As filed with the Securities and Exchange Commission on December 23, 1999
Registration Statement No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
----------------------------------------------
(Name of Small Business Issuer in its Charter)
<TABLE>
<S> <C> <C>
Florida ____ 52-2137517
- ------------------------------- -------------------------- -------------------------------
(State or other jurisdiction of (Primary Standard (I.R.S. Employer Identification
incorporation or organization) Industrial Classification) No.) (Code Number)
</TABLE>
2 Field Court
Wrightstown, NJ 08562
609-723-3200
----------------------
(Address and telephone
number of principal
executive offices)
Mr. Stephen Beloyan
Technology Systems International, Inc.
2 Field Court
Wrightstown, NJ 08562
609-723-3200
---------------------------------------------------------
(Name, address and telephone number of agent for service)
With a copy to:
Charles B. Pearlman, Esq.
Brian Pearlman, Esq.
Atlas, Pearlman, Trop & Borkson, P.A.
350 East Las Olas Boulevard
Suite 1700
Fort Lauderdale, Florida 33301
(954) 763-1200
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, check the following box and
list the Securities Act of 1933 registration number of the earlier registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration number of the earlier registration statement for the same
offering. [ ]
If delivery of this prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ].
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount
Shares to be to be Price Per of Offering Registration
Registered Registered Share (1) Price (1) Fee(2)
- ---------- ---------- --------- --------- ------
<S> <C> <C> <C> <C>
common stock,
$.001 par value
per share 900,000 $1.00 $1.00 $237.60
</TABLE>
(1) Assumes the shares of common stock are issued upon exercise of outstanding
warrants. The shares of common stock are underlying warrants Technology
Systems International, Inc. has issued.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
================================================================================
<PAGE>
The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold by the holders until the registration
statement filed with the Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities, in any state where the offer or
sale is not permitted.
SUBJECT TO COMPLETION DATED DECEMBER 23, 1999
PROSPECTUS
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
900,000 SHARES OF COMMON STOCK
This investment has a high degree of risk. You should carefully consider the
risk factors beginning on page 4 before purchasing any of the shares of
Technology Systems International common stock offered by this prospectus.
The selling security holders identified on pages 18 to 19 of this prospectus are
offering 900,000 shares of our common stock. The shares are underlying warrants
previously purchased by the selling security holders from us in a private
placement which were exempt from the registration requirements of the Securities
Act of 1933. The shares are issuable upon exercise of these warrants at $1.00
per share through January 31, 2002. We will not receive any portion of the
proceeds from the sale of these shares. This offering is not being underwritten.
The selling security holders may offer the shares from time to time through
public or private transactions, at prevailing market prices, or at privately
negotiated prices. For additional information on the methods of sale, you should
refer to the section entitled "Plan of Distribution" on page 19.
Our common stock is currently trading on the Pink Sheets under the symbol
"TSYN."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed on the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is December __, 1999
<PAGE>
TABLE OF CONTENTS
Page No.
--------
Prospectus Summary.................................................... 3
Summary Financial Data................................................ 4
Risk Factors.......................................................... 5
Use of Proceeds....................................................... 7
Capitalization........................................................ 8
Management's Discussion and Analysis of
Financial Condition and Plan of Operations......................... 9
Business.............................................................. 10
Management............................................................ 13
Indemnification of Officers and Directors............................. 15
Certain Relationships and Related Transactions........................ 15
Principal Shareholders................................................ 16
Market For Our Securities............................................. 17
Selling Security Holders.............................................. 18
Plan of Distribution.................................................. 19
Description of Securities............................................. 21
Legal Matters......................................................... 22
Experts............................................................... 22
Index to Financial Statements......................................... F-1
2
<PAGE>
PROSPECTUS SUMMARY
We are a development stage company, incorporated under the laws of
Florida in November 1998. We own the Safe Shopper(TM). We believe the Safe
Shopper, which is a patent protected technology, provides an accurate, safe, and
cost effective method for transmitting credit card information and personal data
over standard telephone lines in consumer merchant transactions. We are
presently seeking marketing, licensing and joint venture agreements. We have
working phototypes.
Our executive offices are located at 2 Field Court, Wrightstown, New
Jersey 08562 . Our telephone number is (609) 723-3200.
3
<PAGE>
SUMMARY FINANCIAL DATA
The following table provides summary financial information on
Technology Systems International from inception (November 23, 1998) to September
30, 1999. The accompanying financial statements are based on the assumptions and
adjustments described in the accompanying notes to the financial statements,
which we believe are reasonable.
Statement of Operations data:
Revenues $ 0
Expenses
General and administrative expenses $ 69,038
Other income
Investment (loss), net of expenses (9,387)
Net (loss) and accumulated deficit $ (78,425)
Basic and diluted (loss) per common share $ (0.02)
===========
Basic and diluted weighted average common shares outstanding 4,128,000
===========
Balance Sheet data:
ASSETS
Cash and equivalents $ 966
Marketable securities (at market, cost $29,594) 16,810
Patent costs, net of $7,977 amortization 68,859
Organizational costs 175
-----------
TOTAL ASSETS $ 86,810
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 4,819
Stockholders' equity
Common stock - authorized 25,000,000 shares, 4,475
issued and outstanding 4,475,000 shares,
par value $.001; Preferred stock -
authorized 5,000,000 shares, no shares
issued or outstanding, par value $.001
Additional paid-in capital 155,941
Deficit accumulated during the development stage (78,425)
81,991
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 86,810
===========
4
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RISK FACTORS
An investment in our common stock involves a high degree of risk. In
addition to the other information contained in this prospectus, you should
carefully consider the following risk factors before investing in our common
stock.
We are a start-up business and lack operating history. We were recently
organized and have little operating history upon which an evaluation of
management's performance and our future prospects can be made. There can be no
assurances whatsoever that we will be able to successfully implement our
business strategy or penetrate our markets or attain a wide following for our
product, or that we will ever attain a level of profitability. In addition, we
will be subject to all the risks inherent in a start-up enterprise. Our
prospects must be considered in light of the numerous risks, expenses, delays,
problems and difficulties frequently encountered in the establishment of a new
business in industries characterized by emerging markets and intense
competition.
Failure to protect our technology could permit others to appropriate
our technology, adversely affecting our financial condition. Although we have
received patent protection on our technology, we may not be able to secure
meaningful worldwide proprietary protection relevant to our business operations.
We currently have patent protection in the United States on the Safe Shopper.
Even though our patent is approved, there are no unique barriers for others to
emulate our methods of operations except for those barriers and limitations
confronting anyone engaged in undertaking innovative activities and obtaining
credibility in an emerging industry.
We lack binding agreements which we need to develop our product. In
order for us to implement our business plan, we will be required to reach
understandings with numerous third parties and enter into joint ventures. We
have not entered into any binding agreements or joint ventures with third
parties to manufacture and develop our product or to offer and sell our product.
In the event we are unable to reach acceptable understandings with third
parties, we may be unable to successfully engage in business operations.
We will depend on third-party manufacturers and we currently do not
have any manufacturing contracts. Our product will be manufactured by
third-party manufacturers pursuant to a final product formulation developed by
us. We do not have any written contracts with any suppliers or manufacturers or
commitments from any suppliers or manufacturers to sell our product.
We face risks associated with technological change. The market in which
we will compete is characterized by rapidly changing technology, evolving
industry standards, frequent new product and service announcements,
introductions and enhancements, and changing customer demands. These market
characteristics are heightened by the emerging nature of the Internet.
Accordingly, our future success will depend on our ability to adapt to rapidly
changing technologies, our ability to adapt our product to meet evolving
industry standards and our ability
5
<PAGE>
to continually improve the performance, features and reliability of our product
in response to both changing customer demands and competitive product and
service offerings. Our failure to successfully adapt to such changes in a timely
manner could have a material adverse effect on our business, results of
operations and financial condition.
We do not have any revenue or operating profits. We expect to incur
substantial operating losses for the immediate future. We currently have no
sources of revenue, whether from product sales, license fees or research
funding, and there can be no assurance that we will be able to develop such
revenue sources or that our operations will become profitable, even if we are
able to enter into joint venture arrangements to commercialize our product.
Our future capital needs are uncertain and we will need additional
financing. Our current capital is insufficient to fund our operations. If our
warrants are not exercised we will need to raise additional funds. We may seek
to satisfy our future funding requirements to numerous sources including public
or private offerings of securities, arrangements with strategic partners, or
debt arrangements. We may not be able to locate additional financing.
6
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the resale of our common stock
issuable upon exercise of our warrants by the selling security holders made
under this prospectus.
7
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization at September 30, 1999
and has been derived from financial information appearing in the financial
statements included in this prospectus.
Total Debt: $ 4,819
---------
Stockholders' equity:
common Stock, $.001 par value
per share; 25,000,000 shares
authorized; 4,475,000 shares issued
and outstanding at September 30, 1999 4,475
Additional paid-in capital 155,941
Deficit accumulated during development stage (78,425)
Dividend 0
---------
Total stockholders' equity $ 81,991
---------
Total capitalization $ 86,810
---------
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND PLAN OF OPERATIONS
The following discussion should be read in conjunction with our
financial statements and the related notes which appear elsewhere in this
prospectus.
We have been working to develop the Safe Shopper and believe that our
technological advancements have made the production of a commercially viable
product a certain possibility. We are now focused on identifying companies and
organizations in the credit card industry and related fields to form agreements
and alliances. Presently we are working to structure agreements, joint ventures,
licensing contracts, and strategic alliances with these companies.
If the Safe Shopper is established in the United States, we will work
to introduce and distribute it throughout the world focusing on securing
international patent protection for our product.
Year 2000 Readiness Disclosure
We are aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The Year 2000 issue
relates to whether computer systems will properly recognize and process
information relating to dates in and after the year 2000. These systems could
fail or produce erroneous results if they cannot adequately process dates beyond
the year 1999, and are not corrected. Significant uncertainty exists in the
software industry concerning the potential consequences that may result from the
failure of software to adequately address the Year 2000 issue. We have reviewed
all software and hardware used internally by us in all support systems to
determine whether they are Year 2000 compliant. We believe we are fully Year
2000 compliant as of the date of this prospectus. However, we cannot predict the
effect of the Year 2000 issue on entities with which we may transact business,
and there can be no assurance that the effect of the Year 2000 issue on these
entities will not have a material adverse effect on our business, financial
condition, or results of operations.
9
<PAGE>
BUSINESS
Our history
Technology Systems International, Inc. was incorporated under the laws
of Florida in November 1998. On December 16, 1998, we acquired the "Safe
Shopper(TM)" from Belco Systems Technology Corp., an affiliated entity. Our
headquarters are currently located at Two Field Court, Wrightstown, New Jersey
08562.
Operations
The Safe Shopper is still in the development phase; however, we have
working prototypes and are in the process of commencing a full marketing
campaign. As part of our marketing efforts, we are attempting to establish a
joint venture with participants in the credit card or merchant banking industry
through which we would license the Safe Shopper.
Products
Currently, our only product is the Safe Shopper. The Safe Shopper is a
patented technology, which we believe will provide an accurate, safe cost
effective method for transmitting credit card and personal data over standard
phone lines in consumer/merchant transactions. The Safe Shopper is designed to
either be attached to a telephone or incorporated as an internal part of the
telephone itself. The Safe Shopper operates by a standard credit card being
swiped through the credit card reader on the Safe Shopper. The information that
is on the credit card will then be sent to the merchant through the same phone
line on which the person is talking to the merchant. The merchant may then
transmit all the information that is on the magnetic strip to the merchant bank
that would then clear the credit card transaction.
Our management believes that the Safe Shopper will allow the merchant
to remotely capture the consumer's full credit card information, which will
provide a definitive record of the transaction and thereby eliminate merchants'
susceptibility to credit card charge backs and fraud which our management
estimates costs merchants, banks and consumers over one billion dollars per
year. Another example of the Safe Shopper's use would be that many smaller "mom
and pop" merchants could do business without the barriers to entry that are
sometimes found when smaller merchants attempt to set up a merchant credit card
account. Finally, the Safe Shopper will allow products purchased with its
technology to be shipped much quicker because the merchant will not have to wait
for credit card purchases to clear the merchant bank.
Our intellectual property
We have received a patent for the Safe Shopper from the U.S. Patent
Office and have also sought patent protection on an international basis. Our
success depends in part on our ability to protect our intellectual property. Our
failure or inability to protect our proprietary rights could
10
<PAGE>
materially adversely effect our business, financial condition, and results of
operations by lessening the value of the intellectual property and possibly
increasing competition.
Competition
We believe that we do not face any direct competition at this time due
to the uniqueness of the Safe Shopper. This is evidenced by the U.S. patent we
now hold. However, there may be other products on the market that do not use our
technology, but are able to provide similar or superior credit card security and
transmissions.
Government regulation
We do not believe that our business activities are currently subject to
direct regulation by any government agency; other than regulations applicable to
business generally. However, it is possible that laws and regulations may be
adopted in the future covering issues such as privacy. Additionally, our product
will be subject to regulations that effect the credit card industry.
Facilities
Our principal offices are located in approximately 500 square feet at 2
Field Court, Wrightstown, New Jersey. We occupy this property on a rent free
basis from Stephen Beloyan, our president.
Employees
We currently employ one employee. Once we have the necessary capital to
market our Safe Shopper we will hire additional employees to suit our growing
needs.
Legal proceedings
We are not a party to any material legal proceedings.
How to get more information
We have filed with the SEC a registration statement on Form SB-2 which
can be read and copied at the public reference facilities maintained by the SEC
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Information about
the operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330. The registration statement is also available to the public from
commercial document retrieval services, or via EDGAR on the SEC's web site at
www.sec.gov.
Before the date of this prospectus we have been a non-reporting
company. Upon effectiveness of the registration statement, we will begin filing
quarterly, annual and other
11
<PAGE>
reports with the SEC. We intend to furnish our stockholders with annual reports,
which will include financial statements audited by independent accountants, and
other periodic reports as we may chose to provide, or as we are required by law.
We have not authorized any dealer, salesperson, or other person to
provide any information or make any representations about us, except the
information or representations contained in this prospectus. You should not rely
on any additional information or representation.
This prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, any securities:
- except the common stock offered by this prospectus;
- in any jurisdiction in which the offer or solicitation is not
authorized;
- in any jurisdiction where the dealer or other salesperson is not
qualified to make the offer or solicitation;
- to any person to whom it is unlawful to make the offer or
solicitation; or
- to any person who is not a United States resident or who is
outside the jurisdiction of the United States.
The delivery of this prospectus or any accompanying sales does not
imply that:
- there have been no changes in our affairs after the date of this
prospectus; or
- the information contained in this prospectus is correct after the
date of this prospectus.
12
<PAGE>
MANAGEMENT
Executive officers and directors
The following table sets forth the names, positions and ages of our
executive officers and directors.
Name Age Positions Held
- ---- --- --------------
Stephen A. Beloyan 32 Director, Secretary, President and Treasurer
Darius Oshidar 35 Director
Stephen Beloyan has been our director, president, treasurer and
secretary since our inception in November 1989. From 1989 to 1999 Mr. Beloyan
has been president and treasurer of Professional Home Inspections, Inc., a
Pennsylvania company which provides home inspection and testing services. Since
1997, Mr. Beloyan has been president, treasurer and sole shareholder of Beloyan
Inspection Services, Inc., a New Jersey company providing home inspection and
testing services. Since March 1998, Mr. Beloyan has been president, secretary
and director of Belco Systems Technology Corp., the company from whom we
acquired the Safe Shopper technology.
Darius Oshidar graduated in 1985 from Suny at Stony Brook College with
a bachelor of science degree in biology with a minor in telecommunications. He
graduated from UNMDNJ (University of Medicine and Dentistry of New Jersey) in
1989 with a doctorate in dental medicine. From 1989 through 1992 he served in
the U.S. Army Dental Corps. He also served as acting clinic chief of the Walson
Army Hospital Dental Clinic and during Operation Dessert Storm as a mobilization
dentist. From 1992 through 1995 Dr. Oshidar served at Fort Monmouth Army Base in
New Jersey as acting clinic chief. He retired with the rank of major from the
U.S. Army Dental Corps in 1995. Since 1995 he has served as president of Quality
Dental Care and is its sole shareholder.
Each director is elected at our annual meeting of shareholders and
holds office until the next annual meeting of shareholders, or until his
successor is elected and qualified. Officers are elected annually by the board
of directors and their terms of office are at the discretion of the board.
Employment agreements
To ensure their continued contribution to our growth and development,
we may enter into employment agreements with our executive officers. We have not
entered into any employment agreements as of the date of this prospectus.
13
<PAGE>
Executive compensation
We began our operations in 1998. The following table summarizes all
compensation accrued and paid by us in each of the last two fiscal years to our
chief executive officer and each other executive officer serving as executive
officers whose annual compensation exceeded $100,000.
<TABLE>
<CAPTION>
Annual Compensation Compensation Awards
------------------- -------------------
Options
Name and Other Annual Number of All Other
Principal Position Year Salary Bonus Compensation Shares Compensation
- ------------------ ---- ------ ----- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Stephen Beloyan 1998 $0 0 0 0 0
1999 $0 0 0 0 0
</TABLE>
Dr. Oshidar is currently our outside director. He receives no
compensation. Members of our board of directors who are our executive officers
do not receive any additional compensation for their services to us in their
capacity as a member of our board of directors.
Incentive Stock Option Plan
Our board of directors with the approval of a majority of our
stockholders may adopt a stock option plan. The purpose of the plan is to
increase the employees', advisors and non-employee directors' proprietary
interest in our company, and to align more closely their interests with the
interests of our stockholders. An additional purpose of the plan is also to
enable us to attract and retain the services of experienced and highly qualified
employees and non-employee directors.
We will establish a compensation committee of the board of directors to
administer the plan including the selection of the persons who will be granted
plan options under the plan, the type of plan options to be granted, the number
of shares which may be granted under each plan option and the plan option price.
