, P.C. having an office at
4651 Roswell Road, Suite B-105 Atlanta, Georgia 30342.
"EXERCISE PRICE" shall be $5.00, subject to
adjustment as hereinafter provided.
"EXPIRATION DATE" means December 31, 2004.
"OTHER SECURITIES" means (i) those securities, convertible
securities, options and warrants of the Company issued prior to, and outstanding
on, the date of issuance of this Warrant, (ii) shares of Common Stock, and
warrants or other securities that are convertible into or exchangeable for
shares of Common Stock, issuable in connection with the subsequent acquisitions
by the Company.
"PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, a government or any department or agency thereof, or any other
entity or organization.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"WARRANT" means this Warrant and all Warrants issued in
exchange, transfer or replacement thereof.
"WARRANT SHARES" means the shares of Common Stock issuable
upon the exercise of this Warrant.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references
herein (A) to the Company shall be deemed to include the Company's successors
and (B) to any applicable law defined or referred to herein, shall be deemed
references to such applicable law as the same may have been or may be amended or
supplemented from time to time.
(ii) When used in this Warrant, the words "HEREIN," "HEREOF,"
and "HEREUNDER," and words of similar import, shall refer to this Warrant as a
whole and not to any provision of this Warrant, and the words "SECTION,"
"SCHEDULE," and "EXHIBIT" shall refer to Sections of, and Schedules and Exhibits
to, this Warrant unless otherwise specified.
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<PAGE> 4
(iii) Whenever the context so requires, the neuter gender
includes the masculine or feminine, and the singular number includes the plural,
and vice versa.
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<PAGE> 5
Section 2. Exercise of Warrant.
(a) Exercise may be done at any time during normal business hours on
any business day on or after the opening of business on the date hereof and
prior to 11:59 P.M. Eastern Time on the Expiration Date by delivery to the
Escrow Agent and the Company in the manner specified below of (i) a written
notice of such Holder's election to exercise this Warrant which notice shall be
in the form attached as Exhibit A hereto, (the "EXERCISE NOTICE"), and shall
specify the number of Warrant Shares to be purchased and the other information
set out therein, (ii) payment to the Company of an amount equal to the Exercise
Price multiplied by the number of Warrant Shares as to which the Warrant is
being exercised (the "AGGREGATE EXERCISE PRICE") in cash or by check or wire
transfer payable to the Company in immediately available funds, and (iii) the
surrender of this Warrant. Provided, that if such Warrant Shares are to be
issued in any name other than that of the registered Holder of this Warrant,
such issuance shall be deemed a transfer and the provisions of Section 7 shall
be applicable and the Exercise Notice shall be accompanied by such additional
documentation as may be required by that Section. Such Exercise Notice, payment,
Warrant and other documentation required for exercise shall be delivered to the
Escrow Agent at the address set out in Section 1 with a copy of the Exercise
Notice being delivered simultaneously to the Company.
(b) In the event of any exercise of the rights represented by this
Warrant in compliance with this Section 2(a), a certificate or certificates for
the Warrant Shares so purchased, in such denominations as may be requested by
the Holder hereof and registered in the name of, or as directed by, the Holder,
shall be delivered at the Company's expense to, or as directed by, such Holder
as soon as practicable after such rights shall have been so exercised, and in
any event no later than five (5) business days after delivery of the Exercise
Notice to the Escrow Agent. In the case of a dispute as to the determination of
the Exercise Price of a security or the arithmetic calculation of the Warrant
Shares, the Company shall promptly issue to the Holder the number of shares of
Common Stock that is not disputed and shall submit the disputed determinations
or arithmetic calculations to the Holder via facsimile within one business day
of receipt of the Holder's subscription notice. If the Holder and the Company
are unable to agree upon the determination of the Exercise Price or arithmetic
calculation of the Warrant Shares within one day of such disputed determination
or arithmetic calculation being submitted to the Holder, then the Company shall
immediately submit via facsimile (i) the disputed determination of the Exercise
Price to an independent, reputable investment banking firm or (ii) the disputed
arithmetic calculation of the Warrant Shares to its independent, outside
accountant. The Company shall cause the investment banking firm or the
accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the Holder of the results no later than two (2)
Business Days from receipt of the disputed determinations or calculations. Such
investment banking firm's or accountant's determination or calculation, as the
case may be, shall be deemed conclusive absent manifest error.
