As Filed with the Securities and Exchange Commission on January 12 , 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INET TECHNOLOGY GROUP INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
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FLORIDA 7389 59-3613365
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
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326 GREEN ACRES ROAD, SUITE A
FT. WALTON BEACH, FL 32547
(850) 862-1668
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT C. HACKNEY, ESQ.
HACKNEY & MILLER, P.A.
ADMIRALTY OFFICE TOWER TWO
4400 PGA BOULEVARD, SUITE 505
PALM BEACH GARDENS, FL 33410
(561) 627-0677
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
COPIES OF ALL COMMUNICATIONS SHOULD BE SENT TO:
ROBERT C. HACKNEY, ESQ.
JOEL M. MCTAGUE, ESQ.
HACKNEY & MILLER, P.A.
ADMIRALTY OFFICE TOWER TWO
4400 PGA BOULEVARD, SUITE 505
PALM BEACH GARDENS, FL 33410
(561) 627-0677
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Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering pursuant
to Rule 462 (b) under the Securities Act, check the following box and list the
Securities Act registration statement number or the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462 (d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF AMOUNT TO BE REGISTERED PROPOSED MAXIMUM OFFERING PROPOSED AMOUNT OF
SECURITIES TO BE REGISTERED PRICE PER SHARE MAXIMUM DOLLAR AMOUNT REGISTRATION FEE
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Common Stock 2,000,000 $12.50 $25,000,000 $6,600
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<FN>
(1) Registration fee enclosed herewith. Estimated solely for purposes of
calculating the registration fee under Rule 457 (f).
</FN>
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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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
PROSPECTUS (SUBJECT TO COMPLETION)
Issued January 12, 2000
2,000,000 SHARES
iNet TECHNOLOGY GROUP INCORPORATED
COMMON STOCK
iNet Technology Group Incorporated, a Florida corporation (the "Company"), has
registered 2,000,000 shares of its Common Stock (the "Common Stock"), which may
from time to time be offered by this Prospectus principally in connection with
the acquisition, directly or indirectly, of entities. Such shares may be issued
in exchange for the shares of capital stock (by merger or otherwise),
partnership interests or other assets representing an interest, direct or
indirect, in other companies or other entities, or in exchange for assets used
in or related to the business of such entities. The terms of the offers will be
determined through exchange offers to stockholders. Underwriting discounts or
commissions will generally not be paid by the Company. Under some circumstances,
however, the Company may issue shares of Common Stock covered by this Prospectus
to pay brokers' commissions incurred in connection with acquisitions.
The Company has filed a Registration Statement on Form S-4 (including all
amendments and documents incorporated by reference, the "Registration
Statement"), under the Securities Act of 1933, as amended ("the Securities
Act"), with the Securities and Exchange Commission (the "SEC") covering up to
2,000,000 shares of the Common Stock offered hereby. This Prospectus does not
cover any resale of Common Stock, and no person is authorized to make use of
this Prospectus in connection with any such resale or distribution.
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AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK - SEE "RISK FACTORS" BEGINNING ON PAGE 13
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THIS
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is January ___, 2000
AVAILABLE INFORMATION
The Company will be subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith will file reports, proxy and information statements and other
information with the SEC. Such reports, proxy and information statements and
other information filed by the Company with the SEC can be inspected and copied
at the public reference facilities of the SEC, Room 1024, Judiciary Plaza, 450
Fifth Street, NW, Washington, DC, 20549, as well as at the following SEC
Regional Offices: Seven World Trade Center, New York, NY 10048; and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661-2511. Copies can
be obtained from the SEC by mail at prescribed rates. Requests should be
directed to the SEC's Public Reference Section, Room 1024, Judiciary Plaza, 450
Fifth Street, NW, Washington, DC, 20549.
The Company has filed the Registration Statement under the Securities Act
covering the securities described herein. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the SEC. For
further information, reference is hereby made to the Registration Statement and
the exhibits thereto, which may be inspected without charge at the office of the
SEC at 450 Fifth Street, NW, Washington, DC, 20549, and copies of which may be
obtained from the SEC at prescribed rates.
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The SEC maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants, such as the Company,
that file electronically with the SEC. The address of such site is
http://www.sec.gov.
FORWARD LOOKING STATEMENTS
This Prospectus and the documents incorporated herein by reference contain
forward-looking statements based on current expectations, estimates and
projections about the Company's industry, management's beliefs and certain
assumptions made by management. All statements, trends, analyses and other
information contained in this Prospectus relative to trends in net sales, gross
margin, anticipated expense levels and liquidity and capital resources, as well
as other statements including, but not limited to, words such as "anticipate,"
"believe," "plan," "estimate," "expect," "seek" and "intend," and other similar
expressions, constitute forward-looking statements. These forward-looking
statements involve risks and uncertainties, and actual results may differ
materially from those anticipated or expressed in such statements. Potential
risks and uncertainties include, among others, those set forth herein under
"Risk Factors." Particular attention should be paid to the cautionary statements
involving the Company's limited operating history, the unpredictability of its
future revenues, the unpredictable and evolving nature of its business model,
the intensely competitive internet service industry and the risks associated
with capacity constraints, systems development, management of growth,
acquisitions, any new products and international or domestic business expansion.
Except as required by law, the Company undertakes no obligation to update any
forward-looking statement, whether as a result of new information, future events
or otherwise. Readers, however, should carefully review the factors set forth in
other reports or documents that the Company will file with the SEC from time to
time.
DESCRIPTION OF BUSINESS
THE COMPANY
iNet Technology Group Incorporated "iNet" is the parent company for an
integrated family of companies devoted to providing services through the power
and worldwide reach of the Internet. Using its anticipated position as a
publicly traded firm on the NASDAQ exchange, iNet is geared to acquire and to
reengineer the business activities of smaller companies that have not yet begun
to utilize or exploit the power of the World Wide Web to grow their sales and
revenues. Using the expertise and entrepreneurial skills of its Board of
Directors, the Company serves as the creative force in identifying and
implementing emerging Internet technology so as to integrate and direct
marketing and sales efforts to the global community.
Currently, iNet is a closely held company that began operations in November,
1999. It is in the business of acquiring and/or merging existing and start-up
companies and introducing them to the power and dynamics of the Internet in
order to further their business objectives. In November, 1999, the Company
acquired 100% ownership of MindLoft Consulting, Inc. (MindLoft) and
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Technology Recruiters, Inc. (TRI), two alternative staffing companies, and a new
corporation known as iRIMS.net Incorporated (iRIMS). Initially, iNet will be
guided by a Board of Directors consisting of three charter members: Malcolm Roy,
President of iNet and CEO of both MindLoft and TRI; Roger Glenn Brown, Ph.D.,
Founder and President of .COMDAQ, a firm developing approaches to funding
technological companies; and Alex Brunner, President of Blue Water Systems and
ScreenScan Systems.
iNet presently owns three subsidiary companies that provide services to the
Alternative Staffing industry:
MINDLOFT CONSULTING, INC. (MINDLOFT)
Formed originally in December, 1996, and doing business under the name of
Technology Consultants, Inc., MindLoft provides both recruiting and consulting
to a vertical niche in the IT industry consisting of end-user companies
utilizing systems and suites developed and sold by JD Edwards & Company.
MindLoft began with one recruiter in a home office in Dallas, Texas, but later
relocated its operations and main office to Fort Walton Beach, Florida, to take
advantage of the excellent pool of skilled IT professionals who were retired
from the Military early enough in life to begin a second career. Also, MindLoft
began an aggressive marketing campaign to promote both its recruiting and
contract services to JD Edwards end-users in Canada and the Uunited States, and
in 1998 constructed a site on the World Wide Web (www.mindloft.com) to attract
both prospective IT job seekers and consultants. By the end of that year, the
Company had a client list of nearly 100 end-users throughout North America. In
January, 1999, MindLoft spun off the recruiting services branch as a separate
company, Technology Recruiters, Inc., which, in July of that year, formally
began operations apart from MindLoft under the leadership of a new Managing
Director. MindLoft ended its third year of operations on June 30, 1999, with
this line of business having sales revenues of more than $1.3 million and is
projected to achieve $50 million in revenues by the end of FY 2003.
TECHNOLOGY RECRUITERS, INC. (TRI)
Although recruiting operations had been conducted under the MindLoft banner for
the previous 12 months, TRI experienced a period of rapid expansion in Q4 of FY
1998, a trend that is accelerating at this time. The Company began its rapid
growth in April, 1999, under the direction of a newly hired Managing Director,
and over a sixty-day period, more than doubled its staff and over five months
increased revenues by nearly 100%. As a separate entity, it continued to
specialize in recruiting trained and skilled IT professionals for placement as
direct-hire employees at JD Edwards end-user facilities throughout Canada and
the United States. TRI's line of business achieved sales revenues of $322,251 in
FY 1998, which ended June 30, 1999, and is projected to reach $31.5 million by
the end of FY 2003. Significant growth occurred after TRI launched its web site
www.jdejobs.com.
IRIMS.NET INCORPORATED (IRIMS)
iRIMS is a start up Internet site development and support firm that has been
operating within MindLoft since July, 1999. The latter Company hired a Web site
developer initially to establish an
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Internet marketing site for MindLoft and a recruitment and job-posting site for
TRI with a sophisticated database management system linked to it for processing
resumes and company clients. In October, 1999, corporate management decided to
spin the Web site development capability off as a separate company, iRIMS.net
Incorporated, and followed by identifying its product offering by the same name,
Internet Recruiting Information Management Systems or iRIMS, for the purpose of
offering sophisticated Web services to recruiting companies in general. The new
Company's services include custom designing Web sites for clients, maintaining
the site and the database linked to it, and conducting online searches of the
resumes and job requisitions stored there. Clients can choose to have their site
housed on iRIMS' servers and can select several fee payment options. iRIMS has
been staffed and in operation by the beginning of Q2 of FY 1999.
INDUSTRY OVERVIEW
If the 1970's and 80's were the age of the computer, the 90's have been the age
of the Internet. In 1988-1989 there were no more than 5,000 users of the Web, as
indicated by the number of domain names assigned at that time. By 1995,
according to figures produced by Network Solutions, Inc., there were 100,000
.com names registered and four short years later the number had risen to 5.3
million. The dramatic change is in part due to the development of powerful
programming languages that could handle both text and graphics/objects, but the
greatest factor was the availability of bandwidth to carry the data online. The
periodic auctioning of bandwidth licenses by the federal government permitted
Internet companies such as America Online (AOL), CompuServe, Yahoo, AltaVista
and a myriad of others to vastly increase the types and quality of services they
provided to their subscribers. In conjunction with this development, browser
capabilities were augmented greatly by the introduction of new routers, the
devices made largely by Cisco Systems, to carry and direct the digital signals.
Where once the Web was mainly a tool for transmitting messages from point to
point, it has now become an important medium for accessing information,
marketing products and services and conducting business. It is not unusual for
IT professionals to perform complex coding tasks and systems analyses over the
Web thousands of miles from the location of the server or mainframe. Investors
can view and trade in securities, and consumers can purchase items ranging from
books and records to automobiles and houses online. Scientists and businessmen
have also benefited from the new technology through the ability to conduct
meetings in real time and gather data through the Web linkages to all parts of
the globe, a capability that is made possible through the development of an
extensive satellite communications system. It is becoming possible to access the
Internet via telephone, laptop or and palm-held computer from virtually any
place in the world and receive voice, text or pictorial transmissions
instantaneously.
Alternate staffing and personnel placement industries have gravitated to the Web
in recent years and today are greatly dependent on the use of Internet based job
bulletin boards and Web accessed databases. A recent industry survey identified
more than 2,500 such sites in 1999, and more appear every day. Information
Technology professionals are especially prone to search for jobs on the Internet
and even post their own Web pages to advertise their skills. A recent survey
revealed that today there are 800 million Internet sites, many of which consist
of multiple pages. In fact, there
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are so many sites that even the largest browsers can access only 15% - 20% of
them. Although new and better routers are coming online everyday, the capacity
to utilize fully the benefits and resources provided by the World Wide Web has
not yet been developed.
Businesses that have been relatively slow to jump on the Internet bandwagon are
now rapidly making up for lost time. With improved security for money
transaction consumers are less leery of buying products and services online, and
the E-commerce industry is growing at a rapid rate. The capability for
businesses to operate or manage their activities has also improved through the
development of powerful data management and data warehousing tools such as
Metadata and Extensible Markup Language (XML) that allow the interfacing of
disparate systems in companies thousands of mile apart. A more recent
development is Corporate Portals or Enterprise Information Portals (EIPs) that
enable the often-dissimilar computer systems of many companies to access the
same database through a single interface or gateway (`portal'). One result of
the new technology is that supply chain management is now possible on the
Internet, allowing clients and companies to perform order/entry and distribution
tasks faster and more efficiently. The major vendors of Enterprise Resource
Planning (ERP) systems used to automate and manage all facets of a business have
realized the potential of adapting applications dealing with inventory
management, human resources, customer relations and core financials using EIP
technology.
The `bottom line' regarding Internet technology today is that it is increasing
exponentially and that the utilization of its many features and advantages has
only started. The potential for exploiting these benefits has not yet been fully
realized and put to use by the business world, and advances are taking place so
rapidly that most corporate managers and business entrepreneurs are having
difficulty in making the right technological decisions. The climate is
appropriate for the entrance of companies like iNet to acquire and provide the
direction and advice to companies seeking to become Internet oriented.
MARKETING ANALYSIS
iNet's business orientation fits into the rapidly expanding field known as
alternative staffing. This field consists of companies large and small that
provide temporary and often skilled personnel to client corporations and
organizations to enable them to meet specific objectives such as completion of a
project or to react to specific and often urgent needs. In the Information
Technology (IT) industry, such projects or needs usually involve the development
of software applications or products, installation of computer-based systems or
filling the vacancy created by the loss of key technical or management personnel
on a temporary basis. iNet has chosen to enter this marketplace and to provide
its alternative staffing services to the Information Technology (IT) industry,
namely those companies and organizations that are end-users of computer
applications and systems in their day-to-day operations.
According to the generally accepted terminology of the IT industry, there are
four main types of alternative staffing firms:
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CONTRACTING - These firms provide the most direct and common type of
short-term staffing service. They subcontract or hire IT professionals on a
contract basis for specified periods of time, usually one to six months, to
satisfy the technical personnel needs of their clients. Once those needs have
been met or the project is completed, the contract computer professional is
released and is free to seek other contract opportunities in the marketplace.
The relationship with the alternative staffing company and their clients is
limited and temporary.
PROFESSIONAL SERVICES - Like the Contracting companies, professional
service firms also hire IT technicians and managers solely to staff projects or
satisfy short-term needs of their clients, but in this case, the IT professional
is not released at the end of the project. Instead he/she is quickly reassigned
to another project, maintaining his/her association with the staffing company on
a more or less continuing or `permanent' basis. In many instances, iNet's
subsidiary, MindLoft, presently falls into this category.
CONSULTING - Many large companies opt to outsource whole systems
development projects to firms that can provide a team of IT professionals with
the necessary skills and experience to complete the project successfully. The IT
professionals themselves are full-time employees of the staffing firm and often
are assigned to work on several projects with different clients at the same
time. Like employees anywhere, they can develop their skills and advance their
careers within the firm itself. Consulting firms include companies such as
Andersen Consulting, KMPG PeatMarwick and EDS.
PLACEMENT/DIRECT-HIRE - These companies fall into the category often
referred to as `recruiters' or `head hunters,' and work closely with clients'
human resources and MIS personnel to locate, pre-screen and present likely
candidates for direct-hire by the client. Unlike the types of firms described
above, they retain no consultants of employees and instead act as an adjunct to
their clients' hiring process. iNet's subsidiary, TRI, presently falls into
this category.
In 1997, there were more than 2,000 companies that provided these services,
mainly to the 500 largest businesses and organizations in the United States. In
the past two years, however, the number of such companies has increased greatly,
so that in various high-tech areas such as Dallas, Texas, there are currently
more than 350 alternative staffing firms.
Within the IT professional services marketplace there is further segmentation
based on the relationships of the service-provider companies to specific
software products or vendors. While some companies are opportunistic, catering
to a variety of clients utilizing a variety of systems and platforms, others
target end-users of specific products such as SAP, PeopleSoft or JD Edwards.
They hire their consulting staff to provide the skills and experience to service
these end-users and often form partnerships to varying degrees with the specific
system vendor. From the beginning of its operations in 1997, iNet's
subsidiaries, MindLoft and TRI, have focused on providing professional services
to the JD Edwards marketplace and, more specifically, to those end-users
utilizing JD Edwards' ERP systems.
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MindLoft consulting services provide technical, functional or managerial
expertise to client companies that either lack that expertise or that want to
supplement their existing expertise. MindLoft currently provides such technical
consulting expertise specifically to clients that use or are planning to
implement applications developed and marketed by JD Edwards & Co. of Denver,
Colorado.
MARKETING STRATEGY
In the Summer and Fall of 1999, two developments occurred: the Web site
development and the management element in iNet were spun off as a separate
corporation and iNet was formed as the holding company of the three formerly
independent firms. As parent company, iNet will provide direction and creative
ideas to the subsidiaries as to the most profitable use of Internet
technological advances and at the same time act independently to acquire and
merge together targeted businesses into consortiums or franchises.
The model for this is the MindLoft Consortium, which consists of startup or
existing alternative staffing companies located in various parts of North
America that offer IT consulting services to end-users of JD Edwards ERP
systems. MindLoft assumes responsibility for funding and accounting functions of
the consortium members and in return receives a portion of the profits earned
from consulting operations. The member companies are free to conduct their
business independently of iNet, but each has access to MindLoft's Web site and
is able to take advantage of its marketing capabilities. In addition, consortium
members are able to supplement or augment the skills and experience levels of
the IT consultants on their staffs by drawing on the pool of consultants in the
consortium as a whole. Thus, if a senior JD Edwards systems analyst is needed by
a member firm to round out a team of personnel required for a project and there
is no one available from the member's own staff, one can be drawn from another
members cadre and the fee for his services goes to the latter company. The
advantage of this arrangement is to make the member assembling the team appear
to be a much larger and more resourceful company than it is in reality without
the need to maintain a large salaried staff of consultants in order to meet
every contingency. In this way MindLoft can compete successfully with much
larger professional services firms with much lower overhead costs, and realize a
greater profit margin. This example demonstrates how powerful and advantageous a
Web linkage can be in addressing business challenges.
iNet intends to use this example as a model for the types of activities it
desires to pursue with the only difference being that in some cases it may be
more advantageous to acquire companies outright and to merge them directly or
through a Web interface with each other. The key to determining which industry
and companies to pursue is the degree to which the Internet can play a
significant role in increasing their business opportunities and profits. iNet
will be opportunistic in selecting its targets, and has chosen as executives and
Board members, individuals with the technical knowledge and business experience
necessary to make appropriate choices.
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The Company enjoys an established track record of excellence with its customers.
Expressions of satisfaction and encouragement are numerous and the Company
intends to continue its advances and growth in the marketplace with more unique
and effective products.
COMPETITION
iNet has positioned itself, through its subsidiaries, as a leading provider of
IT consulting and staffing services to a specific segment of the IT marketplace,
namely, to those companies, government agencies and organizations that are or
will be end-users of ERP software products developed and distributed by JD
Edwards. In this regard, there are only a few other companies in the US that
have a similar business orientation. Competition with iNet, however, exists in
another form, i.e., large consulting companies that service a wide range of ERP
systems including JD Edwards software. These consist of Arthur Andersen
Consulting, KPMG Peat Marwick and similar entities that provide consultants for
Oracle, SAP and a variety of database management systems and programming
languages and platforms, including UNIX and RPG. In many ways, these broadly
based consulting companies have established the marketplace for iNet by setting
consulting fees and practices at their current profitable level. By being able
to match the levels of expertise provided by Arthur Andersen, et al., iNet can
achieve profitable returns on its consulting services, while focusing its
energies on a vertical segment of the marketplace that it understands and can
service well. TRI is a recruiting and direct-hire placement company serving a
specific niche market consisting of the end-users of ERP systems and
applications. Initially, the Company has focused on end-users of JD Edwards
systems, but will be expanding its recruiting efforts to address the needs of
clients of the `big Five' ERP systems vendors. Competition for these clients'
business comes from a variety of sources, ranging from the thousands of
traditional temporary staffing (`Temp') firms across the US to computer based
job boards accessed through the Web.
INTELLECTUAL PROPERTY
The Company regards its trademarks, trade secrets and similar intellectual
property as valuable to its business, and relies on trademark and copyright law,
trade secret protection and confidentiality and/or license agreements with its
employees, partners and others to protect its proprietary rights. There can be
no assurance that the steps taken by the Company will be adequate to prevent
misappropriation or infringement of its intellectual property.
The Company has licensed in the past, and expects that it may license in the
future, certain of its proprietary rights, such as trademarks or copyrighted
material, to third parties. While the Company attempts to ensure that the
quality of its brand is maintained by such licensees, there can be no assurance
that such licensees will not take actions that might materially adversely affect
the value of the Company's proprietary rights or reputation, which could have a
material adverse effect on the Company. See "Risk Factors-Trademarks and
Proprietary Rights."
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EMPLOYEES
As of the date of this Memorandum, the Company employs three executive
management and three staff members.
FACILITIES
The Company's business headquarters and training and design facilities are
located at 326 Green Acres Road, Suite A, Fort Walton Beach, Florida 32547. iNet
is housed in a 4,690 square foot facility complete with full office facilities,
including a local area network (LAN) served by a 400 MHz Dual Pentium II Dell
Power Edge 2300 NT server. These locations provide needed space for service and
expansion to meet project demand over the next few months.
GOVERNMENT REGULATIONS
Because the Company is operating in a business arena known as alternative
staffing and consulting little, if any, government regulation or oversight apply
except as to those regulations which apply to businesses generally. Where
applicable, the Company has complied with all registration requirements to
operate in the State of Florida.
All licenses, permits and permissions have been secured.
The Company has obtained all required federal and state permits, licenses, and
bonds to operate its business activities. There can be no assurance that the
Company's operation and profitability will not be subject to more restrictive
regulation and increased taxation by federal, state or local agencies. (See
"Risks Factors Government Regulations and Legal Uncertainties")
The Company has obtained the following licenses, permits, and certifications:
Registered with the State of Florida as a C-Corporation. Registered with
Okaloosa County, State of Florida, Member of Okaloosa County Florida Economic
Development Council, Active Member of NACCB (National Association of Computer
Consulting Businesses), Member of Dunn and Bradstreet, Member of "Quest" (JD
Edwards "End User" Member Association).
LEGAL PROCEEDINGS
From time-to-time, the Company may be involved in litigation relating to claims
arising out of its ordinary course of business. The Company is presently
involved in no lawsuits nor are any contemplated. See "Risk Factors - Government
Regulation and Legal Uncertainties."
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RISK FACTORS
In addition to the other information contained in this Prospectus, investors
should consider carefully the following risk factors before making an investment
decision concerning the Common Stock. All statements, trend analysis and other
information contained in this Prospectus relative to markets for the Company's
products and trends in the net sales, gross margin and anticipated expense
levels, as well as other statements including words such as "anticipate",
"believe," "plan," "estimate," "expect," "seek" and "intend" and other similar
expressions, constitute forward-looking statements. These forward-looking
statements are subject to business and economic risks, and the Company's actual
results of operations may differ materially from those contained in the
forward-looking statements.
An investment in the Common Stock offered hereby involves a high degree of risk.
The following risk factors, together with the other information set forth in
this Prospectus, should be considered carefully before purchasing the Common
Stock offered hereby.
LIMITED OPERATING HISTORY
The Company was incorporated in October, 1999, and accordingly, the Company has
a limited operating history on which to base an evaluation of its business and
prospects. The Company's prospects must be considered in light of the risks,
expenses and difficulties encountered frequently by companies in their early
stage of online commerce. Such risks for the Company include, but are not
limited to, an evolving and unpredictable business model and the management of
growth. To address these risks, the Company must, among other things, maintain
and increase its customer base, implement and successfully execute its business
and marketing strategy and its expansion into new geographic markets, continue
to develop and upgrade its technology, improve its web site, provide superior
customer service and fulfillment, respond to competitive developments and
attract, retain and motivate qualified personnel. There can be no assurance that
the Company will be successful in addressing such risks, and the failure to do
so could have a material adverse effect on the Company's business, prospects,
financial condition and results of operations.
ABSENCE OF MARKET
At the present time, there is no public market for the Company's Common Stock
and subsequent to this offering there is no assurance that a market will
develop. The Company has applied for listing on the Chicago Stock Exchange to
commence after this offering.
NO DIVIDENDS ANTICIPATED
The Company does not contemplate or anticipate paying any dividends upon its
Common Stock in the foreseeable future. It is currently anticipated that
earnings, if any, will be used to finance the development and expansion of the
Company's business.
UNPREDICTABILITY OF FUTURE REVENUES; POTENTIAL FLUCTUATIONS IN QUARTERLY
OPERATING RESULTS; SEASONALITY
As a result of the Company's limited operating history and the emerging nature
of the markets in which it competes, the Company is unable to forecast
accurately its revenues. The Company's
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current and future expense levels are based largely on its investment plans and
estimates of future revenues and are to a large extent fixed. Sales and
operating results generally depend upon the volume of, timing of and ability to
respond to client requests, which are difficult to forecast. The Company may be
unable to adjust spending in a timely manner to compensate for any unexpected
revenue shortfall. Accordingly, any significant shortfall in revenues in
relation to the Company's planned expenditures would have an immediate adverse
effect on the Company's business, prospects, financial condition and results of
operations. Further, as a strategic response to changes in the competitive
environment, the Company may from time to time make certain pricing, service,
marketing or acquisition decisions that could have a material adverse effect on
its business, prospects, financial condition and results of operations.
The Company expects to experience significant fluctuations in its future
quarterly operating results due to a variety of factors, many of which are
outside the Company's control. Factors that may adversely affect the Company's
quarterly operating results include (i) the Company's ability to retain existing
customers, attract new customers at a steady rate and maintain customer
satisfaction, (ii) the Company's ability to maintain gross margins in its
existing business and in future product lines and markets, (iii) the
development, announcement or introduction of new sites, services and products by
the Company and its competitors, (iv) price competition or higher wholesale
prices in the industry, (v) the level of use of the internet, online services
and computer software and increasing consumer acceptance of the internet, (vi)
the Company's ability to upgrade and develop its systems and infrastructure,
(vii) the Company's ability to attract new personnel in a timely and effective
manner, (viii) the level of traffic on the Company's web site, (ix) the
Company's ability to manage effectively its development of new business segments
and markets, (x) the Company's ability to successfully manage the integration of
operations and technology of acquisitions or other business combinations, (xi)
technical difficulties, system downtime or Internet brownouts, (xii) the amount
and timing of operating costs and capital expenditures relating to expansion of
the Company's business, operations and infrastructure, (xiii) the amount and
timing of new software introductions to market during the period, (xiv)
governmental regulation and taxation policies, (xv) disruptions in service by
common carries due to strikes or otherwise, and (xvi) general economic
conditions and economic conditions specific to the Internet and the computer
software training industry.
The Company expects that it will experience seasonality in its business,
reflecting a combination of seasonal fluctuations in Internet usage and
traditional business seasonality patterns. Internet usage and the rate of
Internet growth may be expected to decline during the summer.
Because of the foregoing factors, in one or more future quarters the Company's
operating results may fall below the expectations of securities analysts or
investors. In such event, the trading price of the Common Stock would likely be
materially adversely affected.
COMPETITION
iNet has positioned itself, through its subsidiaries, as a provider of IT
consulting and staffing services to a specific segment of the IT marketplace,
namely, to those companies, government agencies and organizations that are or
will be end-users of ERP software products developed and distributed by JD
Edwards. In this regard, there are only a few other companies in the US that
have a similar business orientation. Competititon with iNet, however, exists in
another form, i.e., large consulting companies that service a wide range of ERP
systems including JD Edwards
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software. These consist of Arthur Andersen Consulting, KPMG Peat Marwick and
similar entities that provide consultants for Oracle, SAP and a vairety of
database management systems and programming languages and platforms, including
UNIX and RPG. In many ways these broadly based consulting companies have
established the marketplace for iNet by setting consulting fees and practices at
their current profitable level. By being able to match the levels of expertise
provided by Arthur Andersen, et al., iNet can achieve profitable returns on its
consulting services, while focusing its energies on a vertical segment of the
marketplace that it understands and can service well. TRI is a recruiting and
direct-hire placement company serving a specific niche market consisting of the
end-users of ERP systems and applications. Initially, the Company has focused on
end-users of JD Edwards systems, but will be expanding its recruiting efforts to
address the needs of clients of the "big Five" ERP systems vendors. Competition
for these clients' business comes from a variety of sources, ranging from the
thousands of Temp firms across the U.S. to computer based job boards accessed
through the Web.
SYSTEM DEVELOPMENT AND OPERATION RISKS
The Company's business is dependent on the efficient and uninterrupted operation
of its computer and communications hardware systems. The systems and operations
used by the Company are vulnerable to damage or interruption from fire, flood,
power loss, telecommunications failure, break-ins, earthquakes, hurricanes, and
other similar events that are outside of the Company's control. Any system
interruption, including any interruptions in the Company's web site would reduce
the attractiveness of the Company's product and service offerings and could,
therefore, materially adversely affect the Company. Substantially all of the
computer and communications hardware related to the Company's business is
located at the corporate offices of the Company. The Company anticipates
continued growth in the use of its web site as spending for advertising
increases and the upgrading of systems and infrastructure to accommodate such
growth. Any inability or delay in appropriately upgrading its systems and
infrastructure would have a material adverse effect on the Company.
MANAGEMENT OF POTENTIAL GROWTH
iNet has rapidly and significantly expanded its operations and anticipates that
further expansion will be required to address potential growth in its customer
base, to expand its product and service offerings and its international
operations, and to pursue other market opportunities. Similarly, the company's
employee base has expanded. The expansion of the company's operations and
employee base has placed, and is expected to continue to place, a significant
strain on the company's management, operational and financial resources. To
manage the expected growth of its operations and personnel, the company will be
required to improve existing and implement new transaction-processing,
operational and financial systems, procedures and controls, as well as to
expand, train and manage its growing employee base. There can be no assurance
that the company's current and planned personnel, systems, procedures and
controls will be adequate to support the company's future operations; that
management will be able to hire, train, retain, motivate and manage required
personnel; or that company management will be able to successfully identify,
manage and exploit existing and potential market opportunities. If the company
is unable to manage growth effectively, such inability could have a material
adverse effect on the company's business, prospects, financial condition and
results of operations.