Plan options granted under the plan may include:
- incentive stock options under Section 422 of the Internal Revenue
Code of 1986,
- non-qualified options, and
- reload options, which permit an eligible person to pay the
exercise price of the plan option with shares of common stock
owned by the eligible person, and receive a new plan option to
purchase shares of common stock equal in number to the tendered
shares.
14
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INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Florida Business Corporations Act provides for indemnification of
directors, employees, officers and agents of Florida corporations. Our articles
of incorporation and bylaws provide that we shall indemnify our directors and
officers to the fullest extent permitted by the Florida Business Corporation
Act. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers or persons by these
provisions, we have been informed that, in the opinion of the SEC,
indemnification is against public policy as expressed and the Securities Act of
1933 and is therefore unenforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 16, 1998, we acquired the Safe Shopper from Belco Systems
Technologies Corp. in consideration for 250,000 shares of our common stock.
Stephen Beloyan is an officer, director and 50% shareholder of Belco Systems
Technologies Corp. and is our officer and director and significant shareholder.
Mr. Lionel Beloyan is also an officer, director and 50% shareholder of Belco
Systems Technologies Corp. and one of our principal shareholders. Lionel Beloyan
is the father of Stephen Beloyan.
We occupy our executive offices from Stephen Beloyan at no cost.
15
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OUR PRINCIPAL SHAREHOLDERS
As of December 1, 1999, there were 4,475,000 shares of our common stock
issued and outstanding, without giving effect to the exercise of our outstanding
warrants to acquire an additional 900,000 shares of our common stock. The
following table sets forth information as of December 1, 1999, with respect to
the beneficial ownership of shares of common stock currently issued and
outstanding by:
- each person known to us to be the owner of more than 5% of the
outstanding shares of common stock,
- each officer and director, and
- all officers and directors as a group.
Unless otherwise indicated, the address for each individual listed is 2
Field Court, Wrightstown, New Jersey 08562.
Approximate
Percentage of
Number of Shares Outstanding Shares
Name Beneficially Owned Beneficially Owned
- ---- ------------------ ------------------
Stephen Beloyan(1) 1,500,000 34%
Lionel Beloyan(2) 500,000 11%
FMS Distributors, Inc.(3) 300,000 7%
Raffles Toho, Inc. 300,000 7%
Belco Systems Technologies Corp. 250,000 6%
All Officers and Directors 1,500,000 34%
as a Group (1 person)(1)
(1) Does not include an aggregate of 250,000 shares of our common stock that is
owned by Belco Systems Technologies Corp., a company in which Stephen
Beloyan owns approximately 50% of the issued and outstanding common stock.
Mr. Stephen Beloyan is the son of Mr. Lionel Beloyan.
(2) Does not include an aggregate of 250,000 shares of our common stock that is
owned by Belco Systems Technologies Corp., a company in which Lionel
Beloyan owns approximately 50% of the issued and outstanding common stock.
Mr. Lionel Beloyan is the father of Mr. Stephen Beloyan.
(3) Address is 8401 N.W. 47th Drive, Coral Springs, Florida 33067.
16
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MARKET FOR OUR SECURITIES
Our common stock is currently trading on the Pink Sheets.
We have not declared any dividends on our common stock and do not plan
to do so in the future.
We have approximately 27 record shareholders of our common stock. Based
upon the records of our transfer agent, we believe we have in excess of 27
beneficial owners of our common stock.
17
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SELLING SECURITY HOLDERS
The following table sets forth the name of each selling security
holder, the number or shares of common stock underlying our warrants
beneficially owned by the selling security holder as of December 1, 1999, and
the number of shares being offered by each selling security holder. Since
inception no selling security holder has been an officer, director or affiliates
of our company, nor has any selling security holder had any material
relationship with us during the period, other than as set forth below.
The shares of common stock being offered by this prospectus are being
registered to permit public secondary trading, and the selling security holders
may offer all or part of the shares for resale from time to time. However, the
selling security holders are under no obligation to sell all or any portion of
the shares of common stock immediately under this prospectus. Because the
selling security holders may sell all or a portion of their shares of common
stock, no estimate can be given as to the number of shares of common stock that
will be held by any selling security holder upon termination of any offering
made under this prospectus; accordingly, the following table assumes the
exercise of the warrants exercisable at $1.00 per share of common stock and the
sale of all shares of common stock underlying the warrants by the selling
security holders immediately following the date of this prospectus.
<TABLE>
<CAPTION>
No. of Shares No. of Shares of No. of Shares
of Common Stock Common Stock of Common Stock
Name of Selling Beneficially Owned Offered by Beneficially Owned Percentage Ownership
Security Holder as of December 1, 1999 This Prospectus After Offering After Offering
- --------------- ---------------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
William E. Huston 211,000 54,000 211,000 4%
William J. Huston 211,000 54,000 211,000 4%
Ken Bonawitz 186,000 54,000 186,000 3%
Lisa Bonawitz 36,000 54,000 36,000 *
Karl G. Rich 24,000 36,000 24,000 *
Nathaly R. Rich 24,000 36,000 24,000 *
George Brous 174,000 36,000 174,000 *
Roy D. Mittman 24,000 36,000 24,000 *
Christina A. Mittman 24,000 36,000 24,000 *
Barbara Shulman 36,000 54,000 36,000 *
Bernard Shulman 186,000 54,000 186,000 3%
Frederick P. Sturgis 24,000 36,000 24,000 *
</TABLE>
18
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Jacqueline Anne Cooper 24,000 36,000 24,000 *
Mark Beloyan 24,000 90,000 24,000 *
Alicia Beloyan 24,000 90,000 24,000 *
Aaron Anderson 24,000 36,000 24,000 *
Gloria Barton 24,000 36,000 24,000 *
Daniel Bellet 24,000 36,000 24,000 *
Carol A. Bellet 24,000 36,000 24,000 *
------ ------ ------
Total 1,328,000 900,000 1,328,000
</TABLE>
* represents less than 1%
In the preceding table:
- Beneficial ownership is determined in compliance with the rules
of the SEC and generally includes voting or investment power with respect to
securities and includes any securities which the person has the right to acquire
within 60 days of this registration statement through the conversion or exercise
of any security or other right.
All shares of common stock we are offering in this registration
statement are exercisable from warrants that our security holders originally
purchased in a private placement of securities in January 1999. We conducted
this private placement in reliance of the exemption from registration provided
by Rule 504 of Regulation D.
PLAN OF DISTRIBUTION
The shares of our common stock offered by this prospectus may be sold
from time to time by the selling security holders, who consist of the persons
named under "Selling Security Holders" above and those persons' pledgees,
donees, transferees or other successors in interest. The selling security
holders may sell the shares on the Pink Sheets or otherwise, at market prices or
at negotiated prices. They may sell the shares of common stock by one or a
combination of the following:
* a block trade in which a broker or dealer so engaged will attempt
to sell the shares as agent, but may position and resell a
portion of the block as principal to facilitate the transaction;
* purchases by a broker or dealer as principal and resale by the
broker or dealer for its account under this prospectus;
19
<PAGE>
* ordinary brokerage transactions and transactions in which a
broker solicits purchasers;
* an exchange distribution in compliance with the rules of the
exchange;
* privately negotiated transactions;
* short sales;
* if a sale qualifies, in compliance with Rule 144 of the
Securities Act of 1933 rather than under this prospectus; and
* any other method permitted by applicable law.
From time to time, one or more of the selling security holders may
pledge, hypothecate or grant a security interest in some or all of the shares of
common stock owned by them, and the pledgees, secured parties or persons to whom
the shares have been hypothecated shall, upon foreclosure in the event of
default, be deemed to be selling security holders under this prospectus. The
number of selling security holders' shares of common stock beneficially owned by
those selling security holders who transfer, pledge, donate or assign the shares
will decrease when they take that action. The plan of distribution for selling
security holders' shares of common stock sold under this prospectus will
otherwise remain unchanged, except that the transferees, pledgees, donees or
other successors will be selling security holders under this prospectus.
A selling security holder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the common
stock in the course of hedging the positions they assume with the selling
security holder, including in connection with distributions of the common stock
by broker-dealers. A selling security holder may also enter into option or other
transactions with broker-dealers that involve the delivery of the shares of
common stock to the broker-dealers, who may then resell or otherwise transfer
the shares. A selling security holder may also loan or pledge the shares of
common stock to a broker-dealer and the broker-dealer may sell the shares so
loaned or upon a default may sell or otherwise transfer the pledged shares of
common stock.
Brokers, dealers, underwriters or agents participating in the
distribution of the shares of common stock as agents may receive compensation in
the form of commissions, discounts or concessions from the selling security
holders and/or purchasers of the common stock for whom broker-dealers may act as
agent, or to whom they may sell as principal, or both. The compensation as to a
particular broker-dealer may be less than or in excess of customary commissions.
The selling security holders and any broker-dealers who act in connection with
the sale of the shares of common stock under this prospectus may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, and any
commission they receive and proceeds of any sale of the shares of common stock
may be deemed to be underwriting discounts and
20
<PAGE>
commissions under the Securities Act of 1933. Neither we nor any selling
security holder can presently estimate the amount of compensation. We know of no
existing arrangements between any selling security holder, any other
stockholder, broker, dealer, underwriter or agent relating to the sale or
distribution of the shares of common stock included in this prospectus.
We will pay substantially all of the expenses incident to the
registration, offering and sale of the shares of common stock included in this
prospectus to the public, which includes our legal, accounting and printing
expenses. We will not pay commissions or discounts of underwriters,
broker-dealers or agents, or any other costs incurred by the selling security
holders.
We have advised the selling security holders that during the time as
they may be engaged in a distribution of the shares of common stock included in
this prospectus they are required to comply with Regulation M adopted under the
Exchange Act. With some exceptions, Regulation M precludes any selling security
holder, any affiliated purchasers, and any broker-dealers or other person who
participates in the distribution from bidding for or purchasing, or attempting
to induce any person to bid for or purchase any security which is the subject of
the distribution until the entire distribution is complete. Regulation M also
prohibits any bids or purchases made to stabilize the price of a security in
connection with the distribution of that security. All of the factors may affect
the marketability of the shares of our common stock.
DESCRIPTION OF SECURITIES
Common Stock
Our authorized capital stock currently includes 25,000,000 shares of
common stock, par value $.001 per share. As of December 1, 1999, there were
4,475,000 shares of common stock issued and outstanding. The holders of our
common stock:
- have equal ratable rights to dividends from funds legally
available therefor, when, as and if declared by our board of
directors;
- are entitled to share ratably in all of our assets available for
distribution to holders of common stock upon liquidation,
dissolution or winding up of our affairs;
- do not have preemptive subscription or conversion rights and
there are no redemption or sinking fund provisions; and
- are entitled to one vote per share on all matters on which
stockholders may vote at all meetings of stockholders.
All shares of common stock now outstanding are fully paid and
non-assessable. The holders of our shares of common stock do not have cumulative
voting rights, which means that the holders of more than 51% of such outstanding
shares, voting for the election of directors, can elect all of the directors to
be elected, if the so choose and in such event, the holders of the
21
<PAGE>
remaining shares will not be able to elect any of our directors. Our board of
directors is empowered to take all actions necessary to increase the number of
shares we have authorized as necessary, and subject to appropriate financing
arrangements, intends to alter our capital stock structure.
Preferred Stock
The Company is authorized to issue 5,000,000 shares of preferred stock
with such designations, rights and preferences as may be determined from time to
time by our board of directors. Our board of directors is empowered, without
stockholder approval, to issue preferred stock with dividend, liquidation,
conversion, voting or other rights which could adversely effect the voting power
or other rights of the holders of our common stock. In the event of issuance,
our preferred stock could be utilized, under certain circumstances, as a method
of discouraging, delaying or preventing a change in our control.
Warrants
As of December 1, 1999, there were outstanding warrants to purchase
900,000 shares of our common stock exercisable at $1.00 per share. The warrants
are exercisable for a period of three years beginning January 31, 1999.
Transfer agent
Our transfer agent is Florida Atlantic Stock Transfer, Inc., 7130 Nob
Hill Road, Tamarac, Florida 33321.
LEGAL MATTERS
Legal matters in connection with this registration statement will be
passed upon for us by Atlas, Pearlman, Trop & Borkson, P.A., 350 East Las Olas
Boulevard, Suite 1700, Fort Lauderdale, Florida 33301.
EXPERTS
Our financial statements as of September 30, 1999 which are included in
this prospectus have been audited by Richard M. Bogdanoff, P.A., independent
certified public accountant, as indicated in his reports. These financial
statements are included in this prospectus in reliance upon the authority of
Richard M. Bogdanoff, P.A. as an expert in accounting and auditing.
22
<PAGE>
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENTS
Financial Statements for the Periods Ended September 30, 1999
Balance Sheets F-2
Statements of Operations and Accumulated Deficit F-3
Statement of Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6
<PAGE>
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
AUDITED FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR'S REPORT
SEPTEMBER 30, 1999
<PAGE>
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
AUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditor's Report..............................................................1
- ----------------------------
Financial Statements
- --------------------
Balance Sheet.....................................................................2
Statement Of Operations And Accumulated Deficit...................................3
Statement Of Stockholders' Equity.................................................4
Statement Of Cash Flows...........................................................5
Notes To Financial Statements...................................................6 - 10
</TABLE>
<PAGE>
Richard M. Bogdanoff, PA.
Member Certified Public Accountant Member
Florida Institute of American Institute of
Certified Public Accountants Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
To The Board Of Directors And Stockholders
Of Technology Systems International, Inc.
We have audited the accompanying balance sheet of Technology Systems
international, Inc. (a development stage company) as of September 30, 1999, and
the related statements of operations and accumulated deficit, stockholders'
equity, and cash flows for the period from November 23, 1998 (date of inception)
to September 30, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Technology Systems
International, Inc. as of September 30, 1999 and the results of its operations
and cash flows for the period from November 23, 1998 (date of inception) to
September 30, 1999 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As more fully discussed in Note 1 to the
financial statements, the Company is in the development stage and has incurred a
net loss for the period from November 23, 1998 (date of inception) to September
30, 1999. In addition, the Company has limited working capital and the Company
has not entered into any marketing or licensing agreements for its acquired
technology nor are there earned revenues or any assurances that the Company will
be able to do so. These conditions raise substantial doubt as to the ability of
the Company to continue as a going concern. Management's plans with regard to
this matter are also described in Note 1 to the financial statements. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Richard M. Bogdanoff
----------------------------
Richard M. Bogdanoff, P.A.
Boca Raton, Florida
November 24, 1999
-1-
Schever International Plaza o Suite 106 o 7280 West Palmetto Park Road o Boca
Raton, Florida 33433-3401 Telephone (561) 394-6191 o Fax (561) 395-5012
<PAGE>
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
Cash and equivalents $ 966
Marketable securities (at market, cost $29,594) 16,810
Patent costs, net of $7,977 amortization 68,859
Organizational costs, net of $40 amortization 175
---------
TOTAL ASSETS $ 86,810
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 4,819
Stockholders' equity 4,475
Common stock - authorized 25,000,000 shares,
issued and outstanding 4,475,000 shares,
par value $.001; Preferred stock -
authorized 5,000,000 shares, no shares
issued or outstanding, par value $.001
Additional paid-in capital 155,941
Deficit accumulated during the development stage (78,425)
--------
81,991
--------
TOTAL L1ABILITIES AND STOCKHOLDERS' EQUITY $ 86,810
========
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE PERIOD FROM NOVEMBER 23, 1998 (DATE OF INCEPTION)
TO SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C>
Revenues $ 0
Expenses
General and administrative expenses 69,038
Other income
Investment (loss), net of expenses (9,387)
----------
Net (loss) and accumulated deficit $ (78,425)
==========
Basic and diluted (loss) per common share $ (0.02)
==========
Basic and diluted weighted average common shares outstanding 4,128,000
==========
</TABLE>
The accompanying notes notes are integral part of these financial statements.
-3-
<PAGE>
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM NOVEMBER 23, 1998 (DATE OF INCEPTION)
TO SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During The
Common Paid-In Development
Shares Stock Capital Stage
------- ------ ---------- ---------
<S> <C> <C> <C> <C> <C>
Balance At Date Of Inception
November 23, 1998 -- $ -- -- $ --
Common stock purchased upon
incorporation 2,625,000 2,625 -- --
Common stock issued for patent technology
purchased December 1998 250,000 250 57,541 --
Net proceeds from sale of common stock
completed January 1999 600,000 600 49,400 --
Common stock issued for consulting
services - April 1999 1,000,000 1,000 49,000 --
Deficit accumulated during the
development stage -- -- -- (78,425)
--------- --------- --------- ---------
Balance at September 30, 1999 4,475,000 4,475 $ 155,941 $ (78,425)
=== ==== ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE>
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM NOVEMBER 23, 1998 (DATE OF INCEPTION)
TO SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES
- --------------------------------------------------
<S> <C>
Deficit accumulated during the development stage $ (78,425)
Adjustments to reconcile net loss to net 8,017
cash provided (used) by operating activities:
Amortization
Unrealized depreciation in value of investments 12,784
Increase in accounts payable and accrued expenses 4,819
Common stock issued for consulting services 50,000
---------
NET CASH (USED) BY OPERATING ACTIVITIES (2,805)
---------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES
- --------------------------------------------------
Purchase of marketable securities, net of sales (29,594)
Organizational costs (215)
Capitalized patent legal fees (19,045)
---------
NET CASH (USED) BY INVESTING ACTIVITIES (48,854)
---------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Net proceeds from sale of common stock 52,625
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 52,625
---------
NET INCREASE IN CASH AND EQUIVALENTS - SEPTEMBER 30, 1999 $ 966
=========
SCHEDULE OF NONCASH ACTIVITES
- -----------------------------
Common stock issued for purchase of patent technology $ 57,791
Common stock issued for consulting services $ 50,000
---------
$ 107,791
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM NOVEMBER 23, 1998 (DATE OF INCEPTION)
TO SEPTEMBER 30, 1999
Note 1 -- Summary Of Significant Accounting Policies
- -----------------------------------------------------
Business And Organization
Technology Systems International, Inc. (a development stage company) (also
referred to as "TSI, Inc.") is a Florida corporation incorporated on November
23, 1998 for the purpose of marketing the "Safe Shopper"[TM] technology which
was acquired from an affiliated party. Management believes that this United
States approved patented technology provides an accurate, safe and cost
effective method for transmitting credit card and personal data over standard
telephone lines in consumer/merchant transactions. The Safe Shopper(TM) is
designed to either be attached to a telephone or incorporated as in internal
part of the telephone. This technology operates through a standard credit card
being swiped through the credit card reader on the Safe Shopper[TM] which is
then transmitted to the merchant on the same telephone line which the person is
communicating with the merchant. The merchant can then transmit this information
to the merchant's banking institution who would then clear the credit card
transaction. Management believes that this technology, which allows the merchant
to capture the consumer's credit information electronically, will significantly
reduce merchant's susceptibility to credit card chargebacks and fraud in
addition to providing smaller businesses the availability of this service
without the typical barriers of entry for small businesses attempting to set up
merchant credit card accounts at various institutions.