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<PAGE> 6
(c) Unless the rights represented by this Warrant shall have expired
or shall have been fully exercised, the Company shall, as soon as practicable
and in no event later than five business days after any exercise and at its own
expense, issue a new Warrant identical in all respects to the Warrant exercised
except (i) it shall represent rights to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under the Warrant exercised, less
the number of Warrant Shares with respect to which such Warrant is exercised,
and (ii) the Holder thereof shall be deemed for all corporate purposes to have
become the Holder of record of such Warrant Shares immediately prior to the
close of business on the date on which the Warrant is surrendered and payment of
the amount due in respect of such exercise and any applicable taxes is made,
irrespective of the date of delivery of certificates evidencing such Warrant
Shares, except that, if the date of such surrender and payment is a date when
the stock transfer books of the Company are properly closed, such person shall
be deemed to have become the Holder of such Warrant Shares at the opening of
business on the next succeeding date on which the stock transfer books are open.
(d) No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock issued
upon exercise of this Warrant shall be rounded up or down to the nearest whole
number.
Section 3. Covenants as to Common Stock; Certain Registrations. The
Company hereby covenants and agrees as follows:
(a) This Warrant is, and any Common Stock Warrants issued in
substitution for or replacement of this Warrant will upon issuance be, duly
authorized and validly issued.
(b) All Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof.
(c) During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved at least 100% of the number of shares of Common Stock needed to provide
for the exercise of the rights then represented by this Warrant and the par
value of said shares will at all times be less than or equal to the applicable
Exercise Price.
(d) The Company will not, by amendment of its charter or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed by it
hereunder, but will at
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all times in good faith assist in the carrying out of all the provisions of this
Warrant. Without limiting the generality of the foregoing, the Company (i) will
not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Exercise Price then in effect, and (ii) will
take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
(e) This Warrant will be binding upon any entity succeeding to the
Company by merger, consolidation or acquisition of all or substantially all of
the Company's assets.
Section 4. Taxes. The Company shall pay any and all taxes which may be
payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant.
Section 5. Warrant Holder Deemed Not a StockHolder. Except as otherwise
specifically provided herein, no Holder, as such, of this Warrant shall be
entitled to vote or receive dividends or be deemed the Holder of shares of the
Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of this Warrant of the Warrant Shares which he or she is
then entitled to receive upon the due exercise of this Warrant. In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities
on such Holder to purchase any securities or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, the Company will provide the Holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. Representations of Holder. The holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment and not with a view to, or for sale in
connection with, any distribution hereof or of any of the shares of Common Stock
or other securities issuable upon the exercise thereof, and not with any present
intention of distributing any of the same. The holder of this Warrant further
represents, by acceptance hereof, that, as of this date, such holder is an
accredited investor as such term is defined in Rule 501(a) of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
(an "ACCREDITED INVESTOR"). Upon exercise of this Warrant, the holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the Warrant Shares so purchased are being acquired solely for the
holder's own account and not as a
7
<PAGE> 8
nominee for any other party, for investment, and not with a view toward
distribution or resale other than pursuant to an effective registration
statement or an exemption under the Securities Act and that such holder is an
Accredited Investor. Notwithstanding the foregoing, by making the
representations herein, the holder does not agree to hold the Warrant or the
Warrant Shares for any minimum or other specified term and reserves the right to
dispose of the Warrant and the Warrant Shares at any time in accordance with or
pursuant to a registration statement or an exemption under the Securities Act.
If such holder cannot make such representations because they would be factually
incorrect, it shall be a condition to such holder's exercise of the Warrant that
the Company receive such other representations as the Company considers
reasonably necessary to assure the Company that the issuance of its securities
upon exercise of the Warrant shall not violate any United States or state
securities laws.
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive offices
(or such other office or agency of the Company as it may designate by notice to
the Holder hereof), a register for this Warrant, in which the Company shall
record the name and address of the person in whose name this Warrant has been
issued, as well as the name and address of each transferee. The Company may
treat the person in whose name any Warrant is registered on the register as the
owner and Holder thereof for all purposes, notwithstanding any notice to the
contrary, but in all events recognizing any transfers made in accordance with
the terms of this Warrant.