RISKS OF NEW BUSINESS AREAS
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The Company over time intends to expand its operations by promoting new or
complementary products or sales formats and by expanding the breadth and depth
of its products or service offerings. Expansion of the Company's operations in
this manner would require significant additional expenses and development,
operations and editorial resources and would strain the Company's management,
financial and operational resources. Furthermore, gross margins attributable to
new business areas may be lower than those associated with the Company's
existing business activities. There can be no assurance that the Company will be
able to expand its operations in a cost-effective or timely manner. Furthermore,
any new business launched by the Company that is not received favorably by
consumers could damage the Company's reputation or the iNet Technology Group
Incorporated brand. The lack of market acceptance of such efforts or the
Company's inability to generate satisfactory revenues from such expanded
services or products to offset their cost could have a material adverse effect
on the Company's business, prospects, financial condition and results of
operations. Gross margins attributable to new business areas may be lower than
those associated with the Company's existing business activities.
RISKS OF BUSINESS COMBINATIONS AND STRATEGIC ALLIANCES
The Company may choose to expand its operations or market presence by entering
into business combinations, investments, joint ventures or other strategic
alliances with third parties. Any such transaction would be accompanied by risks
commonly encountered in such transactions, which could include, among others,
the difficulty of assimilating the operations, technology and personnel of the
combined companies, the potential disruption of the Company's ongoing business,
the inability to retain key technical and managerial personnel, the inability of
management to maximize the financial and strategic position of the Company
through the successful integration of acquired businesses, additional expenses
associated with amortization of acquired intangible assets, the maintenance of
uniform standards, controls and policies and the impairment of relationships
with existing employees and customers. There can be no assurance that the
Company would be successful in overcoming these risks or any other problems
encountered in connection with such business combinations, investments, joint
ventures or other strategic alliances, or that such transactions would not have
a material adverse effect on the Company's business, prospects, financial
condition and results of operations.
RAPID TECHNOLOGICAL CHANGE
To remain competitive, the company must continue to enhance and improve the
responsiveness, functionality and features of its services to clients. The
internet, and computer technology in general, are characterized by rapid
technological change, changes in user and customer requirements and preferences,
frequent new products and service introductions embodying new technologies and
the emergence of new industry standards and practices that could render the
company's existing web site and services and proprietary technology and systems
obsolete. The company's success will depend, in part, on its ability to license
leading technologies useful in its business, enhance its existing services,
develop new services and technology that address the increasingly sophisticated
and varied needs of its prospective customers and respond to technological
advances and emerging industry standards and practices on a cost-effective and
timely basis. The development of a web site and other proprietary technology
entails significant technical, financial and business risks. There can be no
assurance that the company will successfully implement new technologies or adapt
its web site, proprietary technology and
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computer training systems to customer requirement's or emerging industry
standards. If the company is unable, for technical, legal, financial or other
reasons, to adapt in a timely manner in response to changing market conditions
or customer requirements, such inability could have a material adverse effect on
the company's business, prospects, financial condition and results of operation.
DEPENDENCE OF KEY PERSONNEL
The Company relies in large part on the skills and efforts of its officers and
key employees, in particular, Malcolm R. Roy, to manage the company's
operations. Mr. Roy is under an employment contract with the Company. The
contract is perpetual and can be terminated upon Mr. Roy's death, resignation,
cessation of the company's activities, or criminal conduct. The Company's
success will depend, in part, on its ability to manage its anticipated growth
and to enhance its operations and finances. The Company must maintain and expand
its employee base. It recognizes that additional staff is required to properly
support its marketing, sales, and research functions. Currently, the Company is
composed of six individuals without taking into consideration the employees of
the wholly owned subsidiaries. It is anticipated that 29 employees will be
required to meet the demands of the Five-Year Business Plan.
DEPENDENCE ON INTERNET AND COMPUTER GROWTH
The Company's long term viability is substantially dependent upon the widespread
consumer acceptance and use of the Internet as a medium of commerce. Use of the
Internet as a means of effecting retail transactions as well as marketing is at
an early stage of development, and demand and market acceptance for recently
introduced services and products over the internet is very uncertain. The
Company cannot predict the extent to which consumers will be willing to use the
Company's clients.
The internet's viability as a commercial marketplace could be adversely affected
by delays in the development of services or due to increased government
regulation. Changes in, or insufficient availability of, telecommunications
services to support the internet also could result in slower response times and
aversely affect usage of the internet generally and the Company's clients in
particular. If the use of the internet does not continue to grow or grows more
slowly than expected, or if the infrastructure for the internet does not
effectively support growth that may occur, the Company would be materially
adversely affected.
TRADEMARKS AND PROPRIETARY RIGHTS; UNLICENCED ARRANGEMENTS AND MATERIALS; RISK
OF CLAIMS RESULTING FROM LACK OF LICENSE RIGHTS
The Company regards its trademarks, trade secrets and similar intellectual
property as valuable to its business, and relies on trademark and copyright law,
trade secret protection and confidentiality and/or license agreements with its
employees and others to protect its proprietary rights. There can be no
assurance that the steps taken by the Company will be adequate to prevent
misappropriation or infringement of its proprietary property.
Moreover, the issues of alleged infringement of the trademarks and other
intellectual property rights of third parties is an area that is in a state of
flux as it relates to the Internet and the use by clients of Internet Service
Providers of third parties intellectual property. Any such claims could
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result in substantial costs and diversion of resources, even if ultimately
decided in favor of the Company, and could have a material adverse effect on the
Company, particularly if judgments on such claims are adverse to the Company. If
a claim is asserted alleging that the Company has infringed the proprietary
rights of a third party, the Company may be required to seek licenses to
continue to use such intellectual property. The failure to obtain the necessary
licenses or other rights at a reasonable cost could have a material adverse
effect on the Company.
RELIANCE ON CERTAIN THIRD PARTIES
The Company requires graphical, multi-media and financial presentations to
enhance the attractiveness and marketability of its products and services.
Although the Company does have the resources internally, it has established
third-party supplier relationships and agreements with the following: Dell
Computer Corporation (technical support), Cybertron (Internet service provider),
Brandon Smith Computers (website host), Crosstalk Communications
(telecommunications), Network Associates, Inc. (virus and priority support),
Sprint (T1, ISDN, Phone support). If the Company were unable to maintain these
third-party relationships and agreements, it would be materially adversely
affected.
YEAR 2000 COMPLIANCE RISK
The Company uses computer software programs and operating systems in its
internal operations, including applications used in financial business systems
and various administration functions. Computer programs have traditionally been
written using two digits rather than four to define the applicable year. As a
consequence, unless modified, computer systems will not be able to differentiate
between the years 2000 and 1900. Failure to address this problem could result in
system failures and the generation of erroneous data. The Company has reviewed
its computer programs and systems to ensure that the programs and systems will
function properly and be in compliance for the Year 2000. To the extent these
software applications contain code that is unable to appropriately interpret
upcoming calendar Year 2000, some level of modification of such source code or
applications could be necessary. In addition, the Company cannot predict the
effect of the Year 2000 problem on the entities with which the Company transacts
business, and there can be no assurance that the effect of the Year 2000 problem
on such entities will not have a material adverse effect on the Company's
business, financial condition or results of operations.
GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES
The Company is subject, both directly and indirectly, to various laws and
regulations relating to its business, although there are few laws or regulations
directly applicable to access to the Internet. However, due to the increasing
popularity and use of the Internet, it is possible that a number of laws and
regulations may be adopted with respect to the Internet. Such laws and
regulations may cover issues such as user privacy, pricing, content, copyrights,
distribution and characteristics and quality of products and services.
Furthermore, the growth and development of the market for online commerce may
prompt calls for more stringent consumer protection laws that may impose
additional burdens on those companies conducting business online. The enactment
of any additional laws or regulations may impede the growth of the Internet
which could, in turn, decrease the demand for the Company's products and
services and increase the Company's costs of doing business, or otherwise have
an adverse effect on the Company.
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U.S. and foreign laws regulate certain uses of customer information and
development and sale of mailing lists. The company believes that it is in
material compliance with such laws, but new restrictions may arise in this area
that could have an adverse effect on the Company.
In addition, several telecommunications carriers are seeking to have
telecommunications over the Internet regulated by the Federal Communications
Commission (the "FCC") in the same manner as other telecommunications services.
In addition, because the growing popularity and use of the Internet has burdened
the existing telecommunications infrastructure and many areas with high Internet
use have begun to experience interruptions in phone service, local telephone
carriers have petititioned the FCC to regulate Internet service providers and
online service providers in a manner similar to long distance telephone carriers
and to impose access fees on such providers. If any of these petitions are
granted, or the relief sought therein is otherwise granted, the costs of
communicating on the Internet could increase substantially, potentially slowing
the growth in use of the Internet. Any such new legislation or regulation or
application or interruption of existing laws could have a material adverse
effect on the Company's business, results of operations and financial condition.
MANAGEMENT
As of the date of this Memorandum, the following sets forth information
regarding the directors, executive officers and key management of the Company.
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
Malcolm R. Roy 49 Chairman of the Board, Chief Executive Officer,
and President
Ted P. Scallan 48 Vice-President - Mergers and Acquisitions
Van Eggers 59 Vice-President - Marketing and Stockholder
Relations
Alex Brunner 55 Director
Roger Glenn Brown, Ph.D. 58 Director
MALCOLM R. ROY, CHAIRMAN OF THE BOARD, CEO AND PRESIDENT
Mr. Roy has been a Director, President and Chief Executive Officer of the
Company since its inception. He has served as President and Director of the
Company's main operating subsidiary, Mindloft Consulting, Inc. (formerly known
as Technology Consultants, Inc.). Mr. Roy brings to iNet more than 15 years of
experience in the computer and software development industries, during much of
which he has served in management or senior executive positions. Starting as a
Senior Account Manager for Basic Four/MAI Corporation, he joined the McDonnell
Douglas Computer Systems Company and became, in succession, Manager of the
Dallas branch, Director of Sales for the Western Region and National Director of
ISO sales. In his position as National Director, he also had direct charge of
the Corporation's national value added remarketer (VAR) and dealership sales
operations.
In 1987, Mr. Roy started Omega Systems, a software development company with
products geared for the automobile dealership and telemarketing industries. The
company was acquired by Coral Companies in 1989, and he went on to provide
management consulting to various real estate and manufacturing
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companies. In June 1995, Mr. Roy accepted a senior sales position with Storage
Systems Computers, a company manufacturing and marketing data storage systems
and disk arrays.
Mr. Roy served as President and CEO of Artesia Data Systems, a Dallas based
software development company with a worldwide clientele consisting of major
multinational oil and gas exploration and refining businesses, a position he
occupied from October 1996 to March 1997. One of Artesia's products was a
software package consisting of core financials and application modules developed
by JD Edwards, for which Artesia had exclusive marketing rights. It was during
this period that Mr. Roy became aware of what he believes to be the shortage of
personnel having knowledge of and experience with JD Edwards systems and
software, particularly those skilled in RPG programming, which is key to the
operation of many current JD Edwards systems. Accordingly, on leaving Artesia,
he founded MindLoft in order to address this perceived need in the marketplace.
Mr. Roy supervises the overall operations of iNet and directly assists in
marketing its services to JD Edwards ERP end-users worldwide. He also has
general supervision of the recruiting and retention programs for MindLoft's
staff technical consultants.
TED P. SCALLAN, VICE PRESIDENT - MERGERS AND ACQUISITIONS
Mr. Scallan has been the Vice-President-Mergers and Acquisitions of the Company
since its inception.
Mr. Scallan brings to iNet his extensive experience and successful record as a
nationally recognized analyst, securities trader and money manager and as
President and CEO of his own business consulting firm. During the past five
years, Mr. Scallon has served as president (November 1994 to December 1995) of
Liberty Resource Group, a company focusing on providing financial consulting
services, including preparation of conventional loan as well as venture capital
or investor proposals, and conducting due diligence and feasibility studies for
mergers and acquisitions. In January 1996 he became President and Chief
Executive Officer of Ten Gas Co, Inc. and Ten Gas Co. Pipeline Corporation where
he directed day to day operations, negotiated lines of credit, prepared
secondary stock issue underwriting and raised private placement funds. In
January 1997, Mr. Scallon founded Liberty Financial Consultants, LLC to provide
professional services relating to business management, strategic alliances and
mergers/acquisitions and continues in the role of Principal/ Owner of the
Company today. In addition, he served from January 1998 to December 1998 as an
independent business consultant to Carr, Riggs & Ingram, LLP/Wealth Management
Corporation to assist local business clientele with management, finance and
sales/marketing operations.
Mr. Scallan will advise senior management in its acquisition growth planning and
supervise the implementation of those plans.
VAN EGGERS, VICE PRESIDENT - MARKETING AND STOCKHOLDER RELATIONS
Mr. Eggers has been Vice President - Marketing and Stockholder Relations of the
Company since its inception. Mr. Eggers' role is to establish close ties to
Internet technology producers and end-user associations in order to promote
awareness of iNet's services and those of its subsidiaries. He will also
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assist in the acquisition process and supervise the preparation of documents
required by various governmental oversight agencies and reports to the Company
stockholders.
Following completion of graduate level studies at the University of California,
he undertook a total of 20 years of University teaching, field research and
environmental studies before deciding in 1986 to pursue a career in the computer
industry. In 1987, as one of the first employees of Omega Systems, a start-up
software development company in Dallas, Texas, he rose to the position of
Vice-President, Operations and Marketing responsible for client site
installations and the development and production of company marketing materials.
When the firm was purchased by Coral Companies in 1989, a Denver based Catalogue
software development company, he assumed the position of Director of Marketing
in charge of establishing relationships with computer system VARs and producing
trade shows and marketing campaigns. In July 1990, he joined Electronic
Information Systems as Senior Customer Engineer and Director of Customer Support
for its growing operations in the development of the predictive dialer industry.
From January, 1995, to December, 1996, he served as an independent consultant to
TriOgen, Incorporated, where he conducted marketing campaigns and developed
sales literature for the Company's non-chemically based air purification
systems. From January, 1997, to July, 1997, he was a consultant to Field
Marketing Incorporated. Most recently, in August, 1997, he joined with two
partners to form a professional services/alternative staffing company, RE/source
Professionals, Inc., in Dallas, Texas, and for the past two years has served as
its Director of Operations. In that period, he developed all of the marketing
and contract materials, established a clientele that includes several Fortune
500 companies.
ALEX BRUNNER, MEMBER, BOARD OF DIRECTORS
Mr. Brunner has been a Director of the Company since its inception. For the past
25 years, Mr. Brunner has been a pioneer in the field of information and image
management with the development and implementation of significant technological
advances that today are industry standards. In 1976, he invented the VISCO
microprocessor-driven rollfilm controller that permitted the automatic location
and retrieval of images on microfilm. This innovation enabled Computer Aided
Retrieval ("CAR") systems to become practical and reliable information
management tools and was responsible for the development of a new industry. In
1980, Mr. Brunner founded STS Data Systems ("STS"), one of the earliest service
bureaus to use highly sophisticated technology to convert paper-based documents
to electronic images. Following the acquisition of STS by IBM of Canada, he
formed Visual Support Corporation (a.k.a. Blue Water Systems) in March, 1990, to
handle the conversion of engineering drawings and aperture cards to digital
formats using hybrid CAR systems. He served as president of Visual until 1998.
In 1998 he developed ScreenScan, a device that reads projected rollfilm images
and converts them to electronic images at a fraction of the cost of current
workstation-based technology. He established ScreenScan Systems in January 1994
to develop and market the product and served as its President until April 1996.
In 1997 Mr. Brunner founded Image Vision Corporation to manufacture and market
innovative imaging systems for data archiving and retrieval and presently serves
as its Vice president and Chief Operating Officer.
Mr. Brunner founded and presided over the Michigan Chapter of the National
Micrographics Association, is a lifetime member of the Association for
Information and Image Management (AIIM), is a recognized and sought after public
speaker and has written numerous articles for prestigious industry publications.
In 1996, he was recognized for his major contributions and received the coveted
Pioneer Award presented
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yearly by AIIM. As a member of the Board of Directors, Mr. Brunner's
considerable entrepreneurial skills and business experience will be invaluable
to iNet and the development of plans for future growth.
ROGER GLENN BROWN, PH.D., MEMBER, BOARD OF DIRECTORS
Dr. Brown has been a Director of the Company since its inception. Following
graduation from the University of California with graduate degrees in History
and Economics, he completed a decade of service during the Cold War in the
United States Central Intelligence Agency, where he was Senior Intelligence
Analyst for Technology Transfer. He then established The INSCAPE Companies in
1977 to fund start-up ventures in the fields of publishing, computer hardware
and software and telecommunications and also served as consultant to several
high-tech Fortune 500 companies. He continues to serve as President of INSCAPE.
In July, 1997, Dr. Brown established Logoscape, Inc. under the INSCAPE umbrella
to research patent protection for business processes and software innovations.
This venture was the offspring of a forward-looking conference, Learnscape 2002,
that he sponsored in conjunction with several colleges and universities to
explore the future of the Internet as a learning tool, ways to create knowledge,
and the nature of intellectual capital. Attendees included many of the most
innovative corporations, such as EDS, Silicon Graphics, Cray Research and
Motorola as well as various consultants.
In January, 1999, Dr. Brown founded .COMDAQ Corporation, an early stage
E-commerce venture with the goal of altering the current paradigm of capital
formation and to create entirely new funding approaches to the emerging field of
Intellectual Capital.
Dr. Brown is the author of numerous books and articles and has taught classes at
several universities. He has held post-Doctoral Fellowships at some of the most
prestigious `think tanks' and institutions, including The Rand Corporation, The
Hoover Institute at Stanford University, The University of California, Berkeley
and St. John's University Graduate School of Theology. Dr. Brown has served as a
consultant on several international technology transfer projects both in the US
and overseas.
EXECUTIVE AND DIRECTOR COMPENSATION, CONTRACTS
For the last completed fiscal year, Malcolm R. Roy, who serves as Chairman of
the Board, Chief Executive Officer, and President received $157,500 in
compensation. Mr. Roy is under an employment contract with the Company. The
contract is continual and can be terminated upon Mr. Roy's death, resignation,
cessation of the company's activities, or criminal conduct. The compensation
packages for other key employees have not been finalized as of this date.
Directors are compensated at the rate of $1,000 per meeting attended in person,
and $500 per meeting attended by telephone. In addition, any travel expenses
incurred in attending such meetings are reimbursed to directors in attendance.
Mr. Brunner and Dr. Brown have received an option to acquire 30,000 shares of
the Company's common stock, 10,000 of which vest each year for the next three
years. The options are exercisable for a period of three years from the date
that they vest, and expire if not exercised. All outstanding director option are
exercisable at the rate of $1.00 per share, which was deemed to be the fair
market value upon the date of the grant.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth the number of shares of the Company's Common
Stock, beneficially owned as of the date of this Registration Statement and as
adjusted to reflect the sale of all Common Stock hereby offered by the Company
by (i) owners of more than 10% of the Company's Common Stock; (ii) each director
of the Company; and (iii) all executive officers and directors of the Company as
a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF NUMBER OF SHARES OF PERCENTAGE OF
NAME AND OF COMMON STOCK BENEFICIAL OF COMMON STOCK BENEFICIAL
ADDRESS OF BENEFICIALLY OWNED OWNERSHIP BENEFICIALLY OWNERSHIP
BENEFICIAL OWNER BEFORE OFFERING BEFORE OFFERING OWNED AFTER OFFERING AFTER OFFERING
- ---------------- ------------------ --------------- -------------------- --------------
<S> <C> <C> <C> <C>
Malcolm R. Roy 4,300,000 100% 4,300,000 68.25%
4493 Ocean View Dr.
Destin, FL 32541
All Officers & Directors as a Group 4,300,000 100% 4,300,000 68.25%
</TABLE>
Limitations of Liability of Directors
The Florida Business Corporation Act eliminates the personal liability of the
Company's directors to the Company and its shareholders for monetary damages as
a result of a breach of fiduciary duty with certain exceptions. Such a provision
makes it more difficult to assert a claim and obtain damages from a director in
the event of breach of his fiduciary duty.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY
PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT IN THE
OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
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DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
The authorized capital stock of the Company consists of 300,000,000 shares of
Common Stock, $0.01 par value per share, and 5,000,000 shares of Preferred
Stock, $1 par value per share. The following summary of certain provisions of
the Common Stock and Preferred Stock does not purport to be complete and is
subject to, and qualified in its entirety by, the provisions of the Company's
Restated Certificate of Incorporation and the provisions of applicable law.
COMMON STOCK
There is 300,000,00 shares of Common Stock authorized by the Amount and Reserved
Amount of Interest, with a par value of $.01 per share. Each share is entitled
to one vote, and, subject to those preferences that may exist for preferred
shares, such dividends that, form time to time, the Company may declare to be
paid of out and is legally available for the payment of dividends. In the event
of a liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share ratably in all assets remaining after payment
of liabilities and liquidation preferences of any outstanding shares of
Preferred Stock. Holders of Common Stock have no preemptive rights or rights to
convert their Common Stock into any other securities. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding shares
of Common Stock are fully paid and nonassessable, and the shares of Common Stock
to be issued pursuant to this Prospectus will be fully paid and nonassessable.
PREFERRED STOCK
There are 5,000,000 shares of Preferred Stock authorized to be issued by the
Amount and Reserved Amount of Interest, with a par value of $1 per share. The
Board of Directors has wide latitude in determining the rights and preferences
of such series of stock. The Board of Directors, without stockholder approval,
can issue Preferred Stock with voting, conversion or other rights that could
adversely affect the voting power and other rights of the holders of Common
Stock. Preferred Stock could thus be issued quickly with terms calculated to
delay or prevent a change in control of the Company or make removal of
management more difficult. Additionally, the issuance of Preferred Stock may
have the effect of decreasing the market price of the Common Stock, and may
adversely affect the voting and other rights of the holders of Common Stock. The
Board of Directors has designed 125,000 shares of Preferred Stock to be issued
as "Series A 11% Convertible Preferred Stock."
SERIES A 11% CONVERTIBLE PREFERRED STOCK
(I) DIVIDENDS
24
<PAGE>
The holders of shares of Series A 11% Convertible Preferred Stock shall be
entitled to receive, out of any assets at the time legally available therefor
and when and as declared by the Board of Directors, dividends at the rate of
eleven per cent (11%) per share per annum, and no more, payable in cash
quarterly commencing on the first fiscal quarter after the Series A 11%
Convertible Preferred Stock preferred shareholders shares are issued, and
thereafter on the last day of March, June, September, and December of each year
that any Series A 11% Convertible Preferred Stock shall be outstanding. Such
dividends are prior and in preference to any declaration or payment of any
distribution on the Common Stock of this corporation.
(II) PREFERENCES ON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution, or
winding up of the corporation, the holders of shares of the Class A 11%
Convertible Preferred Stock then outstanding shall be entitled to be paid, out
of the assets of the corporation available for distribution to its stockholders,
whether from capital, surplus or earnings, before any payment shall be made in
respect of the corporation's common stock, an amount equal to Eight Dollars
($8.00) per share, plus all declared and unpaid dividends thereon to the date
fixed for distribution. After setting apart or paying in full the preferential
amounts due the holders of the Series A 11% Convertible Preferred Stock the
remaining assets of the corporation available for distribution to stockholders,
if any, shall be distributed exclusively to the holders of common stock, each
such issued and outstanding share of common stock entitling the holder thereof
to receive an equal proportion of said remaining assets. If upon liquidation,
dissolution, or winding up of the corporation, the assets of the corporation
available for distribution to its shareholders shall be insufficient to pay the
holders of the Series A 11% Convertible Preferred Stock the full amounts to
which they respectively are entitled, then they shall share ratably in any
distribution of assets according to the respective amounts which would be
payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to said shares were paid in full. The merger
or consolidation of the corporation into or with another corporation in which
this corporation shall not survive and the shareholders of this corporation
shall own less than 50% of the voting securities of the surviving corporation or
the sale, transfer or lease (but not including a transfer or lease by pledge or
mortgage to a bona fide lender) of all or substantially all of the assets of the
corporation shall be deemed to be a liquidation, dissolution or winding up of
the corporation.
(III) VOTING RIGHTS
The shares of Series A 11% Convertible Preferred Stock shall have no voting
rights with regard to the election of directors or as to other matters except
those affecting the class. The Company may not take any of the following actions
without first obtaining the approval by vote or written consent, in the manner
provided by law, of the holders of at least a majority of the total number of
shares of Series A 11% Convertible Preferred Stock outstanding, voting
separately as a class, (1) alter or change any of the powers, preferences,
privileges, or rights of the Series A 11% Convertible Preferred Stock; or (2)
amend the provisions of this paragraph; or (3) create any new class or series of
shares having preferences prior to or being on a parity with the Series A 11%
Convertible Preferred Stock as to dividends or assets.
(IV) CONVERSION RIGHTS
25
<PAGE>
Each share of Series A 11% Convertible Preferred Stock may, at the option of the
holder, be converted into fully paid and nonassessable shares of common stock of
the corporation at any time within twelve months after the first date on which
the Company's Common Stock becomes publicly traded. For purposes of this
section, publicly traded shall mean the initiation of quotations or the
publication or submission by a securities broker or dealer of a quotation in any
quotation medium or interdealer quotation system.
The Conversion Ratio per share at which shares of common stock shall be
initially issuable upon conversion of any shares of Series A 11% Convertible
Preferred Stock shall be one for one, subject to adjustment in the event that
the corporation shall at any time subdivide the outstanding shares of common
stock, or shall issue a stock dividend on its outstanding common stock, then the
Conversion Ratio in effect immediately prior to such subdivision or the issuance
of such dividend shall be proportionately increased, and in case the corporation
shall at any time combine the outstanding shares of common stock, the Conversion
Ratio in effect immediately prior to such combination shall be proportionately
decreased.
ANTITAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE COMPANY'S POISON
PILL PLAN, AMENDED CERTIFICATE OF INCORPORATION, THE EQUITY INCENTIVE
PLAN, AND FLORIDA LAW
On November 30, 1999, the Board of Directors (the "Board") of the Company
declared a dividend of one purchase warrant (a "warrant") for every outstanding
share of the Company's Common Stock, $.01 par value (the "Common Stock"). The
Warrants will be distributed on January 31, 2000, to stockholders of record as
of the close of business on that date (the "Dividend Record Date"). The terms of
the Warrants are set forth in the Warrants Agreement dated as of November 30,
1999, (the "Warrants Agreement") between the Company and Florida Atlantic Stock
Transfer, Inc., as Warrants Agent (the "Warrants Agent"). The Warrants Agreement
provides for the issuance of one Warrant for every share of Common Stock issued
and outstanding on the Dividend Record Date and for each share of Common Stock
which is issued or sold after that date and prior to the "Distribution Date" (as
defined below).
Each Warrant entitles the holder to purchase from the Company one share of
Common Stock at a price of $.10 per share, subject to adjustment. The Warrants
will expire on December 30, 2009 (the "Expiration Date"), or the earlier
redemption of the Warrants, and are not exercisable until the Distribution Date.
No separate Warrants certificates will be issued at the present time. Until the
Distribution Date (or earlier redemption or expiration of the Warrants), (i) the
Warrants will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after the Dividend Record Date upon transfer or new
issuance of the Company's Common Stock will contain a notation incorporating the
Warrants Agreement by reference and (iii) the surrender for transfer of any of
the Company's Common Stock certificates will also constitute the transfer of the
Warrants associated with the Common Stock represented by such certificate.
26
<PAGE>
The Warrants will separate from the Common Stock and Warrants certificates will
be issued on the Distribution Date. Unless otherwise determined by a majority of
the Board then in office, the Distribution Date will occur on the earlier of (i)
the tenth business day following the later of the date of a public announcement
that a person, including affiliates or associates of such person (an "Acquiring
Person"), except as described below, has acquired or obtained the Warrant to
acquire, beneficial ownership of 15% or more of the outstanding shares of Common
Stock or the date on which an executive officer of the Company has actual
knowledge that an Acquiring Person became such (the "Stock Acquisition Date") or
(ii) the tenth business day following commencement of a tender offer or exchange
offer that would result in any person together with its affiliates and
associates owning 15% or more of the Company's outstanding Common Stock. In any
event, the Board of Directors may delay the distribution of the certificates.
After the Distribution Date, separate certificates evidencing the Warrants
("Warrant Certificates") will be mailed to holders of record of the Company's
Common Stock as of the close of business on the Distribution Date and such
separate Warrants Certificates alone will evidence the Warrants.
If, at any time after January 31, 2000, any person or group of affiliated or
associated persons (other than the Company and its affiliates) shall become an
Acquiring Person, each holder of a Warrant will have the Warrant to receive
shares of the Company's Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a market value of one
hundred times the exercise price of the Warrant. Also, in the event that after
the Stock Acquisition Date the Company was acquired in a merger or other
business combination, or more than 25% of its assets or earning power was sold,
each holder of a Warrant would have the Warrant to exercise such Warrant and
thereby receive common stock of the acquiring company with a market value of one
hundred times the exercise price of the Warrant. Following the occurrence of any
of the events described in this paragraph, any Warrants that are, or (under
certain circumstances specified in the Warrants Agreement) were, beneficially
owned by any Acquiring Person shall immediately become null and void.
The Board may, at its option, at any time after any person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Warrants
for shares of Common Stock at an exchange ratio of one share of Common Stock per
Warrant, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after November 30, 1999 (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). The Board, however, may not
effect an exchange at any time after any person (other than (i) the Company,
(ii) any subsidiary of the Company, (iii) any employee benefit plan of the
Company or any subsidiary of the Company or (iv) any entity holding Common Stock
for or pursuant to the terms of any such plan), together with all affiliates of
such person, becomes the beneficial owner of 50% or more of the Common Stock
then outstanding. Immediately upon the action of the Board ordering the exchange
of any Warrants and without any further action and without any notice, the
Warrant to exercise such Warrants will terminate and the only Warrant thereafter
of a holder of such Warrants will be to receive that number of shares of Common
Stock equal to the number of such Warrants held by the holder multiplied by the
Exchange Ratio.
The exercise price of the Warrants, and the number of shares of Common Stock or
other securities or property issuable upon exercise of the Warrants are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Stock, (ii) upon the grant to holders of the Common Stock of
27
<PAGE>
certain Warrants or warrants to subscribe for shares of the Common Stock or
convertible securities at less than the current market price of the Common Stock
or (iii) upon the distribution to holders of the Common Stock of evidences of
indebtedness or assets (excluding cash dividends paid out of the earnings or
retained earnings of the Company and certain other distributions) or of
subscription Warrants or Class A Warrants (other than those referred to above).
At any time prior to the earlier of the Distribution Date or the Close of
Business on the Expiration Date, the Company, by a majority vote of the Board
then in office, may redeem the Warrants at a redemption price of $.01 per
Warrant (the "Redemption Price"), as described in the Warrants Agreement.