Although organized in November 1998, the Company has only recently commenced
operations. To-date, the Company has not executed any marketing or licensing
agreements for its acquired technology nor are there earned revenues nor are
there any assurances the Company will be able to do so. Accordingly, the Company
is considered in the development stage and the accompanying financial statements
represent those of a development stage enterprise.
A working prototype of the Safe Shopper[TM] has been manufactured; the Company
is seeking to license this technology including its production and develop a
comprehensive marketing plan for this innovative product. As part of this
effort, the Company seeks to establish a joint venture with participants in the
credit card or merchant banking industry through which the Company would license
the Safe Shopper[TM] technology to such companies. A United States patent for
the "Personal Reader Technology Capture Transfer Technology" integrated into the
Safe Shopper [TM] was granted on November 17, 1998 and the international patents
are pending.
-6-
<PAGE>
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM NOVEMBER 23, 1998 (DATE OF INCEPTION)
TO SEPTEMBER 30, 1999
Note 1. -- Summary Of Significant Accounting Policies - Continued
- ------------------------------------------------------------------
Business And Organization - Continued
Although the Company has received a domestic patent on its technology in
addition to patents pending in certain foreign markets, there is only limited
proprietary protection as to its products. Accordingly, the Company may not be
able to secure meaningful proprietary protection relevant to its method of
business operations as there are no unique barriers for others to emulate the
Company's methods of operations except for those barriers and limitations
confronting anyone engaged in undertaking innovative activities and obtaining
credibility in this emerging industry. In addition, there can be no assurance
the Company's products can be successfully marketed, or that any or all of the
products will be commercially accepted. Even if commercial acceptance is
received, the appeal of the Company's products may be limited given the wide
range of similar available products. Management has not conducted any marketing
or feasibility studies or surveys relating to the marketability of the products
sought to be manufactured or marketed by the Company. These conditions raise
doubt as to the entire recoverability of one's investment in the event of
immediate cash needs should they arise.
Accounting Policies
The accompanying financial statements have been presented in accordance with
generally accepted accounting principles, which assume the continuity of the
Company as a going concern. However, as discussed above, the Company is in the
development stage and, therefore, has generated no revenue to-date. As
reflected in the accompanying financial statements, the Company has incurred a
net loss on its limited operations for the initial period beginning November 23,
1998 and ended September 30, 1999. The Company's capital requirements in
connection with it's proposed operations will be significant. The Company
believes that the funds raised from its completed initial private placement
offering will be adequate to develop and operate the business through March 31,
1999. As such, the Company will be dependent not only on its initial working
capital proceeds, but on future private and/or public financings to expand its
operation, including the continuing development of its technology and the sales
and marketing of its technology and product development. There can be no
assurance that additional financing will be available on commercially reasonable
terms. The inability to obtain additional financing, when needed, would have a
material adverse effect on the Company, including possibly requiring the Company
to significantly curtail its operations. In addition, there are no assurances
that future revenues from this technology will result.
-7-
<PAGE>
Technology Systems International, Inc.
(A Development Stage Company)
Notes To Financial Statements
For The Period From November 23, 1998 (Date Of Inception)
To September 30, 1999
Note 1 - Summary Of Significant Accounting Policies - Continued
- ----------------------------------------------------------------
Accounting Policies - Continued
At a meeting of the Company's Board of Directors on October 1, 1999, it was
adopted that the Company's fiscal year end on September 30th.
Cash and equivalents consist primarily of cash in banks and highly liquid money
market investments.
Marketable securities consist of NASDAQ traded securities which are valued at
market value. These securities are summarized as follows:
Cost of securities $ 29,594
Unrealized (depreciation) (12 784)
--------
$ 16,810
========
Patent costs are being amortized over a seven year period using the straight
line method and amounted to $7,977 for the period from November 23, 1998 (date
of inception) to September 30, 1999.
Organizational costs are being amortized over a period of sixty months using the
straight line method and amounted to $40 for the period from November 23, 1998
(date of inception) to September 30, 1999.
Upon incorporation, the Board of Directors approved for the issuance of
preferred stock with such designations, preferences, conversions rights,
cumulative, relative, participating, optional or other rights including voting
rights, qualifications, limitations or restrictions thereof to be stated and
expressed in the resolution or resolutions providing for the creation and
issuances of such shares to be adopted by the Board of Directors.
There are presently no plans to authorize the issuance of preferred shares.
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amount of assets and liabilities as of the date of the balance sheet
and operations for the periods. Certain estimates, which may be material, may be
subject to a change in their valuation as they relate to the determination of
the estimated net realizable value of certain elements of the Company's patent
and the estimated amortization period of its intangible assets. Although these
estimates are based on management's knowledge of current events and actions it
may undertake in the future, they may ultimately differ from actual results.
-8-
<PAGE>
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM NOVEMBER 23, 1998 (DATE OF INCEPTION)
TO SEPTEMBER 30, 1999
Note 2 -- Operations And Basis Of Presentation
- ----------------------------------------------
In January 1999, the Company completed an initial private placement offering
resulting in the sale of 10,000 units at $5.00 per unit with each unit
consisting of sixty (60) shares of common stock and warrants to purchase ninety
(90) shares of common stock exercisable at $1.00 per share which expire three
years from the date of issuance.
If a public market ever develops for the Company's securities, these securities
will most likely be subject to the Penny Stock Rules promulgated under the
Securities Exchange Act of 1934. These rules generally regulate broker--dealer
practices in connection with transactions in equity securities with a price of
less than five dollars ($5.00) which require obtaining and providing additional
disclosure information and written documentation to prospective buyers which may
result in making it more difficult to market the Company's securities.
Note 3 - Related Party Transactions
- -----------------------------------
On December 17, 1998, the Company acquired the Safe Shopper[TM) technology from
Belco Systems Technologies Corp. in consideration for 250,000 shares of common
stock of the Company. The purchase price was based on the selling Company's book
value of the patent on the date of sale which amounted to $57,791. Mr. Stephen
Beloyan is an officer, director and 50% shareholder of Belco Systems~
Technologies Corp. and is an officer, director and significant shareholder of
the Company. Mr. Lionel Beloyan is also an officer, director and 50% shareholder
of Belco Systems Technologies Corp. and is a principal shareholder of the
Company.
Purchasers of the private placement offering completed in January 1999 included
family members related to the Officers and Directors of the Company.
In April 1999 the Company issued 1,000,000 shares of common stock for consulting
services rendered to the Company by shareholders pursuant to agreements dated
March 31, 1999 owhich the Company valued at $.o5 per share. The consulting
services expired September 30, 1999.
-9-
<PAGE>
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM NOVEMBER 23, 1998 (DATE OF INCEPTION)
TO SEPTEMBER 30, 1999
Note 4 -- Income Taxes
- ----------------------
As of September 30, 1999, the Company has a net operating loss carryforward for
Federal income tax purposes amounting to approximately $52,800 which expires in
2014.
The components of the deferred tax asset as of September 30, 1999 is as follows:
Benefit of net operating loss carryforwards $ 65,600
Less: timing differences valuation allowance (12, 800)
(52,800)
---------
$ --
=========
At September 30, 1999 sufficient uncertainty exists regarding the of the
Company's realizability accordingly, a operating loss, operating loss
carryforwards and, valuation allowance of $52,800 which relates to the net has
been established.
-10-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS.
The articles of incorporation of Technology Systems International, Inc.
provide indemnification of directors and officers and other corporate agents to
the fullest extent permitted under the laws of Florida. The articles of
incorporation also limit the personal liability of Technology Systems
International, Inc.'s directors to the fullest extent permitted by the Florida
Business Corporation Act contains provisions entitling our directors and
officers to indemnification from judgments, fines, amounts paid in settlement
and reasonable expenses, including attorneys' fees, as the result of an action
or proceeding in which they may be involved by reason of being or having been a
director or officer of Technology Systems International, provided said officers
or directors acted in good faith.
Insofar as indemnification or liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers or controlling persons
by these, or otherwise, we have been advised that in the opinion of the SEC this
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable. In the event that a claim for
indemnification against liabilities, other than the payment by us of expenses
incurred or paid by one of our directors, officers or controlling persons in the
successful defense of any action, suit or proceeding, is asserted by a director,
officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether indemnification by us is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final adjudication of
the issue.
1
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses to be incurred in
connection with the issuance and resale of the securities offered by this
prospectus. We are responsible for the payment of all expenses set forth below.
Registration fee $237.60
Blue Sky filing fees and expense 500.00
Printing and engraving expenses 1,000.00
Legal fees and expenses 5,000.00
Accounting fees and expenses 5,000.00
Miscellaneous 262.40
Total $12,000.00
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
In conjunction with our formation, we issued an aggregate of 2,625,000
shares of our common stock to our founders Steve Beloyan, Lionel Beloyan, FMS
Distributers, Inc., Raffles Toho, Inc., and IMCI Technologies. We issued these
shares in reliance upon the Section 4(2) of the Securities Act of 1933.
On December 16, 1998, we acquired the Safe Shopper from Belco Systems
Technology Corp. in consideration for 250,000 shares of our common stock. We
issued these shares in reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.
On January 6, 1999, we issued an aggregate of 1,000,000 shares of
common stock to Ken Bonawitz, Christine Mittman, William J. Huston, Bernard
Shulman and William E. Huston in consideration of consulting services they
provided to us. These shares were valued at $.05 per share. We issued these
shares in reliance upon the exemption from registration provided by Rule 504 of
Regulation D.
In January 1999, we issued an aggregate of 600,000 shares of our common
stock and warrants to purchase 900,000 shares of our common stock exercisable at
$1.00 per share to thirteen accredited investors. We received aggregate proceeds
of $50,000 from this issuance. The offering was conducted under the exemption
from registration provided by Rule 504 of Regulation D.
2
<PAGE>
ITEM 27. EXHIBITS.
Exhibit No. Description of Exhibits
- ----------- -----------------------
<TABLE>
<S> <C>
2.1 Form of Warrant Agreement
3.1 Articles of Incorporation of Technology Systems International, Inc.
3.2 By-Laws of Technology Systems International, Inc.
5 Opinion of Atlas, Pearlman, Trop & Borkson, P.A.
10 Acquisition of Safe Shopper
21 Subsidiaries of the Registrant
23.1 Consent of Richard M. Bogdanoff, P.A., Certified Public Accountant
23.2 Consent of Atlas, Pearlman, Trop & Borkson, P.A. is included in Exhibit 5
27 Financial Data Schedule
99 U.S. Patent
</TABLE>
ITEM 28. UNDERTAKINGS.
(a) We undertake:
(1) To file, during any period in which we offer or sell
securities, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
which, individually or together, represent a
fundamental change in the information set forth in
the registration statement;
(iii) To include any additional or changed material
information with respect to the plan of distribution.
(2) For determining any liability under the Securities Act of
1933, as amended, treat each post-effective amendment as a
new registration statement relating to the securities
offered, and the offering of the securities at that time to
be the initial bona fide offering.
(3) To file a post-effective amendment to remove any of the
securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of Technology Systems International,
Inc.., we have been advised that, in the opinion of the SEC,
indemnification is against public policy as expressed in the
Securities Act of 1933
3
<PAGE>
and is, therefore, unenforceable. In the event that a claim for
indemnification against liabilities (other than the payment by us
of expenses incurred or paid by a director, officer or
controlling person of Technology Systems International, Inc.. in
the successful defense of any action, suit or proceeding) is
asserted by a director, officer or controlling person in
connection with the securities being registered, we will, unless
in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether indemnification by it is
against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of the issue.
4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned on December 23, 1999.
Technology Systems International, Inc.
By: /s/ Stephen Beloyan
----------------------------------
Stephen Beloyan, Chief
Executive Officer and Director
5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibits
- ----------- -----------------------
<S> <C>
2.1 Form of Warrant Agreement
3.1 Articles of Incorporation of Technology Systems International, Inc.
3.2 By-Laws of Technology Systems International, Inc.
5 Opinion of Atlas, Pearlman, Trop & Borkson, P.A.
10 Acquisition of Safe Shopper
21 Subsidiaries of the Registrant
23.1 Consent of Richard M. Bogdanoff, P.A., Certified Public Accountant
23.2 Consent of Atlas, Pearlman, Trop & Borkson, P.A. is included in Exhibit 5
27 Financial Data Schedule
99 U.S. Patent
</TABLE>
6
WARRANT TO PURCHASE COMMON STOCK
Date of Issuance: Right to Purchase ______ shares
of Common Stock
FOR VALUE RECEIVED, TECHNOLOGY SYSTEMS INTERNATIONAL, INC., a
Florida corporation (the "Company"), promises to issue in the name of, and sell
and deliver to __________________________, (the "Holder") a certificate or
certificates for an aggregate of _______ shares of the Company's common stock,
par value $.001 per share (the "Common Stock"), upon payment by the Holder of
the exercise price of $1.00 per share (the "Exercise Price") in lawful funds of
the United States of America, with the Exercise Price being subject to
adjustment in the circumstances set forth below.
Section 1.
Exercise of Warrant
-------------------
1.1 Exercise Period. The Holder may exercise this Warrant, in whole or
in part (but not as to fractional shares), at any time and time to time
commencing upon the date of issuance and ending at 5:00 p.m., Eastern Time, on
January 31, 2002, being three years from the date of issuance (the "Exercise
Period").
1.2 Exercise Procedure.
(a) This Warrant will be deemed to have been exercised at such
time as the Company has received all of the following items (the "Exercise
Date"):
(i) a completed Exercise Agreement, in the form
attached hereto as Exhibit 1 hereto, executed by the Holder (the "Purchaser");
and
(ii) a cashier's or official bank check or other
immediately available funds payable to the Company in an amount equal to the sum
of the product of the Exercise Price multiplied by the number of shares of
Common Stock being purchased upon such exercise.
(b) Certificates for the shares of Common Stock purchased upon
exercise of this Warrant will be delivered by the Company to the Purchaser
within five (5) business days after the Exercise Date. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company will prepare a new Warrant representing the rights formerly
represented by this Warrant that have not expired or been exercised. The Company
will, within such five (5) day period, deliver such new Warrant to the Holder at
the address set forth in this Warrant.
1
<PAGE>
(c) The shares of Common Stock issuable upon the exercise of
this Warrant will be deemed to have been transferred to the Purchaser on the
Exercise Date, and the Purchaser will be deemed for all purposes to have become
the record holder of such Common Stock on the Exercise Date.
(d) The issuance of certificates for shares of Common Stock
upon the exercise of this Warrant will be made without charge to the Purchaser
for any issuance tax in respect thereof or any other cost incurred by the
Company in connection with such exercise and related transfer of the shares;
provided, however, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any certificate or instrument in a name other than that of the Holder of this
Warrant, and that the Company shall not be required to issue or deliver any such
certificate or instrument unless and until the person or persons requiring the
issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
1.3 Fractional Shares. If a fractional share of Common Stock would, but
for the provisions of Subsection 1.1, be issuable upon exercise of the rights
represented by this Warrant, the Company will, within 30 days after the Exercise
Date, deliver to the Purchaser a check payable to the Purchaser, in lieu of such
fractional share, in an amount equal to the value of such fractional share as
determined by the closing bid price of the Company's Common Stock as reported on
the principal exchange on which the Company's Common Stock is then traded, as of
the close of business on the Exercise Date.
Section 2.
Effect of Reorganization, Reclassification, Consolidation, Merger or Sale
-------------------------------------------------------------------------
2.1 Recapitalization or Reclassification of Common Stock. In case the
Company shall at any time prior to the exercise or termination of this Warrant
effect a recapitalization or reclassification of such character that its Common
Stock shall be changed into or become exchangeable for a larger or smaller
number of shares, then, upon the effective date thereof, the number of shares of
Common Stock that the Holder of this Warrant shall be entitled to purchase upon
exercise hereof shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in such number of shares of Common Stock
by reason of such recapitalization or reclassification, and the Exercise Price
of such recapitalized or reclassified Common Stock shall, in the case of an
increase in the number of shares, be proportionately decreased and, in the case
of a decrease in the number of shares, be proportionately increased.
2.2 Consolidation, Merger or Sale. In case the Company shall at any
time prior to the exercise of this Warrant, or the expiration of the Exercise
Period, whichever first occurs, consolidate or merge with any other corporation
(unless the Company shall be the surviving entity) or transfer all or
substantially all of its assets to any other corporation preparatory to a
dissolution, then the Company shall, as a condition precedent to such
2
<PAGE>
transaction, cause effective provision to be made so that the Holder of this
Warrant, upon the exercise thereof after the effective date of such transaction,
shall be entitled to receive the kind and amount of shares, evidences of
indebtedness, and/or other property receivable on such transaction by a holder
of the number of shares of Common Stock as to which the Warrant was exercisable
immediately prior to such transaction (without giving effect to any restriction
upon such exercise); and, in any such case, appropriate provision shall be made
with respect to the rights and interests of the Holder hereof to the effect that
the provisions of this Warrant shall thereafter be applicable (as nearly as may
be practicable) with respect to any shares, evidences of indebtedness, or other
securities or assets thereafter deliverable upon exercise of this Warrant.