(b) The Holder of this Warrant understands that this Warrant has not
been and is not expected to be, registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (a) subsequently registered thereunder, or (b) such Holder shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the securities to be
sold, assigned or transferred may be sold, assigned or transferred pursuant to
an exemption from such registration; provided that (i) any sale of such
securities made in reliance on Rule 144 promulgated under the Securities Act may
be made only in accordance with the terms of said Rule and further, if said Rule
is not applicable, any resale of such securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the Securities and Exchange Commission thereunder; and (ii)
except as provided below, neither the Company nor any other person is under any
obligation to register the Common Stock Warrants under the Securities Act or any
state securities laws or to comply with the terms and conditions of any
exemption thereunder except as may be expressly set out herein.
8
<PAGE> 9
(c) The Company is obligated to register the Warrant Shares for
resale under the Securities Act and the Holder of this Warrant is not entitled
to the registration rights in respect of the Warrant Shares, unless and until
the Company enters into a Registration Rights Agreement with the Holder of these
Warrants, at the sole discretion of the Company.
Section 8. Adjustment of Exercise Price and Number of Shares. In order to
prevent dilution of the rights granted under this Warrant, the Exercise Price
and the number of shares of Common Stock issuable upon exercise of this Warrant
shall be adjusted from time to time as follows:
(a) Adjustment of Exercise Price upon Subdivision or Combination of
Common Stock. If the Company at any time after the date of issuance of this
Warrant subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of shares of Common
Stock obtainable upon exercise of this Warrant will be proportionately
increased. If the Company at any time after the date of issuance of this Warrant
combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of shares of Common Stock obtainable
upon exercise of this Warrant will be proportionately decreased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets to another Person (as
defined below) or other transaction which is effected in such a way that Holders
of Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as "ORGANIC CHANGE." Prior to the
consummation of any Organic Change, the Company will make appropriate provision
(in form and substance satisfactory to the Holders of the Common Stock Warrants
representing a majority of the shares of Common Stock issuable upon exercise of
such Common Stock Warrants then outstanding) to ensure that each of the Holders
of the Common Stock Warrants will thereafter have the right to acquire and
receive in lieu of or addition to (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the exercise of
such Holder's Common Stock Warrants, such shares of stock, securities or assets
as may be issued or payable in the Organic Change with respect to or in exchange
for the number of shares of Common Stock immediately theretofore acquirable and
receivable upon the exercise of such Holder's Common Stock Warrants had such
Organic Change not taken place (without taking into account any limitations or
restrictions on exercise). In any such case, the Company will
9
<PAGE> 10
make appropriate provision (in form and substance satisfactory to the Holders of
the Common Stock Warrants representing a majority of the shares of Common Stock
issuable upon exercise of such Common Stock Warrants then outstanding) with
respect to such Holders' rights and interests to insure that the provisions of
this Section 8 and Section 9 will thereafter be applicable to the Common Stock
Warrants (including, in the case of any such consolidation, merger or sale in
which the successor entity or purchasing entity is other than the Company, an
immediate adjustment of the Exercise Price to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the number of shares of shares of Common
Stock acquirable and receivable upon exercise of the Common Stock Warrants, if
the value so reflected is less than the Exercise Price in effect immediately
prior to such consolidation, merger or sale). The terms of any documents
evidencing an Organic Change shall include such terms as to give effect to the
tenor of this provision and evidencing the obligation to deliver to each Holder
of Common Stock Warrants such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
acquire.
(c) Distribution of Assets. If the Company shall declare or make any
distribution of its assets (or rights to acquire its assets) to Holders of
Common Stock as a partial liquidating dividend, by way or return of capital or
otherwise (including any dividend or distribution to the Company's stockholders
of cash or shares (or rights to acquire shares) of capital stock of a
subsidiary) (a "DISTRIBUTION"), at any time after the issuance of this Warrant,
then the Holder of this Warrant shall be entitled upon exercise of this Warrant
for the purchase of any or all of the shares of Common Stock subject hereto,
after the record date for determining shareholders entitled to receive such
Distribution, to receive the amount of such assets (or rights) which would have
been payable to the Holder had such Holder been the Holder of such shares of
Common Stock on the record date for determination of stockholders entitled to
such Distribution.
(d) Notices.