Immediately upon the action of the Board electing to redeem the Warrants, the
Warrant to exercise the Warrants will terminate and the only right of the
holders of Warrants will be to receive the Redemption Price.
Until a Warrant is exercised, the holder thereof, as such, will have no Warrants
as a stockholder of the Company, including, without limitation, the Warrant to
vote or to receive dividends.
The Warrants Agreement may be amended by the Board at any time prior to the
Distribution Date without the approval of the holders of the Warrants. From and
after the Distribution Date, the Warrants Agreement may be amended by the Board
without the approval of the holders of the Warrants in order to cure any
ambiguity, to correct any defective or inconsistent provisions, to change any
time period for redemption or any other time period under the Warrants Agreement
or to make any other changes that do not adversely affect the interests of the
holders of the Warrants (other than any Acquiring Person or its affiliates and
associates, or their transferees).
The form of Warrants Agreement dated as of November 30, 1999, between the
Company and Florida Atlantic Stock Transfer, Inc., as Warrants Agent, specifying
the terms of the Warrants (including as exhibits the form of the Warrants
Certificate and the Summary of Warrants) is attached hereto as an exhibit. The
foregoing description of the Warrants does not purport to be complete and is
qualified in its entirety by reference to the Warrants Agreement, which is
incorporated herein by reference.
The company's Board of Directors, without stockholder approval, has the
authority under the company's Amended Certificate of Incorporation to issue, at
the Board of Directors' discretion, series of preferred shares with such rights,
limitations and preferences as may be determined at the time of issuance.
Additionally, the company's Equity Incentive Plan allows for all options and
awards in the company's equity to vest upon a "change of control" as defined by
the plan.
The laws of the State of Florida, where the company's principal executive
offices are located, impose restrictions on certain transactions between certain
foreign corporations and significant stockholders. Florida Statutes 607.0901 to
607.0903 is an "affiliated transaction" statute which prevents certain hostile
and coercive merger devices. An affiliated transaction is a significant
transaction (e.g., merger, a sale of more than 5% of the assets, issuance of an
additional 5% of stock, or dissolution) with a shareholder who owns more than
10% of the outstanding stock of a company. In addition to any approval required
by law, the company charter, or by the interests given to either bondholders to
stockholders by operation of an agreement, an affiliated transaction must also
be approved by either a majority of the corporation's disinterested directors,
or two thirds of the remaining disinterested shareholders. There are three
exceptions to this rule. First,
28
<PAGE>
the affiliated transaction statute can be avoided if the minimum price paid to
the shareholders is at least equal to the highest price paid by an interested
shareholder in the past two years. Second, if the interested shareholder has
owned more than 80% of the corporation's outstanding shares for at least five
years before the affiliated transaction occurs, the statute does not apply.
Third, the statute would not apply if the interested shareholder owned more than
90% of the outstanding shares when the affiliated transaction occurs.
Additionally, a corporation may elect to opt out of the statute; the Company has
not yet chosen this option.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Florida Atlantic Stock
Transfer Inc.
NASDAQ SMALL CAP LISTING
The Company plans on applying for a listing on the NASDAQ system immediately
upon completion of this offering. In the meantime, the Company has made an
initial application for listing on the Chicago Exchange.
LEGAL MATTERS
The legality of the Common Stock being offered hereby will be passed upon for
the Company by Hackney & Miller, P.A., Admiralty Office Tower Two, 4400 PGA
Boulevard, Suite 505, Palm Beach Gardens, FL 33410.
29
<PAGE>
INDEX TO
FINANCIAL STATEMENTS
Accountant's Report ..................................................... F-2
Assets .................................................................. F-3
Liabilities and Stockholder's Equity .................................... F-4
Statements of Income .................................................... F-5
Statements of Changes in Stockholder Equity ............................. F-6
Statement of Cash Flows ................................................. F-7
Undependent Auditors Report ............................................. F-8
Balance Sheets .......................................................... F-9
Statements of Income .................................................... F-11
Statements of Changes in Stockholder Equity ............................. F-12
Statements of Cash Flows ................................................ F-13
Notes to Financial Statements ........................................... F-14
F-1
<PAGE>
iNet TECHNOLOGY GROUP INCORPORATED
(SUCCESSOR TO TECHNOLOGY CONSULTANTS, INC.)
FINANCIAL STATEMENTS
NOVEMBER 30, 1999 AND 1998
ACCOUNTANT'S REPORT
To the Board of Directors and Stockholders
iNet Technology Group Incorporated
(Successor to Technology Consultants, Inc.)
We have compiled the accompanying balance sheets of iNet Technology Group
Incorporated (successor to Technology Consultants, Inc.) as of November 30, 1999
and 1998 and the related statements of income, changes in stockholders' equity
and cash flows for the five months then ended, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position, results of operations, and
cash flows. Accordingly, these financial statements are not designed for those
who are not informed about such matters.
CARR, RIGGS & INGRAM, LLP
Certified Public Accountants
Destin, Florida
December 17, 1999
F-2
<PAGE>
iNet TECHNOLOGY GROUP INCORPORATED
(SUCCESSOR TO TECHNOLOGY CONSULTANTS, INC.)
BALANCE SHEETS
NOVEMBER 30, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
ASSETS
Current Assets
Cash in bank $ 61,936 $ 9,674
Restricted Cash 35,103 -
Certificate of deposit 102,025 -
Fees receivable 413,327 175,527
--------------------------
Total current assets 612,391 185,201
Property and equipment
Machinery and equipment 30,846 8,536
Furniture and fixtures 10,752 3,056
Vehicles 63,966 8,605
--------------------------
105,564 20,197
Less accumulated depreciation 25,358 7,806
--------------------------
Property and equipment-Net 80,206 12,391
Other Assets
Other Assets 52,405 20,120
Software Development 30,842 -
Public and Private Offering Costs 34,495 -
--------------------------
Total other assets 117,742 20,120
TOTAL ASSETS $810,339 $217,712
==========================
SEE ACCOUNTANT'S REPORT.
F-3
<PAGE>
iNet TECHNOLOGY GROUP INCORPORATED
(SUCCESSOR TO TECHNOLOGY CONSULTANTS, INC.)
BALANCE SHEETS (CONTINUED)
NOVEMBER 30, 1999 AND 1998
1999 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $279,528 $ -
Current maturities of long-term debt 5,086 -
Accounts payable and accrued compensation 268,378 95,010
Income taxes payable 12,823 8,856
Other current liabilities 200 10,900
--------------------------
Total current liabilities 566,015 114,766
Long-term debt 79,480 -
Stockholders' equity
Common stock, Class A voting, .001
par value; 300,000,000 shares authorized,
4,300,000 shares issued and outstanding at
November 30, 1999 4,300 51,000
Additional paid in capital 105,259 -
Retained Earnings 55,285 51,946
--------------------------
Total Stockholders' equity 164,844 102,946
--------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $810,339 $217,712
==========================
SEE ACCOUNTANT'S REPORT.
F-4
<PAGE>
iNet TECHNOLOGY GROUP INCORPORATED
(SUCCESSOR TO TECHNOLOGY CONSULTANTS, INC.)
STATEMENTS OF INCOME
FIVE MONTHS ENDED NOVEMBER 30, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
Revenues $981,913 $307,203
Cost of revenues 593,316 157,793
--------------------------
Gross profit 388,597 149,410
Expenses
Salaries and benefits 82,907 24,140
Other selling, general and
administrative expenses 236,774 79,082
--------------------------
Total Expenses 319,689 103,222
--------------------------
Operating Income 68,916 46,188
Other income (expenses)
Interest income 3,993 14
Interest expense (2,251) -
--------------------------
Total other income (expense) 1,742 14
--------------------------
Income before provision for income taxes 70,658 46,202
Provision for income taxes 15,373 8,856
--------------------------
Net income $ 55,285 $ 37,346
==========================
Net income per common share $ 0.01 $ 0.01
==========================
SEE ACCOUNTANT'S REPORT.
F-5
<PAGE>
iNet TECHNOLOGY GROUP INCORPORATED
(SUCCESSOR TO TECHNOLOGY CONSULTANTS, INC.)
STATEMENTS CHANGES IN STOCKHOLDERS' EQUITY
FIVE MONTHS ENDED NOVEMBER 30, 1999 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
<S> <C> <C> <C> <C>
TECHNOLOGY CONSULTANTS, INC.
Balance, June 30, 1998 $ 51,000 $ - $ 14,600 $ 65,600
Net income for period - - 37,346 37,346
--------------------------------------------------------------
Balance, November 30, 1999 $ 51,000 $ - $ 51,946 $ 102,946
==============================================================
iNet TECHNOLOGY GROUP INCORPORATED
Balance, June 30, 1999 $ - $ - $ - $ -
Issuance of 4,300,000 shares of common
stock for outstanding voting stock of
subsidiaries 4,300 105,259 - 109,559
Net income for period - - 55,285 55,285
--------------------------------------------------------------
Balance, November 30, 1999 $ 4,300 $ 105,259 $ 55,285 $ 164,844
==============================================================
</TABLE>
SEE ACCOUNTANT'S REPORT.
F-6
<PAGE>
iNet TECHNOLOGY GROUP INCORPORATED
(SUCCESSOR TO TECHNOLOGY CONSULTANTS, INC.)
STATEMENTS OF CASH FLOWS
FIVE MONTHS ENDED NOVEMBER 30, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 55,285 $ 37,346
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation 7,813 1,040
(Increase)/decrease in:
Fees receivable (139,056) (153,127)
Other assets (43,959) (20,120)
Increase/(decrease) in:
Accounts payable and accrued compensation 28,106 84,933
Income taxes payable 3,733 8,060
Other current liabilities (10,700) 4,183
-----------------------
Net cash provided by operating activities (98,778) (37,685)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of certificate of deposit (102,025) -
Maturity of certificate of deposit 100,000 -
Purchase of property and equipment (42,602) (4,532)
Deposits to restricted cash (2,074) -
-----------------------
Net cash provided by investing activities (46,701) (4,532)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt (1,895) -
Purchase of subsidiary treasury stock (28,543) -
Public and private offering costs (34,495) -
Net short-term borrowings 119,568 -
-----------------------
Net cash provided by financing activities 54,635 -
-----------------------
Net decrease in cash (90,844) (42,217)
Cash, beginning of period 152,780 51,891
-----------------------
Cash, end of period $61,936 $9,674
=======================
See accountant's report.
F-7
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Technology Consultants, Inc
We have audited the accompanying balance sheets of Technology Consultants, Inc.
as of June 30, 1999, 1998 and 1997, and the related statements of income,
changes in stockholders' equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Technology Consultants, Inc. as
of June 30, 1999, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
CARR, RIGGS & INGRAM, LLP
Certified Public Accountants
Destin, Florida
December 1, 1999
F-8
<PAGE>
TECHNOLOGY CONSULTANTS, INC.
BALANCE SHEETS
JUNE 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
1999 1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash in bank $152,780 $ 51,891 $ 1,262
Restricted cash 33,029 - -
Certificate of deposit 100,000 - -
Fees receivable 274,271 22,400 -
-------------------------------------------
Total current assets 560,080 74,291 1,262
Property and equipment
Machinery and equipment 21,592 7,060 3,250
Furniture and fixtures 8,778 - -
Vehicles 32,592 8,605 -
-------------------------------------------
62,962 15,665 3,250
Less accumulated depreciation 17,545 6,766 464
-------------------------------------------
45,417 8,899 2,786
Other assets 39,288 - 14,641
-------------------------------------------
Total assets $644,785 $ 83,190 $ 18,689
===========================================
</TABLE>
SEE ACCOMPANYING NOTES.
F-9
<PAGE>
<TABLE>
<CAPTION>
TECHNOLOGY CONSULTANTS, INC.
BALANCE SHEETS (CONTINUED)
JUNE 30, 1999, 1998 AND 1997
- -------------------------------------------------------------------------------------------------
1999 1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $159,960 $ - $ -
Current maturities of long-term debt 4,894 - -
Accounts payable 38,280 10,077 5,210
Accrued compensation 201,992 - -
Income taxes payable 9,090 796 1,567
Other current liabilities 10,900 6,717 -
-------------------------------------------
Total current liabilities 425,116 17,590 6,777
Long-term debt, less current maturities 8,713 - -
Stockholders' equity
Common stock, Class A voting, no par
value; 10,000,000 shares authorized,
6,593,407; 6,315,790; and 6,000,000
shares issued and outstanding at June 30,
1999, 1998 and 1997, respectively 91,000 51,000 1,000
Common stock, Class B non-voting, $5 par
value; 2,000,000 shares authorized, 12,000
shares issued and outstanding at June 30,
1999 60,000 - -
Preferred stock, Class A, non-voting, $5 par
value; 8% cumulative; 1,000,000 shares
authorized, none issued and outstanding - - -
Retained earnings 59,956 14,600 10,912
-------------------------------------------
Total stockholders' equity 210,956 65,600 11,912
-------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $644,785 $ 83,190 $ 18,689
===========================================
</TABLE>
SEE ACCOMPANYING NOTES.
F-10
<PAGE>
TECHNOLOGY CONSULTANTS, INC.
STATEMENTS OF INCOME
YEARS ENDED JUNE 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $1,677,733 $301,618 $ 33,000
Cost of revenues 992,119 169,433 -
---------------------------------------------
Gross profit 685,614 132,185 33,000
Expenses
Salaries and benefits 333,032 51,488 -
Other selling, general and
administrative expenses 289,580 74,156 20,601
---------------------------------------------
Total expenses 622,612 125,644 20,601
---------------------------------------------
Operating income 63,002 6,541 12,399
Other income (expenses)
Interest income 1,651 - 405
Interest expense (7,651) (2,057) (325)
----------------------------------------------
Total other income (expense) (6,000) (2,057) 80
---------------------------------------------
Income before provision for income taxes 57,002 4,484 12,479
Income tax expense 9,846 796 1,567
---------------------------------------------
Net income $ 47,156 $ 3,688 $ 10,912
=============================================
Net income per common share $ 0.01 $ - $ -
=============================================
</TABLE>
SEE ACCOMPANYING NOTES.
F-11
<PAGE>
TECHNOLOGY CONSULTANTS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS A RETAINED
COMMON COMMON PREFERRED EARNINGS TOTAL
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Issuance of 6,000,000 shares
of Class A common stock $ 1,000 $ - $ - $ - $ 1,000
Net income - - - 10,912 10,912
-----------------------------------------------------------------------
Balance, June 30, 1997 1,000 - - 10,912 11,912
Issuance of 315,790 shares
of Class A common stock 50,000 - - - 50,000
Net income - - - 3,688 3,688
-----------------------------------------------------------------------
Balance, June 30, 1998 51,000 - - 14,600 65,600
Issuance of 277,617 shares
of Class A common stock 40,000 - - - 40,000
Issuance of 12,000 shares of
Class B common stock - 60,000 - - 60,000
Dividends paid on Class B
common shares - - - (1,800) (1,800)
Net income - - - 47,156 47,156
-----------------------------------------------------------------------
Balance, June 30, 1999 $91,000 $60,000 $ - $59,956 $210,956
=======================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
F-12
<PAGE>
TECHNOLOGY CONSULTANTS, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
1999 1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 47,156 $ 3,688 $ 10,912
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 10,779 6,302 464
Bad debt expense 12,566 - -
(Increase) decrease in:
Fees receivable (264,437) (22,400) -
Other assets (39,288) 14,641 (14,641)
Increase (decrease) in:
Accounts payable 28,203 4,867 5,210
Accrued compensation 201,992 - -
Income taxes payable 8,294 (771) 1,567
Other current liabilities 4,183 6,717 -
--------------------------------------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 9,448 13,044 3,512
CASH FLOWS FROM (USED IN) INVESTING
ACTIVITIES
Purchase of property and equipment (47,297) (12,415) (3,250)
Purchase of certificate of deposit (100,000) - -
Deposits to restricted cash (33,029) - -
--------------------------------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES (180,326) (12,415) (3,250)
CASH FLOWS FROM (USED IN) FINANCING
ACTIVITIES
Borrowings on long-term debt 15,500 - -
Payments on long-term debt (1,893) - -
Net short-term borrowings 159,960 - -
Common stock issued 100,000 50,000 1,000
Dividends paid (1,800) - -
--------------------------------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 271,767 50,000 1,000
--------------------------------------------
NET INCREASE IN CASH 100,889 50,629 1,262
CASH, BEGINNING OF YEAR 51,891 1,262 -
--------------------------------------------
CASH, END OF YEAR $ 152,780 $ 51,891 $ 1,262
============================================
</TABLE>
SEE ACCOMPANYING NOTES.
F-13
<PAGE>
TECHNOLOGY CONSULTANTS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999, 1998 AND 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Technology Consultants, Inc., (the "Company") was incorporated in December 1996
for the purpose of satisfying a worldwide need for skilled and experienced
computer professionals with an extensive knowledge of J.D. Edwards software.
Operations of the Company have centered around specializing in the placement of
skilled computer professionals with end users as well as hiring qualified
individuals to provide contracted services to the Company's clientele. The
Company was based in Dallas, Texas until August 1, 1998 when operations were
moved to Fort Walton Beach, Florida.
Effective October 25, 1999, the Company changed its name to Mindloft Consulting,
Incorporated.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Additions, renewals and betterments
are capitalized whereas costs for maintenance and repairs are charged to
expense. Depreciation is provided using accelerated methods over the following
estimated useful lives:
YEARS
-----
Machinery and equipment 7
Furniture and fixtures 7
Vehicles 5
CASH FLOWS
For purposes of the Statement of Cash Flows, the Company considers all
instruments with original maturities of 90 days or less to be cash equivalents.
Cash paid for interest totaled $7,651, $2,057 and $325 for the years ended June
30, 1999, 1998 and 1997, respectively. Cash paid for income taxes totaled $1,552
and $1,567 for the years ended June 30, 1999 and 1998, respectively.
Cash accounts are maintained at banks in the Fort Walton Beach, Florida area. At
times, cash balances may be in excess of FDIC insurance limits.
F-14
<PAGE>
INCOME TAXES
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the bases of certain assets and
liabilities for financial and tax reporting. Deferred taxes represent future tax
return consequences of these differences, which will either be taxable or
deductible when the assets and liabilities are recovered or settled. Deferred
income tax amounts are not significant.
BUSINESS SEGMENTS
The Company operates primarily in the computer consulting and placement business
and considers this its only business segment
REVENUES
Revenues are recognized on the accrual basis of accounting as services are
performed. It is the Company's policy to guarantee individuals placed with
customers for a period of time after placement. No significant refunds of fees
earned have been incurred as a result of these guarantees.
ADVERTISING
Advertising costs are expensed as incurred. Advertising expenses for the years
ended June 30, 1999 and 1998 were $22,434 and $1,751, respectively. There were
no advertising expenses for the year ended June 30, 1997.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
NOTE 2 - LINE OF CREDIT
In May 1999, the Company obtained a $100,000 line of credit through a bank that
matures on November 6, 1999. Borrowings under the agreement bear interest at
5.02% and are secured by the Company's $100,000 certificate of deposit that
matures on the same date as the line of credit. This line of credit was unused
at June 30, 1999.
NOTE 3 - FINANCING AGREEMENT
During 1999, the Company entered into a financing agreement with a local bank
whereby the bank purchases approved accounts receivable of the Company.
Receivables are purchased by the bank for 97.85% of the face value of the
invoiced amounts. Additionally, the Company is required to maintain a cash
reserve at the bank at an amount up to 10% of the outstanding receivable
balance.
F-15
<PAGE>
At June 30, 1999, this reserve balance was reflected as Restricted Cash in the
accompanying Balance Sheet.
The bank has the option to require the Company to repurchase any receivable
balances not collected within 90 days of the original date invoiced, however, no
required repurchases have taken place under this agreement. Therefore, the
Company reports all receivable balances on its Balance Sheet at their original
invoiced amount as Accounts Receivable, and the amounts received from the bank
under this arrangement as Short-Term Borrowings. Total amounts borrowed under
this agreement at June 30, 1999 were $159,960.
NOTE 4 - LONG TERM DEBT
Long term debt at June 30 consisted of the following:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Note payable to bank, interest at prime plus 1.5% (9.25%
at June 30, 1999), due $496 monthly including interest
through January, 2002; secured by a vehicle with an original
cost of $23,988 $ 13,607 - -
Less current maturities 4,894 - -
----------------------------------
$ 8,713 - -
==================================
</TABLE>
Maturities of long term debt for years subsequent to June 30, 1999 are as
follows:
June 30, 2000 $ 4,894
June 30, 2001 5,367
June 30, 2002 3,346
NOTE 5 - COMMON STOCK
The Company has the authority to issue three classes of shares, Class A Voting
Common, Class B Non-Voting Common, and Class A Preferred. Class B Non-Voting
Common and Class A Preferred shares are redeemable by the Company at par value.
Additionally, holders of these two classes of stock have the right to convert
their shares to Class A Voting Common shares on a 1 to 1 ratio at any time upon
written notice to the Company. The Class A Preferred shares are non-voting.
The Company's Class A Voting Common shareholders are parties to a Stockholders
Agreement which among other things, requires a shareholder desiring to sell his
or her shares to offer them to the other shareholders, or the Company before
selling to an outside party. The Agreement also
F-16
<PAGE>
requires shareholders who are employed by the Company to offer their shares,
upon termination of employment, to the other shareholders, or the Company at a
price based on the net equity of the Company, or at a price based on a multiple
of annualized current earnings, whichever is greater.
NOTE 6 - INCOME TAXES
Income tax expense consists of the following:
- --------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
Current tax payable:
Federal $ 7,246 $ 796 $ 1,567
State 2,600 - -
-----------------------------------
9,846 796 1,567
Deferred - - -
-----------------------------------
Total income tax expense $ 9,846 $ 796 $ 1,567
===================================
The following is a reconciliation of income tax expense to the amount of income
taxes that would result by applying the statutory federal income tax rate to
income before income taxes:
- --------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
Tax expense at statutory rate $ 19,381 $ 1,525 $ 1,872
State income taxes 2,600 - -
Effect of lower tax brackets and other (12,135) (729) (305)
------------------------------------
Income tax expense $ 9,846 $ 796 $ 1,567
====================================
Deferred income tax amounts were not significant at June 30, 1999, 1998 and
1997.
NOTE 7 - EMPLOYEE BENEFIT PLAN
The Company sponsors a defined contribution, 401(k) profit sharing plan that
became active on December 1, 1998. The plan is open to all employees over age
21. Participants may defer up to 12% of eligible compensation and the Company
will match 50% of the employee's deferral up to 6%. The Company may also make
discretionary contributions to the plan. Participants become
F-17
<PAGE>
fully vested in Company matching contributions after six years of credited
service. Company contributions to the plan totaled $5,419 for the year ended
June 30, 1999.
NOTE 8 - COMMITMENTS
The Company leases office equipment under various operating lease agreements
that have initial or remaining non-cancelable terms in excess of one year.
Future minimum rental payments required under these agreements are as follows:
Year ended
June 30, 2000 $22,447
June 30, 2001 22,447
June 30, 2002 11,321
Total rent expense for the year ended June 30, 1999 was $40,687. Rent expense
for the years ended June 30, 1998 and 1997 was not significant.
NOTE 9 - CONCENTRATIONS
The Company's services through June 30, 1999 have centered around customers and
clientele who use J.D. Edwards based systems and products. Those services
include the placement of individuals, and the employment of individuals with
specialized skills in the J.D. Edwards arena. Subsequent to June 30, 1999, the
Company entered into the planning phases to expand its business outside the J.D.
Edwards-based market.
At June 30, 1999 sales to individual customers that were 10% or more of total
revenues consisted of two customers with individual sales of $714,850 and
$320,939, respectively. At June 30, 1998 sales to individual customers that were
10% or more of total revenues consisted of one customer with sales of $184,494.
At June 30, 1997 sales to individual customers that were 10% or more of total
revenues consisted of two customers with individual sales of $27,000 and $6,000,
respectively.
NOTE 10 - SUBSEQUENT EVENTS
In July 1999, the Company repurchased 593,407 shares of its Class A common stock
from a minority shareholder for a total consideration of $95,144. Of the total
consideration, 30% was
F-18
<PAGE>
paid in cash in August 1999, and the remainder will be paid in equal annual
installments, without interest, in July 2000, 2001 and 2002.
In October 1999, the Company changed its name to Mindloft Consulting,
Incorporated. Following the name change, the remaining holder of Class A common
shares exchanged 100% of those shares for 100% of the outstanding shares of iNet
Technology Corporation.
F-19
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THAT CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR
TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
20,000,000
iNet TECHNOLOGIES GROUP INCORPORATED
COMMON STOCK
PROSPECTUS
January ___, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Florida Statute Section 607.0850 provides that a corporation may indemnify
directors and officers, as well as other employees and agents, along with a
director, officer, employee or agent against of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses
incurred in legal proceedings connected with their service to the corporation,
if he or she acted in good faith and in a manner he or she reasonably believed
to be in, or not opposed to, the best interests of the corporation and, had no
reasonable cause to believe his or her conduct was unlawful.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Index of Exhibits
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Stock Certificate
4.2 Form of Warrant Agreement
5.0 Legal Opinion
10.1 Investment Advisory Agreement with Crown Capital Advisors, Inc.
10.2 Employment Agreement with Malcolm R. Roy
23.1 Consent of Carr, Riggs & Ingram, LLP, independent certified public
accountants
23.2 Consent of Hackney Miller, P.A. (included in Exhibit 5.0)
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes as follows:
(1) Prior to any public reoffering of the securities registered
hereunder through use of a prospectus that is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect
II-1
<PAGE>
to reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) Every prospectus that (i) is filled pursuant to paragraph (1)
immediately preceding or (ii) purports to meet the requirements of Section
10(a)(3) of the Securities Act of 1933 and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of any
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) The undersigned registrant will deliver or cause to be delivered
with the prospectus, to each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirement of Rule
14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, will deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(4) For purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(5) The registrant will respond to requests for information that is
incorporated by reference into the prospectus pursuant to Item of this form,
within one business day of receipt of such request, and to send the incorporated
documents by first-class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(6) The registrant will supply by means of a post-effective amendment
all information concerning a transaction, and the company being acquired
involved therein, that was not the subject of an included in the registration
statement when it became effective, except where the transaction in which the
securities being offered pursuant to the registration statement would itself
qualify for an exemption under Section 5 of the Securities Act of 1933, absent
the existence of other similar (prior or subsequent) transactions.
(7) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such 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
II-2
<PAGE>
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by its is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(8) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(A) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(B) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement; and
(C) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement or any
material change to such information in the registration statement.
(9) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(10) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the termination of
the offering.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
caused this registration statement to be signed by the undersigned, thereunto
duly authorized, in the City of Palm Beach Gardens, State of Florida, on
December 29, 1999.
iNet Technology Group, Incorporated
By: /s/MALCOLM ROY
--------------------------------
Malcolm Roy, President
II-3
<PAGE>
POWER OF ATTORNEY
The undersigned constitute and appoint Malcolm Roy their true and lawful
attorney-in-fact and agent with full power of substitution, for him and in his
name, place, and stead, in any and all capacities, to sign any and all
amendments, including post-effective amendments, to this Form S-4 Registration
Statement, and to file the same with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting such
attorney-in-fact the full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the premises, as
fully and to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that such attorney-in-fact may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
date indicated:
Signature Title Date
/s/ALEX BRUNNER Director January 12, 2000
- ---------------------
Alex Brunner
/S/ROGER GLENN BROWN Director January 12, 2000
- ---------------------
Roger Glenn Brown
II-4
<PAGE>
Exhibit Index
Exhibit No. Exhibit Description
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Stock Certificate
4.2 Form of Warrant Agreement
5.0 Legal Opinion
10.1 Investment Advisory Agreement with Crown Capital Advisors, Inc.
10.2 Employment Agreement with Malcolm R. Roy
23.1 Consent of Carr, Riggs & Ingram, LLP, independent certified public
accountants
EXHIBIT 3.1
FILED
99 NOV 18 PM 12:37
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
ARTICLES OF INCORPORATION
OF
iNet TECHNOLOGY GROUP INCORPORATED
ARTICLE 1. NAME
The name of this corporation is iNet TECHNOLOGY GROUP INCORPORATED).
Article 2. Purposes
The purpose or purposes for which this corporation organized are:
To acquire and own tangible and intangible asset including by not limited to
stock or other equity or debt in companies, limited partnerships, limited
liability companies or other such entities.
To acquire by purchase, exchange, gift, bequest, subscription or otherwise, and
to hold, own, mortgage, pledge, hypothecate, sell, assign, transfer, exchange or
otherwise dispose of or deal in or with its own corporate securities or stock or
other securities, including without limitations, any shares of stock, bonds,
debentures, notes, mortgages, or other instruments representing right or
interests therein or any property or assets created or issued by any person,
firm, association or corporation, or any government or subdivisions, agencies or
instrumentalities thereof; to make payment therefore in any lawful manner or to
issue in exchange therefore its own securities or to use its unrestricted or
intention that the purposes specified in each of the paragraphs of this Article
2 shall be regarded as independent purposes and powers.
To do each and everything necessary, suitable or proper for the accomplishment
of any of the purposes or the attainment of any one or more of the subjects
herein enumerated, or which any at any time appear conductive to or expedient
for the protection or benefit of this corporation, and to do said acts as fully
and to the same extent as natural pensions might, or could do, in any part of
the world as principals, agents, partners; trustees or otherwise, either alone
or in conjunction with any other persons, association or corporation.
To transact any and all lawful business or which corporations may be
incorporated under the Florida General Corporation Act.
The foregoing clauses shall be construed both as purposes and powers, and shall
not be held to limit or restrict in any manner the general power of the
corporation, and the enjoyment and exercise thereof, as conferred by Laws of the
State of Florida; and it is the intention that the purposes and powers specified
in each of the paragraphs of this Article 2 shall be regarded as independent
purposes and power.
ARTICLE 3. REGISTERED OFFICE; REGISTERED AGENT
The address of the initial registered office of the corporation is 4400 PGA
Boulevard, Suite 505, Palm Beach Gardens, Florida 33410 and the name of its
initial registered agent at such address is Robert C. Hackney.
<PAGE>
ARTICLE 4. PRINCIPAL OFFICE
The business address of the corporation's principal office is; 326 Green Acres,
Ft. Walton Beach, Florida 32547.
ARTICLE 5. DURATION
The period of this corporation's duration is perpetual.
ARTICLE 6. DIRECTORS AND OFFICERS
6.1 NUMBER; INITIAL DIRECTORS
The number of directors constituting the initial board of directors one, and
the name and address of the person who is to serve as a director until the
first annual meeting of the shareholders or until their successors are
elected and qualified is:
Name Address
---- -------
Malcolm R. Roy 4493 Ocean View Drive
Destin, Florida 32541
6.2 CHANGES IN AUTHORIZED NUMBER OF DIRECTORS
The numbers of directors of the corporation set forth in Section 6.1 of this
Article shall constitute the authorized number of directors until changed by
an amendment of these articles of incorporation or by a bylaw duly adopted
by the vote or written consent of the holders of a majority of the then
outstanding shares of stock in the corporation.