2.3 Notice of Adjustment. Whenever the number of shares of Common Stock
purchasable upon exercise of this Warrant shall be adjusted as provided herein,
the Company shall file with its corporate records a certificate of its Chief
Financial Officer or designated officer setting forth the computation and the
adjusted number of shares of Common Stock purchasable hereunder resulting from
such adjustments, and a copy of such certificate shall be mailed to the Holder.
Any such certificate or letter shall be conclusive evidence as to the
correctness of the adjustment or adjustments referred to therein and shall be
available for inspection by the holders of the Warrants on any day during normal
business hours.
Section 3.
Reservation of Common Stock
---------------------------
The Company will at all time reserve and keep available such number of
shares of Common Stock as will be sufficient to permit the exercise in full of
this Warrant. Upon exercise of this Warrant pursuant to its terms, the Holder
will acquire fully paid and non assessable ownership rights of the Common Stock,
free and clear of any liens, claims or encumbrances.
Section 4.
No Shareholder Rights or Obligations
------------------------------------
This Warrant will not entitle the Holder hereof to any voting rights or
other rights as a shareholder of the Company. Until the shares of Common Stock
issuable upon the exercise of this Warrant are recorded as issued on the books
and records of the Company's transfer agent, the Holder shall not be entitled to
any voting rights or other rights as a shareholder; provided, however, the
Company uses its best efforts to ensure that, upon receipt of the Exercise
Agreement and payment of the Exercise Price, the appropriate documentation
necessary to effectuate the exercise of the Warrant and the issuance of the
Common Stock is accomplished as expeditiously as possible. No provision of this
Warrant, in the absence of affirmative action by the Holder to purchase Common
Stock, and no enumeration in this Warrant of the rights or privileges of the
Holder, will give
3
<PAGE>
rise to any obligation of such Holder for the Exercise Price or as a stockholder
of the Company.
Section 5.
Transferability
---------------
Subject to the terms hereof, this Warrant and all rights hereunder are
transferrable, in whole or in part, upon surrender of this Warrant with a
properly executed Assignment in the form of Exhibit 2 hereto at the principal
offices of the Company. This Warrant and the underlying shares of Common Stock
may not be offered, sold or transferred except in compliance with the Securities
Act of 1933, as amended (the "Act"), and any applicable state securities laws,
and then only against receipt of an agreement of the person to whom such offer
or sale or transfer is made to comply with the provisions of this Warrant with
respect to any resale or other disposition of such securities; provided that no
such agreement shall be required from any person purchasing this Warrant or the
underlying shares of Common Stock pursuant to a registration statement effective
under the Act. The Holder of this Warrant agrees that, prior to the disposition
of any security purchased on the exercise hereof other than pursuant to an
registration statement then effective under the Act, or any similar statute then
in effect, the Holder shall give written notice to the Company, expressing his
intention as to such disposition. Upon receiving such notice, the Company shall
present a copy thereof to its securities counsel. If, in the sole opinion of
such counsel, which such opinion shall not be unreasonably withheld, the
proposed disposition does not require registration of such security under the
Act, or any similar statute then in effect, the Company shall, as promptly as
practicable, notify the Holder of such opinion, whereupon the Holder shall be
entitled to dispose of such security in accordance with the terms of the notice
delivered by the Holder to the Company.
Section 6.
Miscellaneous
-------------
6.1 Notices. Any notices, requests or consents hereunder shall be
deemed given, and any instruments delivered, two days after they have been
mailed by first class mail, postage prepaid, or upon receipt if delivered
personally or by facsimile transmission, as follows:
If to the Company: 2 Field Court
Wrightstown, New Jersey 08562
Attention: Stephen Beloyan, President
With a copy to: Atlas, Pearlman, Trop & Borkson, P.A.
350 East Las Olas Boulevard, Suite 1700
Fort Lauderdale, Florida 33301
Attention: Brian A. Pearlman, Esq.
4
<PAGE>
If to the Holder: ___________________________
___________________________
___________________________
Attention: ________________
except that any of the foregoing may from time to time by written notice to the
other designate another address which shall thereupon become its effective
address for the purposes of this paragraph.
6.2 Entire Agreement. This Warrant, including the exhibits and
documents referred to herein which are a part hereof, contain the entire
understanding of the parties hereto with respect to the subject matter and may
be amended only by a written instrument executed by the parties hereto or their
successors or assigns. Any paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Warrant.
6.3 Governing Law. This Warrant is governed by, interpreted under and
construed in all respects in accordance with the substantive laws of the State
of Florida, without regard to the conflicts of law provision thereof, and
irrespective of the place of domicile or resident of the party. In the event of
a controversy arising out of the interpretation, construction, performance or
breach of this Warrant, the parties hereby agree and consent to the jurisdiction
and venue of the Courts of the State of Florida, or the United States District
Court for the Southern District of Florida; and further agree and consent that
personal service of process in any such action or preceding outside the State of
Florida shall be tantamount to service in person in Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
TECHNOLOGY SYSTEMS
INTERNATIONAL, INC.
By:_____________________________
Stephen Beloyan, President
ATTEST:
- --------------------------------
5
<PAGE>
EXHIBIT 1
---------
EXERCISE AGREEMENT
------------------
To: Dated:
The undersigned record Holder, pursuant to the provisions set forth in
the within Warrant, hereby subscribed for and purchases _______ shares of Common
Stock covered by such Warrant and hereby makes full cash payment of
$_____________ for such shares at the Exercise Price provided by such Warrant.
-------------------------------
(Signature)
-------------------------------
(Print or type name)
-------------------------------
(Address)
--------------------------------
--------------------------------
NOTICE: The signature of this Exercise Agreement must correspond with
the name as written upon the face of the within Warrant, or upon the Assignment
thereof, if applicable, in every particular, without alteration, enlargement or
any change whatsoever.
<PAGE>
EXHIBIT 2
---------
ASSIGNMENT
----------
FOR VALUE RECEIVED, _________________________________, the
undersigned Holder hereby sell, assigns, and transfer all of the rights of the
undersigned under the within Warrant with respect to the number of shares of
Common Stock issuable upon the exercise of such Warrant set forth below, unto
the Assignee identified below, and does hereby irrevocable constituted and
appoint ________________ to effect such transfer of rights on the books of the
Company, with full power of substitution:
Number of Shares
Name of Assignee Address of Assignee of Common Stock
- ---------------- ------------------- ---------------
Dated:____________________ _____________________________
(Signature of Holder)
_____________________________
(Print or type name)
NOTICE: The signature of this Exercise Agreement must correspond with
the name as written upon the face of the within Warrant, or upon the Assignment
thereof, if applicable, in every particular, without alteration, enlargement of
any change whatsoever.
CONSENT OF ASSIGNEE
-------------------
I HEREBY CONSENT to abide by the terms and conditions of the within
Warrant.
Dated:_______________________ _____________________________
(Signature of Holder)
_____________________________
(Print or type name)
ARTICLES OF INCORPORATION
-------------------------
OF
--
TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
--------------------------------------
The undersigned, a natural person competent to contract, does hereby
make, subscribe and file these Articles of Incorporation for the purpose of
organizing a corporation under the laws of the State of Florida.
ARTICLE I
CORPORATE NAME
--------------
The name of this Corporation shall be: TECHNOLOGY SYSTEMS
INTERNATIONAL, INC.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
------------------------------------
The principal office and mailing address of the Corporation is Two
Field Court, Wrightstown, NJ 08562.
ARTICLE III
NATURE OF CORPORATE BUSINESS AND POWERS
---------------------------------------
The general nature of the business to be transacted by this Corporation
shall be to engage in any and all lawful business permitted under the laws of
the United States and the State of Florida.
ROBERT J. BURNETT, ESQ., FLA. BAR #0117978
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
Phone No.: (954) 763-1200
1
<PAGE>
ARTICLE IV
CAPITAL STOCK
-------------
The maximum number of shares that this Corporation shall be authorized
to issue and have outstanding at any one time shall be 25,000,000 shares of
common stock, par value $.001 per share, and 5,000,000 shares of preferred
stock, par value $.001 per share. Series of the preferred stock may be created
and issued from time to time, with such designations, preferences, conversion
rights, cumulative, relative, participating, optional, or other rights,
including voting rights, qualifications, limitations, or restrictions thereof as
shall be stated and expressed in the resolution or resolutions providing for the
creation and issuance of such series of preferred stock as adopted by the Board
of Directors pursuant to the authority in this paragraph given.
ARTICLE V
TERM OF EXISTENCE
-----------------
This Corporation shall have perpetual existence.
ARTICLE VI
REGISTERED AGENT AND
INITIAL REGISTERED OFFICE IN FLORIDA
------------------------------------
The Registered Agent and the street address of the initial Registered
Office of this Corporation in the State of Florida shall be: Mark Beloyan, 13900
S.W. 24th Street, Davie, Florida, 33325.
ARTICLE VII
BOARD OF DIRECTORS
------------------
This Corporation shall have one (1) Director initially.
2
<PAGE>
ARTICLE VIII
INITIAL DIRECTORS
-----------------
The name and address of the initial Director of this Corporation are:
Stephen Beloyan
Two Field Court
Wrightstown, NJ 08562
The person named as initial Director shall hold office for the first
year of existence of this Corporation, or until their successors are elected or
appointed and have qualified, whichever occurs first.
ARTICLE IX
INCORPORATOR
------------
The name and address of the person signing these Articles of
Incorporation as the Incorporator is Robert J. Burnett, Esq., Atlas, Pearlman,
Trop & Borkson, P.A., 200 East Las Olas Blvd., #1900, Ft. Lauderdale, FL 33301.
ARTICLE X
INDEMNIFICATION
---------------
This Corporation may indemnify any director, officer, employee or agent
of the Corporation to the fullest extent permitted by Florida law.
ARTICLE XI
AFFILIATED TRANSACTIONS
-----------------------
This Corporation expressly elects not to be governed by Section
607.0901 of the Florida Business Corporation Act, as amended from time to time,
relating to affiliated transactions.
ARTICLE XII
CONTROL SHARE ACQUISITIONS
--------------------------
This Corporation expressly elects not to be governed by Section
607.0902 of the Florida Business Corporation Act, as amended from time to time,
relating to control share acquisitions.
IN WITNESS WHEREOF, the undersigned Incorporator has executed the
foregoing Articles of Incorporation on the 23rd day of November, 1998
-----------------------------
Robert J. Burnett, Incorporator
3
<PAGE>
CERTIFICATE DESIGNATING REGISTERED AGENT
AND OFFICE FOR SERVICE OF PROCESS
TECHNOLOGY SYSTEMS INTERNATIONAL, INC., a corporation existing under
the laws of the State of Florida with its principal office and mailing address
at Two Field Court, Wrightstown, NJ 08562, has named Mark Beloyan, 13900 S.W.
24th Street, Davie, FL 33325, as its agent to accept service of process within
the State of Florida.
ACCEPTANCE:
-----------
Having been named to accept service of process for the above named
Corporation, at the place designated in this Certificate, I hereby accept the
appointment as Registered Agent, and agree to comply with all applicable
provisions of law. In addition, I hereby am familiar with and accept the duties
and responsibilities as Registered Agent for said Corporation.
------------------------------------
Mark Beloyan
4
BYLAWS
OF
Technology Systems International, Inc.
a Florida corporation
<PAGE>
INDEX
-----
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
---------
Offices
-------
<S> <C> <C> <C>
Section 1.01 Principal Office......................... 1
----------------
Section 1.02 Registered Office........................ 1
-----------------
Section 1.03 Other Offices............................ 1
-------------
ARTICLE II
----------
Meetings of Shareholders
------------------------
Section 2.01 Annual Meeting........................... 1
--------------
Section 2.02 Special Meeting.......................... 2
---------------
Section 2.03 Shareholders' List for Meeting........... 2
------------------------------
Section 2.04 Record Date.............................. 3
-----------
Section 2.05 Notice of Meetings and Adjournment....... 3
----------------------------------
Section 2.06 Waiver of Notice......................... 4
----------------
ARTICLE III
-----------
Shareholder Voting
------------------
Section 3.01 Voting Group Defined..................... 5
--------------------
Section 3.02 Quorum and Voting Requirements for
----------------------------------
Voting Groups............................ 5
-------------
Section 3.03 Action by Single and Multiple Voting
------------------------------------
Groups................................... 6
------
Section 3.04 Shareholder Quorum and Voting; Greater
--------------------------------------
or Lesser Voting Requirements............ 5
-----------------------------
<PAGE>
Section 3.05 Voting for Directors; No
Cumulative Voting........................ 6
-----------------
Section 3.06 Voting Entitlement of Shares............. 7
----------------------------
Section 3.07 Proxies.................................. 8
-------
Section 3.08 Shares Held by Nominees.................. 9
-----------------------
Section 3.09 Corporation's Acceptance of Votes........ 10
---------------------------------
Section 3.10 Action by Shareholders Without Meeting... 11
--------------------------------------
Section 3.11 Frequency of Solicitations for Action
-------------------------------------
by Shareholders Without a Meeting........ 14
---------------------------------
ARTICLE IV
----------
Board of Directors and Officers
-------------------------------
Section 4.01 Qualifications of Directors.............. 15
---------------------------
Section 4.02 Number of Directors...................... 15
-------------------
Section 4.03 Terms of Directors Generally............. 15
----------------------------
Section 4.04 Staggered Terms for Directors............ 16
-----------------------------
Section 4.05 Vacancy on Board......................... 16
----------------
Section 4.06 Compensation of Directors................ 16
-------------------------
Section 4.07 Meetings................................. 16
--------
Section 4.08 Action by Directors Without a Meeting.... 17
-------------------------------------
Section 4.09 Notice of Meetings....................... 17
------------------
Section 4.10 Waiver of Notice......................... 17
----------------
Section 4.11 Quorum and Voting........................ 18
-----------------
Section 4.12 Powers of the Directors.................. 18
-----------------------
<PAGE>
Section 4.13 Committees............................... 18
----------
Section 4.14 Loans to Officers, Directors and
--------------------------------
Employees; Guaranty of Obligations....... 19
----------------------------------
Section 4.15 Required Officers........................ 20
-----------------
Section 4.16 Duties of Officers....................... 20
------------------
Section 4.17 Resignation and Removal of Officers...... 20
-----------------------------------
Section 4.18 Contract Rights of Officers.............. 20
---------------------------
Section 4.19 General Standards for Directors.......... 21
-------------------------------
Section 4.20 Director Conflicts of Interest........... 21
------------------------------
Section 4.21 Resignation of Directors................. 22
------------------------
ARTICLE V
---------
Indemnification of Directors, Officers,
Employees and Agents
--------------------
Section 5.01 Directors, Officers, Employees
and Agents............................... 23
----------
ARTICLE VI
----------
Office and Agent
----------------
Section 6.01 Registered Office and Registered
Agent.................................... 28
-----
Section 6.02 Change of Registered Office or Registered
-----------------------------------------
Agent; Resignation of Registered Agent... 28
--------------------------------------
ARTICLE VII
-----------
Shares, Options, Dividends and Distributions
--------------------------------------------
Section 7.01 Authorized Shares........................ 29
-----------------
Section 7.02 Terms of Class or Series Determined
-----------------------------------
by Board of Directors.................... 30
---------------------
<PAGE>
Section 7.03 Issued and Outstanding Shares............ 30
-----------------------------
Section 7.04 Issuance of Shares....................... 31
------------------
Section 7.05 Form and Content of Certificates......... 31
--------------------------------
Section 7.06 Shares Without Certificates.............. 32
---------------------------
Section 7.07 Restriction on Transfer of Shares
---------------------------------
and Other Securities..................... 33
--------------------
Section 7.08 Shareholder's Pre-emptive Rights......... 33
--------------------------------
Section 7.09 Corporation's Acquisition of its
Own Shares............................... 33
----------
Section 7.10 Share Options............................ 33
-------------
Section 7.11 Terms and Conditions of Stock Rights
------------------------------------
and Options.............................. 34
-----------
Section 7.12 Share Dividends.......................... 34
---------------
Section 7.13 Distribution to Shareholders............. 35
----------------------------
<PAGE>
ARTICLE VIII
------------
Amendment of Articles and Bylaws
--------------------------------
Section 8.01 Authority to Amend the Articles of
----------------------------------
Incorporation............................ 36
-------------
Section 8.02 Amendment by Board of Directors.......... 37
-------------------------------
Section 8.03 Amendment of Bylaws by Board of
-------------------------------
Directors................................ 37
---------
Section 8.04 Bylaw Increasing Quorum or Voting
---------------------------------
Requirements for Directors............... 37
--------------------------
<PAGE>
ARTICLE IX
----------
Records and Report
------------------
Section 9.01 Corporate Records........................ 38
-----------------
Section 9.02 Financial Statements for Shareholders.... 39
-------------------------------------
Section 9.03 Other Reports to Shareholders............ 40
-----------------------------
Section 9.04 Annual Report for Department of State.... 40
-------------------------------------
ARTICLE X
---------
Miscellaneous
-------------
Section 10.01 Definition of the "Act".................. 41
-----------------------
Section 10.02 Application of Florida Law............... 41
--------------------------
Section 10.03 Fiscal Year.............................. 41
-----------
Section 10.04 Conflicts with Articles of
Incorporation............................ 41
-------------
Section 10.05 Partial Invalidity....................... 41
------------------
</TABLE>
<PAGE>
ARTICLE I
---------
Offices
-------
Section 1.01. Principal Office.
-----------------
The principal office of the corporation in the State of Florida shall
be established at such places as the board of directors from time to time
determine.
Section 1.02. Registered Office.
------------------
The registered office of the corporation in the State of Florida shall
be at the office of its registered agent as stated in the articles of
incorporation or as the board of directors shall from time to time determine.