(i) Immediately upon any adjustment of the Exercise Price, the
Company will give written notice thereof to the Holder of this Warrant, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company will give written notice to the Holder of
this Warrant at least twenty (20) days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to Holders of Common Stock or (C) for determining rights to
vote with respect to any Organic Change, dissolution or liquidation and in no
event shall such notice be provided to such Holder prior to such information
being made known to the public.
10
<PAGE> 11
(iii) The Company will also give written notice to the Holder
of this Warrant at least twenty (20) days prior to the date on which any Organic
Change, dissolution or liquidation will take place and in no event shall such
notice be provided to such Holder prior to such information being made known to
the public.
Section 9. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen, mutilated or destroyed, the Company shall, on receipt of an
indemnification undertaking, issue a new Warrant of like denomination and tenor
as the Warrant so lost, stolen, mutilated or destroyed.
Section 10. Notice. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Warrant must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) upon receipt, when delivered by a
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
Sochrys.com Inc.
4651 Roswell Road
suite B-106
Atlanta, Georgia 30342
Telephone: (404) 256-1963
Telefax: (404) 256-2500
Attention: Jean Pierre Hoffman, President
If to a Holder of this Warrant, to it at the address set forth below
such Holder's signature on the signature page hereof.
Each party shall provide five days' prior written notice to the other party of
any change in address or facsimile number.
Section 11. Miscellaneous.
(a) No Voting Rights; Limitation of Liability - Prior to exercise,
this Warrant will not entitle the Holder to any voting rights or other rights as
a stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Holder to exercise this Warrant, and no enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of the
Holder for the purchase price of the Warrant Shares pursuant to the exercise
hereof.
11
<PAGE> 12
(b) Waiver and Modification. This Warrant and any term hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or Holder hereof against which enforcement of such change,
waiver, discharge or termination is sought.
(c) Headings - The headings in this Warrant are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(d) Governing Law - THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA. The Holder hereby submits
to the jurisdiction of the State of Georgia and agrees that service of all
writs, process and summonses in any such suit, action or proceeding brought in
the United States against the Company may be made upon the Escrow Agent and
shall be governed by and interpreted under the laws of the State of Georgia
without regard to principles of conflicts of law thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its duly authorized officer as of the date first indicated above.
SOCHRYS.COM INC.
By: /s/ JEAN PIERRE HOFMAN
---------------------------
Name: Jean Pierre Hofman
Title: President
By: /s/ PAUL CLAVERIE
----------------------
Name: Paul Claverie
Title: Vice President
12
<PAGE> 1
EXHIBIT 6.A
Synopsis of Office Leases in Geneva offices
Lessor: L'Agence Immobiliere
Gerard Rosset
Rue des Charmilles 28
1203 Geneva
Lessee: SOCHRYS Technologies SA
Route de Jussy 29
1226 Geneva
The company's Geneva offices are leased for a period of three years beginning
November 1, 1999 through October 31, 2002. The lessor has no affiliation with
the issuer. The lease covers two separate floors and 10 spaces in the parking
garage. The applicable annual charges are provided separately for each space
rented:
<TABLE>
<CAPTION>
Annual Approx. Deposit Approx.
Rental US Dollar on US Dollar
Space Space Rent Utilities Cost Equivalent Lease Equivalent
(Square (Square (Swiss (Swiss (Swiss (Swiss
Meters) Footage) Francs) Francs) Francs) (USD) Francs)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2nd Floor 230 2 476 88 008 7 200 95 208 63 472 14 380 9 587
4th Floor 352 3 789 57 504 5 160 62 664 41 776 22 000 14 667
------
Garage 10 n.a. 21 000 n.a. 21 000 14 000
spaces -------
119 248 24 253
======= ======
</TABLE>
Providing the terms and conditions of the lease have been met, the lease may be
renewed yearly by written request six months prior to expiration. The
termination of the lease may be considered with six-months' notice but subject
to the regular fulfillment of the terms of the lease.
<PAGE> 1
EXHIBIT 6.B
FEE AGREEMENT DATED THIS 30TH DAY OF AUGUST 1999
BETWEEN
Sochrys.com Inc. a Nevada Corporation having an office at
Route de Jussy 29, CH 1226 Thonex-Geneva, Switzerland
(Herein the "Company")
AND
Capital House A Finance And Investment Corporation a Canadian
company having an office at 30 Metcalfe Street, Suite 620,
Ottawa, Canada K1P 5L4
(Herein "CH")
WHEREAS:
i. The Company is a company whose common shares currently are quoted for
trading on the Over The Counter Bulletin Board in the U.S.; and
ii. The Company desires to obtain equity and debt financing ("Financing" as
defined below) and to enter into certain transactions ("Transactions" as
defined below); and
iii. CH represents that it has the ability to advise and to assist certain
Financing(s) and Transactions.