6.3 POWERS OF DIRECTORS
Subject to the limitations contained in the articles of incorporation and
the Florida General Corporation Act concerning corporate action that must be
authorized or approved by the shareholders of the corporation, all corporate
powers shall be exercised by or under the authority of the board of
directors, and the business and affairs of the corporation shall be
controlled by the board.
The board of directors shall delegate, to the extent that it considers
necessary, any portion of its authority to manage, control, and conduct the
current business of the company, to any standing or special committee of the
corporate or to any officer or agent thereof. Notwithstanding any delegation
of authority that the board may make hereunder, it shall exercise general
supervision over the officers and agents of the corporation and shall be
responsible to the shareholders for the proper performance of their
respective duties.
6.4 REMOVAL OF DIRECTORS AND OFFICERS
Any officer elected or appointed by the board of directors, or by the
Executive Committee, or by the shareholders, or any number of the Executive
Committee, or any other standing committee, or any director of this
corporation may be removed at any time, with or without cause, in such
manner as shall be provided in the bylaws of this corporation.
2
<PAGE>
6.5 VOTING DIRECTORS
In all elections of directors of this corporation, each shareholder has the
right to cast as many votes as equal the number of shares held by the
shareholder multiplied by the number of directors to be elected, and the
shareholder may cast all of such votes for a single director or may
distribute them among the number of directors to be elected, or any two or
more of them, as such shareholder may see fit. This Section 6.5 may be
amended only by a vote of all of the outstanding shares of stock of the
corporation.
ARTICLE 7. INCORPORATOR
The name and address of the Incorporator is:
Name Address
---- -------
Malcolm R. Roy 4493 Ocean View Drive
Destin, Florida 32541
ARTICLE 8. CAPITALIZATION
The total number of shares of all classes of stock which the corporation
shall have authority to issue is 350,000,000, divided into 300,000,000
shares of common stock at $.001 par value each and 50,000,000 shares of
preferred stock, at $1.00 par value each. This Article can be amended only
by the vote or written consent of the holders of 100% of the outstanding
shares.
8.1 STATEMENT OF RIGHTS FOR COMMON SHARES
(a) Subject to any prior rights to receive dividends to which the holders of
shares of any series of the preferred stock may be entitled, the holders of
shares of common stocks shall be entitled to receive dividends, if and when
declared payable from time to time by the board of directors, from funds
legally available for payment of dividends.
(b) In the event of any dissolution, liquidation or winding up of this
corporation, whether voluntary or involuntary, after there shall have been
paid to, the holders of shares of preferred stock the full amounts to which
they shall be entitled, the holders of the then outstanding shares of common
stock shall be entitled to receive, pro rata, any remaining assets of this
corporation available for distribution to its shareholders. The board of
directors may distribute in kind to the holders of the shares of common
stock such remaining assets of this corporation or may sell, transfer or
otherwise dispose of all or any part of such remaining assets to any other
corporation, trust or entity and receive payment in cash, stock or
obligations of such other corporation, trust or entity or any combination of
such cash, stock or obligations, and may sell all or any part of the
consideration so received, and may distribute the consideration so received
or any balance or proceeds of it to holders of the shares of common stock.
The voluntary sale, conveyance, lease, exchange or transfer of all or
substantially all the property or assets of this corporation (unless in
connection with that event the dissolution, liquidation or winding up or
this corporation is specifically approved) or the merger or consolidation of
this corporation into or with any other corporation, or the merger of other
corporation into it, or any purchase or redemption of shares of shares of
this corporation of any class, shall not be deemed to be a dissolution,
liquidation or winding up of this corporation for the purpose of this
paragraph (b).
3
<PAGE>
(c) Except as provided by law or this certificate of incorporation with respect
to voting by class or series, each outstanding share of common stock of this
corporation shall entitle the holder of that share to one vote on each
matter submitted to a vote at a meeting of shareholders.
(d) Such numbers of shares of common stock as may from time to time be required
for such purpose shall be reserved for issuance (i) upon conversion of
preferred stock or any obligation of this corporation convertible into
shares of common stock and (ii) upon exercise of any options or warrants to
purchase shares of common stock.
8.2 STATEMENT OF RIGHTS FOR PREFERRED SHARES
The board of directors is expressly authorized to adopt from time to time, a
resolution or resolutions providing for the issue of preferred stock in one
or more series, to fix the number of shares in each such series and to fix
the designations and the powers, preferences and relative, participating,
optional and other special rights and the qualifications, limitations and
restrictions of such shares, of each such series.
The authority of the board of directors with respect to each such series
shall include a determination of the following, which may vary as between
the different series of preferred stock:
(a) The number of shares constituting the series and the distinctive designation
of the series;
(b) The dividend rate on the shares of the series, the conditions and dates upon
which dividends on such shares shall be payable, the extent, if any, to
which, dividends on such shares shall be cumulative, and the relative rights
of preference, if any, of payment of dividends on such shares;
(c) Whether or not the shares of the series are redeemable and, if redeemable,
the time or times during which they shall be redeemable and the amount per
share payable on redemption of such shares, which amount may, but need not,
vary according to the time and circumstances of such redemption;
(d) The amount payable in respect of the shares of the series, in the event of
any liquidation, dissolution or winding up of this corporation, which amount
may, but need not, vary according to the time or circumstances of such
action, and the relative rights of preference, if any, of payment such
amount;
(e) Any requirement as to a sinking fund for the shares of the series, or any
requirement as to be the redemption, purchase or other retirement by this
corporation of the shares of the series;
(f) The right, if any, to exchange or convert shares of the series into other
securities or property, and the rate or basis, time, manner and condition of
exchange or conversion;
(g) The voting rights, if any, to which the holders of shares of the series
shall be entitled in addition to the voting rights provided by law; and
(h) Any other terms, conditions or provisions with respect to the series not
inconsistent with the provisions of this Article or any resolution adopted
by the board of directors pursuant to this Article.
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(i) The number of authorized shares of preferred stock may be increased or
decreased by the affirmative vote of the holders of a majority of the stock
of this corporation entitled to vote at a meeting of shareholders. No
holder of shares of preferred stock of this corporation shall, by reason of
such holding have any preemptive right to subscribe to any additional issue
of any stock of any class or series nor to any security convertible into
such stock.
ARTICLE 9. SHAREHOLDERS
9.1 AMENDMENT OF BYLAWS
The board of directors has the power to make, repeal, amend and alter the
bylaws of the corporation, to the extent provided in the bylaws. However,
the paramount power to repeal, amend and alter the bylaws, or to adopt new
bylaws, is vested in the shareholders. This power may be exercised by a
vote of all of the shareholders presents at any annual or special meeting
of the shareholders. Moreover, the directors have no power to suspend,
repeal, amend or otherwise alter any bylaw or portion of any bylaw so
enacted by the shareholders, unless the shareholders, in enacting any bylaw
or portion of any bylaw, otherwise provide.
9.2 PERSONAL LIABILITY OF SHAREHOLDERS
The private property of the shareholders of this corporation is not subject
to the payment of corporate debts, except to the extent of any unpaid
balance of subscription for shares.
9.3 VOTING RIGHTS
Except as otherwise expressly provided by the law of the State of Florida
or these articles of incorporation or the resolution of the board of
directors providing for the issue of a series of preferred stock, the
holders of the common stock shall possess exclusive voting power for the
election of directors and for all other purposes. Every holder of record of
common stock entitled to vote and, except as otherwise expressly provided
in the resolution or resolutions of the board of directors providing for
the issue of a series of preferred stock, every holder of record of any
series of preferred stock at the time entitled to vote, shall be entitled
to one vote for each share held.
9.4 ACTIONS BY WRITTEN CONSENT
Whenever the vote of shareholders at a meeting of shareholders is required
or permitted to be taken for or in connection with any corporate action by
any provision of the corporation law of the State of Florida, or of these
articles of incorporation or of the bylaws authorized or permitted by that
law, the meeting and vote of shareholders may be dispensed with if the
proposed corporate action is taken with the written consent of the holders
of stock having a majority of the total number of votes which might have
been cast for or in connection with that action if a meeting were held;
provided that in no case shall the written consent be by the holders of
stock having less than the minimum percentage of the vote required by
statute for that action, and provided that prompt notice is given to all
shareholders of the taking of corporate action without a meeting and by
less than unanimous written consent.
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ARTICLE 10. AMENDMENTS
The corporation shall be deemed, for all purposes, to have reserved the
right to amend, alter, change or repeal any provision contained in its
articles of incorporation, as amended, to the extent and in the manner now
or in the future permitted or prescribed by statute, and all rights
conferred in these articles upon shareholders are granted subject to that
reservation.
ARTICLE 11. REGULATION OF BUSINESS AND AFFAIRS OF CORPORATION
11.1 POWERS OF BOARD OF DIRECTORS
(a) In furtherance and not in limitation of the powers conferred upon the board
of directors by statute, the board of directors is expressly authorized,
without any vote or other action by shareholders other than such as at the
time shall be expressly required by statute or by the provisions of these
articles of incorporation, as amended, or of the bylaw, to exercise all of
the powers, rights and privileges of the corporation (whether expressed or
implied in these articles or conferred by statute) and to do all acts and
things which may be done by the corporation, including, without, limiting
the generality of the above, the right
(i) Pursuant to a provision of the bylaw, by resolution adopted by a
majority of the actual number of directors elected and qualified,
to designate from among its members an executive committee and
one or more other committees, each of which, to the extent
provided in hat resolution or in the bylaw, shall have and
exercise all the authority of the board of directors except as
otherwise provided by law;
(ii) To make, alter, amend or repeal bylaw for the corporation;
(iii) To authorize the issuance from time to time of all or any shares
of the corporation, now or in the future authorized, part paid
receipts or allotment certificates in respect of any such shares,
and any securities convertible into or exchangeable for any such
shares (regardless of whether those shares, receipts,
certificates or securities be unissued or issued and subsequently
acquired by the corporation), in each case to such corporations,
associations, partnerships, firms, individuals, or others
(without offering those shares or any part of them to the holders
of any shares of the corporation of any class now or in the
future authorized), and for such consideration (regardless of
whether more or less than the par value of the shares), and on
such terms as the board of directors from time to time in its
discretion lawfully may determine;
(iv) From time to time to create and issue rights or options to
subscribe for, purchase or otherwise acquire any shares of stock
of the corporation of any class now or in the future authorized
or any bonds or other obligations or securities of the
corporation (without offering the same or any part of then to the
holders of any shares of the corporation of any class now or in
the future authorized);
(v) In furtherance and not in limitation of the provisions of the
above subdivisions (iii) and (iv), from time to time to establish
and amend plans for the distribution among or sale to any one or
more of the officers or employees of the corporation, or any
subsidiary of the corporation, of any shares of stock or other
securities of the corporation of any class, or for the grant to
any of such officers or employees of rights or options to
subscribe for, purchase or otherwise acquire any such shares or
other securities, without in any case offering those shares or
any part of them to the holders of any
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shares of the corporation of any class now or in the future
authorized; such distribution, sale or grant may be in addition
to, or partly in lieu of the compensation of any such officer or
employee and may be made in consideration for or in recognition
of services rendered by the officer or employee, or to provide
them with an incentive to serve or to agree to serve the
corporation or any subsidiary of the corporation, or otherwise as
the board of directors may determine; and
(vi) To sell, lease, exchange, mortgage, pledge, or otherwise dispose
of or encumber all or any part of the assets of the corporation
unless and except to the extent otherwise expressly required by
statute.
(b) The board of directors, in its discretion, may from time to time;
(i) Declare and pay dividends upon the authorized shares of stock or
the corporation out of any assets of the corporation available
for dividends, but dividends may be declared and paid upon
shares issued as party paid only upon the basis of the percentage
of the consideration actually paid on those shares at the time of
the declaration and payment;
(ii) Use and apply any of its assets available for dividends in
purchasing or acquiring any of the shares of the corporation; and
(iii) Set apart out of its assets available for dividends such sum or
sums as the board of directors may deem proper, as a reserve or
reserves to meet contingencies, or for equalizing dividends, or
for maintaining or increasing the property or business of the
corporation, or for any other purpose it may deem conducive to
the best interests of the corporation. The board of directors in
its discretion at any time may increase, diminish or abolish any
such reserve in the manner in which it was created.
11.2 APPROVAL OF INTERESTED DIRECTOR OR OFFICER TRANSACTIONS
No contract or transaction between the corporation and one or more of its
directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in which one
or more of its director or officers are director or officers, or have a
financial interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or participates in the
meeting of the board or committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such
purpose, if:
1. The material facts as to his interest and as to the contract or
transaction are disclosed or are known be the board of directors or
the committee in good faith authorizes the contract or transaction by
a vote sufficient for such purpose without counting me vote of the
interested director or directors; or
2. The material facts as to his interest and as to the contract or
transaction are disclosed or are known to the shareholders entitled to
vote thereon, and the contract or transaction is specifically approved
in good faith by vote of the shareholders; or
3. The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified, by the board of
directors, a committee thereof, or the shareholders. Interested
directors may be counted in determining the presence of a quorum at a
meeting of the board of directors or of a committee which authorizes
the contract or transaction.
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11.3 INDEMNIFICATI0N
(a) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fee), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest 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 action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent; shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interest of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interest of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable for negligence
or misconduct in the performance of his duty to the corporation unless and
only to the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnify for such expenses which such
other court shall deem proper.
(c) To the extent that any person referred to in paragraph (a) and (b) of this
article has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to therein or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under paragraphs (a) and (b) of this article (unless
ordered by a court) shall be made by the corporation only as authorized in
the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in paragraphs (a)
and (b) of this article. 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 action, suit or proceeding, or (b) if such quorum
is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
{c) by the shareholder.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final
deposition of such action, suit or proceeding as authorized
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by the board of directors in the specific case upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount unless it shall be ultimately be determined that he is
entitled to be indemnified by the corporation as provided in this article.
(f) The indemnification provided by this article shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled
under any statute, 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, and shall continue
as to a person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators
of such a person.
(g) 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/her 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 Article 11.
(h) For the purposes of this article, references to "the corporation" include
all constituent corporations absorbed in a consolidation or merger as well
as the resulting or surviving corporation so that any person who is or was
a director, officer, employee or agent of such a constituent corporation or
is or was serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise shall stand in the same position
under the provisions of this section with respect to the resulting or
surviving corporation as he would if he had served the resulting or
surviving corporation in the same capacity.
For the purpose of forming a corporation under the laws of the State of Florida,
the undersigned, has personally executed these articles of incorporation on this
15th day of November, 1999.
/s/ Malcolm R. Roy
- ----------------------------------------
Malcolm R. Roy
(Incorporator)
STATE OF FLORIDA
COUNTY OF OKALOOSA
The foregoing Articles of Incorporation were acknowledged before me by Malcolm
R. Roy, who produced his Texas Driver's License as identification this the 15th
day of November, 1999 by:
ILLEGIBLE
- ----------------------------------------
Notary Public
State of Florida
(SEAL)
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FILED
99 NOV 18 PM 12:37
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
CERTIFICATE DESIGNATING PLACE OF
BUSINESS OR DOMICILE FOR THE SERVICE
OF PROCESS WITHIN THIS STATE NAMING,
AGENT UPON WHOM PROCESS MAY BE SERVED
The following is submitted pursuant to Sections 48.091 (1) and 607.034, F1orida
Statutes:
iNet TECHNOLOGY GROUP INCORPORATED desiring to organize under the laws of the
State of Florida being in the County of Palm Beach, at 4400 PGA Blvd., Suite
505, Palm Beach Gardens, FL 33410 has named Robert C. Hackney, Esquire, located
at that same address as its initial registered agent to accept service of
process within this state.
ACKNOWLEDGEMENT
Having been named to accept service of process for the above-stated corporation,
at the initial registered office of the Corporation of this State, I hereby
accept to act in this capacity and agree to comply with the provisions of said
statute relative to keeping the registered office of the corporation open from
10:00 a.m. to noon each day, except Saturdays, Sundays and legal holidays, and
to pose therein a sign designating the name of the corporation and the name of
its registrant agent.
Date: November 15, 1999
/s/ Robert C. Hackney, Esquire
---------------------------------------
Robert C. Hackney, Esquire
l0
EXHIBIT 3.2
BYLAWS
OF
iNet TECHNOLOGY GROUP INCORPORATED
A FLORIDA CORPORATION
ARTICLE ONE
OFFICES
Section 1.1. REGISTERED OFFICE - The registered office of this
corporation shall be in the City of Destin, State of Florida.
Section 1.2- OTHER OFFICES - The Corporation may also have offices at
such other places both within and 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 TWO
MEETINGS OF STOCKHOLDERS
Section 2.1. PLACE - All annual meetings of the stockholders shall be
held at the registered office of the corporation or at such other place within
or without the State of Florida as the directors shall determine. Special
meetings of the stockholders may be held at such time and place within or
without the State of Florida as shall be stated in the notice of the meeting, or
in a duly executed waiver of notice thereof.
Section 2.2. ANNUAL MEETINGS - Annual meetings of the stockholders,
commencing with the Year 2000, shall be held on the 15th day of August each year
if not a legal holiday and, if a legal holiday, then on the next secular day
following, or at such other time as may be set by the Board of Directors from
time to time, at which the stockholders shall elect by vote a Board of Directors
and transact such other business as may properly be brought before the meeting.
Section 2.3. SPECIAL MEETINGS - Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by the President or the Secretary by
resolution of the Board of Directors or at the request in writing of
stockholders owning a majority in amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote. Such request shall
state the purpose of the proposed meeting.
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Section 2.4. NOTICES OF MEETINGS - Notices of meetings shall be in
writing and signed by the President or a Vice President or the Secretary or an
Assistant Secretary or by such other person or persons as the directors shall
designate. Such notice shall state the purpose or purposes for which the meeting
is called and the time and the place, which may be within or without this State,
where it is to be held. A copy of such notice shall be either delivered
personally to or shall be mailed, postage prepaid, to each stockholder of record
entitled to vote at such meeting not less than ten (10) nor more than sixty (60)
days before such meeting. If mailed, it shall be directed to a stockholder at
his address as it appears upon the records of the corporation and upon such
mailing of any such notice, the service thereof shall be complete and the time
of the notice shall being to run from the date upon which such notice is
deposited in the mail for transmission to such stockholder. Personal delivery of
any such notice to any officer of a corporation or association or to any member
of a partnership shall constitute delivery of such notice to such corporation,
association or partnership. In the event of the transfer of stock after delivery
of such notice of and prior to the holding of the meeting it shall not be
necessary to deliver or mail notice of the meeting to the transferee.
Section 2.5. PURPOSE OF MEETINGS - Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.
Section 2.6. QUORUM - The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Articles of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 2.7. VOTING - When a quorum is present or represented at any
meeting, the vote of the holders of a majority of the stock having voting power
present in person or represented by proxy shall be sufficient to elect directors
or to decide any questions brought before such meeting, unless the question is
one upon which by express provision of the statutes or of the Articles of
Incorporation, a different vote is required in which case such express provision
shall govern and control the decision of such question.
Section 2.8. SHARE VOTING - Each stockholder of record of the
corporation shall be entitled at each meeting of stockholders to one vote for
each share of stock standing in his name on the books of the corporation. Upon
the demand of any stockholder, the vote for directors and the vote upon any
question before the meeting shall be by ballot.
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Section 2.9. PROXY - At any meeting of the stockholders, any
stockholder may be represented and vote by a proxy or proxies appointed by an
instrument in writing. In the event that any such instrument in writing shall
designate two or more persons to act as proxies, a majority of such persons
present at the meeting, or, if only one shall be present, then that one shall
have and may exercise all of the powers conferred by such written instrument
upon all of the persons so designated unless the instrument shall otherwise
provide. No proxy or power of attorney to vote shall be used to vote at a
meeting of the stockholders unless it shall have been filed with the secretary
of the meeting when required by the inspectors of election. All questions
regarding the qualification of voters, the validity of proxies and the
acceptance or rejection of votes shall be decided by the inspectors of election
who shall be appointed by the Board of Directors, or if not so appointed, then
by the presiding officer of the meeting.
Section 2.10. WRITTEN CONSENT IN LIEU OF MEETING - Any action which may
be taken by the vote of the stockholders at a meeting may be taken without a
meeting if authorized by the written consent of stockholders holding at least a
majority of the voting power, unless the provisions of the statutes or of the
Articles of Incorporation require a greater proportion of voting power to
authorize such action in which case such greater proportion of written consents
shall be required.
ARTICLE THREE
DIRECTORS
Section 3.1. POWERS - The business of the corporation shall be managed
by its Board of Directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the Articles
of Incorporation or by these Bylaws directed or required to be exercised or done
by the stockholders.
Section 3.2. NUMBER OF DIRECTORS - The number of directors which shall
constitute the whole board shall be three (3). The number of directors may from
time to time be increased or decreased to not less than one nor more than
fifteen by action of the Board of Directors. The directors shall be elected at
the annual meeting of the stockholders and except as provided in Section 2 of
this Article, each director elected shall hold office until his successor is
elected and qualified. Directors need not be stockholders.
Section 3.3. VACANCIES - Vacancies in the Board of Directors including
those caused by an increase in the number of directors, may be filled by a
majority of the remaining directors, though less than a quorum, or by a sole
remaining director, and each director so elected shall hold office until his
successor is elected at an annual or a special meeting of the stockholders. The
holders of a two-thirds of the outstanding shares of stock entitled to vote may
at any time peremptorily terminate the term of office of all or any of the
directors by vote at a meeting called for such purpose or by a written statement
filed with the secretary or, in his absence, with any other officer. Such
removal shall be effective immediately, even if successors are not elected
simultaneously and the vacancies on the Board of Directors resulting therefrom
shall be filled only by the stockholders.
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A vacancy or vacancies in the Board of Directors shall be deemed to
exist in case of the death, resignation or removal of any directors, or if the
authorized number of directors be increased, or if the stockholders fail at any
annual or special meeting of stockholders at which any director or directors are
elected to elect the full authorized number of directors to be voted for at that
meeting.
The stockholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors. If the Board of Directors
accepts the resignation of a director tendered to take effect at a future time,
the Board or the stockholders shall have power to elect a successor to take
office when the resignation is to become effective.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
ARTICLE FOUR
MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1. PLACE - Regular meetings of the Board of Directors shall
be held at any place within or without the State which has been designated from
time to time by resolution of the Board or by written consent of all members of
the Board. In the absence of such designation regular meetings shall be held at
the registered office of the corporation. Special meetings of the Board may be
held either at a place so designated or at the registered office.
Section 4.2. FIRST MEETING - The First meeting of each newly elected
Board of Directors shall be held immediately following the adjournment of the
meeting of stockholders and at the place thereof. No notice of such meeting
shall be necessary to the directors in order legally to constitute the meeting,
provided a quorum is present. In the event such meeting is not so held, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board of Directors.
Section 4.3. REGULAR MEETINGS - Regular meetings of the Board of
Directors may be held without call or notice at such time and at such place as
shall from time to time be fixed and determined by the Board of Directors.
Section 4.4. SPECIAL MEETINGS - Special Meetings of the Board of
Directors may be called by the Chairman or the President or by any Vice
President or by any two directors.
Written notice of the time and place of special meetings shall be
delivered personally to each director, or sent to each director by mail or by
other form of written communication, charges prepaid, addressed to him at his
address as it is shown upon the records or is not readily ascertainable, at the
place in which the meetings of the directors are regularly held. In case such
notice is mailed it shall be deposited in the United States mail at lease
forty-eight (48) hours prior to the time of the holding of the meeting. In case
such notice is delivered as above provided, it shall be so delivered at lease
twenty-four (24) hours prior to the time of the holding of the meeting. Such
mailing or delivery as above provided shall be due, legal and personal notice to
such director.
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Section 4.5. NOTICE - Notice of the time and place of holding an
adjourned meeting need not be given to the absent directors if the time and
place be fixed at the meeting adjourned.
Section 4.6. WAIVER - The transactions of any meeting of the Board of
Directors, however called and noticed or wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice, if a quorum be
present, and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice, or a consent to holding such meeting,
or an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 4.7. QUORUM - A majority of the authorized number of directors
shall be necessary to constitute a quorum for the transaction of business,
except to adjourn as hereinafter provided. Every act or decision done or made by
a majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors, unless a greater
number be required by law or by the Articles of Incorporation. Any action of a
majority, although not at a regularly called meeting, and the record thereof, if
assented to in writing by all of the other members of the Board shall be as
valid and effective in all respects as if passed by the Board in regular
meeting.
Section 4.8. ADJOURNMENT - A quorum of the directors may adjourn any
directors meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the directors present at any
directors meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the Board.
ARTICLE FIVE
COMMITTEES OF DIRECTORS
Section 5.1. POWER TO DESIGNATE - The Board of Directors may, by
resolution adopted by a majority of the whole Board, designate one or more
committees of the Board of Directors, each committee to consist of one or more
of the directors of the corporation which, to the extent provided in the
resolution, shall have and may exercise the power of the Board of Directors in
the management of the business and affairs of the corporation and may have power
to authorize the seal of the corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or names as may be
determined from time to time by the Board of Directors. The members of any such
committee present at any meeting and not disqualified from voting may, whether
or not they constitute a quorum, unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any absent or disqualified
member. At meetings of such committees, a majority of the members or alternate
members shall constitute a quorum for the transaction of business, and the act
of a majority of the members or alternate members at any meeting at which there
is a quorum shall be the act of the committee.
Section 5.2. REGULAR MINUTES - The committees shall keep regular
minutes of their proceedings and report the same to the Board of Directors.
5
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Section 5.3. WRITTEN CONSENT - Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if a written consent thereto is signed by all members
of the Board of Directors or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board or
committee.
ARTICLE SIX
COMPENSATION OF DIRECTORS
Section 6.1. COMPENSATION - The directors may be paid their expenses of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.
ARTICLE SEVEN
NOTICES
Section 7.1. NOTICE - Notices to directors and stockholders shall be in
writing and delivered personally or mailed to the directors or stockholders at
their addresses appearing on the books of the corporation. Notices by mail shall
be deemed to be given at the time when the same shall be mailed. Notices to
directors may also be given by telegram.
Section 7.2. CONSENT - Whenever all parties entitled to vote at any
meeting, whether of directors or stockholders, consent, either by a writing on
the records of the meeting or filed with the secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking part in the
deliberations at such meeting without objection, the doings of such meetings
shall be as valid as if had at a meeting regularly called and noticed, and at
such meeting any business may be transacted which is not excepted from the
written consent or to the consideration of which no objection for want of notice
is made at the time, and if any meeting be irregular for want of notice or of
such consent, provided a quorum was present at such meeting, the proceedings of
said meeting may be ratified and approved and rendered likewise valid and the
irregularity or defect therein waived by a writing Signed by all parties having
the right to vote at such meeting; and such consent or approval of stockholders
may be by proxy or attorney, but all such proxies and powers of attorney must be
in writing.
Section 7.3. WAIVER OF NOTICE - Whenever any notice whatever is
required to be given under the provisions of the statutes, of the Articles of
Incorporation or of these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice. Whether before or after the time
stated therein, shall be deemed equivalent thereto.
6
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ARTICLE EIGHT
OFFICERS
Section 8.1. APPOINTMENT OF OFFICERS - The officers of the corporation
shall be chosen by the Board of Directors and shall be a President, a Secretary
and a Treasurer. Any person may hold two or more offices.
Section 8.2. TIME OF APPOINTMENT - The Board of Directors at its first
meeting after each annual meeting of stockholders shall choose a Chairman of the
Board who shall be a director, and shall choose a President, a Secretary and a
Treasurer, none of whom need be directors.
Section 8.3. ADDITIONAL OFFICERS - The Board of Directors may appoint a
Vice Chairman of the Board, Vice Presidents and one or more Assistant
Secretaries and Assistant Treasurers and such other officers and agents as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors.
Section 8.4. SALARIES - The salaries and compensation of all officers
of the corporation shall be fixed by the Board of Directors.
Section 8.5. VACANCIES - The officers of the corporation shall hold
office at the pleasure of the Board of Directors. Any officer elected or
appointed by the Board of Directors may be removed at any time by the Board of
Directors. Any vacancy occurring in any office of the corporation by death,
resignation, removal or otherwise shall be filled by the Board of Directors.
Section 8.6. CHAIRMAN OF THE BOARD - The CHAIRMAN OF THE BOARD shall
preside at meetings of the stockholders and the Board of Directors, and shall
see that all orders and resolutions of the Board of Directors are carried into
effect.
Section 8.7. VICE CHAIRMAN - The VICE CHAIRMAN shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board and shall perform such other duties as the
Board of Directors may from time to time prescribe.
Section 8.8. PRESIDENT - The PRESIDENT shall be the Chief Executive
Officer of the corporation and shall have active management of the business of
the corporation. He shall execute on behalf of the corporation all instruments
requiring such execution except to the extent the signing and execution thereof
shall be expressly designated by the Board of Directors to some other officer or
agent of the corporation.
Section 8.9. VICE PRESIDENT - The VICE PRESIDENT shall act under the
direction of the President and in the absence or disability of the President
shall perform the duties and exercise the powers of the President. They shall
perform such other duties and have such other powers as the President or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more Executive Vice Presidents or may otherwise specify the
order of seniority of the Vice Presidents. The duties and powers of the
President shall descend to the Vice Presidents in such specified order of
seniority.
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Section 8.10. SECRETARY - The SECRETARY shall act under the direction
of the President. Subject to the direction of the President he shall attend all
meetings of the Board of Directors and all meetings of the stockholders and
record the proceedings. He shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the President or the Board of
Directors.
Section 8.11. ASSISTANT SECRETARIES - The ASSISTANT SECRETARIES shall
act under the direction of the President. In order of their seniority, unless
otherwise determined by the President or the Board of Directors, they shall, in
the absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary. They shall perform such other duties and have such
other powers as the President or the Board of Directors may from time to time
prescribe.
Section 8.12. TREASURER - The TREASURER shall act under the direction
of the President. Subject to the direction of the President he shall have
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation and
shall deposit all monies and other valuable effects in the name and to the
credit of the corporation in such depositories as may be designated by the Board
of Directors. He shall disburse the funds of the corporation as may be ordered
by the President or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer arid of the financial condition of the
corporation.
Section 8.13. SURETY- If required by the Board of Directors, he shall
give the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance of
the duties of his office and for the restoration to the corporation, in case of
his death, resignation, retirement or removal from office of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 8.14. ASSISTANT TREASURER - The ASSISTANT TREASURER in the
order of their seniority, unless otherwise determined by the President or the
Board of Directors, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer. They shall perform
such other duties and have such other powers as the President or the Board of
Directors may from time to time prescribe.