Section 1.03. Other Offices.
--------------
The corporation may have additional offices at such other places,
either within or without the State of Florida, as the board of directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
Meetings of Shareholders
------------------------
Section 2.01. Annual Meeting.
---------------
(1) The corporation shall hold a meeting of shareholders annually, for
the election of directors and for the transaction of any proper business, at a
time stated in or fixed in accordance with a resolution of the board of
directors.
(2) Annual shareholders' meeting may be held in or out of the State of
Florida at a place stated in or fixed in accordance with a resolution by the
board of directors or, when not inconsistent with the board of directors'
resolution stated in the notice of the annual meeting. If no place is stated in
or fixed in accordance with these bylaws, or stated in the notice of the annual
meeting , annual meetings shall be held at the corporation's principal office.
(3) The failure to hold the annual meeting at the time stated in or
fixed in accordance with these bylaws or pursuant to the Act
<PAGE>
does not affect the validity of any corporate action and shall not work a
forfeiture of or dissolution of the corporation.
Section 2.02. Special Meeting.
----------------
(1) The corporation shall hold a special meeting of shareholders:
(a) On call of a majority of its board of directors or the
person or persons authorized to do so by the board of directors; or
(b) By the Chief Executive Officer of the Corporation;
(c) If the holders of not less than 10% of all votes entitled
to be cast on any issue proposed to be considered at the proposed special
meeting sign, date and deliver to the corporation's secretary one or more
written demands for the meeting describing the purpose or purposes for which it
is to be held.
(2) Special shareholders' meetings may be held in or out of the State
of Florida at a place stated in or fixed in accordance with a resolution of the
board of directors, or, when not inconsistent with the board of directors'
resolution, in the notice of the special meeting. If no place is stated in or
fixed in accordance with these bylaws or in the notice of the special meeting,
special meetings shall be held at the corporation's principal office.
(3) Only business within the purpose or purposes described in the
special meeting notice may be conducted at a special shareholders' meeting.
Section 2.03. Shareholders' List for Meeting.
-------------------------------
(1) After fixing a record date for a meeting, a corporation
entitled to notice of a shareholders' meeting, in accordance with the Florida
Business Corporation Act (the "Act"), or arranged by voting group, with the
address of, and the number and class and series, if any, of shares held by,
each.
(2) The shareholders' list must be available for inspection by any
shareholder for a period of ten days prior to the meeting or such shorter time
as exists between the record date and the meeting and continuing through the
meeting at the corporation's principal office, at a place identified in the
meeting notice in the city where the meeting will be held, or at the office of
the
<PAGE>
corporation's transfer agent or registrar. A shareholder or his agent or
attorney is entitled on written demand to inspect the list (subject to the
requirements of Section 607.1602(3) of the Act), during regular business hours
and at his expense, during the period it is available for inspection.
(3) The corporation shall make the shareholders' list available at the
meeting, and any shareholder or his agent or attorney is entitled to inspect the
list at any time during the meeting or any adjournment.
Section 2.04. Record Date.
------------
(1) The board of directors may set a record date for purposes of
determining the shareholders entitled to notice of and to vote at a
shareholders' meeting; however, in no event may a record date fixed by the board
of directors be a date preceding the date upon which the resolution fixing the
record date is adopted.
(2) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to demand a special meeting is the date
the first shareholder delivers his demand to the corporation. In the event that
the board of directors sets the record date for a special meeting of
shareholders, it shall not be a date preceding the date upon which the
corporation receives the first demand from a shareholder requesting a special
meeting.
(3) If no prior action is required by the board of directors pursuant
to the Act, and, unless otherwise fixed by the board of directors, the record
date for determining shareholders entitled to take action without a meeting is
the date the first signed written consent is delivered to the corporation under
Section 607.0704 of the Act. If prior action is required by the board of
directors pursuant to the Act, the record date for determining shareholders
entitled to take action without a meeting is at the close of business on the day
on which the board of directors adopts the resolution taking such prior action.
(4) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to notice of and to vote at an annual or
special shareholders' meeting is the close of business on the day before the
first notice of such annual or special shareholders' meeting is delivered to
shareholders.
(5) A record date may not be more than 70 days before the meeting or
action requiring a determination of shareholders.
<PAGE>
(6) A determination of shareholders entitled to notice of or to vote at
a shareholders' meeting is effective for any adjournment of the meeting unless
the board of directors fixes a new record date, which it must do if the meeting
is adjourned to a date more than 120 days after the date fixed for the original
meeting.
Section 2.05. Notice of Meetings and Adjournment.
-----------------------------------
(1) The corporation shall notify shareholders of the date, time and
place of each annual and special shareholders' meeting no fewer than 10 or more
than 60 days before the meeting date. Unless the Act requires otherwise, the
corporation is required to give notice only to shareholders entitled to vote at
the meeting. Notice shall be given in the manner provided in Section 607.0141 of
the Act, by or at the direction of the president, the secretary, of the officer
or persons calling the meeting. If the notice is mailed at least 30 days before
the date of the meeting, it may be done by a class of United States mail other
than first class. Notwithstanding Section 607.0141, if mailed, such notice shall
be deemed to be delivered when deposited in the United Statement mail addressed
to the shareholder at his address as it appears on the stock transfer books of
the corporation, with postage thereon prepaid.
(2) Unless the Act or the articles of incorporation requires otherwise,
notice of an annual meeting need not include a description of the purpose or
purposes for which the meeting is called.
(3) Notice of a special meeting must include a description of the
purpose or purposes for which the meeting is called.
(4) If an annual or special shareholders meeting is adjourned to a
different date, time, or place, notice need not be given of the new date, time,
or place if the new date, time or place is announced at the meeting before
adjournment is taken, and any business may be transacted at the adjourned
meeting that might have been transacted on the original date of the meeting. If
a new record date is or must be fixed under Section 607.0707 of the Act,
however, notice of the adjourned meeting must be given under this section to
persons who are shareholders as of the new record date who are entitled to
notice of the meeting.
(5) Notwithstanding the foregoing, no notice of a shareholders' meeting
need be given if: (a) an annual report and proxy statements for two consecutive
annual meetings o(pound) shareholders, or (b) all, and at least two checks in
payment of dividends or interest on securities during a 12-month period, have
been sent by first-class United States mail, addressed to the
<PAGE>
shareholder at his address as it appears on the share transfer books of the
corporation, and returned undeliverable. The obligation of the corporation to
give notice of a shareholders' meeting to any such shareholder shall be
reinstated once the corporation has received a new address for such shareholder
for entry on its share transfer books.
Section 2.06. Waiver of Notice.
-----------------
(1) A shareholder may waive any notice required by the Act, the
articles of incorporation, or bylaws before or after the date and time stated in
the notice. The waiver must be in writing, be signed by the shareholder entitled
to the notice, and be delivered to the corporation for inclusion in the minutes
or filing with the corporate records. Neither the business to be transacted at
nor the purpose of any regular or special meeting of the shareholders need be
specified in any written waiver of notice.
(2) A shareholder's attendance at a meeting: (a) Waives objection to
lack of notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting; or (b) waives objection to consideration of a particular matter
at the meeting that is not within the purpose or purposes described in the
meeting notice, unless the shareholder objects to considering the matter when it
is presented.
ARTICLE III
-----------
Shareholder Voting
------------------
Section 3.01. Voting Group Defined.
---------------------
A "voting group" means all shares of one or more classes or series that
under the articles of incorporation or the Act are entitled to vote and be
counted together collectively on a matter at a meeting of shareholders. All
shares entitled by the articles of incorporation or the Act to vote generally on
the matter are for that purpose a single voting group.
Section 3.02. Quorum and Voting Requirements for Voting Groups.
-------------------------------------------------
(1) Shares entitled to vote as a separate voting group may take action
on a matter at a meeting only if a quorum of those shares exists with respect to
that matter. Unless the articles of incorporation or the Act provides otherwise,
a majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
<PAGE>
(2) Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
(3) If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
articles of incorporation or the Act requires a greater number of affirmative
votes.
Section 3.03. Action by Single and Multiple Voting Groups.
--------------------------------------------
(1) If the articles of incorporation or the Act provides for voting by
a single voting group on a matter, action on that matter is taken when voted
upon by that voting group as provided in Section 3.02 of these bylaws.
(2) If the articles of incorporation or the Act provides for voting by
two or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately as provided in
Section 3.02 of these bylaws. Action may be taken by one voting group on a
matter even though no action is taken by another voting group entitled to vote
on the matter.
Section 3.04. Shareholder Quorum and Voting; Greater or Lesser Voting
-------------------------------------------------------
Requirements.
- -------------
(1) A majority of the shares entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of shareholders. When a
specified item of business is required to be voted on by a class or series of
stock, a majority of the shares of such class or series shall constitute a
quorum for the transaction of such item of business by that class or series.
(2) An amendment to the articles of incorporation that changes the
quorum to a greater or lesser quorum or voting requirement must meet the same
quorum requirement and be adopted by the same vote required to take action under
the quorum and voting requirements then in effect or proposed to be adopted,
whichever is greater.
(3) If a quorum exists, action on a matter, other than the election of
directors, is approved if the votes cast by the holders of the shares
represented at the meeting and entitled to vote on
<PAGE>
the subject matter favoring the action exceed the votes cast opposing the
action, unless a greater number of affirmative votes or voting by classes is
required by the Act or the articles of incorporation.
(4) After a quorum has been established at a shareholders~ meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof.
Section 3.05. Voting for Directors; No Cumulative Voting.
-------------------------------------------
(1) Directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a quorum is
present.
(2) Each shareholder who is entitled to vote at an election of
directors has the right to vote the number of shares owned by him for as many
persons as there are directors to be elected and for whose election he has a
right to vote. Shareholders do not have a right to cumulate their votes for
directors.
Section 3.06. Voting Entitlement of Shares.
-----------------------------
(1) Unless the articles of incorporation or the Act provides otherwise,
each outstanding share, regardless of class, is entitled to one vote on each
matter submitted to a vote at a meeting of shareholders. Only shares are
entitled to vote.
(2) The shares of a corporation are not entitled to vote if they are
owned, directly or indirectly, by a second corporation, domestic or foreign, and
the first corporation owns, directly or indirectly, a majority of shares
entitled to vote for directors of the second corporation.
(3) This section does not limit the power of the corporation to vote
any shares, including its own shares, held by it in a fiduciary capacity.
(4) Redeemable shares are not entitled to vote on any matter, and shall
not be deemed to be outstanding, after notice of redemption is mailed to the
holders thereof and a sum sufficient to redeem such shares has been deposited
with a bank, trust company, or other financial institution upon an irrevocable
obligation to pay the holders the redemption price upon surrender of the shares.
<PAGE>
(5) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the bylaws of the
corporate shareholder may prescribe or, in the absence of any applicable
provision, by such person as the board of directors of the corporate shareholder
may designate. In the absence of any such designation or in case of conflicting
designation by the corporate shareholder, the chairman of the board, the
president, any vice president, the secretary, and the treasurer of the corporate
shareholder, in that order, shall be presumed to be fully authorized to vote
such shares.
(6) Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee.
(7) Shares held by or under the control of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by him without the transfer thereof into his name.
(8) If a share or shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety, or otherwise, or if two or more persons have
the same fiduciary relationship respecting the same shares, unless the secretary
of the corporation is given notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, then acts with respect to voting have the following effect:
(a) If only one votes, in person or in proxy, his act
binds all;
(b) If more than one vote, in person or by proxy, the act of
the majority so voting binds all;
(c) If more than one vote, in person or by proxy, but the vote
is evenly split on any particular matter, each faction is entitled to vote the
share or shares in question proportionally;
(d) If the instrument or order so filed shows that any such
tenancy is held in unequal interest, a majority or a vote evenly split for
purposes of this subsection shall be a majority or a vote evenly split in
interest;
<PAGE>
(e) The principles of this subsection shall apply, insofar as
possible, to execution of proxies, waivers, consents, or objections and for the
purpose of ascertaining the presence of a quorum;
(f) Subject to Section 3.08 of these bylaws, nothing herein
contained shall prevent trustees or other fiduciaries holding shares registered
in the name of a nominee from causing such shares to be voted by such nominee as
the trustee or other fiduciary may direct. Such nominee may vote shares as
directed by a trustee or their fiduciary without the necessity of transferring
the shares to the name of the trustee or other fiduciary.
Section 3.07. Proxies.
--------
(1) A shareholder, other person entitled to vote on behalf of a
shareholder pursuant to Section 3.06 of these bylaws, or attorney in fact may
vote the shareholder's shares in person or by proxy.
(2) A shareholder may appoint a proxy to vote or otherwise act for him
by signing an appointment form, either personally or by his attorney in fact. An
executed telegram or cablegram appearing to have been transmitted by such
person, or a photographic, photostatic, or equivalent reproduction of an
appointment form, is a sufficient appointment form.
(3) An appointment of a proxy is effective when received by the
secretary or other officer or agent authorized to tabulate votes. An appointment
is valid for up to 11 months unless a longer period is expressly provided in the
appointment form.
(4) The death or incapacity of the shareholder appointing a proxy does
not affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
(5) An appointment of a proxy is revocable by the shareholder unless
the appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest. Appointments coupled with an interest
include the appointment of: (a) a pledgee; (b) a person who purchased or agreed
to purchase the shares; (c) a creditor of the corporation who extended credit to
the corporation under terms requiring the appointment; (d) an employee of the
corporation whose employment contract requires the appointment; or (e) a party
to a voting agreement created in accordance with the Act.
<PAGE>
(6) An appointment made irrevocable under this section becomes
revocable when the interest with which it is coupled is extinguished and, in a
case provided for in Subsection 5(c) or 5(d), the proxy becomes revocable three
years after the date of the proxy or at the end of the period, if any, specified
herein, whichever is less, unless the period of irrevocability is renewed from
time to time by the execution of a new irrevocable proxy as provided in this
section. This does not affect the duration of a proxy under subsection (3).
(7) A transferee for value of shares subject to an irrevocable
appointment may revoke the appointment if he did not know of its existence when
he acquired the shares and the existence of the irrevocable appointment was not
noted conspicuously on the certificate representing the shares or on the
information statement for shares without certificates.
(8) Subject to Section 3.09 of these bylaws and to any express
limitation on the proxy's authority appearing on the face of the appointment
form, a corporation is entitled to accept the proxy's vote or other action as
that of the shareholder making the appointment.
(9) If an appointment form expressly provides, any proxy holder may
appoint, in writing, a substitute to act in his place.
Section 3.08. Shares Held by Nominees.
------------------------
(1) The corporation may establish a procedure by which the beneficial
owner of shares that are registered in the name of a nominee is recognized by
the corporation as the shareholder. The extent of this recognition may be
determined in the procedure.
(2) The procedure may set forth (a) the types of nominees to which it
applies; (b) the rights or privileges that the corporation recognizes in a
beneficial owner; (c) the manner in which the procedure is selected by the
nominee; (d) the information that must be provided when the procedure is
selected; (e) the period for which selection of the procedure is effective; and
(f) other aspects of the rights and duties created.
Section 3.09. Corporation's Acceptance of Votes.
----------------------------------
(1) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation if acting in good
faith is entitled to accept the vote, consent waiver, or proxy appointment and
give it effect as the act of the shareholder.
<PAGE>
(2) If the name signed on a vote, consent, waiver, or proxy appointment
does not correspond to the name of its shareholder, the corporation if acting in
good faith is nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder if: (a) the
shareholder is an entity and the name signed purports to be that of an officer
or agent of the entity; (b) the name signed purports to be that of an
administrator, executor, guardian, personal representative, or conservator
representing the shareholder and, if the corporation requests, evidence of
fiduciary status acceptable to the corporation has been presented with respect
to the vote, consent, waiver, or proxy appointment; (c) the name signed purports
to be that of a receiver, trustee in bankruptcy, or assignee for the benefit of
creditors of the shareholder and, if the corporation requests, evidence of this
status acceptable to the corporation has been presented with respect to the
vote, consent, waiver, or proxy appointment; (d) the name signed purports to be
that of a pledgee, beneficial owner, or attorney in fact of the shareholder and,
if the corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder has been presented with
respect to the vote, consent, waiver, or proxy appointment; or (e) two or more
persons are the shareholder as covenants or fiduciaries and the name signed
purports to be the name of at least one of the co-owners and the person signing
appears to be acting on behalf of all the co-owners.
(3) The corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's authority to sign for
the shareholder.
(4) The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this section are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(5) Corporate action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
Section 3.10. Action by Shareholders Without Meeting.
---------------------------------------
(1) Action by Written Consent. Any action which is required to be or
may be taken at any annual or special meeting of the shareholders of the
corporation may be taken without a meeting,
<PAGE>
without prior notice and without a vote, if written consents which set forth the
specific corporate action (the "Corporate Action") to be taken have been signed
by the holders of outstanding shares of common stock which possess not less than
the minimum number of votes necessary to authorize or take such Corporate Action
at an annual or special meeting of shareholders at which all outstanding shares
of common stock are represented and the other requirements contained herein and
in the corporation's articles of incorporation and Florida law are complied
with.
(2) Determination of Record Date for Action by Written Consent. In
order to inform the corporation's shareholders and the investing public in
advance that a record date for action by written consent will occur and in order
that the corporation may determine the shareholders entitled to consent to
Corporate Action in writing without a meeting, the Board of Directors may fix a
record date for such action, which record date shall not precede the date upon
which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than 10 business days after
the date upon which the resolution fixing such record date is adopted by the
Board of Directors. Any Soliciting Party (as defined herein) who seeks to have
the shareholders authorize or take a Corporate Action by written consent must
advise the corporation by written notice (the "Solicitation Notice") delivered
to the Secretary of the corporation (the "Secretary"), which must be delivered
by certified mail, overnight courier or hand delivery, of the proposed Corporate
Action for which written consents will be sought and request that the Board of
Directors fix a record date. The record date for determining shareholders
entitled to consent to the Corporate Action in writing shall be fixed by the
Board of Directors by resolution within 10 business days after the date of
delivery of the Solicitation Notice. If the Board of Directors does not fix a
record date within the 10 business day-period after the date of delivery of the
Solicitation Notice, and no prior action by the Board of Directors is required
by Florida law, the corporation's articles of incorporation or these bylaws, the
record date shall be the first date on which a valid signed consent setting
forth the Corporate Action is delivered to the corporation in accordance with
Florida law, the corporation's articles of incorporation and these bylaws. If
the Board of Directors does not fix a record date within the 10 business
day-period after the date of delivery of the Solicitation Notice and prior
action by the Board of Directors is required by Florida law, the corporation's
articles of incorporation or these bylaws, the record date shall be at the close
of business on the day on which the Board of Directors adopts the resolution
taking such prior action.