THEREFORE, in consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Parties agree as follows:
1. DEFINITION OF FINANCING
"Consideration" means the aggregate value of all cash, securities, the
assumption of debt by the Target or the Company and any other forms of payment
received or to be received, directly or indirectly, by the Target or the Company
or the shareholders of the Target or the Company pursuant to a Transaction
including the total of all interest-bearing indebtedness of the Target or the
Company (both long term and short term including capitalized leases)
outstanding, assumed or refinanced at the closing of a Transaction and also
including any infusions of cash, securities, assets or other forms of value into
the Target or the Company pursuant to a Transaction. The term "Consideration"
expressly includes the amount paid for all options and warrants assumed or
purchased in connection with a Transaction; (ii) all payments to the existing
officers, directors and employees of the Target or the Company, including, but
not limited to, cash, securities, options and warrants paid in connection with a
Transaction, as well as amounts paid pursuant to consulting agreements,
non-competitive agreements, employment agreements and all other agreements
entered into in connection with a Transaction provided that such consulting,
non-competitive and employment agreements represent no less than 5% of the total
Consideration; and (iii) any letters of credit, standby letters of credit and
other types of third part guarantees used to secure indebtedness or otherwise as
a form of payment (regardless of whether any underlying indebtedness is repaid
as part of the Transaction), subject to the proviso that there will be no double
counting of any forms of value or of payment in calculating the Consideration
including, but not limited to, the definition of consideration above. The value
of all option and warrants
<PAGE> 2
included as part of Consideration will be determined by mutually acceptable
techniques between the Company and CH. If part or all of the Consideration is
represented by securities, the value thereof for the purpose of computing the
Transaction Fee shall be determined as follows:
(xx) For securities which are publicly traded prior to the consummation
of such Transaction, the average last sale price for such
securities for the twenty trading day prior to the consummation of
such Transaction;
(yy) for newly-issued, publicly-traded securities, the average last sale
price for such securities for the first ten trading days subsequent
to the consummation of such Transactions, with such portion of the
Transaction Fee being payable the eleventh trading day subsequent to
the consummation of such Transaction; and
(zz) for securities for which no market exists, the mutual agreement of
the Company and CH as determined prior to the closing of such
Transactions.
If part of the Consideration is contingent upon the occurrence of some
future event (e.g., the realization of earnings projections), then such
portion of the Transaction Fee shall be paid by the Company to CH upon the
earlier of the determination or receipt of such Consideration.
1.2 "Financing" means the gross proceeds or gross value of any equity
financing or debt financing or other forms of financing including but not
limited to limited partnerships arranged by or through CH for the Company
within 24 months of the termination or completion of this agreement by
sources introduced by CH to the Company. Notwithstanding the generality of
the foregoing, it is understood and agreed that Financing shall be limited
to a private placement of common or preferred stock of the Company
("Securities") and includes:
i. any common or preferred stock of the Company issued in connection
with the acquisition of or merger with another company;
ii. any common or preferred stock of the Company issued in connection
with the acquisition of any technology or other assets.
1.3 "Target" means any person, group of persons, partnership, joint venture,
corporation or other entity, including subsidiaries, operations and assets
thereof other than those of the Company, that is part of a "Transaction".
1.4 "Transaction" means (a) any merger, consolidation, reorganization,
recapitalization, business combination or other transaction pursuant to
which a Target or a material subsidiary or other business unit of a Target
acquires, is acquired by, or combined with, the Company or (b) the
acquisition, directly or indirectly, of or by the Company (or by one or
more persons acting together with the Company pursuant to a written
agreement or otherwise), in a single transaction or a series of
transactions, (i) all or substantially all of the assets of a Target or of
the Company or a material subsidiary or other business unit of a Target or
of the Company or (ii) fifty percent or more of a Target's, or of the
Company's, outstanding common stock (whether by way of tender or exchange
offer, open market purchases, negotiated purchases or otherwise).