8
<PAGE>
ARTICLE NINE
CERTIFICATES OF STOCK
Section 9.1. SHARE CERTIFICATES - Every stockholder shall be entitled
to have a certificate signed by the President or a Vice President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the corporation, certifying the number of shares owned by him in the
corporation. If the corporation shall be authorized to issue more than once
class of stock or more than one series of any class, the designations,
preferences and relative, participating, optional or other special rights of the
various classes of stock or series thereof and the qualifications, limitations
or restrictions of such rights, shall be set forth in full or summarized on the
face or back of the certificate which the corporation shall issue to represent
such stock.
Section 9.2. TRANSFER AGENTS - If a certificate is signed (a) by a
transfer agent other than the corporation or its employees or (b) by a registrar
other than the corporation or its employees, the signatures of the officers of
the corporation may be facsimiles. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall cease to be such
officer before such certificate is issued, such certificate may be issued with
the same effect as though the person had not ceased to be such officer. The seal
of the corporation, or a facsimile thereof, may, but need not be, affixed to
certificates of stock.
Section 9.3. LOST OR STOLEN CERTIFICATES - The Board of Directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation alleged to
have been lost or destroyed upon the making of an affidavit that fact by the
person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost or destroyed.
Section 9.4. SHARE TRANSFERS - Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation, if it is satisfied that all
provisions of the laws and regulations applicable to the corporation regarding
transfer and ownership of shares have been complied with, to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
9
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Section 9.5. VOTING SHAREHOLDER - The Board of Directors may fix in
advance a date not exceeding sixty (60) days nor less than ten (10) days
preceding the date of any meeting of stockholders, or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining the consent of stockholders for any purpose,
as a record date for the determination of the stockholders entitled to notice of
and to vote at any such meeting, and any adjournment thereof, or entitled to
receive payment of any such dividend, or to give such consent, and in such case,
such stockholders, and only such stockholders as shall be stockholder of record
on the date so fixed, shall be entitled to notice of and to vote at such
meeting, or any adjournment thereof, or to receive payment of such dividend, or
to receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the corporation after any such record date fixed as aforesaid.
Section 9.6. SHAREHOLDERS RECORD - The corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including voting and dividends. And the
corporation shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as other wise provided by
the laws of Florida.
ARTICLE TEN
GENERAL PROVISIONS
Section 10.1. DIVIDENDS - Dividends upon the capital stock of the
corporation, subject to the provisions of the Articles of Incorporation, if any,
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property or in shares of the
capital stock, subject to the provisions of the Articles of Incorporation.
Section 10.2. RESERVES - Before payment of any dividend, there may be
set aside out of any funds of the corporation available for dividends such sum
or sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends or for repairing or maintaining any property of the corporation or for
such other purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 10.3. CHECKS - All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 10.4. FISCAL YEAR - The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
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Section 10.5. CORPORATE SEAL - The corporation may or may not have a
corporate seal, as may from time to time be determined by resolution of the
Board of Directors. If a corporate seal is adopted, it shall have inscribed
thereon the name of the Corporation and the words "Corporate Seals" and
"Florida". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE ELEVEN
INDEMNIFICATION
Every person who was or is a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or a person of
whom he is the legal representative is or was a director or officer of the
corporation or is or was serving at the request of the corporation or for its
benefit as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless to the fullest extent legally permissible under
the General Corporation Law of the State of Florida from time to time against
all expenses, liability and loss (including attorneys' fees, judgments, fines
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
him in connection therewith. The expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. Such right of indemnification shall be a contract right which may
be enforced in any manner desired by such person. Such right of indemnification
shall not be exclusive of any other fight which such directors, officers or
representatives may have or hereafter acquire and, without limiting the
generality of such statement, they shall be entitled to their respective rights
of indemnification under any bylaw, agreement, vote of stockholders, provision
of law or otherwise, as well as their rights under this Article.
The Board of Directors may cause the corporation to purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the corporation would have the power to indemnify
such person.
The Board of Directors may from time to time adopt further Bylaws with
respect to indemnification and may amend these and such Bylaws to provide at all
times the fullest indemnification permitted by the General Corporation Law of
the State of Florida.
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ARTICLE TWELVE
AMENDMENTS
Section 12.1. BY SHAREHOLDER - The Bylaws may be amended by a majority
vote of all the stock issued and outstanding and entitled to vote at any annual
or special meeting of the stockholders, provided notice of intention to amend
shall have been contained in the notice of the meeting.
Section 12.2. BY BOARD OF DIRECTORS - The Board of Directors by a
majority vote of the whole Board at any meeting may amend these Bylaws,
including Bylaws adopted by the stockholders, but the stockholders may from time
to time specify particular provisions of the Bylaws which shall not be amended
by the Board of Directors.
APPROVED AND ADOPTED this ____ day of ____________ 19___
______________________________
Secretary
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of iNet Technology Group Incorporated,
and that the foregoing Bylaws, consisting of _____________ pages, constitute the
code of Bylaws of iNet Technology Group Incorporated, as duly adopted at a
regular meeting of the Board of Directors of the corporation held ______________
__________, 19___ .
IN WITNESS WHEREOF, I have hereunto subscribed my name this ___________
__________ day of ______________________, 19____.
______________________________
Secretary
12
EXHIBIT 4.1
FORM OF STOCK CERTIFICATE
[FRONT OF SAMPLE STOCK CERTIFICATE]
NUMBER SHARES
SEE REVERSE FOR CERTAIN DEFINITIONS
COMMON STOCK
CUSIP 45104W 10 9
iNet Technology Group Incorporated
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
THIS CERTIFIES THAT:
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF $.01 PAR VALUE EACH OF
iNet TECHNOLOGY GROUP INCORPORATED
transferable on the books of the Corporation in person or by attorney upon
surrender of this certificate duly endorsed or assigned. This certificate and
the shares represented hereby are subject to the laws of the State of Florida
and to the Articles of Incorporation and Bylaws of the Corporation, as now or
hereafter amended. This certificate is not valid until countersigned by the
Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
DATED: COUNTERSIGNED:
Florida Atlantic Stock Transfer, Inc.
7130 Nob Hill Road
Tamarac, FL 33321
BY:
AUTHORIZED SIGNATURE
[CORPORATION SEAL]
/s/ /s/ Malcolm R. Roy
SECRETARY PRESIDENT
<PAGE>
[BACK OF SAMPLE STOCK CERTIFICATE]
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants
in common
UNIF GIFT MIN ACT............................Custodian .........................
(Cust) (Minor)
under Uniform Gifts to Minors
Act............. (State)
Additional abbreviations may also be used though not in the above list.
For Value Received, _____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
- ------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Shares
of the stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint
- ------------------------------------------------------------------------------
Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated _____________________________
-------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR,WITHOUT ALTERATION
OR ENLARGEMENT OR CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A COMMERCIAL BANK
OR TRUST COMPANY OR A MEMBER FIRM OF A NATIONAL OR REGIONAL OR OTHER RECOGNIZED
STOCK EXCHANGE IN CONFORMANCE WITH A SIGNATURE GUARANTEE MEDALLION PROGRAM,
PURSUANT TO S.CE.C.RULE 17AD-15.
EXHIBIT 4.2
iNet Technology Group Incorporated
and
Florida Atlantic Stock Transfer Corporation, Inc.
as Warrants Agent
Warrants Agreement
Dated as of November 30, 1999
WARRANTS AGREEMENT
This Warrants Agreement (the "Agreement") dated as of November 30,
1999, is between iNet Technology Group Incorporated, a Florida corporation (the
"Company") and Florida Atlantic Stock Transfer Corporation, Inc.., as Warrants
agent (the "Warrants Agent").
W I T N E S S E T H:
WHEREAS, on November 30, 1999, the Board of Directors of the Company
(the "Board") authorized the issuance of Warrants (collectively, the "
Warrants," and individually a " Warrant"), each Warrant being a right to
purchase, on the terms and subject to the provisions of this Agreement, one
share of the Company's Common Stock; and
WHEREAS, on November 30, 1999, (the "Declaration Date") the Board
(a) authorized and declared a dividend distribution of one Warrant for every
share of Common Stock of the Company outstanding at the Close of Business on
January 31, 2000, (the "Dividend Record Date"), and (b) authorized the issuance
of, and agreed to issue, one Warrant (as such number may be adjusted in
accordance with Section 11(i) or 11(p) hereof) for every share of Common Stock
of the Company issued between the Dividend Record Date and the Distribution Date
(as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as follows:
Section 1. Certain Definitions.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates of such
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Person, shall be the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding, but shall not include (i) theCompany, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan ofthe Company or of
any Subsidiary of the Company, (iv) any Person organized, appointed, or
established by the Company or a Subsidiary of the Company pursuant to the terms
of any plan described in clause (iii) above or (v) any such Personwho has
reported or is required to report such ownership on Schedule 13G under the
Exchange Act (or any comparable or successor report) or on Schedule 13 D under
the Exchange Act (or any comparable or successor report) which Schedule13D does
not state any intention to or reserve the Warrant to control or influencethe
management or policies of the Company or engage in any of the actions specified
in Item 4 of such Schedule (other than the disposition of the CommonStock) and,
within 10 Business Days of being requested by the Company to adviseit regarding
the same, certifies to the Company that such Person acquired sharesof Common
Stock in excess of 14.9% inadvertently or without knowledge of theterms of the
Warrants and who, together with all of such Person's Affiliates, thereafter does
not acquire additional shares of Common Stock while the Beneficial Owner of 15%
or more of the shares of Common Stock then outstanding,provided, however, that
if the Person requested to so certify fails to do so within 10 Business Days,
then such Person shall become an Acquiring Person immediately after such 10
Business Day Period.
(b) "Act" shall mean the Securities Act of 1933 (or any successor act),
as amended and as may from time to time be in effect and the Rules and
Regulations promulgated by the Securities and Exchange Commission thereunder.
(c) "Affiliate," with respect to any Person, shall mean any other
Person who is, or who would be deemed to be, an "affiliate" or an "associate" of
such Person within the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as such Rule is in
effect on the Declaration Date; provided, that no Person shall be deemed an
affiliate of another Person solely as a result of such Persons' status as
directors of the Company.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own" or have "Beneficial Ownership" of, any securities:
(i) which such Person or any of such Person's Affiliates has
"beneficial ownership" of within the meaning of Rule 13d-3 of the General Rules
and Regulations under the Exchange Act, as such Rule is in effect on the
Declaration Date;
(ii) which such Person or any of such Person's Affiliates has,
directly or indirectly, the warrant to acquire (whether such Warrant is
exercisable immediately or after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise of
conversion, exchange or other Warrants, or options, or otherwise;
(iii) which such Person or any of such Person's Affiliates
has, directly or indirectly, the right to vote or dispose of, including pursuant
to any agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security for purposes of this Section 1(d)(iii) as
a result of an agreement,
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<PAGE>
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable proxy solicitation rules and regulations
promulgated under the Exchange Act or (B) is made in connection with, or is to
otherwise participate in, a proxy or consent solicitation made, or to be made,
pursuant to, and in accordance with, the applicable proxy solicitation rules and
regulations promulgated under the Exchange Act, in either case described in
clause (A) or (B) above, whether or not such agreement, arrangement or
understanding is also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iv) which are beneficially owned, directly or indirectly, by
any other Person or any Affiliate thereof with which such Person or any of such
Person's Affiliates has any agreement, arangement or understanding (whether or
not in writing ), for the purpose of acquiring, holding, voting except pursuant
to a revocable proxy or in connection with a proxy or consent solicitation
described in clause (A) or (B) of the provison to Section 1(d)(iii) hereof) or
disposing of any securities of the Company;
provided, however, that for purposes of this Section 1(d) a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates until such tendered securities are accepted for
purchase or exchange, (B) securities issuable upon exercise of Warrants at any
time prior to the occurrence of a Common Stock Event, or (C) securities issuable
upon exercise of Warrants which were held by a Person or its Affiliates prior to
the Distribution Date as long as such Person is not responsible for the
occurrence of the Common Stock Event giving rise to the Distribution Date; and
provided, further, however, that nothing in this Section 1(d) shall cause a
Person engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.
(e) "Board" shall have the meaning set forth in the preamble to this
Agreement.
(f) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of Florida or the city in which
the principal office of the Warrants Agent is located are authorized or
obligated by law or executive order to close.
(g) "Common Stock" shall mean the Common Stock, par value $.0001 per
share, of the Company.
(h) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(i) "Warrants" shall have the meaning set forth in the preamble to this
Agreement.
(j) "Warrant Certificates" shall have the meaning set forth in Section
3(a) hereof.
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(k) "Class A Warrants Agreement" shall mean the Class A Warrants
Agreement dated as of November 30, 1999, between the Company and Florida
Atlantic Stock Transfer Corporation, Inc., as Warrants Agent.
(l) "Close of Business" on any given date shall mean 5:00 p.m., Eastern
Standard Time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., Eastern Standard Time, on the next
succeeding Business Day.
(m) "Closing Price" shall have the meaning set forth in Section 11(d)
hereof.
(n) "Common Stock" shall mean collectively, the Common Stock, except
that "Common Stock" when used with respect to any Person other than the Company
shall mean either (i) the common stock (or other capital stock or shares of
beneficial interest) of such Person with the greatest voting power, or (ii) the
equity securities or other equity interests having power to control or direct
the management and affairs of such Person, or (iii) if such Person a Subsidiary
of another Person, the Person (A) who ultimately controls such Person that is
the Subsidiary and (B) which has outstanding such common stock (or such other
capital stock, equity securities or interests).
(o) "Common Stock Event" shall mean the occurrence of any event
described in (i) Section 11(a)(ii) hereof or (ii) clause (a), (b) or (c) of the
first sentence of Section 13 hereof.
(p) "Company" shall have the meaning set forth in the preamble to this
Agreement.
(q) "Current Market Price" shall have the meaning set forth in Section
11(d) hereof.
(r) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(s) "Declaration Date" shall have the meaning set forth in the preamble
to this Agreement.
(t) "Directors" shall mean the members of the Board.
(u) "Disqualified Transferee" shall mean any Person who is a direct or
indirect transferee Warrant from an Acquiring Person or an Affiliate of an
Acquiring Person and became such a transferee (x) after the occurrence of a
Common Stock Event or (y) prior to or concurrently with the acquiring Person
becoming such and received such Warrant pursuant to a transfer (whether or not
for value) (A) from the Acquiring Person to holders of its Common Stock or other
equity securities or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement, or understanding (whether or not in writing)
regarding the transferred Warrant, or (B) which a majority of the Board then in
office reasonably determines is part of a plan, arrangement, or understanding
(whether or not in writing) which has as a primary purpose or effect, the
avoidance of Section 7(e) hereof.
(v) "Distribution Date" shall mean the date which is the later of (A)
the earlier of (x) the 10th Business Day following the Stock Acquisition Date or
(y) the 10th Business Day following the Offer
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Commencement Date or (B) such specified or unspecified date thereafter which is
on or after the Dividend Record Date, as may be determined by a majority of the
Board then in office.
(w) "Dividend Record Date" shall have the meaning set forth in the
preamble to this Agreement.
(x) "Excess Amount" shall have the meaning set forth in Section
11(a)(iii) hereof.
(y) Exchange Act" shall mean the Securities Exchange Act of 1934 (or
any successor act), as in effect the Declaration Date and the Rules and
Regulations promulgated under by the securities Exchange Commission.
(z) "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.
(aa) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(bb) "Offer Commencement Date" shall mean the date of the commencement
by any Person, other than (i) the Company, (ii) a Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any Subsidiary of the
Company or (iv) any Person organized, appointed, or established by the Companyor
such Subsidiary pursuant to the terms of any such plan, of a tender or exchange
offer (including when such offer is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act) if upon consummation thereof the Person and Affiliates thereof would be the
Beneficial Owner of 15% or more of the then outstanding shares of Common Stock
(including any such datewhich is after the date of this Agreement and prior to
the issuance of the Warrants on the Record Date or thereafter).
(cc) "Officers' Certificate" has the meaning set forth in Section 20(b)
hereof.
(dd) "Other Consideration" has the meaning set forth in Section 6(a)
hereof.
(ee) "Permitted Transferee" shall have the meaning set forth in
paragraph 4 of Section A of the Company's Articles of Incorporation.
(ff) "Person" shall mean a corporation, association, partnership, joint
venture, trust, limited liability company, estate, organization, business,
entity or individual.
(gg) "Purchase Price" shall have the meaning set forth in Section 7(b)
hereof.
(hh) "Redemption Price" shall have the meaning set forth in Section 23
hereof.
(ii) "Warrants" shall have the meaning set forth in the preamble to
this Agreement.
(jj) "Warrants Agent" shall have the meaning set forth in the preamble
to this Agreement subject to the appointment of a successor Warrants Agent
pursuant to Section 21 hereof.
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(kk) "Stock Acquisition Date" shall mean the later of (i) the date of
the first public announcement by an Acquiring Person or the Company that an
Acquiring Person has become such (including the first date on which any filing
with any governmental authority disclosing that an Acquiring Person has become
such becomes available to the public), or (ii) the date on which an executive
officer of the Company has actual knowledge that an Acquiring Person has become
such.
(ll) "Subsidiary" shall mean, as of any date, any Person of which the
Company (or other specified parent) owns directly, or indirectly through a
Subsidiary or Subsidiaries, at least majority of the outstanding capital stock
(or other shares of beneficial interest) entitled to vote generally, or holds
directly, or indirectly through a Subsidiary or Subsidiaries, at least a
majority of partnership or similar interests, or is a general partner or of
which the Company (or other specified parent) owns voting securities sufficient
to elect at least a majority of the directors of such Person.
(mm) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(nn) "Summary of Warrants" shall have the meaning set forth in Section
3(b) hereof.
(oo) "Trading Day" shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is
open for the transaction of business or, if such security is not listed or
admitted to trading on any national securities exchange, a day which is a
Business Day.
Section 2. Appointment of Warrants Agent.
The Company hereby appoints the Warrants Agent to act as agent for the
Company and the holders of the Warrants (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders of the Common
Stock) in accordance with the terms and conditions hereof, and the Warrants
Agent hereby accepts such appointment. The Company may from time to time, upon
prior written notice to the Warrants Agent, appoint such Co-Warrants Agents as
it may deem necessary or desirable and the respective duties of the Warrants
Agent and the Co-Warrants Agent shall be as the Company shall determine.
Section 3. Issuance of Warrant Certificates.
(a) Until the Distribution Date, (i) the Warrants will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates
representing shares of Common Stock registered in the names of the holders of
the Common Stock (which certificates shall be deemed also to be certificates for
the associated Warrants) and not by separate Warrants certificates, and (ii) the
Warrants will be transferable only in connection with the transfer of the
associated shares of Common Stock. As soon as practicable after the Distribution
Date, the Warrants Agent will send by first-class, insured, postage prepaid
mail, to each record holder of the Common Stock as of the Close of Business on
the Distribution Date, at the address of such holder shown on the stock transfer
records of the Company,one or more Warrant Certificates, in substantially the
form of Exhibit A hereto (the "Warrant Certificates"), evidencing in the
aggregate that number of Warrants to which such holder is entitled in
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accordance with the provisions of this Agreement. As of and after the
Distribution Date, the Warrants will be evidenced solely by such Warrant
Certificates. The Warrants are exercisable only in accordance with the
provisions of Section 7 thereof and are redeemable only in accordance with
Section 23 hereof.
(b) As soon as practicable after the Dividend Record Date, the Company
will cause a copy of a Summary of Warrants, in substantially the form attached
hereto as Exhibit B (the "Summary of Warrants"), to be sent by first-class,
postage prepaid mail, to each record holder of the Common Stock as of the Close
of Business on the Dividend Record Date, at the address of such holder shown on
the stock transfer records of the Company. With respect to certificates for the
Common Stock outstanding as of the Dividend Record Date, until the Distribution
Date, the Warrants associated with the shares of Common Stock represented by
such certificates will be evidenced by such certificates for the Common Stock
and the registered holders of the Common Stock shall also be the registered
holders of the associated Warrants. Until the Distribution Date (or the earlier
redemption, expiration or termination of the Warrants), the surrender for
transfer of any of the certificates representing shares of the Common Stock
outstanding on the Dividend Record Date, with or without a copy of the Summary
of Warrants, shall also constitute the transfer of the Warrants associated with
the Common Stock represented by such certificate.
(c) Warrants shall be issued in respect of all shares of Common Stock
issued (whether originally issued or delivered from the Company's treasury)
after the Dividend Record Date but prior to the earliest of (i) the Distribution
Date, (ii) the Expiration Date, or (iii) the redemption of the Warrants,
including in respect of all shares of Common Stock issued upon conversion of
Class A Warrants to buy Common Stock. Certificates representing such shares of
Common Stock and certificates issued on transfer of such shares of Common Stock,
with or without a copy of the Summary of Warrants, prior to the Distribution
Date (or earlier expiration or redemption of the Warrants) shall be deemed also
to be certificates for the associated Warrants, and commencing as soon as
reasonably practicable following the Dividend Record Date shall bear the
following legend (or a legend substantially in the form thereof):
This certificate also evidences and entitles the holder to Warrants set
forth in a Warrants Agreement between the issuer and Florida Atlantic
Stock Transfer Corporation, Inc., as Warrants Agent (the "Warrants
Agent"), dated as of November 30, 1999, (the " Warrants Agreement"),
the terms of which are incorporated herein by reference and a copy of
which is on file at the principal offices of both the issuer and the
Warrants Agent. The Warrants Agent will mail to the registered holder
of this certificate a copy of the Warrants Agreement, as in effect on
the date of mailing, without charge upon written request. Under certain
circumstances set forth in the Warrants Agreement, such Warrants will
be evidenced by separate certificates and will no longer be evidenced
by this certificate. Under certain circumstances set forth in the
Warrants Agreement, Warrants issued to, or held by any Person who is,
was or becomes, or acquires shares from, an Acquiring Person or any
Affiliate of an Acquiring Person (as each such term is defined in the
Warrants Agreement and generally relating to the ownership or purchase
of large shareholdings), whether currently held by or on behalf of such
Person or Affiliate or by certain subsequent
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holders, may become null and void.
Until the Distribution Date or the earlier redemption, expiration or termination
of the Warrants, the Warrants associated with the Common Stock shall be
evidenced by the Common Stock certificates alone and the registered holders of
Common Stock shall also be the registered holders of the associated Warrants,
and the surrender for transfer of any of such certificates shall also constitute
the transfer of the Warrants associated with the Common Stock represented by
such certificate. Warrants shall be issued to the extent provided in Section 22
hereof after the Distribution Date and prior to the Expiration Date.
Section 4. Form of Warrant Certificates.
(a) The Warrant Certificates (and the form of assignment and the form
of exercise notice and certificate to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit A hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Warrants may from time to time be listed or traded, or to conform to usage.
Subject to the provisions of Sections 11 and 22 hereof, the Warrant
Certificates, whenever distributed, shall be dated as of the Dividend Record
Date (or, if the shares pursuant to which the Warrants are attached are issued
thereafter, such date of issuance), shall include the date of countersignature
and on their face shall entitle the holders thereof to purchase such number of
shares of Common Stock as shall be set forth therein at the Purchase Price (as
hereinafter defined), but the amount and type of securities issuable upon the
exercise of each Warrant and the Purchase Price shall be subject to adjustment
as provided herein.
(b) Any Warrant Certificate issued pursuant to Section 3(a) or 22
hereof that represents Warrants beneficially owned by (i) any Acquiring Person
or any Affiliate of an Acquiring Person, or (ii) any Disqualified Transferee,
and any other Warrant Certificate issued pursuant to Section 6 or 11 hereof upon
the transfer, exchange, replacement, or adjustment of any such Warrant
Certificate shall contain (to the extent feasible) the following legend:
The Warrants represented by this Warrant Certificate are orwere
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate which includes both affiliates and associates) of an
Acquiring Person (as each such term defined in the Warrants Agreement
between the issuer and FLORIDA ATLANTIC STOCK TRANSFER CORPORATION,
INC.as Warrants Agent, dated as of November 30, 1999, (the "Warrants
Agreement"). Accordingly,thisWarrant Certificate and the ClassA
Warrants represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Warrants Agreement.The
Warrants Agent will mail to the registered holder of this Certificate a
copy of the Warrants Agreement, as in effect on the date of such
mailing, without charge upon written request.
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Section 5. Countersignature and Registration.
The Warrant Certificates shall be executed on behalf of the company by
its Chairman of the Board, President, or any Vice President, either manually or
by facsimile signature, and shall have affixed thereto the Company's seal or
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Warrant
Certificates shall be countersigned, either manually or by facsimile signature,
by the Warrants Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be such officer of the Company before
countersignature by the Warrants Agent and issuance and delivery by the Company,
such Warrant Certificates, nevertheless, may be countersigned by the Warrants
Agent, issued, and delivered with the same force and effect as though the person
who signed such Warrant Certificates had not ceased to be such officer of the
Company. Any Warrant Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Warrant Certificate,
shall be a proper officer of the Company to sign such Warrant Certificate,
although at the date of the execution of this Agreement any such person was not
such an officer.
Following the Distribution Date, the Warrants Agent shall keep or cause
to be kept, at the office of the Warrants Agent designated for such purpose,
books for registration and transfer of the Warrant Certificates issued
hereunder. Such books shall show the names and addresses of the
respectiveholders of the Warrant Certificates, the number of Warrants evidenced
on its face by each of the Warrant Certificates, and the dateof countersignature
thereof by the Warrants Agent. Section 6. Transfer, Split Up, Combination and
Exchange of Warrants Certificates; Mutilated, Destroyed, Lost or Stolen Warrant
Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e), and 14 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the earlier of the Close of Business on the Expiration Date or the redemption
of the Warrants, any Warrant Certificate may be transferred, split up, combined
or exchanged for another Warrant Certificate or Warrant Certificates, entitling
the registered holder to purchase a like number of shares of Common Stock (or,
following a Common Stock Event, Common Stock and/or such other securities, cash,
or other assets as shall be issuable in respect of the Warrants in accordance
with the terms of this Agreement (such other securities, cash or other assets
being referred to herein as "Other Consideration")) as the Warrant Certificate
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Warrant Certificate shall make such request in writing
delivered to the Warrants Agent, and shall surrender the Class A Warrant
Certificate to be transferred, split up, combined, or exchanged at the office of
the Warrants Agent designated for such purpose, accompanied by a signature
guarantee and such other documentation as the Warrants Agent may reasonably
request. Neither the Warrants Agent nor the Company shall be obligated to take
any action whatsoever with respect to the transfer of any such surrendered
Warrant Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Warrant Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner from whom the
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Warrants evidenced by such Warrant Certificate are to be transferred or the
Beneficial Owner to whom such Warrants are to be transferred) or Affiliates
thereof as the Company shall reasonably request. Thereupon, subject to Sections
4(b), 7(e) and 14 hereof, the Company shall execute and the WarrantsAgent shall
countersign and deliver to the Person entitled thereto a Warrant Certificate or
Warrant Certificates, as the case may be, as sorequested. The Company may
require payment by the holders of Warrants of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Warrant Certificates which the Company is
not required to pay in accordance with Section 9(d) hereof.
(b) Upon receipt by the Company and the Warrants Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Warrant Certificate, and, in case of loss, theft or destruction, the receipt
of indemnity or security satisfactory to them, and upon reimbursement to the
Company and the Warrants Agent of all reasonable expenses incidental thereto,
and upon surrender to the Warrants Agent and cancellation of the Warrant
Certificate, if mutilated, accompanied by a signature guarantee and such other
documentation as the Warrants Agent may reasonably request, the Company will
execute and deliver a new Warrant Certificate of like tenor to the Warrants
Agent for countersignature and delivery to the registered owner in lieu of the
Warrant Certificate so lost, stolen, destroyed, or mutilated.
Section 7. Exercise of Warrants; Purchase Price; Expiration Date of Class A
Warrants.
(a) Except as otherwise provided herein, the registered holder of any
Warrant Certificate may exercise the Warrants evidenced thereby in whole or in
part at any time from and after the Distribution Date and at or prior to the
Close of Business on December 30, 2009, (the "Expiration Date") or the earlier
redemption of the Warrants. Immediately upon the Close of Business on the
Expiration Date (or the earlier redemption of Warrants), all Warrants shall be
extinguished and all Warrant Certificates shall become null and void. To
exercise Warrants, the registered holder of the Warrant Certificate evidencing
such Warrants shall surrender such Warrant Certificate, with the form of
election to purchase on the reverse side thereof and the certificate contained
therein duly executed, to the Warrants Agent at the office of the Warrants Agent
designated for such purpose, accompanied by a signature guarantee and such other
documentation as the Warrants Agent may reasonably request, together with
payment in cash, only by electronic or wire transfer, or by certified check or
bank check, of the Purchase Price with respect to the total number of shares of
Common Stock (or, after a Common Stock Event, shares or similar units of Common
Stock and/or Other Consideration) as to which the Warrants are exercised (which
payment shall include any additional amount payable by such Person in accordance
with Section9(d) hereof). The Warrants Agent shall promptly deliver to the
Company all the payments of the Purchase Price received in respect of Warrants
Certificates accepted for this exercise.
(b) The purchase price for each share of Common Stock issuable pursuant
to the exercise of a Warrant (the "Purchase Price") shall initially be $.10,
shall be subject to adjustment as provided in Section 11 hereof, and shall be
payable in lawful money of the United States of America.
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(c) Upon receipt of a Warrant Certificate representing the Warrants,
with the form of election to purchase set forth on the reverse side thereof and
the certificate contained therein duly executed, accompanied by payment of the
Purchase Price, with respect to each Warrant so exercised, the Warrants Agent,
subject to Sections 7(e), 11(a)(iii) and 20(k) hereof, shall thereupon promptly
(i) requisition from any transfer agent of the Common Stock (or from the Company
if there shall be no such transfer agent, or make available if the Warrants
Agent is such transfer agent) certificates for the total number of shares of
Common Stock to be purchased and the Company hereby irrevocably authorizes such
transfer agent to comply with any such request, (ii) after receipt of such
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Warrant Certificate, registered in such name or names
as may be designated in writing by such holder, and (iii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of a fractional share in accordance with Section 14 hereof and after receipt
promptly deliver such cash to or upon the order of the registered holder of such
Warrant Certificate. After the occurrence of a Common Stock Event, the Company
shall make all necessary arrangements so that any Other Consideration then
deliverable in respect of the Warrants is available for distribution by the
Warrants Agent. For purposes of this Section 7, the Warrants Agent shall be
entitled to rely, and shall be protected in relying, on an Officers' Certificate
from the Company to the effect that the Distribution Date has occurred.