<PAGE>
(3) Duration and Revocation of Consents. Consents to a Corporate Action
shall only be valid during the period ending 60 days after the date the first
valid signed consent regarding the proposed Corporate Action is delivered to the
corporation in accordance with Florida law, the corporation's articles of
incorporation and these bylaws. Consents may be revoked by written notice to (i)
the Secretary or (ii) any other officer or agent of the corporation having
custody of the book in which proceedings of meetings of shareholders are
recorded.
(4) Retention and Duties of Inspector. Within 15 business days after
receipt of a Solicitation Notice, the Secretary shall engage a
nationally-recognized independent inspector of elections (the "Inspector") to
perform a review of any consents and revocations related to such Solicitation
Notice. The Inspector shall review all such consents and revocations, determine
whether the requisite number of valid and unrevoked consents has been obtained
to authorize or take the Corporate Action specified in the consents, and certify
such determination for entry in the records of the corporation. All costs of
retaining the Inspector shall be borne by the party which is soliciting
consents. For the purpose of permitting the Inspector to perform such review, no
action by written consent without a meeting shall be effective until such date
as the Inspector certifies to the corporation that the consents delivered to the
corporation in accordance with this Section 3.10 represent at least the minimum
number of votes that would be necessary to take the Corporate Action by written
consent.
(5) Procedures for Counting and Challenging Consents. All consents and
revocations shall be delivered to the Inspector upon receipt by the corporation
or its other designated agents. When such consents and revocations are received,
the Inspector shall review the consents and revocations and shall maintain a
count of the number of valid and unrevoked consents. As soon as practicable
after the end of the 60-day period provided for in paragraph (c), the Inspector
shall issue a preliminary report to the corporation and the Soliciting Party
stating:
(a) The number of valid and unrevoked consents;
(b) The number of valid revocations;
(c) The number of invalid consents;
(d) The number of invalid revocations; and
(e) Based on a preliminary count, whether the requisite
number of valid and unrevoked consents has been
obtained to authorize or take the Corporate Action
specified in the consents.
<PAGE>
Unless the corporation and the Soliciting Party shall agree to a
shorter or longer period, the corporation and the Soliciting Party shall each
have 48 hours to review the consents and revocations and to advise the Inspector
and the other party in writing whether they will challenge any of the
determinations set forth in the Inspector's preliminary report. Any such written
notice must describe with specificity the particular determinations set forth in
the preliminary report that are being challenged. Both the corporation and the
Soliciting Party may challenge any aspect of any of the consents or revocations.
If no written notice of a challenge to the preliminary report is received by the
Inspector within 48 hours after the issuance of the preliminary report, the
preliminary report of the Inspector shall become its final report.
If the corporation or the Soliciting Party or both deliver timely
written notice of a challenge to the preliminary report, the Inspector shall
hold a meeting as promptly as possible to allow the challenging party or parties
to present its or their challenges to any consents and/or revocations. The
Inspector shall adopt such reasonable procedures to be used at such meeting as
it deems necessary in its sole discretion. Representatives and counsel of the
corporation and the Soliciting Party may be present at such meeting. In such
meeting each challenging party (if there are two) and its counsel will be given
an opportunity to present documentation to support its position. The other party
will be given an opportunity to respond to a challenging party's presentation if
it so desires. A transcript of the meeting shall be recorded by a certified
court reporter and will be available for inspection by all parties. Following
completion of this meeting and a review of its results, the Inspector shall as
promptly as possible issue its final report to the corporation and the
Soliciting Party containing its final determinations plus any changes in the
preliminary totals as a result of any challenges and a certification of whether
the requisite number of valid and unrevoked consents was obtained to authorize
or take the Corporate Action specified in the consents. Nothing contained in
this paragraph shall in any way be construed to suggest or imply that the
corporation or any shareholder shall not be entitled to contest the validity of
any consent or revocation thereof or to take any other action (including,
without limitation, the commencement, prosecution or defense of any litigation
with respect thereto).
For purposes of determining the identity of the party which is
soliciting written consents, and to ensure that the limitations contained in
this Section are complied with, "Soliciting Party" shall include (x) any person
who directly or indirectly is the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the
<PAGE>
"Exchange Act")) of shares of common stock of the corporation and who delivers a
Solicitation Notice to the corporation or on whose behalf a Solicitation Notice
is delivered to the corporation by the record holder of such shares, (y) any
corporation, partnership or other business entity which such person and/or his
affiliates control (as both terms are defined in Rule 12b-2 promulgated under
the Exchange Act), and (z) any group (within the meaning of Section 13(d)(3) of
the Exchange Act) of which such person is a member.
(6) Notice of Result. Notice of any Corporate Action taken without a
meeting shall be given to those shareholders who have not consented in writing
to such Corporate Action or who were not entitled to vote on the Corporate
Action within five business days after the date on which such Corporate Action
becomes effective.
(7) Amendment, Repeal, Alteration or Modification. This Section 3.10 of
the corporation's bylaws shall not be amended, repealed, altered or modified
until three years after its effective date, except by a vote or consent of
shareholders representing a majority of the then-issued and outstanding shares
entitled to vote thereon; provided, however, that this Section 3.10 of the
corporation's bylaws may be amended, repealed, altered or modified by the Board
of Directors when and to the extent that, in the written opinion of counsel, a
statutory amendment or judicial decision represents a material change in Florida
law relative to the subject matter hereof and the amendment, repeal, alteration
or modification is meant solely to conform with such change of law.
Section 3.11. Frequency of Solicitations for Action by Shareholders Without a
---------------------------------------------------------------
Meeting.
- --------
Notwithstanding any other provision of these bylaws or Florida law, a
Soliciting Party may only solicit (as such term is defined for purposes of
Section 14(a) of the Exchange Act and the regulations thereunder) written
consents from shareholders for any Corporate Action one time during each fiscal
year of the corporation. The corporation shall not (a) provide a shareholder
list or any other shareholder information to a Soliciting Party, (b) set a
record date pursuant to a Solicitation Notice (and no record date shall be set
in accordance with the next to last sentence of Section 3.10(2) of these
bylaws), or (c) have any obligation to mail any materials for or on behalf of
such Soliciting Party for any consent solicitation made by such Soliciting Party
which has already solicited written consents regarding the same or substantially
similar Corporate Action(s) (as determined by the Board of Directors in its
reasonable discretion) within the corporation's then-current fiscal year;
provided, however, that a Soliciting Party may solicit written consents twice
<PAGE>
in such fiscal year if the corporation has not conducted an annual meeting of
shareholders within 16 months prior to the date that the Soliciting Party
delivers its Solicitation Notice for the second consent solicitation. For
purposes of this Section 3.11, all parties contained in the definition of
"Soliciting Party" in Section 3.10(5) of these bylaws shall be considered to be
the same Soliciting Party for purposes of determining whether a consent
solicitation can be made during the fiscal year.
ARTICLE IV
Board of Directors and Officers
-------------------------------
Section 4.01. Qualifications of Directors.
----------------------------
Directors must be natural persons who are 18 years of age or older but
need not be residents of the State of Florida or shareholders of the
corporation.
Section 4.02. Number of Directors.
--------------------
(1) The board of directors shall consist of not less than one nor more
than 15 individuals.
(2) The number of directors may be increased or decreased from time to
time by amendment to these bylaws by a majority of the directors or by a vote of
67% of the shares entitled to vote. If the terms of the directors are staggered
under Section 4.04 of these bylaws, any increase or decrease in the number of
directors shall be allocated proportionately among the classes. Any decrease in
the number of directors shall not prematurely shorten the term of any incumbent
director.
(3) Directors are elected at the first annual shareholders~ meeting and
at each annual meeting thereafter unless their terms are staggered under Section
4.04 of these bylaws.
Section 4.03. Terms of Directors Generally.
-----------------------------
(1) The terms of the initial directors of the corporation expire at the
first shareholders' meeting at which directors are elected.
(2) The terms of all other directors expire at the next annual
shareholders' meeting following their election unless their terms are staggered
under Section 4.04 of these bylaws.
<PAGE>
(3) A decrease in the number of directors does not shorten an incumbent
director's term.
(4) The term of a director elected to fill a vacancy expires at the
next shareholders' meeting at which directors are elected.
(5) Despite the expiration of a director's term, the director shall
continue to serve until that director's successor is elected and qualified or
until there is a decrease in the number of directors.
Section 4.04. Staggered Terms for Directors.
------------------------------
The directors of the corporation may, by the articles of incorporation,
or by amendment to these bylaws adopted by a vote of the directors, be divided
into one, two or three classes with the number of directors in each class being
as nearly equal as possible; the term of office of those of the first class to
expire at the annual meeting next ensuing; of the second class one year
thereafter; at the third class two years thereafter; and at each annual election
held after such classification and election, directors shall be chosen for a
full term, as the case may be, to succeed those whose terms expire. If the
directors have staggered terms, then any increase or decrease in the number of
directors shall be so apportioned among the classes as to make all classes as
nearly equal in number as possible.
Section 4.05. Vacancy on Board.
-----------------
(1) Whenever a vacancy occurs on a board of directors, including a
vacancy resulting from an increase in the number of directors, it may be filled
by the affirmative vote of a majority of the remaining directors.
(2) A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
(3) A director chosen as a result of this Section 4.06 or Section 4.02
shall hold such office until the next election of the class for which such
director has been chosen and until their successors shall be elected and
qualified.
Section 4.06. Compensation of Directors.
--------------------------
The board of directors may fix the compensation of directors.
<PAGE>
Section 4.07. Meetings.
---------
(1) The board of directors may hold regular or special meetings in or
out of the State of Florida.
(2) A majority of the directors present, whether or not a quorum
exists, may adjourn any meeting of the board of directors to another time and
place. Notice of any such adjourned meeting shall be given to the directors who
were not present at the time of the adjournment and, unless the time and place
of the adjourned meeting are announced at the time of the adjournment, to the
other directors.
(3) Meetings of the board of directors may be called by the chairman of
the board or by the president.
(4) The board of directors may permit any or all directors to
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all directors participating may
simultaneously hear each other during the meeting. A director participating in a
meeting by this means is deemed to be present in person at the meeting.
Section 4.08. Action by Directors Without a Meeting.
--------------------------------------
(1) Action required or permitted by the Act to be taken at a board of
directors' meeting or committee meeting may be taken without a meeting if the
action is taken by all members of the board or of the committee. The action must
be evidenced by one or more written consents describing the action taken and
signed by each director or committee member.
(2) Action taken under this section is effective when the last director
signs the consent, unless the consent specifies a different effective date.
(3) A consent signed under this section has the effect of a meeting
vote and may be described as such in any document.
Section 4.09. Notice of Meetings.
-------------------
Regular and special meetings of the board of directors may be held
without notice of the date, time, place, or purpose of the meeting.
<PAGE>
Section 4.10. Waiver of Notice.
-----------------
Notice of a meeting of the board of directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and a waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting or promptly upon
arrival at the meeting, any objection to the transaction of business because the
meeting is not lawfully called or convened.
Section 4.11. Quorum and Voting.
------------------
(1) A quorum of a board of directors consists of a majority of the
number of directors prescribed by the articles of incorporation or these bylaws.
(2) If a quorum is present when a vote is taken, the affirmative vote
of a majority of directors present is the act of the board of directors.
(3) A director of the corporation who is present at a meeting of the
board of directors or a committee of the board of directors when corporate
action is taken is deemed to have assented to the action taken unless:
(a) He objects at the beginning of the meeting (or promptly
upon his arrival) to holding it or transacting specified business at the
meeting; or
(b) He votes against or abstains from the action taken.
Section 4.12. Powers of the Directors.
------------------------
In furtherance, and not in limitation of the powers conferred to the
Directors by statute, the Board of directors is expressly authorized as follows:
(1) To make and alter the Bylaws of this corporation.
(2) To authorize and to cause to be executed mortgages and liens upon
the real and personal property of the corporation.
(3) To set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purpose, or to abolish any
such reserve in the manner in which it was created.
(4) From time to time to determine whether and to what extent, at what
time and place, and under what conditions and
<PAGE>
regulations the accounts and books of this corporation, or any of them, shall be
open to inspection of any stockholder; and no stockholder shall have any right
to inspect any account, book, or document of this corporation except as
conferred by statute or by the bylaws or as authorized by a resolution of the
stockholders or board of directors.
Section 4.13. Committees.
-----------
(1) The board of directors, by resolution adopted by a majority of the
full board of directors, may designate from among its members an executive
committee and one or more other committees each of which, to the extent provided
in such resolution and by these bylaws, shall have and may exercise all the
authority of the board of directors, except that no such committee shall have
the authority to:
(a) Approve or recommend to shareholders actions or proposals
required by the Act to be approved by shareholders.
(b) Fill vacancies on the board of directors or any committee
thereof.
(c) Adopt, amend, or repeal these bylaws.
(d) Authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the board of directors.
(e) Authorize or approve the issuance or sale or contract for
the sale of shares, or determine the designation and relative rights,
preferences, and limitations of a voting group except that the board of
directors may authorize a committee (or a senior executive officer of the
corporation) to do so within limits specifically prescribed by the board of
directors.
(2) The sections of these bylaws which govern meetings, notice and
waiver of notice, and quorum and voting requirements of the board of directors
apply to committees and their members as well.
(3) Each committee must have two or more members who serve at the
pleasure of the board of directors. The board, by resolution adopted in
accordance herewith, may designate one or more directors as alternate members of
any such committee who may act in the place and stead of any absent member or
members at any meeting of such committee.
<PAGE>
(4) Neither the designation of any such committee, the delegation
thereto of authority, nor action by such committee pursuant to such authority
shall alone constitute compliance by any member of the board of directors not a
member of the committee in question with his responsibility to act in good
faith, in a manner he reasonably believes to be in the best interests of the
corporation, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances.
Section 4.14. Loans to Officers, Directors, and Employees; Guaranty
-----------------------------------------------------
of Obligations.
- ---------------
The corporation may lend money to, guaranty any obligation of, or
otherwise assist any officer, director, or employee of the corporation or of a
subsidiary, whenever, in the judgment of the board of directors, such loan,
guaranty, or assistance may reasonably be expected to benefit the corporation.
The loan, guaranty, or other assistance may be with or without interest and may
be unsecured or secured in such manner as the board of directors shall approve,
including, without limitation, a pledge of shares of stock of the corporation.
Nothing in this section shall be deemed to deny, limit, or restrict the powers
of guaranty or warranty of any corporation at common law or under any statute.
Loans, guaranties, or other types of assistance are subject to section 4.20.
Section 4.15. Required Officers.
------------------
(1) The corporation shall have such officers as the board of directors
may appoint from time
(2) A duly appointed officer may appoint one or more assistant
officers.
(3) The board of directors shall delegate to one of the officers
responsibility for preparing minutes of the directors' and shareholders'
meetings and for authenticating records of the corporation.
(4) The same individual may simultaneously hold more than one office in
the corporation.
Section 4.16. Duties of Officers.
-------------------
Each officer has the authority and shall perform the duties set forth
in a resolution or resolutions of the board of directors or by direction of any
officer authorized by the board of directors to prescribe the duties of other
officers.
<PAGE>
Section 4.17. Resignation and Removal of Officers.
------------------------------------
(1) An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date and the corporation accepts the future effective date, the board of
directors may fill the pending vacancy before the effective date if the board of
directors provides that the successor does not take office until the effective
date.
(2) The board of directors may remove any officer at any time with or
without cause. Any assistant officer, if appointed by another officer, may
likewise be removed by the board of directors or by the officer which appointed
him in accordance with these bylaws.
Section 4.18. Contract Rights of Officers.
----------------------------
The appointment of an officer does not itself create contract rights.
Section 4.19. General Standards for Directors.
--------------------------------
(1) A director shall discharge his duties as a director, including his
duties as a member of a committee:
(a) In good faith;
(b) With the care an ordinarily prudent person in a like
position would exercise under similar circumstances; and
(c) In a manner he reasonably believes to be in the best
interests of the corporation.
(2) In discharging his duties, a director is entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, if prepared or presented by:
(a) One or more officers or employees of the corporation whom
the director reasonably believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants, or other persons as to
matters the director reasonably believes are within the persons' professional or
expert competence; or
<PAGE>
(c) A committee of the board of directors of which he is not a
member if the director reasonably believes the committee
(3) In discharging his duties, a director may consider such factors as
the director deems relevant, including the long-term prospects and interests of
the corporation and its shareholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the corporation
or its subsidiaries, the communities and society in which the corporation or its
subsidiaries operate, and the economy of the state and the nation.
(4) A director is not acting in good faith if he has knowledge
concerning the matter in question that makes reliance otherwise permitted by
subsection (2) unwarranted.
(5) A director is not liable for any action taken as a director, or any
failure to take any action, if he performed the duties of his office in
compliance with this section.
Section 4.20. Director Conflicts of Interest.
-------------------------------
No contract or other transaction between a corporation and one or more
interested directors shall be either void or voidable because of such
relationship or interest, because such director or directors are present at the
meeting of the board of directors or a committee thereof which authorizes,
approves or ratifies such contract or transaction, or because his or their votes
are counted for such purpose, if:
(1) The fact of such relationship or interest is disclosed or known to
the board of directors or committee which authorizes, approves or ratifies the
contract or transactions by a vote or consent sufficient for the purpose without
counting the votes or consents of such interested directors;
(2) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(3) The contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the board, a committee or the
shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at the meeting of the board of directors
<PAGE>
or a committee thereof which authorizes, approves or ratifies such contract or
transaction.