2
<PAGE> 3
2. CONSULTATIVE SERVICES
The Company hereby engages CH as the Company' financial advisor
("Financial Advisor") with respect to a proposed Financing on a private
placement basis or Transaction. CH shall provide such consultative
services in respect of any Financing or Transaction as may reasonably be
required by the Company but, it is expressly understood and agreed, that
the acceptance of the terms of any Financing or Transaction shall be
within the sole discretion and control of the Company.
3. FEES & EXPENSES
As compensation for providing the services described hereunder, the
Company agrees to pay CH:
3.1 A Retainer Fee of $5,000 U.S. per month, payable quarterly in
advance on the first day of each calendar quarter during the term
hereof provided that the Retainer Fees payable in respect of the
current quarter shall be deemed to be $7,500 in total and shall be
paid upon the execution thereof;
3.2 All reasonable out-of-pocket expenses incurred by CH from time to
time pursuant to the performance of its services hereunder, provided
that the Company shall not be liable for expenditures in excess of
$5,000 U.S. per calendar quarter unless the Company has approved the
expenditures in excess of that amount prior to their being incurred
by CH;
3.3 A cash success fee (the "Success Fee") of 5% of each Financing
payable at the closing of each Financing directly to CH out of the
proceeds of the Financing;
3.4 The Company agrees to pay CH a transaction fee (the "Transaction
Fee") as a percentage of the Consideration of any Transaction equal
to:
(i) 1.5% of up to and including $50 million of Consideration;
(ii) 1.25% of Consideration between $50 million and $100 million;
(iii) 1.0% of Consideration in excess of $100 million.
3.5 If a Transaction is not consummated, but instead the Company
acquires any subsidiary, business segment or operation, division,
assets or securities of the Target, not constituting a Transaction
as set forth above, or the Target acquires any subsidiary, business
segment or operation, division, assets or securities of the Company
(an "Alternate Transaction"), a cash fee calculated in accordance
with the fee schedule set forth in subparagraphs 3.4.
3.6 Warrants for 390,000 shares of Common Stock of the Company at an
exercise price of $3.00 per share and with provisions for cashless
exercise. The issuance and exercise of the warrants are to be
pursuant to Regulation S as promulgated under the Securities Act of
1933.
3.7 If the Company requests CH to assist in arranging a transaction or
perform investment banking services that are not otherwise covered
by the provisions of this Agreement and CH agrees to assist in
arranging such transaction or perform such investment banking
services, the Company agrees to pay CH mutually acceptable
3
<PAGE> 4
compensation taking into account, among other things, the results
obtained and the custom and practice among investment bankers acting
in similar transactions.
Notwithstanding the foregoing, the Retainer Fees and the Warrants shall be
deemed to be earned upon receipt by CH but no Success Fee or Transaction
Fee shall be payable to CH unless and until: (a) the proceeds of the
Financing are payable to or by the Company; or (b) the Consideration for
any Transaction is payable to or by the Company or its shareholders.
4. COMPLIANCE WITH SECURITIES LAWS
The Company will not make any offer or sale of any securities of the same
or similar class as the Securities, or take any action, the result of
which would cause the offer and sale of the Securities to fail to be
eligible for offer and sale pursuant to the provisions of Regulation D or
Regulation S promulgated pursuant to the Securities Act of 1933 (the
"Act") and will comply with all provisions of Regulation D or Regulation S
applicable to the offering of the Securities.
5. INDEMNIFICATION
The Company shall jointly and severally indemnify CH and associated
companies, its directors, officers, shareholders and employees and hold
them and each of them harmless against any loss, liability or expense
incurred by them or any of them arising out of or in connection with the
exercise or performance of any of CH's obligations, powers or duties under
this Agreement excepting only those acts or omissions taken or performed
in bad faith or with gross negligence of CH.
CH shall indemnify and save harmless the Company, its officers, directors,
shareholders and employees, as well as its subsidiaries, and their
respective officers, directors and employees, against any and all claims
or demands for fees, costs, expenses or other payments made from or by any
Funder or any third party pursuant to any agreement with CH with respect
to any Financing provided by any of the Funders.
The rights of indemnification hereunder shall survive the termination of
this agreement or the discharge of the CH hereunder.