(d) Subject to Sections 4(b), 7(e) and 14 hereof, in case the
registered holder of any Warrant Certificate shall exercise less than all the
Class A Warrants evidenced thereby, a new Warrant Certificate evidencing
Warrants equivalent to the Warrants remaining unexercised shall be executed and
delivered by the Company to the Warrants Agent and countersigned and delivered
by the Warrants Agent to the registered holder of such Warrant Certificate or to
such holder's duly authorized assigns.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Common Stock Event, any Warrants
beneficially owned by (i) an Acquiring Person or an Affiliate of an Acquiring
Person, or (ii) a Disqualified Transferee shall become null and void without any
further action, and no holder of such Warrants shall have any Warrants
whatsoever with respect to such Warrants, whether under any provision of this
Agreement or otherwise.The company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) and Section 4(b) hereof are complied
with, but the Company shall have no liability to any holder of Warrant
Certificates or other Person and none of the terms of this Agreement or the
Warrants shall be deemed to be waived with respect to such holder or other
Person as a result of any failure by the Company to make any determinations with
respect to an Acquiring Person or any Affiliate of an Acquiring Person or
Disqualified Transferees hereunder or any failure to have a legend placed on any
Warrant Certificate in accordance with Section 4(b) hereof or on any Common
Stock certificate in accordance with Section 3(c) hereof.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Warrants Agent nor the Company shall be obligated to undertake any action
with respect to a holder of any Warrant Certificate upon the occurrence of any
purported exercise thereof unless such holder shall have (i) completed and
signed the certificate contained in the form of election to purchase set forth
on the
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reverse side of the Warrant Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the Beneficial Owner from
whom the Warrants evidenced by such Warrants Certificate are to be transferred
(or the Beneficial Owner to whom such Warrants are to be transferred) or
Affiliates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Warrant Certificates.
All Warrant Certificates surrendered for the purpose of and accepted
for exercise, or surrendered for the purpose of redemption, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents (other than the Warrants Agent), be delivered to the Warrants Agent for
cancellation or in canceled form, or, if surrendered to the Warrants Agent,
shall be canceled by it, and no Warrant Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Warrants Agent for cancellation and
retirement, and the Warrants Agent shall so cancel and retire, any other Warrant
Certificates purchased or retired by the Company otherwise than upon the
exercise thereof. The Warrants Agent shall deliver all canceled Warrants
Certificates to the Company, or may, at the written request of the Company, but
shall not be required to, destroy such canceled Warrant Certificates, and in
such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Common Stock; Other
Covenants.
(a) The Company covenants and agrees that on and after the Distribution
Date, it shall use reasonable efforts to cause to be reserved and kept available
out of its authorized and unissued shares of Common Stock (or, following the
occurrence of a Common Stock Event, out of its authorized and unissued shares of
Common Stock and/or Other Consideration, or out of its authorized and issued
shares held in its treasury), the number of shares of Common Stock (or,
following a Common Stock Event, shares and/or similar units of Common Stock
and/or Other Consideration) that, except as provided in Section 11(a)(iii)
hereof, would then be sufficient to permit the exercise in full of all
outstanding Warrants; provided, that the reservation of such shares, however,
shall be subject and subordinate to any other reservation of such shares made by
the Company at any time for any lawful purpose; provided, further, however, that
in no event shall such failure to so reserve shares affect the Warrants of any
holder of Warrants hereunder.
(b) The Company covenants and agrees that on and after the Distribution
Date so long as the Common Stock (or, following a Common Stock Event, shares
and/or similar units of Common Stock and/or Other Consideration) issuable upon
the exercise of Warrants may be listed on any national securities exchange, the
Company shall use its best efforts to cause all shares (or similar units)
reserved for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company covenants and agrees that it shall take all such action
as may be necessary to ensure that each share of Common Stock (or, following a
Common Stock Event, each share and/or similar unit of Common Stock and/or Other
Consideration) delivered upon exercise of Warrants shall, at the time of
delivery of the certificates for such shares (or units), subject to payment in
full of
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the Purchase Price, be duly and validly authorized and issued and fully paid and
nonassessable.
(d) The Company covenants and agrees that it shall pay when due and
payable any and all federal and state transfer taxes and similar charges which
may be payable in respect of the issuance or delivery of the Warrants
Certificates or of any shares of Common Stock (or, following the occurrence of a
Common Stock Event, each share and/or similar unit of Common Stock and/or Other
Consideration) upon the exercise of Warrants; provided, however, that the
Company shall not be required to pay any transfer tax which may be payable in
respect of any transfer involved in the transfer or delivery of Warrant
Certificates or in the issuance or delivery of certificates for any shares of
Common Stock (or, following the occurrence of a Common Stock Event, each share
and/or similar unit of Common Stock and/or Other Consideration) in a name other
than that of the registered holder of the Warrant Certificate evidencing
Warrants surrendered for exercise or to issue or deliver any certificates for
any shares of Common Stock (and, following the occurrence of a Common Stock
Event, any shares and/or similar units of Common Stock and/or Other
Consideration) upon the exercise of any Warrants until any such tax shall have
been paid (any such tax being payable by the holder of such Warrants Certificate
at the time of surrender thereof) or until it has been established to the
Company's satisfaction that no such tax is due.
(e) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the first occurrence of a Common
Stock Event on which the consideration to be delivered by the Company upon
exercise of the Warrants has been determined in accordance with this Agreement,
or as soon as is required by law following the Distribution Date, as the case
may be, a registration statement under the Act, with respect to the securities
issuable upon exercise of the Warrants on an appropriate form, (ii) to cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Warrants are no longer exercisable for
such securities, or (B) the Expiration Date or earlier redemption of the
Warrants. The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the various
states of the United States in connection with the exercisability of the
Warrants. The Company may temporarily suspend, for a period of time not to
exceed niNety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(e), the exercisability of the Class A Warrants in
order to prepare and file such registration statement or to permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Warrants has been
temporarily suspended. The Company shall thereafter issue a public announcement
at such time as the suspension is no longer in effect. Notwithstanding any
provision of this Agreement to the contrary, the Warrants shall not be
exercisable in any jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained.
Section 10. Common Stock Record Date; Etc.
Each Person in whose name any certificate for any shares of Common
Stock (or, following the occurrence of a Common Stock Event, shares and/or
similar units of Common Stock and/or Other Consideration) is issued upon the
exercise of Warrants shall for all purposes be deemed to have
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become the holder of record of such shares of Common Stock (or such shares
and/or similar units of Common Stock and/or Other Consideration, as the case may
be) represented thereby, and such certificate shall be dated the date which is
the later of (i) the date upon which the Warrants Certificate evidencing such
Warrants was duly surrendered, or (ii) the date upon which payment of the
Purchase Price (and any applicable transfer taxes) in respect thereof was made;
provided, however, that if such date is a date upon which the relevant transfer
books of the Company are closed, such Person shall be deemed to have become the
record holder of such shares (or Other Consideration) on, and such certificate
shall be dated, the next succeeding Business Day on which such transfer books of
the Company are open; provided, further, that the Company covenants and agrees
that it shall not close such transfer books for a period exceeding t n
consecutive days. Prior to the exercise of the Warrants evidenced thereby (which
shall be deemed to have occurred on the date such certificate for shares and/or
similar units of Common Stock or Other Consideration shall be dated in
accordance with this Section 10), the holder of a Warrant Certificate, as such,
shall not be entitled to any Warrants of a security holder of the Company with
respect to the shares of Common Stock (and/or such shares or similar units of
Common Stock or Other Consideration) for which the Warrants shall be
exercisable, including, without limitation, the Warrant to vote, to receive
dividends or other distributions, or to exercise any preemptive Warrants, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as expressly provided herein.
Section 11. Antidilution Adjustments.
The Purchase Price and the number and kind of securities covered by
each Warrant and the number of Warrants outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a)(i) In the event that the Company shall at any time after the
Declaration Date (A) declare and pay a dividend on the Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding Common Stock, (C) combine
the outstanding Common Stock into a smaller number of shares, or (D) issue,
change, or Alter any of its shares of capital stock in a classification or
recapitalization (including any such reclassification in connection with
consolidation or merger in which the Company is the continuing or surviving
Person), except as otherwise provided in this Section 11(a) and Section 7(e)
hereof, then, and in each such case, the Purchase Price in effect at the time of
the record date for such dividend or the effective time of such subdivision,
combination, reclassification or recapitalization, and the number and kind of
shares of capital stock issuable upon exercise of the Warrants at such time,
shall be proportionately adjusted so that the holder of any Warrant exercised
after such time shall be entitled to receive the aggregate number and kind of
shares of Common Stock or other capital stock which, if such Warrant had been
exercised immediately prior to such time at the Purchase Price then in effect
and at a time when the transfer books for the Common Stock (or other capital
stock) of the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination, reclassification or recapitalization. If an event occurs which
would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof. (ii) In the event:
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(A) any Person shall at any time after the Declaration Date
become an Acquiring Person; or
(B) any Acquiring Person or any Affiliate of any Acquiring
Person, at any time after the Declaration Date, directly or indirectly, shall
(1) merge into the Company or otherwise combine with the Company, and the
Company shall be the continuing or surviving corporation of such merger or
combination and the Class A Common Stock of the Company shall remain outstanding
and no shares thereof shall be changed or otherwise transformed into stock or
other securities of any other Person or the Company or cash or any other
property, (2) in one or more transactions, transfer any assets to the Company in
exchange (in whole or in part) for shares of any class of its equity securities
or forsecurities exercisable for or convertible into shares of any such class or
otherwise obtain from the Company, with or without consideration, any additional
shares of any such class or securities exercisable for or convertible into
shares of any such class (other than as part of a pro rata distribution to all
holders of such class), (3) sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise dispose (in one transaction or a series of transactions)
to, from or with the Company or any of the Company's Subsidiaries, assets with
an aggregate fair market value in excess of 25% of the assets of the Company and
its Subsidiaries determined on a consolidated basis on terms and conditions less
favorable to the Company than the Company would be able to obtain through
arm's-length negotiation with an unaffiliated third party, (4) receive any
compensation from the Company or any of the Company's Subsidiaries other than
compensation as a director of the Company or for full-time employment as a
regular employee at rates in accordance with the Company's (or such
Subsidiary's) past practices, (5) receive the benefit (except proportionately as
a stockholder), of any loans, advances, guarantees, pledges or other financial
assistance provided by the Company or any of its Subsidiaries on terms and
conditions less favorable to the Company (or such Subsidiary) than the Company
would be able to obtain through arm's-length negotiation with an unaffiliated
third party or (6) commence a tender or exchange offer for securities of the
Company; or
(C) during such time as there is an Acquiring Person at any
time after the Declaration Date, there shall be any reclassification of
securities (including any combination thereof), or capitalization of the
Company, or any merger or consolidation of the Company with any of its
Subsidiaries (whether or not with or into or otherwise involving an Acquiring
Person or any Affiliate of an Acquiring Person), or any repurchase by the
Company or any of its Subsidiaries of shares of the Common Stock of the Company,
or any other class or series of securities issued by the Company, which
reclassification, recapitalization, merger, consolidation or repurchase is
effected at a time when a majority of the Board consists of persons who are the
Acquiring Person or its Affiliates, or nominees or designees of any thereof,
which has the effect, directly or indirectly, of increasing by more than 1% the
the proportionate share of the outstanding shares of any class of equity
securities or securities exercisable for or convertible into any class of equity
securities of the Company or any of its Subsidiaries which is directly or
indirectly owned by an Acquiring Person or any Affiliate of an Acquiring Person,
then, in each such case, upon the Close of Business 10 Business Days after the
occurrence of such event, proper provision shall be made so that each holder of
a Warrant, except as provided in Section 7(e) hereof, shall thereafter have the
Warrant to receive, upon exercise thereof at
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the Purchase Price in effect at the time of exercise in accordance with the
terms of this Agreement, in lieu of one share of Common Stock, such number of
shares of Common Stock the Company as shall equal the result obtained by (x)
multiplying an amount equal to the then current Purchase Price by an amount
equal to the number of shares of Common Stock for which a or would have been
exercisable immediately prior to the first occurrence of any such event whether
or not such Warrant was then exercisable, and (y) dividing that product by 1% of
the Current Market Price per share of the Common Stock of the Company (as
defined in Section 11(d) hereof) determined as of the date of such first
occurrence.
(iii) In lieu of issuing whole or fractional shares of Common Stock
accordance with Section7(c) hereof, the Company shall in the event that the
number of shares of Common Stock which are authorized by the Company's
charterbut no outstanding or reserved for issuance for purposes other than upon
exercise of the Warrants are not sufficient to permit the exercise in full of
the Warrants accordance with Section 7(c)hereof, or (ii) if majority of the
Board then in office determines that it would be appropriate and not contrary to
the interests of the holders of Warrants (other than any Acquiring Person or
Disqualified Transferee or any Affiliate of ExcessAmount") equal to the excess
of (1) the value (the "Current Value") ofthe whole or fractional shares of
Common Stock issuable upon theexercise of a Warrant in accordance with Section
7(c) hereof, over(2) the Purchase Price, and (B) with respect to each
Warrant,(subject to Section 7(e) hereof) make adequate provision to
substitutefor such whole or fractional shares of Common Stock, uponpayment of
the applicable Purchase Price, (1) cash, (2) a reduction inthe Purchase Price,
(3) Class B Common Stock or other equity securities of the Company (including,
without limitation, shares or units ofpreferred stock which the Board has deemed
in good faith to have the same value as a share of Common Stock (such shares of
equity securities being referred to herein as "Common Stock Equivalents"), (4)
debt securities of the Company, (5) other assets, or (6) any combination of the
foregoing (which would include the additional consideration provided to any
holder by reducing the Purchase Price) having an aggregate value equal to the
Current Value, where such aggregate value has been determined by the Board;
provided, however, subject to the provisions of Section 9(e), that if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B)above within 30 days following the Close of Business 10 Business
Daysafter the first occurrence of a Common Stock Event described in
Section11(a)(ii) hereof, then the Company shall be obligated to deliver, upon
the surrender for exercise of a Warrant and without requiring payment of the
Purchase Price, whole or fractional shares of Common Stock (to the extent
available) and then, if necessary, cash,securities, and/or assets which in the
aggregate are equal to the Excess Amount. If the Board shall determine in good
faith that it is likely that sufficient additional shares of Common Stock or
Common Stock Equivalents could be authorized for issuance upon exercise in full
of the Warrants, the 30-day period set forth above may be extended to the extent
necessary, but not more than 90 days followingthe Close of Business 10 Business
Days after the first occurrence ofsuch a Common Stock Event (such 30 day period)
as it may be extended to 90days, is referred to herein as
the"SubstitutionPeriod"). To the extent that the Company determines that some
action is to
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be taken pursuant to the preceding provisions of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e) hereof, that (exceptas to the
form of consideration which shall be determined as appropriateby a majority of
the Board then in office) such action shall applyuniformly to all outstanding
Warrants which shall not have become null and void, and (y) may suspend the
exercisability of the Warrants until the expiration of the Substitution Period
in order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such provisions and to
determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the
Warrants has been temporarily suspended. The Company shall thereafter issue a
public announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the Common Stock issuable upon
exercise of a Warrant in accordance with Section 7(c) hereof shall be the
Current Market Price per share of the Common Stock (as determined pursuant to
Section 11(d) hereof) on the Close of Business 10 Business Days after the date
of the first occurrence of such a Common Stock Event and the value of any Common
Stock Equivalent shall be deemed to be equal to the Current Market Price per
share of the Common Stock on such date.
(b) In the event the Company shall, after the Dividend Record Date, fix a record
date for the issuance of any options, warrants, or other Warrants to all holders
of Common Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase (i) Common Stock or (ii)
Common Stock Equivalents or (iii) securities convertible into Common Stock or
Common Stock Equivalents at a price per share of Common Stock or Common Stock
Equivalents (or having a conversion price per share of Common Stock, if a
security is convertible into Common Stock or Common Stock Equivalents) less than
the Current Market Price per share of Common Stock (determined in accordance
with Section 11(d) hereof) determined as of such record date, the Purchase Price
to be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
on such record date plus the number of shares of Common Stock and/or Common
Stock Equivalents which the aggregate minimum offering price of the total number
of shares of Common Stock and/or Common Stock Equivalents so to be offered
(and/or the aggregate minimum conversion price of such convertible securities so
to be offered) would purchase at such Current Market Price, and the denominator
of which shall be the number of shares of Common Stock outstanding on such
record date plus the maximum number of additional shares of Common Stock and/or
Common Stock Equivalents to be offered for subscription or purchase (or the
maximum number of shares into which such convertible securities so to be offered
are convertible). In case such subscription price may be paid by delivery of
consideration part or all of which shall be in a form other than cash, for
purposes of this Section 11(b) the value of such consideration shall be the fair
market value thereof as determined in good faith by the Board (which
determination shall be described in an Officers' Certificate filed with the
Warrants Agent). Shares of Common Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such options, warrants or other Warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed (subject,
however, to such other adjustments as are provided herein).
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(c) In the event that the Company shall, after the Dividend Record
Date, fix a record date for the making of a distribution to all holders of
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the surviving or continuing
Person) of evidences of indebtedness, cash (other than cash dividends paid out
of the earnings or retained earnings of the Company and its Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied), other property (other than a
dividend payable in a number of shares of Common Stock, but including any
dividend payable in capital stock other than Common Stock), or subscription
Warrants or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, of which the numerator shall be (i) the Current Market Price per
share of Common Stock (as defined in Section 11(d) hereof) determined as of such
record date, less (ii) the sum of (A) that portion of cash plus (B) the fair
market value, as determined in good faith by the Board (which determination
shall be described in an Officers' Certificate filed with the Warrants Agent) of
that portion of such evidences of indebtedness, such other property, and/or such
subscription Warrants or warrants applicable to one share of Common Stock and of
which the denominator shall be such Current Market Price per share of the Common
Stock. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event such distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed (subject, however, to such other
adjustments as are provided herein).
(d) For purposes of any computation pursuant to Section 11(a)(iii)
hereof, the "Current Market Price"per share(or unit)of any security on any date
shall be deemed to be the average of the daily Closing Price of such security
for the 10 consecutive Trading Days immediately after such date, and for the
purpose of any other computation hereunder, the "Current Market Price" per share
(or unit) of any security on any date shall be deemed to be the average of the
daily Closing Price of such security for the 20 consecutive Trading Days
immediately prior to such date; provided, however, that in the event that the
Current Market Price per share of such security is determined during a period
following the announcement by the issuer of such security of (i) a dividend or
distribution on such security payable in shares (or units) of such security or
securities convertible into shares (or units) of such security, or (ii) any
subdivision, combination or reclassification of such security, and prior to the
expiration of such 10 Trading Days or 20 Trading Days after (A) the ex-dividend
date for such dividend or distribution, or (B) the record date for such
subdivision, combination or reclassification, as the case may be, then, and in
each such case, the "Current Market Price" shall be the Closing Price of such
security on the last day of such respective 10 Trading Day or 20 Trading Day
period. For purposes of this Agreement, the "Closing Price" of any security on
any day shall be the last sale price, regular way, with respect to shares (or
units) of such security, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, with respect to such
security, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange; or, if such security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such security is listed or
admitted to trading; or, if such security is not
Page 18 of 47
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so listed or admitted to trading, the last quoted sale price with respect to
shares (or units) of such security, or, if not so quoted, as the average of the
high bid and low asked prices in the over-the-counter market with respect to
shares (or units) of such security, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or such other similar system
then in use; or, if on any such date such security is not quoted by any such
organization, the average of the closing bid and asked prices with respect to
shares (or units) of such security, as furnished by a professional market maker
making a market in such security selected by the Board; or, if no such market
maker is available, the fair market value of shares (or units) of such security
as of such day as determined in good faith by the Board (which determination
shall be described in an Officers' Certificate filed with the Warrants Agent).
(e) No adjustment in the Purchase Price shall be required unless
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share (or similar
unit) of Common Stock or other securities. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction which
mandates the adjustment or (ii) the Expiration Date. Anything in this Section 11
to the contrary notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those required by this Section
11, as it in its discretion shall determine to be advisable in order that any
dividends, subdivision of shares, distribution of Warrants to purchase shares of
beneficial interest or other stock or securities, or distribution of se curities
convertible into or exchangeable for stock hereafter made by the Company to its
stockholders shall not be taxable.
(f) In the event that at any time, as a result of an adjustment made in
respect of a Common Stock Event, the holder of any Warrant thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to such other shares
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k), (m) and (p)
hereof, and the provisions of Sections 7, 9, 10, 11(d), 13 and 14 hereof with
respect to the shares of Common Stock shall apply on like terms to any such
other shares.
(g) All Warrants originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the Warrant to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Warrants
represented thereby, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made pursuant to Sections 11(b) and 11(c) hereof, each Warrant
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the Warrant to purchase, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest ten-thousandth of a share)
obtained by
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(i) multiplying (x) the number of shares of Common Stock covered by a Warrant
immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) Assuming that no other adjustment pursuant to this Section 11 has
been made, the Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Warrants in substitution for any
adjustment in the number of shares of Common Stock purchasable upon the exercise
of a Warrant. Each of the Warrants outstanding after such adjustment of the
number of Warrants shall be exercisable for the number of shares of Common Stock
for which a Warrant was exercisable immediately prior to such adjustment. Each
Warrant held of record prior to such adjustment of the number of Warrants shall
become that number of Warrants (calculated to the nearest ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price by the Purchase Price in effect immediately
after such adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Warrants, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Warrant Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Warrant Certificates have been issued, upon each adjustment of
the number of Warrants pursuant to this Section 11(i) the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Warrants Certificates on such record date Warrant Certificates evidencing,
subject to Section 14 hereof, the additional Warrants to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in substitution
and replacement for the Warrant Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company, new
Warrant Certificates evidencing all the Warrants to which such holders shall be
entitled after such adjustment. Warrant Certificates so to be distributed shall
be issued, executed, and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Purchase Price) and shall
be registered in the names of the holders of record of Warrant Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of whole or fractional shares of Common Stock issuable upon exercise
of such Warrants, the Warrant Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of shares of
Common Stock which were expressed in the initial Warrant Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the number of shares of
Common Stock issuable upon exercise of the Warrants, the Company may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue such number of fully paid and nonassessable shares of Common Stock
at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be
Page 20 of 47
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made effective as of a record date for a specified event, the Company may elect
to defer until the occurrence of such event the issuing to the holder of any
Warrant exercised after such record date of the number of shares of Common Stock
or other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of shares of Common Stock or other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's Warrant to receive such
additional securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, by means of a resolution of the Board acting in good faith,
shall determine to be advisable in order that any consolidation or subdivision
of the Common Stock, issuance wholly for cash of any Common Stock at less than
the Current Market Price thereof, issuance wholly for cash of Common Stock (or
other securities which by their terms are convertible into or exchangeable for
Common Stock), dividends payable in shares of Common Stock or other capital
stock or shares of beneficial interest, or issuance of Warrants, options, or
warrants referred to hereinabove in this Section 11, hereafter made or declared
by the Company to the holders of its Common Stock, shall not be taxable to such
holders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, more than 25% of (A) the assets
(taken at net asset value as stated on the books of the Company and determined
on a consolidated basis in accordance with generally accepted accounting
principles consistently applied) or (B) the earning power of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) to any other Person or
Persons (other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale, there are any
Warrants, warrants or other instruments or securities outstanding or agreements
(whether or not in writing) in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Warrants or (y)
prior to, simultaneously with or immediately after such consolidation, merger or
sale, the stockholders of such other Person shall have received a distribution
of Warrants previously owned by such Person or any of its Affiliates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23 or 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Warrants.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company
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shall at any time after the Dividend Declaration Date and prior to the
Distribution Date (i) declare or pay a dividend on the outstanding shares of
Common Stock payable in shares of Common Stock, or (ii) effect a subdivision,
combination or consolidation of the outstanding Class A Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock) into a greater or smaller number of shares, then in any such case, (i)
the number of shares of Common Stock purchasable after such event upon proper
exercise of each Warrant shall be determined by multiplying the number of shares
of Common Stock so purchasable immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event; and (ii) each share of
Common Stock outstanding immediately after such event shall have issued with
respect to it that number of Warrants which each share of Common Stock
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(p) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
Section 12. Certificate of Adjustments.
Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall (a) promptly prepare an Officers' Certificate setting forth
such adjustment, including any adjustment in Purchase Price, the number of
shares or Other Consideration payable, and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Warrants Agent and
with the transfer agent for the Common Stock a copy of such Officers'
Certificate, and (c) mail a brief summary thereof to each registered holder of a
Warrant Certificate in accordance with Section 26 hereof. The Warrants Agent
shall be fully protected in relying on any such Officers' Certificate and on any
adjustment therein contained, and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such an Officers'
Certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
In the event that, following the Stock Acquisition Date, directly or
indirectly, (a) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof) and the Company shall not be the continuing
or surviving Person of such consolidation or merger, (b) any Person (other than
a Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof) shall consolidate with, or merge with and into, the Company, the Company
shall be the continuing or surviving Person of such consolidation or merger and,
in connection with such consolidation or merger, all or part of the Common Stock
of the Company shall be changed or otherwise transformed into other stock or
other securities of any other Person or the Company or cash or any other
property, or (c) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, more than 25% of (A) the assets (taken at net
asset value as stated on the books of the Company and determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied) or (B) the earning power of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with
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generally accepted accounting principles consistently applied) to any Person
(other than the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o) hereof) then, from and
after such event, proper provision shall be made so that (i) each holder of a
Warrant, except as provided in Section 7(e) hereof, shall thereafter have the
Warrant to receive, upon the exercise thereof at the Purchase Price in effect at
the time of such exercise in accordance with the terms of this Agreement, such
number of whole or fractional shares of validly authorized and issued, fully
paid, non-assessable, and freely tradeable Common Stock of such other Person (or
in the case of a transaction or series of transactions described in clause (c)
above, the Person receiving the greatest amount of the assets or earning power
of the Company, or if the Common Stock of such other Person is not and has not
been continuously registered under Section 12 of the Exchange Act for the
preceding 12-month period and such Person is a direct or indirect Subsidiary of
another Person, that other Person, or if such other Person is a direct or
indirect Subsidiary of more than one other Person, the Common Stock of two or
more of which are and have been so registered, such other Person whose
outstanding Common Stock has the greatest aggregate value), free and clear of
any liens, encumbrances, Warrants of first refusal, or other adverse claims, as
shall be equal to the result obtained by (x) multiplying the Purchase Price in
effect immediately prior to the first occurrence of any Common Stock Event
described in this Section 13 by the number of shares of Common Stock for which a
Warrant is exercisable immediately prior to such first occurrence (and without
taking into account any prior adjustment made pursuant to 11(a)(ii)) and (y)
dividing that product by 1% of the Current Market Price per share (as defined in
Section 11(d) hereof) of the Common Stock of such other Person determined as of
the date of consummation of such consolidation, merger, sale, or transfer; (ii)
the issuer of such Common Stock shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale, or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed, for all purposes of this Agreement, to
refer to such issuer, it being specifically intended that the provisions of
Section 11 hereof (other than Section 11(a)(ii) hereof) shall apply only to such
issuer following the first occurrence of a Common Stock Event described in this
Section 13; (iv) such issuer shall take such steps (including, but not limited
to, the reservation of a sufficient number of shares of its Common Stock) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the whole or fractional shares of its Common Stock thereafter
deliverable upon the exercise of the Warrants; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the first occurrence of any
Common Stock Event described in clauses (a), (b) or (c) of this Section 13. The
Company shallnot consummate any such consolidation, merger, sale or transfer
unless (i) such issuer shall have a sufficient number of authorized shares of
its Common Stock which have not been issued or reserved for issuance as will
permit the exercise in full of the Warrants in accordance with this Section 13,
and (ii) prior thereto the Company and such issuer shall have executed and
delivered to the Warrants Agent a supplemental agreement so providing and
further providing that as soon as practicable after the date of any Common Stock
Event described above in this Section 13 such issuer shall (A) prepare and file
a registration statement under the Act, with respect to the Warrants and the
securities purchasable upon exercise of the Warrants on an appropriate form, and
will use its best efforts to cause such registration statement to (I) become
effective as soon as practicable after such filing and (II) remain effective
(with a prospectus at all times meeting the requirements of the Act) until the
Expiration Date, and (B) will deliver to holders of the Warrants historical
financial statements of such
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issuer and each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act. Furthermore, in
case the Person which is to be party to a transaction referred to in this
Section 13 has any provision in any of its authorized securities or in its
charter or by-laws or other agreement or instrument governing its affairs, which
provision would have the effect of causing such Person to issue, in connection
with, or as a consequence of, the consummation of a Common Stock Event described
in clauses (a), (b), or (c) of this Section 13, whole or fractional shares of
Common Stock of such Person at less than the then Current Market Price per share
thereof (as defined in Section 11(d) hereof), or to issue securities exercisable
for, or convertible into, Common Stock of such Person at less than such then
Current Market Price, then, in such event, the Company hereby agrees with each
holder of the Warrants that it shall not consummate any such transaction unless
prior thereto the Company and such Person shall have executed and delivered to
the Warrants Agent a supplemental agreement providing that such provision in
question shall have been canceled, waived, or amended so that it will have no
effect in connection with, or as a consequence of, the consummation of the
proposed transaction. The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Common Stock Event described in this Section 13 shall occur at any time
after the occurrence of a Common Stock Event described in Section 11(a)(ii)
hereof, the Warrants which have not theretofore been exercised shall thereafter
become exercisable, except as provided in Section 7(e) hereof, in the manner
described in this Section 13.
Section 14. Fractional Warrants and Fractional Shares.
(a) The Company shall not be required to issue fractions of Warrants or
to distribute fractions of Warrants, except prior to the Distribution Date as
provided in Section 11(i) hereof, or to distribute Warrant Certificates which
evidence fractional Warrants. In lieu of issuing such fractional Warrants, at
the election of the Company, there shall be paid to the registered holders of
the Warrants with regard to which such fractional Warrants would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Warrant. For the purposes of this Section 14(a), the current
market value of a whole Warrant shall be the Closing Price of the Warrants for
the Trading Day immediately prior to the date on which such fractional Warrants
would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of shares of
its capital stock upon exercise of the Warrants or to distribute certificates
which evidence fractional shares. In lieu of fractional shares, at the election
of the Company, there shall be paid to the registered holders of Warrants at the
time such Warrants are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of a share of such capital stock.
For purposes of this Section 14(b), the current market value of a share of such
capital stock shall be the Closing Price of such capital stock for the Trading
Day immediately prior to the date of such exercise.