For the purpose of paragraph (2) above, a conflict of interest
transaction is authorized, approved or ratified if it receives the vote of a
majority of the shares entitled to be counted under this subsection. Shares
owned by or voted under the control of a director who has a relationship or
interest in the conflict of interest transaction may not be counted in a vote of
shareholders to determine whether to authorize, approve or ratify a conflict of
interest transaction under paragraph (2). The vote of those shares, however, is
counted in determining whether the transaction is approved under other sections
of the Act. A majority of the shares, whether or not present, that are entitled
to be counted in a vote on the transaction under this subsection constitutes a
quorum for the purpose of taking action under this section.
Section 4.21. Resignation of Directors.
-------------------------
A director may resign at any time by delivering written notice to the
board of directors or its chairman or to the corporation.
A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date, the board of directors may fill the pending vacancy before the
effective date if the board of directors provides that the successor does not
take office until the effective date.
ARTICLE V
Indemnification of Directors, Officers,
Employees and Agents
--------------------
Section 5.01. Directors, Officers, Employees and Agents.
------------------------------------------
(1) The corporation shall indemnify any director or executive officer
who was or is a party to any proceeding (other than an action by, or in the
right of, the corporation), by reason of the fact that he is or was a director
or executive officer of the corporation against liability incurred in connection
with such proceeding, including any appeal thereof, 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
termination of any proceeding by judgment, order, settlement, or conviction or
upon a plea of nolo contendere or its equivalent shall not, of itself, create a
<PAGE>
presumption that the director or executive officer 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 or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(2) The corporation shall have power to indemnify any person who was or
is a party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was an 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 liability incurred in connection
with such proceeding, including any appeal thereof, 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
termination of any proceeding by judgment, order, settlement, or 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 or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(3) The corporation shall indemnify any person, who was or is a party
to any proceeding 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 or executive
officer of the corporation, against expenses and amounts paid in settlement not
exceeding, in the judgment of the board of directors, the estimated expense of
litigating the proceeding to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such proceeding, including any
appeal thereof. Such indemnification shall be authorized if such director or
executive officer 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 under this subsection in respect of any claim,
issue, or matter as to which such director or executive officer shall have been
adjudged to be liable unless, and only to the extent that, the court in which
such proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such director or executive officer is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
<PAGE>
(4) The corporation shall have power to indemnify any person, who was
or is a party to any proceeding 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 an 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 and amounts paid in
settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof. Such indemnification shall be
authorized if such person 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 under this subsection in respect of
any claim, issue, or matter as to which such person shall have been adjudged to
be liable unless, and only to the extent that, the court in which such
proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
(5) 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
proceeding referred to in subsections (1) or (2), or in defense of any claim,
issue, or matter therein, he shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith.
(6) Any indemnification under subsections (1), (2), (3) and (4) unless
pursuant to a determination 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 subsections (1) or (2),
(3) and (4). Such determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable,
by majority vote of a committee duly designated by the board of directors (in
which directors who are parties may participate) consisting solely of two or
more directors not at the time parties to the proceeding;
(c) By independent legal counsel:
(1) Selected by the board of directors prescribed in
paragraph (a) or the committee prescribed in paragraph (b); or
(2) If a quorum of the directors cannot be obtained for
paragraph (a) and the committee cannot be designed under paragraph (b), selected
by majority vote of the full board of directors (in which directors who are
parties may participate); or
(d) By the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such proceeding or, if no
such quorum is obtainable, by a majority vote of shareholders who were not
parties to such proceeding.
(7) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by paragraph (6)(c)
shall evaluate the reasonableness of expenses and may authorize indemnification.
(8) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if he is ultimately found not to
be entitled to indemnification by the corporation pursuant to this section.
Expenses incurred by other employees and agents may be paid in advance upon such
terms or conditions that the board of directors deems appropriate.
(9) The indemnification and advancement of expenses provided pursuant
to this section are not exclusive, and the corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
However, indemnification or advancement of expenses shall not be made to or on
behalf of any director, officer, employee, or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the director,
officer, employee, or agent had reasonable cause to
<PAGE>
believe his conduct was lawful or had no reasonable cause to believe his conduct
was unlawful;
(b) A transaction from which the director, officer, employee,
or agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of Section 607.0834 under the Act are applicable; or
(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
(10) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, 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, unless otherwise provided when authorized or ratified.
(11) Notwithstanding the failure of the corporation to provide
indemnification, and despite any contrary determination of the board or of the
shareholders in the specific case, a director, officer, employee, or agent of
the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
On receipt of an application, the court, after giving any notice that it
considers necessary, may order indemnification and advancement of expenses,
including expenses incurred in seeking court-ordered indemnification or
advancement of expenses, if it determines that:
(a) The director, officer, employee, or agent is entitled to
mandatory indemnification under subsection (5), in which case the court shall
also order the corporation to pay that person reasonable expenses incurred in
obtaining court-ordered indemnification or advancement of expenses;
(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the corporation of its power pursuant to subsection (9); or
(c) The director, officer, employee, or agent is fairly and
reasonably entitled to indemnification or advancement of
<PAGE>
expenses, or both, in view of all the relevant circumstances, regardless of
whether such person met the standard of conduct set forth in subsection (1),
subsection (2), subsection (3), subsection (4) or subsection (9).
(12) For purposes of this section, the term "corporation~ includes, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger, so that
any person who is or was a director, officer, employee, or agent of a
constituent corporation, or is or was serving at the request of a constituent
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, is in the same position
under this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(13) For purposes of this section:
(a) The term "other enterprises" includes employee benefit
plans;
(b) The term "expenses" includes counsel fees, including those
for appeal;
(c) The term "liability" includes obligations to pay a
judgment, settlement, penalty, fine (including an excise tax assessed with
respect to any employee benefit plan), and expenses actually and reasonably
incurred with respect to a proceeding;
(d) The term "proceeding" includes any threatened, pending, or
completed action, suit or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the corporation~
includes any service as a director, officer, employee, or agent of the
corporation that imposes duties on such persons, including duties relating to an
employee benefit plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation describes the actions of a person who acts in good faith and in a
manner he reasonably believes to be in the best interests of the participants
and beneficiaries of an employee benefit plan.
<PAGE>
(14) The corporation shall have power to purchase and maintain
insurance on behalf of any person who 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 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 the provisions of this section.
ARTICLE VI
Office and Agent
----------------
Section 6.01. Registered Office and Registered Agent.
(1) The corporation shall have and continuously maintain in the State
of Florida:
(a) A registered office which may be the same as its place of
business; and
(b) A registered agent, who, may be either:
(1) An individual who resides in the State of Florida whose
business office is identical with such registered office; or
(2) Another corporation or not-for-profit corporation as
defined in Chapter 617 of the Act, authorized to transact business or conduct
its affairs in the State of Florida, having a business office identical with the
registered office; or
(3) A foreign corporation or not-for-profit foreign
corporation authorized pursuant to Chapter 607 or Chapter 617 of the Act to
transact business or conduct its affairs in the State of Florida, having a
business office identical with the registered office.
Section 6.02. Change of Registered Office or Registered Agent, Resignation of
---------------------------------------------------------------
Registered Agent.
- -----------------
(1) The corporation may change its registered office or its registered
agent upon filing with the Department of State of the State of Florida a
statement of change setting forth:
<PAGE>
(a) The name of the corporation;
(b) The street address of its current registered office;
(c) If the current registered office is to be changed, the
street address of the new registered office;
(d) The name of its current registered agent;
(e) If its current registered agent is to be changed, the name
of the new registered agent and the new agent's written consent (either on the
statement or attached to it) to the appointment;
(f) That the street address of its registered office and the
street address of the business office of its registered agent, as changed, will
be identical;
(g) That such change was authorized by resolution duly adopted
by its board of directors or by an officer of the corporation so authorized by
the board of directors.
ARTICLE VII
Shares, Options, Dividends and Distributions
--------------------------------------------
Section 7.01. Authorized Shares.
------------------
(1) The articles of incorporation prescribe the classes of shares and
the number of shares of each class that the corporation is authorized to issue,
as well as a distinguishing designation for each class, and prior to the
issuance of shares of a class the preferences, limitations, and relative rights
of that class must be described in the articles of incorporation.
(2) The articles of incorporation must authorize:
(a) One or more classes of shares that together have unlimited
voting rights, and
(b) One or more classes of shares (which may be the same class
or classes as those with voting rights) that together are entitled to receive
the net assets of the corporation upon dissolution.
(3) The articles of incorporation may authorize one or more classes of
shares that have special, conditional, or limited voting
<PAGE>
rights, or no rights, or no right to vote, except to the extent prohibited by
the Act;
(a) Are redeemable or convertible as specified in the articles
of incorporation;
(b) Entitle the holders to distributions calculated in any
manner, including dividends that may be cumulative, non cumulative, or partially
cumulative;
(c) Have preference over any other class of shares with
respect to distributions, including dividends and distributions upon the
dissolution of the corporation.
(4) Shares which are entitled to preference in the distribution of
dividends or assets shall not be designated as common shares. Shares which are
not entitled to preference in the distribution of dividends or assets shall be
common shares and shall not be designated as preferred shares.
Section 7.02. Terms of Class or Series Determined by Board of Directors.
----------------------------------------------------------
(1) If the articles of incorporation so provide, the board of directors
may determine, in whole or part, the preferences, limitations, and relative
rights (within the limits set forth in Section 7.01) of:
(a) Any class of shares before the issuance of any shares of
that class, or
(b) One or more series within a class before the issuance of
any shares of that series.
(2) Each series of a class must be given a distinguishing designation.
(3) All shares of a series must have preferences, limitations, and
relative rights identical with those of other shares of the same series and,
except to the extent otherwise provided in the description of the series, of
those of other series of the same class.
(4) Before issuing any shares of a class or series created under this
section, the corporation must deliver to the Department of State of the State of
Florida for filing articles of amendment, which are effective without
shareholder action, in accordance with Section 607.0602 of the Act.
<PAGE>
Section 7.03. Issued and Outstanding Shares.
------------------------------
(1) A corporation may issue the number of shares of each class or
series authorized by the articles of incorporation. Shares that are issued are
outstanding shares until they are reacquired, redeemed, converted, or canceled.
(2) The reacquisition, redemption, or conversion of outstanding shares
is subject to the limitations of subsection (3) and to Section 607.06401 of the
Act.
(3) At all times that shares of the corporation are outstanding, one or
more shares that together have unlimited voting rights and one or more shares
that together are entitled to receive the net assets of the corporation upon
dissolution must be outstanding.
Section 7.04. Issuance of Shares.
-------------------
(1) The board of directors may authorize shares to be issued for
consideration consisting of any tangible or intangible property or benefit to
the corporation, including cash, promissory notes, services performed, promises
to perform services evidenced by a written contract, or other securities of the
corporation.
(2) Before the corporation issues shares, the board of directors must
determine that the consideration received or to be received for shares to be
issued is adequate. That determination by the board of directors is conclusive
insofar as the adequacy of consideration for the issuance of shares relates to
whether the shares are validly issued, fully paid, and non-assessable. When it
cannot be determined that outstanding shares are fully paid and non-assessable,
there shall be a conclusive presumption that such shares are fully paid and
non-assessable if the board of directors makes a good faith determination that
there is no substantial evidence that the full consideration for such shares has
not been paid.
(3) When the corporation receives the consideration for which the board
of directors authorized the issuance of shares, the shares issued therefor are
fully paid and non-assessable. Consideration in the form of a promise to pay
money or a promise to perform services is received by the corporation at the
time of the making of the promise, unless the agreement specifically provides
otherwise.
(4) The corporation may place in escrow shares issued for a contract
for future services or benefits or
<PAGE>
a promissory note, or make other arrangements to restrict the transfer of the
shares, and may credit distributions in respect of the shares against their
purchase price, until the services are performed, the note is paid, or the
benefits received. If the services are not performed, the shares escrowed or
restricted and the distributions credited may be canceled in whole or part.
Section 7.05. Form and Content of Certificates.
---------------------------------
(1) Shares may but need not be represented by certificates. Unless the
Act or another statute expressly provides otherwise, the rights and obligations
of shareholders are identical whether or not their shares are represented by
certificates.
(2) At a minimum, each share certificate must state on its face:
(a) The name of the issuing corporation and that the
corporation is organized under the laws of the State of Florida;
(b) The name of the person to whom issued; and
(c) The number and class of shares and the designation of the
series, if any, the certificate represents.
(3) If the shares being issued are of different classes of shares or
different series within a class, the designations, relative rights, preferences,
and limitations applicable to each class and the variations in rights,
preferences, and limitations determined for each series (and the authority of
the board of directors to determine variations for future series) must be
summarized on the front or back of each certificate. Alternatively, each
certificate may state conspicuously on its front or back that the corporation
will furnish the shareholder a full statement of this information on request and
without charge.
(4) Each share certificate:
(a) Must be signed (either manually or in facsimile) by an
officer or officers designated by the board of directors, and
(b) May bear the corporate seal or its facsimile.
(5) If the person who signed (either manually or in facsimile) a share
certificate no longer holds office when the certificate is issued, the
certificate is nevertheless valid.
<PAGE>
(6) Nothing in this section may be construed to invalidate any share
certificate validly issued and outstanding under the Act on July 1, 1990.
Section 7.06. Shares Without Certificates.
----------------------------
(1) The board of directors of the corporation may authorize the issue
of some or all of the shares of any or all of its classes or series without
certificates. The authorization does not affect shares already represented by
certificates until they are surrendered to the corporation.
(2) Within a reasonable time after the issue or transfer of shares
without certificates, the corporation shall send the shareholder a written
statement of the information required on certificates by the Act.
Section 7.07. Restriction on Transfer of Shares and Other Securities.
-------------------------------------------------------
(1) The articles of incorporation, these bylaws, an agreement among
shareholders, or an agreement between shareholders and the corporation may
impose restrictions on the transfer or registration of transfer of shares of the
corporation. A restriction does not affect shares issued before the restriction
was adopted unless the holders of such shares are parties to the restriction
agreement or voted in favor of the restriction.
(2) A restriction on the transfer or registration of transfer of shares
is valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this section, and effected in compliance with the
provisions of the Act, including having a proper purpose as referred to in the
Act.
Section 7.08. Shareholder's Pre-emptive Rights.
---------------------------------
The shareholders of the corporation do not have a pre-emptive right to
acquire the corporation's unissued shares.
Section 7.09. Corporation's Acquisition of its Own Shares.
--------------------------------------------
(1) The corporation may acquire its own shares, and, unless otherwise
provided in the articles of incorporation or except as provided in subsection
(4), shares so acquired constitute authorized but unissued shares of the same
class but undesignated as to series.
<PAGE>
(2) If the articles of incorporation prohibit the reissue of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired, effective upon amendment of the articles of incorporation.
(3) Articles of amendment may be adopted by the board of directors
without shareholder action, shall be delivered to the Department of State of the
State of Florida for filing, and shall set forth the information required by
Section 607.0631 of the Act.
(4) Shares of the corporation in existence on June 30, 1990, which are
treasury shares under Section 607.004(18), Florida Statutes (1987), shall be
issued, but not outstanding, until canceled or disposed of by the corporation.
Section 7.10. Share Options.
--------------
(1) Unless the articles of incorporation provide otherwise, the
corporation may issue rights, options, or warrants for the purchase of shares of
the corporation. The board of directors shall determine the terms upon which the
rights, options, or warrants are issued, their form and content, and the
consideration for which the shares are to be issued.
(2) The terms and conditions of stock rights and options which are
created and issued by the corporation, or its successor, and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized by unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions, or conditions that preclude or limit the exercise, transfer,
receipt, or holding of such rights or options by any person or persons,
including any person or persons owning or offering to acquire a specified number
or percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
Section 7.11. Terms and Conditions of Stock Rights and Options.
-------------------------------------------------
The terms and conditions of the stock rights and options which are
created and issued by the corporation [or its successor], and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized but unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions or conditions that preclude or limit the exercise, transfer,
receipt
<PAGE>
or holding of such rights or options by any person or persons, including any
person or persons owning or offering to acquire a specified number or percentage
of the outstanding common shares or other securities of the corporation, or any
transferee or transferees of any such person or persons, or that invalidate or
void such rights or options held by any such person or persons or any such
transferee or transferees.
Section 7.12. Share Dividends.
----------------
(1) Shares may be issued pro rata and without consideration to the
corporation's shareholders or to the shareholders of one or more classes or
series. An issuance of shares under this subsection is a share dividend.
(2) Shares of one class or series may not be issued as a share dividend
in respect of shares of another class or series unless:
(a) The articles of incorporation so authorize,
(b) A majority of the votes entitled to be cast by the class
or series to be issued approves the issue, or
(c) There are no outstanding shares of the class or series to
be issued.
(3) If the board of directors does not fix the record date for
determining shareholders entitled to a share dividend, it is the date of the
board of directors authorizes the share dividend.
Section 7.13. Distributions to Shareholders.
------------------------------
(1) The board of directors may authorize and the corporation may make
distributions to its shareholders subject to restriction by the articles of
incorporation and the limitations in subsection (3).
(2) If the board of directors does not fix the record date for
determining shareholders entitled to a distribution (other than one involving a
purchase, redemption, or other acquisition of the corporation's shares), it is
the date the board of directors authorizes the distribution.
(3) No distribution may be made if, after giving it effect:
(a) The corporation would not be able to pay its debts as they
become due in the usual course of business; or
<PAGE>
(b) The corporation's total assets would be less than the sum
of its total liabilities plus (unless the articles of incorporation permit
otherwise) the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
(4) The board of directors may base a determination that a distribution
is not prohibited under subsection (3) either on financial statements prepared
on the basis of accounting practices and principles that are reasonable in the
circumstances or on a fair valuation or other method that is reasonable in the
circumstances. In the case of any distribution based upon such a valuation, each
such distribution shall be identified as a distribution based upon a current
valuation of assets, and the amount per share paid on the basis of such
valuation shall be disclosed to the shareholders concurrent with their receipt
of the distribution.