6. BEST EFFORTS
It is understood that CH's commitment under this Agreement is to use CH's
best efforts throughout the period that CH serves as the Company'
exclusive Financial Advisor as set forth herein. CH's commitment is not
intended to provide any assurance that any Financing or Transaction will
be consummated. In the event that any Financing or Transaction is not
consummated during the period of time CH acts as the Company's Financial
Advisor and the Company consummates a Financing or Transaction within 12
months thereafter with a source introduced by CH to the Company, the
Company agrees to pay CH the Success Fee or Transaction Fee, respectively.
7. CONFIDENTIALITY
The Company will furnish CH with such information as CH may reasonably
request for CH's use in connection with any Financing or Transaction. The
Company recognizes and confirms that (i) CH will use and rely primarily on
the information furnished to CH by the Company and on information
available to CH from generally recognized public sources without having
4
<PAGE> 5
independently verified the same and (ii) CH does not assume responsibility
for the accuracy or completeness of said information. The Company hereby
represents and warrants the information furnished by it to CH, taken as a
whole, will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not false
or misleading. The Company further agrees that it will immediately notify
CH of the occurrence of any event or circumstance that results in the
above representation regarding such information not continuing to be true
during the entire term of CH's engagement hereunder.
CH shall keep this agreement and the fact of the Company's negotiations
for any Financing or Transaction and any information or documentation
about or received from the Company strictly confidential as between CH and
the Company until such time as and to the extent only that it becomes
publicly available otherwise than by a breach of this or any other
confidentiality agreement to which the Company is a party. CH acknowledges
that breach of this obligation will cause irreparable harm to the Company
that may not be compensable in damages and agrees that, without limitation
to any other right or remedy to which the Company may otherwise be
entitled in consequence thereof, such breach may be restrained by
injunction without proof of actual damage.
8. TERM.
The term of this Agreement shall commence on the date hereof and end
twenty four (24) months thereafter. Notwithstanding the foregoing, either
party may terminate this Agreement at any time prior to the end of the
twenty four month period by giving the other party at least thirty (30)
days prior written notice of such termination, at which time the Company
shall pay to CH all fees earned and all reasonable expenses incurred to
the date of such termination, subject to and in accordance with paragraphs
3 and 5 hereof, respectively. Upon termination of this Agreement, any
periodic Retainer payments payable following termination will cease to be
payable to CH. The Company agrees to pay CH any fees specified in
paragraph 3 if the events specified therein shall occur during the term of
this Agreement or if any source of financing is identified during the term
of this Agreement but a Financing or Transaction is consummated within 12
months after the termination or expiration of this Agreement. Any
obligation pursuant to paragraph 3 shall survive the termination or
expiration of this Agreement. This Agreement may be renewed upon mutual
written agreement of CH and the Company.
9. TOMBSTONES
All tombstones, announcements or other marketing materials used by CH with
respect to any Financing or Transaction in which the Company's name is
used shall be approved by the Company in advance of their release and such
approval shall not be unreasonable withheld.
10. NON-ASSIGNABLE
This agreement shall not be assignable by CH, unless to associated
companies, without written approval by the Company and any assignment
purported to be made by CH in violation of this provision shall be void
and of no effect.
5
<PAGE> 6
11. COMPLETE AGREEMENT
This agreement contains the complete agreement between the parties and
replaces and supercedes all oral or written agreements, understandings or
representations made by either party to the other prior to or
contemporaneous with this agreement.
12. AUTHORITY
Neither party has the authority to bind the other or hold itself out as
having the authority to bind the other or to make any representations or
to execute any document, including general correspondence, on behalf of
the other.
13. COUNTERPARTS & TELEFACSIMILE
This agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original and all of which shall constitute one
agreement. A telefacsimile of this Agreement may be relied upon as full
and sufficient evidence as an original.
14. JURISDICTION
This agreement shall be governed by the laws of the province of Ontario,
Canada.
IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT THIS 30TH DAY OF
AUGUST 1999.
CAPITAL HOUSE A FINANCE. SOCHRYS.COM INC.
AND INVESTMENT CORPORATION
/s/ BRUCE BENN /s/ Jean Pierre Hofman
- ----------------------- -----------------------
PER: BRUCE BENN PER: JEAN PIERRE HOFMAN
/s/ Pierre Claverie
-----------------------
PER: PIERRE CLAVERIE
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 35,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 35,000
<PP&E> 55,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 90,000
<CURRENT-LIABILITIES> 19,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 90,000
<SALES> 170,000
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (58,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