(c) The holder of a Warrant, by the acceptance of the Warrant,
expressly waives such holder's Warrant to receive any fractional Warrants or
(except as provided in Section 14(b) hereof) any fractional share upon exercise
of a Warrant.
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Section 15. Warrants of Action.
Excepting the Warrants of action given the Warrants Agent under Section
18 hereof and except as set forth in Section 20(l) hereof, all Warrants of
action in respect of this Agreement are vested in the registered holder of each
Warrant; and any registered holder of any Warrant, without the consent of the
Warrants Agent or of the holder of any other Warrant, may, in its own behalf and
for its own benefit, enforce, and may institute and maintain any suit, action,
or proceeding against the Company to enforce, or otherwise act in respect of,
such registered holder's Warrant to exercise the Warrants evidenced by such
Warrant in the manner provided in such Warrant Certificate and in this
Agreement, and the Company hereby agrees to reimburse such registered holder for
all expenses (including reasonable attorneys' fees) incurred by such registered
holder in connection therewith. Without limiting the foregoing or any remedies
available to the holders of Warrants, it is specifically acknowledged that the
holders of Warrants would not have an adequate remedy at law for any breach of
the obligations hereunder, and shall be entitled to injunctive relief against
actual or threatened violations of the obligations hereunder of any Person
subject to this Agreement.
Section 16. Agreement of Warrants Holders.
Every holder of a Warrant by accepting the same consents and agrees
with the Company and the Warrants Agent and with every other holder of a Warrant
that:
(a) prior to the Distribution Date, the Warrants will be transferable
only in connection with the transfer of Common Stock;
(b) from and after the Distribution Date, the Warrants Certificates are
transferable only on the registry books of the Warrants Agent if surrendered at
the principal office of the Warrants Agent, duly endorsed or accompanied by a
proper instrument of transfer with a form of assignment and certificate set
forth on the reverse side thereof duly executed, accompanied by a signature
guarantee and such other documentation as the Warrants Agent may reasonably
request;
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the
Warrants Agent may deem and treat the person in whose name a Warrant Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Warrants evidenced thereby
(notwithstanding any notations of ownership or writing on the Warrant
Certificate or, prior to the Distribution Date, the associated Common Stock
certificate, made by anyone other than the Company or the Warrants Agent) for
all purposes whatsoever, and neither the Company nor the Warrants Agent shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Warrants Agent shall have any liability to any holder of a
Warrant or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or
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executive order promulgated or enacted by any governmental authority prohibiting
or otherwise restraining performance of such obligation; provided, however, the
Company agrees to use its best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
Section 17. Warrant Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Warrant Certificate shall be entitled to
vote, receive dividends, or otherwise be deemed for any purpose the holder of
any securities of the Company which may be issuable on the exercise of the Class
A Warrants represented thereby, nor shall anything contained herein or in any
Warrant Certificate be construed to confer upon the holder of any Warrant
Certificate, as such, any of the Warrants of a stockholder of the Company or any
Warrant to vote in the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
action by the Company, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 hereof), or to receive
dividends or preemptive Warrants, or otherwise, until the time specified in
Section 10 hereof.
Section 18. Concerning the Warrants Agent.
The Company agrees to pay to the Warrants Agent such reasonable
compensation as shall be agreed to in writing between the Company and the
Warrants Agent for all services rendered by it hereunder and, from time to time,
on demand of the Warrants Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Warrants Agent for, and to
hold it harmless against, any and all loss, liability, damages, claims or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Warrants Agent, for anything done or omitted by the Warrants
Agent in connection with the acceptance and administration of this Agreement,
including the costs and expenses (including reasonable attorneys' fees and
expenses) of defending against any claim of liability for any of the foregoing.
The Warrants Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered, or omitted by it in connection with
its administration of this Agreement in reliance upon any Warrants Certificate
or certificate for any number of shares of Common Stock or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, instruction, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed and executed by the proper Person or Persons, and verified or
acknowledged as required by this Agreement.
Section 19. Merger or Consolidation or Change of Name of Warrants Agent.
Any corporation into which the Warrants Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrants Agent shall be a party, or any corporation
succeeding to the shareholder services business of the Warrants Agent, shall be
the successor to the Warrants Agent under this Agreement without the
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execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such corporation would be eligible for
appointment as a successor Warrants Agent under the provisions of Section 21
hereof. In case at the time such successor Warrants Agent shall succeed to the
agency created by this Agreement and any of the Warrant Certificates shall have
been countersigned but not delivered, any such successor Warrants Agent may
adopt the countersignature of the predecessor Warrants Agent and deliver such
Warrant Certificates so countersigned; and in case at that time any of the
Warrant Certificates shall not have been countersigned, any successor Warrants
Agent may countersign such Warrant Certificates either in the name of the
predecessor Warrants Agent or in the name of the successor Warrants Agent; and
in all such cases such Warrant Certificates shall have the full force provided
in the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrants Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrants Agent may adopt the countersignature under its prior
name and deliver such Warrant Certificates so countersigned; and in case at that
time any of the Warrant Certificates shall not have been countersigned, the
Warrants Agent may countersign such Warrant Certificates either in its prior
name or in its changed name; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in this
Agreement.
Section 20. Duties of Warrants Agent.
The Warrants Agent undertakes only the duties and obligations expressly
imposed upon it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Warrants Agent. The Warrants Agent shall
perform its duties and obligations hereunder upon the following terms and
conditions:
(a) The Warrants Agent may consult with legal counsel of its selection
(who may be legal counsel to the Company), and the opinion of such counsel shall
be full and complete authorization and protection to the Warrants Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Warrants Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person) be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate (an "Officers' Certificate") signed by a person believed by the
Warrants Agent to be the Chairman of the Board, the President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Warrants Agent; and
such Officers' Certificate shall be full authorization to the Warrants Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such Officers' Certificate.
(c) The Warrants Agent shall be liable hereunder only for its own gross
negligence, bad faith, or
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willful misconduct.
(d) The Warrants Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Warrant
Certificates (except its countersignature on such Warrants Certificate) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Warrants Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Warrants Agent) or in respect of the validity or
execution of any Warrant Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Warrants Certificate; nor shall
it be responsible for any adjustment required under the provisions of Sections
11 or 13 hereof or be responsible for the manner, method or amount of any such
adjustment or procedures or the ascertaining of the existence of facts that
would require any such adjustment or procedure (except with respect to the
exercise of Warrants evidenced by Warrants Certificates after receipt of a
certificate delivered pursuant to Section 12 hereof, describing any such
adjustment or procedures); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Common Stock or other securities to be issued pursuant to this Agreement or any
Warrant Certificate or as to whether any shares of Common Stock, or any shares
or similar units of other securities, will, when issued, be validly authorized
and issued, fully paid, and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Warrants Agent for the carrying out or performing by the
Warrants Agent of the provisions of this Agreement.
(g) The Warrants Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Warrants Agent to be the Chairman of the Board, the
President or any Vice President or the Secretary or any Assistant Secretary or
the Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer. Any application by the
Warrants Agent for written instructions from the Company may, at the option of
the Warrants Agent, set forth in writing any action proposed to be taken or
omitted by the Warrants Agent with respect to its duties or obligations under
this Agreement and the date on and/or after which such action shall be taken or
omitted and the Warrants Agent shall not be liable for any action taken or
omitted in accordance with a proposal included in any such application on or
after the date specified therein (which date shall not be less than three
Business Days after the date any such officer actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking or omitting any such action, the Warrants
Agent has received written instructions from the Company in response to such
application specifying the action to be taken or omitted.
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(h) The Warrants Agent and any stockholder, director, officer, or
employee of the Warrants Agent may buy, sell, or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Warrants Agent under this Agreement. Nothing herein shall preclude the Warrants
Agent from acting in any other capacity for the Company or for any other entity.
(i) The Warrants Agent may execute and exercise any of the Warrants or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Warrants Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, that reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Warrants Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its Warrants if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Warrant Certificate surrendered to the
Warrants Agent for exercise or transfer, the certification appearing on the
reverse side thereof following the form of election to purchase has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Warrants Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the Company.
(l) The provisions of this Section 20 are solely for the benefit of the
Warrants Agent or the Company and any failure or omission under this Section 20
shall not affect the Warrants of the Company under this Agreement and neither
the Warrants Agent nor the Company shall have any liability to any holder of
Warrants or other Person on account of such failure or omission.
Section 21. Change of Warrants Agent.
The Warrants Agent or any successor Warrants Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to the transfer agent of the Common Stock by
registered or certified mail, and, subsequent to the Distribution Date, to the
holders of the Warrant Certificates by first-class mail. The Company may remove
the Warrants Agent or any successor Warrants Agent upon 30 days' notice in
writing, mailed to the Warrants Agent, to the transfer agent of the Common Stock
by registered or certified mail, and, subsequent to the Distribution Date, to
the holders of the Warrant Certificates by first-class mail. If the Warrants
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Warrants Agent. If the Company
shall fail to make such appointment within a period o 30 days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Warrants Agent or by
the holder of a Warrant Certificate (who shall, with such notice,
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submit such holder's Warrant Certificate for inspection by the Company), then
the registered holder of any Warrant Certificate may apply to any court of
competent jurisdiction for the appointment of a new Warrants Agent. Any
successor Warrants Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States, the State of New York or the State of Florida (or of any other State of
the United States so long as such corporation is authorized to do business as a
banking institution in the State of New York or the State of Florida, in good
standing, having an office designated for such purpose in the State of New York
or the State of Florida, which is authorized under such laws to exercise
corporate trust and/or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Warrants Agent a combined capital and surplus of at least
$50,000,000. After appointment, the successor Warrants Agent shall be vested
with the same powers, Warrants, duties and responsibilities as if it had been
originally named as Warrants Agent without further act or deed; but the
predecessor Warrants Agent shall deliver and transfer to the successor Warrants
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose; and,
except as the context herein otherwise requires, such successor Warrants Agent
shall be deemed to be the "Warrants Agent" for all purposes of this Agreement.
Not later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Warrants Agent and the transfer
agent of the Common Stock, and mail a notice thereof in writing to the
registered holders of the Warrant Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Warrants
Agent or the appointment of the successor Warrants Agent, as the case may be.
Section 22. Issuance of New Warrant Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Warrants to the contrary, the Company may, at its option, issue new Warrant
Certificates evidencing Warrants in such form as may be approved by the Board to
reflect any adjustment or change in the Purchase Price per share and the number
or kind or class of shares of stock or other securities or property purchasable
under the Warrant Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale by the Company
of shares of Common Stock following the Distribution Date and prior to the
redemption or expiration of the Warrants, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board, issue
Warrant Certificates representing the appropriate number of Warrants in
connection with such issuance or sale; provided, however, that (i) no such
Warrants evidenced by a Warrant Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the Company or
the Person to whom such Warrants would be issued, and (ii) no such Warrant
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
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The Company, may, at its option, upon the affirmative vote or written
consent of not less than a majority of the Board then in office, at any time
prior to the earlier of (i) the Distribution Date or (ii) the Close of Business
on the Expiration Date, redeem all (but not less than all) of the then
outstanding Warrants at a redemption price of $.01 per Warrant, appropriately
adjusted to reflect any stock split, stock dividend, combination of shares, or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). The Company may, at its
option, pay the Redemption Price in cash, Common Stock (based on the Current
Market Price of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the majority of the Board then in office.
Immediately upon the taking of such action ordering the redemption of all of the
Warrants, evidence of which shall have been filed with the Warrants Agent, and
without any further action and without any notice, the Warrant to exercise the
Warrants so redeemed will terminate and the only Warrant thereafter of the
holders of such Warrants so redeemed shall be to receive the Redemption Price
(without the payment of any interest thereon). Within 10 days after such action
ordering the redemption of all of the Warrants, the Company shall give notice of
such redemption to the holders of the then outstanding Warrants by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Warrants Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption shall state the
method by which the payment of the Redemption Price shall be made.
Section 24. Exchange.
(a) The Board, by majority vote of the Directors then in office, may,
at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Warrants for shares
of Common Stock at an exchange ratio of one share of Common Stock per Warrant,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio, as the same
may be adjusted from time to time, being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board shall not be
empowered to effect such exchange at any time after any Person (other than (i)
the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan
of the Company or of any such Subsidiary, or (iv) any entity holding Common
Stock for or pursuant to the terms of any such plan), together with all
Affiliates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Stock then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of
any Warrants pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the Warrant to exercise such Warrants
shall terminate and the only Warrant thereafter of a holder of such Warrants
shall be to receive that number of shares of Common Stock equal to the number of
such Warrants held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice of any such exchange
to all of the holders of such Warrants at their last addresses as they
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appear upon the registry books of the Warrants Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange shall state the method by
which the exchange of the Common Stock for Warrants shall be effected and, in
the event of any partial exchange, the number of Warrants which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Warrants (other than Warrants which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Warrants.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute shares of Common Stock Equivalents for shares of Common
Stock exchangeable for Warrants.
(d) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Warrants as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
Common Stock for issuance upon exchange of the Warrants.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to each registered holder of a Warrant Certificate with regard to
which a fractional share of Common Stock would otherwise be issuable an amount
in cash equal to the same fraction of the current market value of a whole share
of Common Stock. For the purposes of this paragraph (e), the current market
value of a whole share of Common Stock shall be the Closing Price of a share of
Common Stock (as determined pursuant to Section 11(d) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions.
In case the Company shall after the Distribution Date propose (a) to
pay any dividend payable in stock of any class to the holders of its Common
Stock or to make any other distribution to the holders of its Common Stock
(other than a cash dividend out of earnings or the retained earnings of the
Company), or (b) to offer to the holders of its Common Stock Warrants or
warrants to subscribe for or to purchase any additional shares of Common Stock
or shares of stock of any other class or any other securities, Warrants, or
options, or (c) to effect any reclassification of the Common Stock (other than a
reclassification involving only the subdivision of outstanding shares of Common
Stock), or (d) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one transaction or a series of related
transactions, of more than 25% of (i) the assets of the Company and its
Subsidiaries (taken at net asset value as stated on the books of the Company and
determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied) or (ii) the earning power of the
Company and its Subsidiaries (determined on a consolidated basis in accordance
with generally accepted accounting principles consistently applied) to any other
Person or Persons, or (e) to effect the liquidation, dissolution or winding up
of the Company, then, in each such case, the Company shall give to the Warrants
Agent and each holder of a Warrant, in
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<PAGE>
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
Warrants or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein b y the holders of Common Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (a) or (b) above at least twenty days prior to the
record date for determining holders of the Common Stock for purposes of such
action, and in the case of any such other action, at least twenty days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of Common Stock which ever shall be The earlier.
Thefailure to give notice required by this Section 25 or any defect there in
shall not affect the legality or validity of the action taken by the Company or
the vote upon any such action.
In case any Common Stock Event described in Section 11(a)(ii) hereof
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to the Warrants Agent and each holder of a Warrants Certificate,
in accordance with Section 26 hereof, a notice of the occurrence of such Common
Stock Event, which shall specify such event and the consequences of the event to
holders of Warrants under Section 11(a)(ii) hereof.
Notwithstanding anything in this Agreement to the contrary, prior to
the Distribution Date a filing by the Company with the Securities and Exchange
Commission shall constitute sufficient notice to the holders of securities of
the Company, including the Warrants, for purposes of this Agreement and no other
notice need be given.
Section 26. Notices.
Notices or demands authorized by this Agreement to be given or made by
the Warrants Agent or by the holder of any Warrant Certificate to the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Warrants
Agent) as follows:
iNet Technology Group Inc.
4400 PGA Boulevard, Suite 307
Palm Beach Gardens, FL 33410
ATTN: Donald Miller
Copy to:
Joel McTague
Hackney Miller, P.A.
4400 PGA Boulevard, Suite 505
Palm Beach Gardens, FL 33410
Subject to the provisions of Sections 19 and 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Warrant Certificate to or
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<PAGE>
on the Warrants Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
FLORIDA ATLANTIC STOCK TRANSFER CORPORATION, INC.
(iNet Technology Group Inc. Warrants Agreement)
Notices or demands authorized by this Agreement to be given or made by the
Company or the Warrants Agent to the holder of any Warrant Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
Prior to the Distribution Date, the Board, upon the vote of a majority
of the Board then in office, may from time to time supplement or amend this
Agreement without the approval of any holders of the Warrants. From and after
the Distribution Date, the Board may, upon the vote of a majority of the Board
then in office, from time to time amend this Agreement without the approval of
any holders of the Warrants in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to change any time period
governing redemption of the Warrants or any other time period or (iv) to make
any other provisions in regard to matters or questions arising hereunder which
the Board, upon the vote of a majority of the Board then in office, may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of the Warrants (other than any Acquiring Person or Disqualified
Transferee or any Affiliate of an Acquiring Person or Disqualified Transferee).
The Warrants Agent shall join with the Company in the execution and delivery of
any such supplement or amendment, unless such supplement or amendment affects
any of the Warrants, duties, or obligations of the Warrants Agent hereunder, in
which case the Warrants Agent may, but shall not be required to, join in such
execution and delivery.
Section 28. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrants Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board; etc.
The Board shall have the exclusive power and authority to administer
this Agreement and to exercise all Warrants and powers specifically granted to
the Board, or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the Warrant and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below all omissions with respect to the
foregoing) which are done or made by the Board in good faith and
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<PAGE>
with the concurrence of a majority of the Board then in office shall (x) be
final, conclusive and binding on the Company, the Warrants Agent, the holders of
the Warrants and all other parties and (y) not subject any Director to any
liability to the holders of the Warrants.
Section 30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Warrants Agent, and the registered holders of the
Warrants (and, prior to the Distribution Date, the associated shares of Common
Stock) any legal or equitable Warrant, remedy, or claim under this Agreement or
the Warrants; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Warrants Agent, and the registered holders of the Warrants
(and, prior to the Distribution Date, the associated Class A Common Stock).
Section 31. Severability.
The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the Warrant of redemption set
forth in Section 23 hereof shall be reinstated and shall not expire until the
Close of Business on the tenth day following the date of such determination by
the Board.
Section 32. Governing Law.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Florida and for all
purposes shall be governed by and construed in accordance with the laws of said
State applicable to contracts to be made and performed entirely within said
State.
Section 33. Counterparts.
This Agreement may be executed in any number of counterparts andeachof
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
Section 34. Descriptive Headings.
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and set their respective hands and seals, all as of the day and year
first above written.
iNet Technology Group Inc.
By: _______________________________
Title: President
Attest:
By: ______________________________
Title:
FLORIDA ATLANTIC STOCK TRANSFER CORPORATION, INC.
By: ______________________________
Title:
Attest:
By: _______________________________
Title:
Page 36 of 47
<PAGE>
EXHIBIT A
FORM OF WARRANT CERTIFICATE
Certificate No. W- _______ Warrants
NOT EXERCISABLE AFTER DECEMBER 30, 2009, OR EARLIER IF ORDER OF REDEMPTION IS
GIVEN. THE WARRANTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.01 PER WARRANT ON THE TERMS SET FORTH IN THE WARRANT AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, WARRANTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE (WHICH INCLUDES AFFILIATES AND ASSOCIATES) OF AN ACQUIRING PERSON (AS
EACH SUCH TERM IS DEFINED IN THE WARRANTS AGREEMENT) AND ANY SUBSEQUENT HOLDER
OF SUCH WARRANTS MAY BECOME NULL AND VOID. THE WARRANTS SHALL NOT BE
EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION
WHERE THE REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE
EXERCISE BY SUCH HOLDER, OF THE WARRANTS IN SUCH JURISDICTION SHALL NOT HAVE
BEEN OBTAINED OR BE OBTAINABLE. [THE WARRANTS REPRESENTED BY THIS CERTIFICATE
ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE (WHICH INCLUDES AFFILIATES ANDASSOCIATES) OF AN ACQUIRING PERSON
(AS EACH SUCH TERM IS DEFINED IN THE WARRANTS AGREEMENT). ACCORDINGLY, THIS
WARRANT CERTIFICATE AND THE WARRANTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE WARRANT AGREEMENT.](1)
Warrant Certificate
iNet Technology Group Inc.
This certifies that _______________, or registered assigns, is the
registered owner of the number of Warrants set forth above, each of which
entitles the owner thereof, subject to the terms, provisions, and conditions of
the Warrants Agreement dated as of November 30, 1999, (the "Warrants Agreement")
between iNet Technology Group Inc. (the "Company"), and FLORIDA ATLANTIC STOCK
TRANSFER CORPORATION, INC. (the "Warrants Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is defined in the Warrants
Agreement) and prior to 5:00 p.m. (Eastern Standard Time) on December 30, 2009,
(the "Expiration Date") at the office of the Warrants Agent designated for such
purpose, or its successors as Warrants Agent, one share of Common Stock, with a
par value of $.0001 per share (" Common Stock"), of the Company per each Warrant
represented hereby, at a purchase price of $.10
- --------
(1) The portion of the legend in brackets shall be inserted only if
applicable.
Page 37 of 47
<PAGE>
per share (the "Purchase Price") upon presentation and surrender of this Warrant
Certificate with the Form of Election to Purchase set forth on the reverse side
hereof and the certificate contained therein duly completed and executed,
accompanied by a signature guarantee and such other documentation as the
Warrants Agent may reasonably request. The number of Warrants evidenced by this
Warrant Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of January 31, 2000, based on the
shares of Common Stock of the Company as constituted at such date.
As more fully set forth in the Warrants Agreement, upon the occurrence
of a Common Stock Event (as such term is defined in the Warrants Agreement), if
the Warrants evidenced by this Warrants Certificate are beneficially owned by
(i) an Acquiring Person or an Affiliate of an Acquiring Person (as each such
term is defined in the Warrants Agreement) or (ii) a Disqualified Transferee (as
defined in the Warrants Agreement), such Warrants shall automatically become
null and void and no holder hereof shall have any Warrant with respect to such
Warrants from and after the occurrence of such Common Stock Event.
The Warrants evidenced by this Warrant Certificate shall not be
exercisable, and shall be void so long as held, by a holder in any jurisdiction
where the requisite qualification to the issuance to such holder, or the
exercise by such holder, of the Warrants in such jurisdiction shall not have
been obtained or be obtainable.
As provided in the Warrants Agreement, the Purchase Price, and the
number and type of securities which may be purchased upon the exercise of the
Warrants evidenced by this Warrant Certificate are subject to modification and
adjustment upon the happening of certain events.
In the circumstances described in Section 13 of the Warrants Agreement,
the securities issuable upon the exercise of the Warrants evidenced hereby shall
be the common stock or similar equity securities or equity interests of an
entity other than the Company.
This Warrant Certificate is subject to all of the terms, provisions,
and conditions of the Warrants Agreement, which terms, provisions, and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Warrants Agreement reference is hereby made for a full description
of the Warrants, limitations of Warrants, obligations, duties, and immunities
hereunder of the Warrants Agent, the Company, and the holders of the Warrant
Certificates, which limitations of Warrants include the temporary suspension of
the exercisability of such Warrants under the specific circumstances set forth
in the Warrants Agreement. Copies of the Warrants Agreement are on file at the
office of the Warrants Agent designated for such purpose and may be obtained by
the holder of any Warrants upon written request to the Warrants Agent.
This Warrant Certificate, with or without other Warrants Certificates,
upon surrender at the office of the Warrants Agent designated for such purpose,
accompanied by a signature guarantee and such other documentation as the
Warrants Agent designated for such purpose may reasonably request, may be
exchanged for another Warrant Certificate or Warrant Certificates of like tenor
and
Page 38 of 47
<PAGE>
date evidencing Warrants entitling the holder to purchase a like aggregate
number of shares of Common Stock (or other consideration, as the case may be) as
the Warrants evidenced by the Warrant Certificate or Warrant Certificates
surrendered shall have entitled such holder to purchase. If this Warrant
Certificate shall be exercised in part, the holder shall be entitled to receive,
upon surrender hereof, another Warrant Certificate or Warrant Certificates for
the number of whole Warrants not exercised.
Subject to the provisions of the Warrants Agreement, the Warrants
evidenced by this Warrant Certificate may be redeemed by the Company by a
majority vote of the Board (as defined in the Warrants Agreement) then in office
at any time prior to the earlier of the Distribution Date or the Expiration
Date, at a redemption price of $.01 per Warrant (which amount is subject to
adjustment as provided in the Warrants Agreement). In addition, in certain
circumstances, the Warrants may be exchanged, in whole or in part, for shares of
Common Stock. Immediately upon the action of the Board ordering the exchange of
any Warrants and without any further action and without any notice, the Warrant
to exercise such Warrants will terminate and the only Warrant thereafter of a
holder of such Warrants will be to receive that number of shares of Common Stock
issuable upon the exchange.
The Company is not obligated to issue whole or fractional shares of
Common Stock (or other securities) upon the exercise of any Warrant or Warrants
evidenced hereby, but in lieu thereof a cash payment may be made at the election
of the Company, as provided in the Warrants Agreement.
No holder of this Warrant Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Common
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Warrants
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the Warrants of a stockholder of the Company or any Warrant to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any action by the Company, or
to receive notice of meetings or other actions affecting stockholders (except as
provided in the Warrants Agreement), or to receive dividends or subscription
Warrants, or otherwise, until the Warrant evidenced by this Warrant Certificate
shall have been exercised as provided in the Warrants Agreement.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it hall have been countersigned by the Warrants Agent.
WITNESS the facsimile signature of the proper officers and the seal of
the Company. Dated as of November 30, 1999.
iNet Technology Group Inc.
By _________________________________
Title:
Page 39 of 47
<PAGE>
ATTEST:
________________________________
Title:
Countersigned:
_______________________________________
FLORIDA ATLANTIC STOCK CORPORATION INC.
By:_____________________________
Authorized Signatory
_____________________________
Date of Countersignature
Page 40 of 47
<PAGE>
[Form of Reverse Side of Warrant Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Warrant Certificate)
FOR VALUE RECEIVED ________________________ hereby sells, assigns and transfers
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
__________________________________________________________________ whose social
security or tax identification number is: __________________ the Warrants
evidenced by this Warrant Certificate, together with all Warrant, title and
interest herein, and does hereby irrevocably constitute and appoint
____________________ Attorney, to transfer the within Warrant Certificate on the
books of the within-named Company, with full power of substitution.
Dated: _________________________, ____.
________________________________
Signature
Signature Guaranteed:*
_______________________________
* Signature must be guaranteed by an "Eligible Guarantor Institution" (with
membership in an approved signature guarantees medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
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<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Warrants evidenced by this Warrant Certificate [ ] are [ ] are
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate of an Acquiring Person (as each such
term is defined in the Warrants Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Warrants evidenced by this Warrants Certificate
after the occurrence of a Common Stock Event from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate of an Acquiring Person.
Dated:____________________ ______________________________________
Signature
Signature Guaranteed:*
__________________________
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Warrants Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrant Certificate)
iNet Technology Group, Inc.
The undersigned hereby irrevocably elects to exercise _________________
Warrants represented by this Warrant Certificate to purchase the number of
shares of Common Stock (or other securities) issuable upon the exercise of such
Warrants and requests that certificates for such shares be issued in the name
of: ________________________________________________________________
Please insert social security
or other identifying number ________________________________________
(Please print name and address)
____________________________________________________________________
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
____________________________________________________________________
Please insert social security
or other identifying number :_______________________________________
(Please print name and address)
____________________________________________________________________
Dated: _______________________, ____
____________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this Class
A Warrant Certificate)
Signature Guaranteed:**
______________________________________
** Signature must be guaranteed by an "Eligible Guarantor Institution" (with
membership in an approved signature guarantee medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
Page 43 of 47
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Warrants evidenced by this Warrant Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate of any such Acquiring Person (as each such term is
defined in the Warrants Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Warrants evidenced by this Warrants Certificate
after the occurrence of a Common Stock Event (as such term is defined in the
Warrants Agreement) from any Person who is, was, or subsequently became an
Acquiring Person or an Affiliate of an Acquiring Person.
Dated: _________________, ____ _________________________
Signature
Signature Guaranteed:***
______________________________
*** Signature must be guaranteed by an "Eligible Guarantor Institution" (with
membership in an approved signature guarantee medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
EXHIBIT B
iNet Technology Group Inc.
SUMMARY OF PURCHASE WARRANTS
On November 30, 1999, the Board of Directors (the "Board") of iNet
Technology Group, Inc. (the "Company") declared a dividend of one purchase
Warrant (a "Warrant") for every outstanding share of the Company's Common Stock,
$.10 par value per share (the " Common Stock"). The Warrants will be distributed
on January 31, 2000, to stockholders of record as of the close of business on
January 31, 2000, (the "Dividend Record Date"). The terms of the Warrants are
set forth in a Warrants Agreement dated as of November 30, 1999, (the "Warrants
Agreement") between the Company and American Stock Transfer Trust Company (the
"Warrants Agent"). The Warrants Agreement provides for the issuance of one
Warrant for every share of Common Stock issued and outstanding on the Dividend
Record Date and for each share of Common Stock which is issued or sold after
that date and prior to the "Distribution Date" (as defined below).
Page 44 of 47
<PAGE>
Each Warrant entitles the holder to purchase from the Company one share
of Common Stock at a price of $.10 per share, subject to adjustment. The
Warrants will expire on December 30, 2009 (the "Expiration Date"), or upon the
earlier redemption of the Warrants, and are not exercisable until the
Distribution Date.
No separate certificates representing the Warrants will be issued at
the present time. Until the Distribution Date (or earlier redemption or
expiration of the Warrants), (i) the Warrants will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after the Dividend
Record Date upon transfer or new issuance of the Company's Common Stock will
contain a notation incorporating the Warrants Agreement by reference and (iii)
the surrender for transfer of any of the Company's Common Stock certificates
will also constitute the transfer of the Warrants associated with the Common
Stock represented by such certificate.
The Warrants will separate from the Common Stock and certificates
representing the Warrants will be issued on the Distribution Date. Unless
otherwise determined by a majority of the Board then in office, the Distribution
Date will occur on the earlier of (i) the tenth business day following the later
of (A) the date of a public announcement that a person, including affiliates or
associates of such person (an "Acquiring Person"), except as described below,
has acquired or obtained the Warrant to acquire, beneficial ownership of 15% or
more of the outstanding shares of Common Stock or (B) the date on which an
executive officer of the Company has actual knowledge that an Acquiring Person
became such (the later being, the "Stock Acquisition Date") or (ii) the tenth
business day following commencement of a tender offer or exchange offer that
would result in any person, together with its affiliates and associates owning
15% or more of the Company's outstanding Common Stock. In any event, the Board
of Directors may delay the distribution of the certificates. After the
Distribution Date, separate certificates evidencing the Warrants (" Warrant
Certificates") will be mailed to holders of record of the Company's Class A
Common Stock as of the close of business on the Distribution Date and
thereafter, such separate Warrant Certificates alone will evidence the Warrants.