(5) Except as provided in subsection (7), the effect of a distribution
under subsection (3) is measured;
(a) In the case of distribution by purchase, redemption, or
other acquisition of the corporation's shares, as of the earlier of:
1. The date money or other property is transferred or debt
incurred by the corporation, or
2. The date the shareholder ceases to be a shareholder
with respect to the acquired shares;
(b) In the case of any other distribution of indebtedness, as
of the date the indebtedness is distributed;
(c) In all other cases, as of:
1. The date the distribution is authorized if the payment
occurs within 120 days after the date of authorization, or
2. The date the payment is made if it occurs more than 120
days after the date of authorization.
(6) A corporation's indebtedness to a shareholder incurred by reason of
a distribution made in accordance with this section is at
<PAGE>
parity with the corporation's indebtedness to its general, unsecured creditors
except to the extent subordinated by agreement.
(7) Indebtedness of the corporation, including indebtedness issued as a
distribution, is not considered a liability for purposes of determinations under
subsection (3) if its terms provide that payment of principal and interest are
made only if and to the extent that payment of a distribution to shareholders
could then be made under this section. If the indebtedness is issued as a
distribution, each payment of principal or interest is treated as a
distribution, the effect of which is measured on the date the payment is
actually made.
ARTICLE VIII
Amendment of Articles and Bylaws
--------------------------------
Section 8.01. Authority to Amend the Articles of Incorporation.
-------------------------------------------------
(1) The corporation may amend its articles of incorporation at any time
to add or change a provision that is required or permitted in the articles of
incorporation or to delete a provision not required in the articles of
incorporation. Whether a provision is required or permitted in the articles of
incorporation is determined as of the effective date of the amendment.
(2) A shareholder of the corporation does not have a vested property
right resulting from any provision in the articles of incorporation, including
provisions relating to management, control, capital structure, dividend
entitlement, or purpose or duration of the corporation.
Section 8.02. Amendment by Board of Directors.
--------------------------------
The corporation's board of directors may adopt one or more amendments
to the corporation's articles of incorporation without shareholder action:
(1) To extend the duration of the corporation if it was incorporated at
a time when limited duration was required by law;
(2) To delete the names and addresses of the initial directors;
(3) To delete the name and address of the initial registered agent or
registered office, if a statement of change is on file with the Department of
State of the State of Florida;
<PAGE>
(4) To delete any other information contained in the articles of
incorporation that is solely of historical interest;
(5) To change each issued and unissued authorized share of an
outstanding class into a greater number of whole shares if the corporation has
only shares of that class outstanding;
(6) To delete the authorization for a class or series of shares
authorized pursuant to Section 607.0602 of the Act, if no shares of such class
or series have been issued;
(7) To change the corporate name by substituting the word
"corporation," "incorporated," or "company," or the abbreviation "corp.," Inc.,"
or Co.," for a similar word or abbreviation in the name, or by adding, deleting,
or changing a geographical attribution for the name; or
(8) To make any other change expressly permitted by the Act to be made
without shareholder action.
Section 8.03. Amendment of Bylaws by Board of Directors.
------------------------------------------
The corporation's board of directors may amend or repeal the
corporation's bylaws unless the Act reserves the power to amend a particular
bylaw provision exclusively to the shareholders.
Section 8.04. Bylaw Increasing Quorum or Voting Requirements for Directors.
-------------------------------------------------------------
(1) A bylaw that fixes a greater quorum or voting requirement for the
board of directors may be amended or repealed:
(a) If originally adopted by the shareholders, only by the
shareholders;
(b) If originally adopted by the board of directors, either by
the shareholders or by the board of directors.
(2) A bylaw adopted or amended by the shareholders that fixes a greater
quorum or voting requirement for the board of directors may provide that it may
be amended or repealed only by a specified vote of either the shareholders or
the board of directors.
(3) Action by the board of directors under paragraph (l)(b) to adopt or
amend a bylaw that changes the quorum or voting requirement for the board of
directors must meet the same quorum requirement and be adopted by the same vote
required to take action
<PAGE>
under the quorum and voting requirement then in effect or proposed to be
adopted, whichever is greater.
ARTICLE IX
Records and Reports
-------------------
Section 9.01. Corporate Records.
------------------
(1) The corporation shall keep as permanent records minutes of all
meetings of its shareholders and board of directors, a record of all actions
taken by the shareholders or board of directors without a meeting, and a record
of all actions taken by a committee of the board of directors in place of the
board of directors on behalf of the corporation.
(2) The corporation shall maintain accurate accounting records.
(3) The corporation or its agent shall maintain a record of its
shareholders in a form that permits preparation of a list of the names and
addresses of all shareholders in alphabetical order by class of shares showing
the number and series of shares held by each.
(4) The corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
(5) The corporation shall keep a copy of the following records:
(a) Its articles or restated articles of incorporation and all
amendments to them currently in effect;
(b) Its bylaws or restated bylaws and all amendments to them
currently in effect;
(c) Resolutions adopted by the board of directors creating one
or more classes or series of shares and finding their relative rights,
preferences, and limitations, if shares issued pursuant to those resolutions are
outstanding;
(d) The minutes of all shareholders' meetings and records of
all action taken by shareholders without a meeting for the past three years;
<PAGE>
(e) Written communications to all shareholders generally or
all shareholders of a class or series within the past three years, including the
financial statements furnished for the past three years;
(f) A list of the names and business street addresses of its
current directors and off
(g) Its most recent annual report delivered to the Department
of State of the State of Florida.
Section 9.02. Financial Statements for Shareholders.
--------------------------------------
(1) Unless modified by resolution of the shareholders within 120 days
of the close of each fiscal year, the corporation shall furnish its shareholders
annual financial statements which may be consolidated or combined statements of
the corporation and one or more of its subsidiaries, as appropriate, that
include a balance sheet as of the end of the fiscal year, an income statement
for that year, and a statement of cash flows for that year. If financial
statements are prepared for the corporation on the basis of generally-accepted
accounting principles, the annual financial statements must also be prepared on
that basis.
(2) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
corporation's accounting records:
(a) Stating his reasonable belief whether the statements were
prepared on the basis of generally-accepted accounting principles and, if not,
describing the basis of preparation; and
(b) Describing any respects in which the statements were not
prepared on a basis of accounting consistent with the statements prepared for
the preceding year.
(3) The corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the corporation
to prepare its financial statements, if for reasons beyond the corporation's
control, it is unable to prepare its financial statements within the prescribed
period. Thereafter, on written request from a shareholder who was not mailed the
statements, the corporation shall mail him the latest annual financial
statements.
<PAGE>
Section 9.03. Other Reports to Shareholders.
------------------------------
(1) If the corporation indemnifies or advances expenses to any
director, officer, employee or agent otherwise than by court order or action by
the shareholders or by an insurance carrier pursuant to insurance maintained by
the corporation, the corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting, or prior to such meeting if the indemnification or advance occurs after
the giving of such notice but prior to the time such meeting is held, which
report shall include a statement specifying the persons paid, the amounts paid,
and the nature and status at the time of such payment of the litigation or
threatened litigation.
(2) If the corporation issues or authorizes the issuance of shares for
promises to render services in the future, the corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
Section 9.04. Annual Report for Department of State.
--------------------------------------
(1) The corporation shall deliver to the Department of State of the
State of Florida for filing a sworn annual report on such forms as the
Department of State of the State of Florida prescribes that sets forth the
information prescribed by section 607.1622 of the Act.
(2) Proof to the satisfaction of the Department of State of the State
of Florida on or before July 1 of each calendar year that such report was
deposited in the United States mail in a sealed envelope, properly addressed
with postage prepaid, shall be deemed in compliance with this requirement.
(3) Each report shall be executed by the corporation by an officer or
director or, if the corporation is in the hands of a receiver or trustee, shall
be executed on behalf of the corporation by such receiver or trustee, and the
signing thereof shall have the same legal effect as if made under oath, without
the necessity of appending such oath thereto.
(4) Information in the annual report must be current as of the date the
annual report is executed on behalf of the corporation.
(5) Any corporation failing to file an annual report which complies
with the requirements of this section shall not be permitted to maintain or
defend any action in any court of this
<PAGE>
state until such report is filed and all fees and taxes due under the Act are
paid and shall be subject to dissolution or cancellation of its certificate of
authority to do business as provided in the Act.
ARTICLE X
Miscellaneous
-------------
Section 10.01. Definition of the "Act."
------------------------
All references contained herein to the "Act" or to sections of the
"Act" shall be deemed to be in reference to the Florida Business Corporation
Act.
Section 10.02. Application of Florida Law.
---------------------------
Whenever any provision of these bylaws is inconsistent with any
provision of the Florida Business Corporation Act, Statutes 607, as they may be
amended from time to time, then in such instance Florida law shall prevail.
Section 10.03. Fiscal Year.
------------
The fiscal year of the corporation shall be determined by resolution of
the board of directors.
Section 10.04. Conflicts with Articles of Incorporation.
-----------------------------------------
In the event that any provision contained in these bylaws conflicts
with any provision of the corporation's articles of incorporation, as amended
from time to time, the provisions of the articles of incorporation shall prevail
and be given full force and effect, to the full extent permissible under the
Act.
Section 10.05. Partial Invalidity.
-------------------
If any provision of these bylaws shall, for any reason, be held by a
court of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of these bylaws, and these bylaws shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
350 East Las Olas Boulevard, Suite 1700
Fort Lauderdale, Florida 33301
December 23, 1999
Technology Systems International, Inc.
2 Field Court
Wrightstown, New Jersey 08562
Re: Registration Statement on Form SB-2; Technology Systems
International, Inc. (the "Company")
Gentlemen:
This opinion is submitted pursuant to the applicable rules of the
Securities and Exchange Commission with respect to the registration by the
Company of 900,000 shares of Common Stock underlying the Company's outstanding
Warrants, $.001 par value.
In connection therewith, we have examined and relied upon original,
certified, conformed, photostat or other copies of (i) the Articles of
Incorporation and Bylaws of the Company; (ii) resolutions of the Board of
Directors of the Company authorizing the offering and the issuance of the
Warrants and the shares of Common Stock underlying the Warrants, and related
matters; (iii) the Registration Statement and the exhibits thereto; and (iv)
such other matters of law as we have deemed necessary for the expression of the
opinion herein contained. In all such examinations, we have assumed the
genuineness of all signatures on original documents, and the conformity to
originals or certified documents of all copies submitted to us as conformed,
photostat or other copies. In passing upon certain corporate records and
documents of the Company, we have necessarily assumed the correctness and
completeness of the statements made or included therein by the Company, and we
express no opinion thereon. As to the various questions of fact material to this
opinion, we have relied, to the extent we deemed reasonably appropriate, upon
representations or certificates of officers or directors of the Company and upon
documents, records and instruments furnished to us by the Company, without
independently checking or verifying the accuracy of such documents, records and
instruments.
Based upon the foregoing, we are of the opinion that the Common Stock,
the Warrants, and the shares of Common Stock underlying the Warrants have been
duly and validly authorized and when issued and paid for in accordance with
their terms will be fully paid and non-assessable.
<PAGE>
Technology Systems International, Inc.
December 23, 1999
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to use our name under the caption "Legal Matters" in
the prospectus comprising part of the Registration Statement. In giving such
consent, we do not thereby admit that we are included in with the category of
persons whose consent is required under Section 7 of the Act or the rules and
regulations promulgated thereunder.
Sincerely,
/s/ Atlas, Pearlman, Trop & Borkson, P.A.
---------------------------------------------
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS: That, BELCO SYSTEMS
TECHNOLOGIES CORP., a Florida corporation, hereinafter referred to as the
"Grantor", for and in consideration as set forth below, paid by TECHNOLOGY
SYSTEMS INTERNATIONAL, INC., a Florida corporation, hereinafter referred to as
the "Grantee", the receipt of which is hereby acknowledged, has granted,
bargained, sold, conveyed, transferred and delivered and by these presents the
Grantor does hereby bargain, sell, grant, convey, transfer and deliver unto the
said Grantee all of Grantor's assets (including the Safe Shopper(TM) Patent
number 5,838,773) listed on Exhibit "A" attached hereto (the "Assets").
TO HAVE AND TO HOLD the same unto the Grantee, its successors and
assigns forever.
THE GRANTOR does further covenant to and with the Grantee that it is
the lawful owner of the Assets; that the Assets are free and clear of any and
all liens, security agreements, encumbrances, claims, demands, and charges of
every kind and character whatsoever; that the Grantor has good right and lawful
authority to sell the Assets as aforesaid, and that the Grantor will warrant and
defend the sale, transfer and conveyance of the Assets hereby made, unto the
Grantee, against the claims and demands of all individuals, firms, associations,
businesses, partnerships, entities, corporations and all other persons
whomsoever.
SUBJECT TO Grantee's payment of the purchase price described below,
this Bill of Sale shall be effective as of the date hereof.
THE PURCHASE PRICE of the Assets is 250,000 shares of Grantee's common
stock, par value $.001 per share.
WHENEVER used herein, the use of the singular number shall include the
plural, and the plural the singular, and the use of any gender shall include all
genders. Whenever used herein, the terms "Grantor" and "Grantee" include the
parties to this instrument and their respective heirs, legal representatives,
assigns and successors.
THE GRANTEE shall be entitled to recover from the Grantor all costs and
expenses, including attorneys' fees, incurred by Grantee as a consequence of the
breach of any covenant and/or warranty herein contained.
THIS Bill of Sale may be executed and delivered in counterparts, each
of which shall be deemed to be a duplicate original hereof.
1
<PAGE>
IN WITNESS WHEREOF, the said Grantor has signed and sealed these
presents this day of December, 1998.
Signed, Sealed and Delivered
in the presence of: BELCO SYSTEMS TECHNOLOGIES
CORP.
a Florida corporation
By: /s/ Stephen Beloyan
STATE OF )
)SS
COUNTY OF )
The foregoing instrument was acknowledged before me this day of
December, 1998, by , the of BELCO SYSTEMS TECHNOLOGIES CORP., a Florida
corporation, on behalf of said corporation. He is personally known to me.
My Commission Expires:
----------------------------------
Notary Public, State of
(SEAL)
----------------------------------
Printed Notary Signature
2
SUBSIDIARIES OF TECHNOLOGY SYSTEMS INTERNATIONAL, INC.
none
Richard M. Bogdanoff, PA.
Member Certified Public Accountant Member
Florida Institute of American Institute of
Certified Public Accountants Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
To The Board Of Directors And Stockholders
Of Technology Systems International, Inc.
We have audited the accompanying balance sheet of Technology Systems
international, Inc. (a development stage company) as of September 30, 1999, and
the related statements of operations and accumulated deficit, stockholders'
equity, and cash flows for the period from November 23, 1998 (date of inception)
to September 30, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Technology Systems
International, Inc. as of September 30, 1999 and the results of its operations
and cash flows for the period from November 23, 1998 (date of inception) to
September 30, 1999 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As more fully discussed in Note 1 to the
financial statements, the Company is in the development stage and has incurred a
net loss for the period from November 23, 1998 (date of inception) to September
30, 1999. In addition, the Company has limited working capital and the Company
has not entered into any marketing or licensing agreements for its acquired
technology nor are there earned revenues or any assurances that the Company will
be able to do so. These conditions raise substantial doubt as to the ability of
the Company to continue as a going concern. Management's plans with regard to
this matter are also described in Note 1 to the financial statements. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Richard M. Bogdanoff
----------------------------
Richard M. Bogdanoff, P.A.
Boca Raton, Florida
November 24, 1999
Schever International Plaza o Suite 106 o 7280 West Palmetto Park Road o Boca
Raton, Florida 33433-3401 Telephone (561) 394-6191 o Fax (561) 395-5012
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</TABLE>
<TABLE>
<CAPTION>
<S> <C>
United States Patent [19] [11] Patent Number: 5,838,773
Eisner et al. [45] Date of Patent: Nov. 17, 1998
[54] PERSONAL READER CAPTURE TRANSFER TECHNOLOGY
[75] Inventors: Meyer W. Eisner, Bensalem; Stanley G. Schwartz,
Philadelphia, both of Pa.
[73] Assignee: Belco Systems Technology Corp., Langhorne, Pa.
[21] Appl. No.: 871,526
[22] Filed: June 9, 1997
Related U.S. Application Data
[63] Continuation of Ser. No. 512,798, Aug. 8, 1995, abandoned.
[51] Int. Cl.6 .......................................................................H04M 11/00
[52] U.S. Cl. ...................................................379/91.01; 379/93.26; 379/93.02
[58] Field of Search ...................379/91.01, 93.08, 379/93.02, 93.03, 93.09, 93.12, 93.26;
235/380, 382, 379
[56] References Cited
</TABLE>
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<PAGE>
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FOREIGN PATENT DOCUMENTS
2 208 057 2/1989 United Kingdom
Primary Examiner-Stella Woo
Attorney, Agent, or Firm-Burns, Doane, Swecker & Mathis, L.L.P.
[57] ABSTRACT
A method and apparatus for performing electronic financial transactions is
disclosed having a card reader which may determine if the card being read is
authorized for use with the card reader. The card reader also has a serial
number which is sent to a clearing house at the time a request for authorization
is made to validate the use of the card reader. Card data and the card reader's
serial number are converted to DTMF tones at a customer's location and are sent
to a merchant over conventional telephone lines thereby making a standard modem
unnecessary. The DTMF tones are decoded at the merchants location and the data
is sent by point-of-sale terminal to a clearing house for authorization.
Furthermore, a traditional conversation may proceed with a merchant over the
same telephone lines as that by which the DTMF tones are being sent, eliminating
the need for a second line at the customer's location.