If, at any time after the Board declares the Warrants dividend, any
person or group of affiliated or associated persons (other than the Company and
its affiliates) shall become an Acquiring Person, each holder of a Warrant will
have the Warrant to receive shares of the Company's Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a
market value of two times the exercise price of the Warrant. For example, if the
exercise price is $.10, the holder of each Warrant would be entitled to receive
$10.00 in market value of the Company's Common Stock for $.10. Also, in the
event that at any time after the Stock Acquisition Date, the Company was
acquired in a merger or other business combination, or if more than 25% of its
assets or earning power was sold, each holder of a Warrant would have the
Warrant to exercise such Warrant and thereby receive common stock of the
acquiring company with a market value of two times the exercise price of the
Warrant. Thus, if the exercise price is $.10, the holder of each Warrant would
be entitled to receive $10.00 in market value of the acquiring company's common
stock upon payment of the $.10. Following the occurrence of any of the events
described in this paragraph, any Warrants that are, or (under certain
circumstances specified in the Warrants
Page 45 of 47
<PAGE>
Agreement) were, beneficially owned by any Acquiring Person or Disqualified
Transferee shall immediately become null and void.
The Board may, at its option, at any time after any person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Warrants for shares of Common Stock (or, other securities of the Company
equivalent in value to such shares of Common Stock) at an exchange ratio of one
share of Common Stock (or other such consideration) per Warrant, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of declaration of the Warrants dividend (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). The Board,
however, may not effect an exchange at any time after any person (other than (i)
the Company, (ii) any subsidiary of the Company, (iii) any employee benefit plan
of the Company or any such subsidiary or any entity holding Common Stock for or
pursuant to the terms of any such plan), together with all affiliates of such
person, becomes the beneficial owner of 50% or more of the Common Stock then
outstanding. Immediately upon the action of the Board ordering the exchange of
any Warrants and without any further action and without any notice, the Warrant
to exercise such Warrants will terminate and the only Warrant thereafter of a
holder of such Warrants will be to receive that number of shares of Common Stock
equal to the number of such Warrants held by the holder multiplied by the
Exchange Ratio.
The exercise price of the Warrants, and the number of shares of Common
Stock or other consideration issuable upon exercise of the Class A Warrants, are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Common Stock, (ii) upon the grant to holders of the Common Stock of certain
Warrants or warrants to subscribe for shares of the Common Stock or convertible
securities at less than the current market price of the Common Stock or (iii)
upon the distribution to holders of the Common Stock of evidences of
indebtedness or assets (excluding cash dividends paid out of the earnings or
retained earnings of the Company and certain other distributions) or of
subscription Warrants or warrants (other than those referred to above).
With certain exceptions, no adjustments in the exercise price of the
Warrants will be required until cumulative adjustments equal at least 1% in such
price.
At any time prior to the earlier of (i) the Distribution Date or (ii)
the close of business ten years after the Warrants Agreement becomes effective
(the "Expiration Date"), the Company, by a majority vote of the Board then in
office, may redeem the Warrants at a redemption price of $.01 per Warrant (the
"Redemption Price"), as described in the Warrants Agreement. Immediately upon
the action of the Board electing to redeem the Class A Warrants, the Warrant to
exercise the Warrants will terminate and the only Warrant of the holders of
Warrants will be to receive the Redemption Price.
Until a Warrant is exercised, the holder thereof, as such, will have no
Warrants as a stockholder of the Company, including, without limitation, the
Warrant to vote or to receive dividends.
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<PAGE>
Neither the distribution of the Warrants nor the subsequent separation
of the Warrants on the Distribution Date will be a taxable event for the Company
or its stockholders. Holders of Warrants may, depending upon the circumstances,
recognize taxable income upon the occurrence of certain Warrants triggering
events including at end of offer for 15% or more of the Common Stock or a person
or group attaining beneficial ownership of 15% or more of the Common Stock
(collectively, "Common Stock Events"). In addition, holders of Warrants may have
taxable income as a result of (i) an exchange by the Company of shares of Common
Stock for Warrants as described above or (ii) certain anti-dilution adjustments
made to the terms of the Warrants after the Distribution Date. A redemption of
the Warrants would be a taxable event to holders.
The Warrants Agreement may be amended by the Board at any time prior to
the Distribution Date without the approval of the holders of the Warrants. From
and after the Distribution Date, the Warrants Agreement may be amended by the
Board without the approval of the holders of the Warrants in order to cure any
ambiguity, to correct any defective or inconsistent provisions, to change any
time period for redemption or any other time period under the Warrants Agreement
or to make any other changes that do not adversely affect the interests of the
holders of the Warrants (other than any Acquiring Person or its affiliates or
associates or their transferees).
A copy of the Warrants Agreement will be filed with the Securities and
Exchange Commission as an Exhibit to the Company's Form 8-A registration
statement with respect to the Warrants. A copy of the Warrants Agreement is
available free of charge from the Warrants Agent, at the following address:
FLORIDA ATLANTIC STOCK TRANSFER CORPORATION, INC.
(iNet Technology Group, Inc. Warrants Agreement)
This summary description of the Warrants does not purport to be complete and is
qualified in its entirety by reference to the Warrants Agreement, which is
incorporated herein by reference.
EXHIBIT 5.0
Registration Statement Form S-4
December 27, 1999
iNet Technology Group Incorporated
326 Green Acres Road, Suite A
Fort Walton Beach, FL 32547
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
We are counsel for iNet Teachnology Group Incorporated, a Florida
corporation (the "Company") in connection with its proposed public offering
under the Securities Act of 1933, as amended, of up to 2,000,000 shares of
common stock of $.01 par value Common Stock ("Common Stock") through a
Registration Statement on Form S-4 ("Registration Statement") as to which this
opinion is a part, to be filed with the Securities and Exchange Commission (the
"Commission").
In connection with rendering our opinion as set forth below, we have
reviewed and examined originals or copies identified to our satisfaction of the
following:
(1) Articles of Incorporation, and amendment thereto, of the Company as
filed with the Secretary of State of the State of Florida.
(2) Corporate minutes containing the written deliberations and resolutions
of the Board of Directors and shareholders of the Company.
(3) The Registration Statement and the Preliminary Prospectus contained
within the Registration Statement.
(4) The other exhibits to the Registration Statement.
We have examined such other documents and records, instruments and
certificates of public officials, officers and representatives of the Company,
and have made such other investigations as we have deemed necessary or
appropriate under the circumstances.
Based upon the foregoing and in reliance thereon, it is our opinion that
the Common Stock will, upon the purchase, receipt of full payment, issuance and
delivery in accordance with the terms of the offering described in the
Registration Statement, be fully and validly authorized, legally issued fully
paid and non-assessable.
We hereby consent to the use of this opinion, as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus constituting a part thereof.
Very truly yours,
Hackney & Miller, P.A.
EXHIBIT 10.1
FINANCIAL ADVISORY AND
INVESTMENT ADVISING AGREEMENT
This Agreement is made and entered into as this ____ day of __________,
1999 by and between Crown Capital Advisors, Inc. ("the Investment Adviser") and
iNet Technology Group Incorporated ("the Company"), for the purpose of defining
and acknowledging the terms of this Agreement.
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EXCLUSIVITY. The Company hereby engages the Investment Adviser on an
non-exclusive basis for the term specified in Paragraph Two (2) hereof
to render services to the Company as its corporate finance consultant,
financial adviser and investment adviser upon the terms and conditions
set forth herein.
2. TERM. This Agreement shall be effective for a period of one year,
commencing upon the date this contract is executed by both parties and
may be extended as the parties shall mutually agree in writing, subject
to the establishment of arrangements for additional compensation and
other appropriate terms for such extension.
3. SERVICES TO BE PROVIDED. During the term of this Agreement, the
Investment Adviser shall provide the Company with such regular and
customary consulting advice as is reasonably requested by the Company,
provided that the Investment Adviser shall not be requested to
undertake duties not reasonably within the scope of the financial
advisory or investment advising services contemplated by this
agreement. It is understood and acknowledged by the parties that the
value of Investment Adviser's advice is not readily quantifiable, and
that Investment Adviser shall be obligated to render advice upon the
request of the Company, in good faith, and shall use its best efforts
to perform the contemplated duties as set forth herein. Investment
Adviser's duties may include, but will not necessarily be limited to,
providing recommendations and assisting in the following:
1. disseminating information about the Company to the investment
community at large;
2. rendering advice and assistance in connection with the
preparation of annual and interim reports and press releases;
3. assisting in the company's financial public relations;
4. arranging, on behalf of the Company, at appropriate times,
meetings with securities
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analysts of investment banking firms;
5. rendering advice with regard to internal operations,
including, but not limited to:
1. the formation of corporate goals and their
implementation;
2. the Company's financial structure and its divisions
or subsidiaries;
3. securing, when and if necessary and possible,
additional financing through banks, insurance
companies or other institutions; and
4. corporate organization and personnel;
6. rendering advice with regard to any of the following corporate
finance matters:
1. changes in the capitalization of the Company;
2. changes in the corporate structure;
3. redistribution of shareholdings of the Company's
stock;
4. sales of securities in public or private transactions
and the structuring thereof;
5. alternative uses of corporate assets; and
6. structure and use of debt;
7. rendering advice or assistance with regard to any of the
following merger or acquisition activities:
1. the acquisition and/or merger of or with other
companies;
2. divestiture or any other similar transaction; and
3. the sale of the Company itself (or any significant
percentage, assets, subsidiaries or affiliates
thereof);
8. rendering advice and/or assistance with regard to bank
financing or any other financing from financial institutions
or individuals (including but not limited to revolving credit
facilities, lines of credits, term loans, rediscounted credit
facilities, senior and junior loans, whether collateralized or
unsecured, etc.);
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9. act as an information agent in connection with any tender
offers or share exchange offers;
10. it is understood by both parties that Investment Adviser will
not act as an underwriter or placement agent for the Company's
securities.
4. UNDERTAKINGS OF THE COMPANY. In order to facilitate financing, the
Company shall afford to the Investment Adviser and its representatives
full and complete access to all of its properties and records and the
full cooperation of management in the prompt preparation of a
confidential placement memorandum containing all of the information the
Investment Adviser may deem necessary to effect the successful
placement of the transaction.
5. COMPENSATION. In consideration for the services rendered by Investment
Adviser to the Company pursuant to this agreement (and in addition to
the expenses provided for in Paragraph Seven hereof), the Company shall
compensate the Investment Adviser as follows:
1. INITIAL RETAINER. None.
2. INITIAL WARRANTS. At closing of the first transaction, credit
facility or equity financing transaction, as contemplated
herein, the Company shall issue to the Investment Adviser
and/or its designees Warrants to purchase two and one-half
percent (2 1/2%) of the Company's fully diluted common stock
at a nominal purchase price, and an additional two and
one-half percent (2 1/2%) of the Company's fully diluted
common stock at a purchase price of $1.00 per share (the
"Warrant Option"). All Warrants shall expire five (5) years
from the date of issuance and shall have "piggy back" and
demand registration rights.
1. CASHLESS EXERCISE . In lieu of paying the shares
purchase price in cash, the Investment Adviser may,
at its option, deliver to the Company for
cancellation shares of common stock or other
outstanding securities of the Company convertible
into the Company's common stock (including rights
represented by this Warrant) that have a value equal
to the shares purchase price. The determination of
value shall be made by agreement between the Holder
and the Company, but, failing such agreement, by
reference to the trading price of the Company's
common stock on the date of exercise.
2. The Investment Adviser shall be restricted from
liquidiating the Warrants and/or securities acquired
from the exercise of said warrants. The Investment
Adviser shall not sell within a period of three
months more than the greater of (i) one percent of
the share of other units of the class outstanding or
(ii) the average weekly reported volume of trading
for the Company during the four
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calendar weeks prior to the sale of the securities or
(iii) the average weekly volume of trading in such
securities reported through the consolidated
transaction reporting system contemplated by Rule
11A(a)3-1 under the Securities Exchange Act of 1934
during the four week period specified in the
subdivision (ii) of this paragraph.
3. The figures in the initial paragraph labeled Initial
Warrants above shall be calculated based on a $25
million transaction figure. If the transaction is
less than $25 million, the Warrants issued shall be
prorated for the amount raised.
3. MERGER AND ACQUISITION FEE. If any transaction (as hereinafter
defined) is consummated during the Term of this Agreement with
any parties, introduced or contacted by the Investment Adviser
during the term of this agreement, the Company shall pay at
the closing of each such transaction a cash fee equal to the
sum of:
1. Five percent (5%) of the first fifteen million
dollars ($15,000,000) of the aggregate consideration
(as herein defined) of a transaction;
2. Four percent (4%) of the next ten million dollars
($10,000,000) of the aggregate consideration of a
transaction;
3. Three percent (3%) of the next ten million dollars
($10,000,000) of the aggregate consideration of a
transaction;
4. Two percent (2%) of the aggregate consideration over
thirty five million dollars ($35,000,000); and
5. In no event shall the fee provided for above within
this subparagraph be less than $25,000.
4. AGGREGATE CONSIDERATION is defined and computed as follows:
1. The total sale proceeds and other consideration
received (which shall be deemed to include amounts
paid into escrow) by the Company and/or its
shareholders or by a target and/or its shareholders
upon the consummation of the transaction (including
payments made in installments), inclusive of cash,
securities, notes, consulting agreements and
agreements not to compete, plus the total value of
liabilities assumed.
2. If a portion of such consideration includes
contingency payments (whether or not related to
future earnings or operations), aggregate
consideration will include 75% of the face value of
such payment without regard to whether the
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conditions for the payment of such contingent amounts
have been or may be satisfied.
3. If the aggregate consideration for the transaction
consists in whole or in part of securities, for the
purposes of calculating the amount of aggregate
consideration, the value of such securities will be
the value thereof on the day preceding the
consummation of the transaction as the company and
investment adviser agree; provided, in the case of
securities for which there is a public trading
market, however, the value will be determined by the
average last sales price for such securities for the
last twenty (20) days prior to such consummation as
determined by Investment Adviser and communicated by
Investment Adviser to the Company. If there is no
public trading market for such securities but
securities have been sold in a private placement
within the past twenty-four (24) months, the fair
market value shall be based upon the gross sales
price in the last such private placement. For other
property received or receivable as a part of the
aggregate consideration and the parties are unable to
agree, then each of Investment Adviser and the
Company will select an investment banking firm
respected in the merger and acquisition field to
determine a value and the midpoint between the two
values established by the two independent experts
will be the fair market value for the purpose hereof.
4. For purposes of this agreement, any of the following
transactions shall constitute a "transaction":
(1) the sale, outside of the ordinary course of
business, of the Company or any of its
assets, securities, or business by means of
a merger, consolidation, joint venture,
exchange offer or purchase or sale of stock
or assets, or any transaction resulting in
any change of control of the Company or its
assets or business; or
(2) the purchase by the Company, outside of the
ordinary course of business, or another
company or any of its assets, securities or
business by means of a merger,
consolidation, joint venture, exchange
offer, tender offer or purchase or sale of
stock or assets.
(3) Notwithstanding the above, the proposed
initial transaction involving the public
offering of the Company's Securities as
described by the Form S-4 filed by Hackney &
Miller, P.A., shall be aggregated as a
single transaction.
5. THIRD-PARTY DEBT PLACEMENTS. In the event Investment Adviser
provides introduction
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to a lender originating a debt facility, inclusive of
revolving credit facilities, lines of credits, term loans,
rediscounted credit facilities, senior and junior loans,
whether collateralized or unsecured, etc., (the "credit
facility") with a bank or other institutional lender (the
"lending source"), the Company will pay Investment Adviser a
fee of two percent (2%) of the maximum amount of the Credit
Facility. In the event Investment Adviser is involved in
arranging an increase in a Credit Facility, the Company will
pay Investment Adviser a fee of two percent (2%) of the
increase from the maximum amount of the existing Credit
Facility to the maximum amount of the new Credit Facility. In
no event, however, shall the fee provided for within this
subparagraph be less than $25,000.
6. STRATEGIC ALLIANCES AND PARTNERSHIPS. In the event Investment
Adviser introduces the Company to a joint venture partner or
customer and sales develop as a result of the introduction,
the Company agrees to pay a fee of two percent (2%) of total
sales generated directly from this introduction during the
first five (5) years following the date of the first sale.
Total sales shall mean cash receipts less any applicable
refunds, returns, allowances, credits and shipping charges and
monies paid by the Company by way of settlement or judgment
arising out of claims made or threatened against the Company.
Commission payments shall be paid on the 15th day of each
month following the receipt of customers' payment. In the
event any adjustments are made to the total sales after the
commission has been paid, the Company shall be entitled to an
appropriate refund or credit against future payments due under
this Agreement.
7. FAIRNESS OPINIONS, VALUATIONS AND OTHER SERVICES. Fees and
expenses payable to Investment Adviser with regard to fairness
opinions, valuations, and services not specifically set forth
herein will be determined by mutual agreement in writing at
such time as the nature and terms of such transactions are
determined.
6. PAYMENT OF FEES. All fees to be paid pursuant to this Agreement are due
and payable to the Investment Adviser in cash at the closing or
closings of any transaction as specified in Paragraph Three hereof. The
Company hereby irrevocably authorizes and instructs third party funding
sources, including Lending Sources and private equity groups, (the
"Funding Sources"), to pay directly to Investment Adviser cash sums
provided for in Paragraph Five above and further authorizes Investment
Adviser to notify the Funding Sources of this provision and the terms
of this agreement for purposes of this provision and payment of the
sums due under Paragraph Five of this Agreement. The Company agrees
that Investment Adviser is a direct beneficiary of any eventual
financing agreement between the Company and the Funding Sources. The
Company hereby expressly agrees that in the event any dispute or
disagreement arises with respect to the payment to Investment Adviser
under this agreement, that the Financing Sources shall immediately
place all disputed sums in an interest bearing Escrow account pending
resolution of the dispute. The Company hereby irrevocably authorizes
and instructs the Funding Sources to escrow such disputed sums. The
Company
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further agrees that any sums due under this agreement which are not in
dispute shall not be escrowed, but shall be paid upon closing to
Investment Adviser by the Funding Sources as provided for under the
terms of this Agreement.
7. CONTINUING OBLIGATION. In the event that this agreement shall not be
renewed or if terminated for any reason notwithstanding any such
renewal or termination, Investment Adviser shall be entitled to a full
fee as provided under Paragraph Five hereof, for any transaction for
which the discussions were initiated during the term of this agreement
and which is consummated within a period of twelve (12) months after
non-renewal or termination of this agreement.
8. EXPENSE REIMBURSEMENT. In addition to the compensation payable
hereunder, and regardless whether any transaction set forth in
Paragraph Three or Five hereof is proposed or consummated, the Company
shall reimburse Investment Adviser for all fees and disbursements of
Investment Adviser's counsel, travel and out of pocket expenses
incurred in connection with the services performed by Investment
Adviser pursuant to this Agreement, including without limitation,
hotel, food and associated expenses, telephone calls and legal
expenses. Any travel, accommodations or consultant fees in excess of
$2,000 shall be approved in advance by the Company.
9. CONFIDENTIALITY. The Company acknowledges that all opinions and advice
(written or oral) given by the Investment Adviser to the Company in
connection with Investment Adviser's engagement are intended solely for
the benefit and use of the Company in considering the transaction to
which they relate, and the Company agrees that no person or entity
other than the Company shall be entitled to make use of or rely upon
the advice of the Investment Adviser to be given hereunder, and no such
opinion or advice shall be used for any other purpose or reproduced,
disseminated, quoted or referred to at any time, in any manner or for
any purpose, nor may the Company make any public references to
Investment Adviser, or use Investment Adviser's name in any annual
reports or any other reports or releases of the Company without
Investment Adviser's prior written consent.
10. INDEPENDENT CONTRACTOR. The Company acknowledges that the Investment
Adviser is in the business of providing financial services and
consulting advice to others. Nothing herein contained shall be
construed to limit or restrict Investment Adviser in conducting such
business with respect to others, or in rendering such advice to others.
Investment Adviser shall perform its services hereunder as an
independent contractor and not as an employee of the Company or an
affiliate thereof. It is expressly understood and agreed to by the
parties hereto that the Investment Adviser shall have no authority to
act for, represent or bind the Company or any affiliate thereof in any
manner, except as may be agreed to expressly by the Company in writing
from time to time.
11. RELIANCE. The Company recognizes and confirms that, in advising the
Company and in fulfilling its engagement hereunder, the Investment
Adviser will use and rely on data, material
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and other information furnished to Investment Adviser by the Company.
The Company acknowledges and agrees that in performing its services
under this engagement, Investment Adviser may rely upon the data,
material and other information supplied by the Company without
independently verifying the accuracy, completeness or veracity of same.
12. NOTICES. Any notice or communication permitted or required hereunder
shall be in writing and shall be deemed sufficiently given if
hand-delivered or sent (i) postage prepaid by registered mail, or (ii)
by facsimile, to the respective parties as set forth below, or to such
other address as either party may notify the other of in writing:
- --------------------------------------------------------------------------------
Malcolm Roy, President Crown Capital Advisors, Inc.
iNet Technology Group Incorporated Admiralty Tower Two
326 Green Acres Road 4400 PGA Boulevard
Fort Walton Beach, FL 32547 Suite 307
(850) 862-1922 Palm Beach Gardens, FL 33410
(561) 625-4685 (fax)
- --------------------------------------------------------------------------------
13. INDEMNIFICATION. Investment Adviser and the Company have entered into a
separate letter agreement dated the date hereof ("the indemnity
letter") proving for the indemnification of Investment Adviser by the
Company in connection with Investment Adviser's engagement hereunder.
14. COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which together shall constitute one and the same
original document.
15. ASSIGNABILITY AND MODIFICATION. This agreement is not assignable and
cannot be modified or changed, nor can any of its provisions be waived,
except by the mutual agreement in writing of all parties.
16. GOVERNING LAW. This agreement shall be governed by the laws of the
State of Florida.
17. SEVERABILITY. Each paragraph, term or provision of this agreement shall
be considered severable and if, for any reason, any paragraph, term or
provision is determined to be invalid or contrary to any existing or
future law or regulation, such will not impair the operation, or effect
the remaining portions, of this agreement.
18. DISPUTE RESOLUTION. The parties shall attempt amicably to resolve
disagreements by negotiating with each other. In the event that the
matter is not amicably resolved through negotiation, any controversy,
dispute or disagreement arising out of or relating to this agreement (a
"controversy") shall be submitted to a nationally recognized
arbitration association, such as the American Arbitration Association,
for final binding arbitration, which
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shall be conducted by a single arbitrator (the "arbitrator") in West
Palm Beach, Florida, pursuant to the American Arbitration Association
Rules ("the rules"). Notwithstanding anything to the contrary contained
in the Rules, the Arbitrator shall not award consequential, exemplary,
incidental, punitive or special damages.
If any part shall desire relief of any nature whatsoever from any other
party as a result of any Controversy, such party will initiate such
arbitration proceedings within a reasonable time, but in no event more
than one (1) year after the facts underlying said Controversy first
arise or become known to the party seeking relief (whichever is later).
The failure of such party to institute such proceedings within said
period shall be deemed a full waiver of any claim for such relief.
Arbitrator may award the prevailing party its costs for the arbitration
proceeding; including its reasonable attorneys' fees and costs. The
parties agree that the decision and award of the Arbitrator shall be
taken, but that such award or decision may be entered as a judgement
and enforced in any court having jurisdiction over the party against
whom enforcement is sought. Any equitable relief awarded under this
paragraph shall be dissolved upon issuance of the Arbitrator's decision
and order.
Notwithstanding the provisions for dispute resolution, in the event of
a breach or threatened breach by any party to this agreement, either
party shall be entitled in order to maintain the status quo and pending
the outcome of any arbitration pursuant to this agreement, seek an
injunction or similar equitable relief restraining either party, as the
case may be, from committing or continuing any such breach or
threatened breach or granting specific performance of any act required
to be performed without the necessity of showing that money damages
would not afford an adequate remedy and without the necessity of
posting any bond or other security. The parties hereto hereby consent
to the jurisdiction of the Federal district courts for the Southern
District of Florida, and the Florida state courts located in 15th
Circuit Court for any proceedings under this paragraph. The parties
agree that the availability of arbitration in the agreement shall not
be used by any party as grounds for the dismissal of an injunctive
action instituted by the other party.
Agreed to and accepted by:
________________________________________ ________________________________
For iNet Technology Group Incorporated For Crown Capital Advisers, Inc.
________/__________/__________ ________/__________/____________
Date Date
Page 9
EXHIBIT 10.2
EMPLOYMENT CONTRACT
By this Agreement, iNet Technology Group Incorporated, a Florida
corporation, referred to in this Agreement as "Employer", located at 326 Green
Acres Road, Suite A, Ft. Walton Beach, Florida, employs Malcolm R. Roy, referred
to in this Agreement as "Employee", who accepts employment on the following
terms and conditions:
I. TERM OF EMPLOYMENT
By this Agreement, Employer employs Employee, and Employee accepts
employment with Employer, as the President and Chief Executive Officer of
Employer, with such employment to begin on January 1, 2000 and continue until
this Agreement is terminated, as provided hereinafter.
II. COMPENSATION
As compensation for the services rendered under this Agreement,
Employee shall be paid by Employer a salary of at least $144,000 per year,
payable in equal monthly salary payments, minus appropriate deductions for
income taxes and benefit plan payments, on the 15th day of each month during the
term of this Agreement. The amount paid is to be prorated for any partial
employment period. In addition, Employee shall be compensated for his service as
a member of Employer`s Board of Directors in the same amounts, if any, as other
Board members. Employee's base salary ($144,000 during the year 2000) shall be
increased annually, as follows:
(1) Each year on December 31, Employee's base salary for the next year
shall be determined by multiplying that year's base salary by a
multiplier calculated by dividing the closing price of the Employer's
stock by the closing price of the Employer's stock on the previous
December 31. For the purposes of the calculation for December 31, 2000,
the previous year's closing price shall be considered to be $12.50 per
share. Thus, if the stock of the Employer closes at $25.00 per share on
December 31, 2000, Employee's base salary for the year 2001 shall be
$288,000, calculated by multiplying the year 2000 base salary of
$144,000 by $25 (the 12/31/00 closing price) and dividing the product
by $12.50 (the previous year's closing price). If the closing price
should decrease in any year of this Agreement, or if the closing price
should remain the same, then no adjustment shall be made in Employee's
base salary except any cost-of-living increase as hereinafter
described. Stock prices used shall first be adjusted for any stock
splits.
(2) As soon as practicable after January 1 of each year during the term of
this Agreement, Employee shall receive a cost of living increase based
upon the cost of living increase during the previous year published by
the United States Department of Labor for the Standard Metropolitan
Statistical Area in which Employee resides. If the cost of living
figures decrease or remain the same for any year during the term of
this Agreement, then no cost of living adjustment will be made for that
year.
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III. DUTIES OF EMPLOYEE
Employee is employed as the President and Chief Executive Officer of
Employer and shall be provided with an office suitable for his position at
Employer`s principal place of business and home office, which is currently
located at 326 Green Acres Road, Suite A, Ft. Walton Beach, Florida, and at such
other locations as Employer and Employee may agree from time to time. Employee
shall be responsible for the overall operations of Employer, to serve as an
officer and director of Employer and to perform such other and further duties of
a similar nature as Employer and Employee may agree from time to time. Employee
shall report directly to the Board of Directors, and all of the other employees
of Employer shall report to Employee, directly or indirectly. Employee's duties
may not be changed without Employee's consent.
IV. INDEMNIFICATION
Employer agrees to fully indemnify, defend save and hold Employee
harmless from any and all liabilities, claims, judgements, expenses and causes
or theories of action arising out of the performance by Employee of the duties
of his employment except as such may have arisen as a result of Employee`s own
fraudulent or criminal conduct. This indemnification obligation is intended to
be construed as broadly as is allowed under the laws of the State of Florida.
V. BENEFITS, STOCK OPTIONS AND STOCK BONUSES
Employer agrees to provide to Employee all employee benefits such as
health insurance, retirement or 401k plan, vacation time, disability insurance,
life insurance and any other similar benefits on the same basis that Employer
chooses to provide such benefits to other officers of Employer. In addition,
Employer hereby grants to Employee the following stock bonuses:
During the term of this Agreement, Employee shall be granted up to a
total of 6,000,000 shares of Employer's stock in 1,000,000 increments the first
time the stock of Employer reaches each of the following trading levels per
share, after said options and prices having been adjusted for any stock splits:
1. $ 15.00
2. $ 18.00
3. $ 21.60
4. $ 25.92
5. $ 31.10
6. $ 37.32
VI. TERMINATION
This Agreement shall terminate on the occurrence of any one of the following
events:
1. The death of Employee.
2. The voluntary resignation of Employee.
3. Discontinuance of Employer`s operations, in which case this Agreement
shall cease and terminate on the last day of the month in which
Employer ceases operations.
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4. The termination of Employee's employment by Employer because of
Employee's fraudulent or criminal conduct.
In the event this Agreement is terminated for any reason except for
Employee's fraudulent or criminal conduct, Employer agrees to issue to Employee
all unissued stock grants described in Article V. above as if the stock had
reached the per share trading levels described therein, and Employer agrees to
pay to Employee on the date of the termination severance pay in an amount equal
to one year of Employee's base salary at Employee's base salary level then in
effect. In the event this Agreement is terminated as a result of Employee's
fraudulent or criminal conduct, Employer agrees to issue to Employee 1,000,000
shares of Employer's stock and pay to Employee an amount equal to one year of
Employee's base salary at Employee's base salary level then in effect.
VII. GENERAL PROVISIONS
1. CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
2. ENTIRETY OF AGREEMENT. This Agreement supersedes all other agreements,
either written or oral, between the parties to this Agreement with
respect to the employment of Employee by Employer and contains all of
the covenants and agreements between the parties with respect to such
employment.
3. MODIFICATION. This Agreement shall not be amended, modified or altered
in any manner except in a writing signed by all parties.
4. ASSIGNMENT. This Agreement, any portion of this Agreement, or any right
or privilege contained or implied in this Agreement shall not be
assigned in any manner whatsoever.
Executed at ____________________________________________________________________
on ______________________________, 1999.
EMPLOYER: EMPLOYEE:
iNet Technology Group Incorporated Malcolm R. Roy
By:______________________________ ______________________________
Malcolm R. Roy, CEO & President Malcolm R. Roy, as Employee
Page 3 of 3
EXHIBIT 23.1
CONSENT AND REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANT
WE HEREBY consent to the use in this Registration Statement of our
report dated December 1, 1999, relating to the financial statements of iNet
Technology Group Incorporated (Successor to Technology Consultants, Inc.) and to
the reference to our Firm under the caption "Experts" in the Prospectus.
/s/ CARR, RIGGS & INGRAM, LLP
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CARR, RIGGS & INGRAM, LLP
Certified Public Accountants
Destin, Florida
January 7, 2000
