<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
REG. NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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E-STAR HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEVADA 811190 06-1574303
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CODE NUMBER) IDENTIFICATION NO.)
ORGANIZATION)
</TABLE>
165 EAB PLAZA, WEST TOWER, 6TH FLOOR, UNIONDALE, NY 11566 (516) 522-2725
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DANIEL BOUCHER, PRESIDENT
E-STAR HOLDINGS, INC.
165 EAB PLAZA, WEST TOWER, 6TH FLOOR, UNIONDALE, NY 11566 (516) 522-2725
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
Copies to:
GABRIEL KASZOVITZ, ESQ.
SAUL M. KASZOVITZ, ESQ.
FEDER, KASZOVITZ, ISAACSON, WEBER, SKALA & BASS LLP
750 LEXINGTON AVENUE, NEW YORK, NY 10022-1200
(212) 888-8200 FAX: (212) 888-7776
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
other than securities offered only in connection with dividend or interest
reinvestment plans, 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, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
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. [ ]
- ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration number
of the earlier effective registration statement for the same offering. [ ]
- ---------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
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TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001 per
share................................. 250,000 Shares $6.00 $1,500,000 $396.00
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Common Stock, par value $.001 per share,
to be sold by a selling shareholder... 100,000 Shares $6.00 $600,000 $159.00
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Total................................... 350,000 Shares $6.00 $2,100,000 $555.00
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</TABLE>
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED
[E-STAR LOGO]
350,000 SHARES
COMMON STOCK
This is an initial public offering of up to 350,000 shares of our common
stock. We are offering to sell 250,000 shares and one of our shareholders is
offering to sell 100,000 shares.
We and the selling shareholder will be selling our shares on a "best
efforts" basis. The shares will be sold by our officers and directors and by the
selling shareholder. No one has agreed to buy any of our shares, and there is no
assurance that any sales will be made. Even if not all, or very few, of the
350,000 shares are sold, neither we nor the selling shareholder will refund any
payments for the shares. The first 250,000 shares sold will be sold by us and
the selling shareholder will not sell any of its shares until we have sold
250,000 shares. We and the selling shareholder have the right to accept or
reject any subscriptions for shares offered hereby in whole or in part.
Prior to this offering there has been no public market for the trading of
the shares, and it is possible that no such market will develop or trading will
commence for a substantial period of time after the closing of this offering. We
plan to apply for the approval of the shares for quotation on the Nasdaq
Bulletin Board under the symbol , but there is no assurance that we
will be able to secure such listing. The price of the shares has been determined
solely by us, and does not bear any direct relationship to our assets,
operations, book value or other established criteria of value.
------------------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION. YOU SHOULD CAREFULLY READ AND CONSIDER THE "RISK FACTORS,"
COMMENCING ON PAGE , AND "DILUTION" ON PAGE .
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE PER SHARE DISCOUNTS AND PROCEEDS TO SELLING
TO PUBLIC COMMISSIONS(1) US(2) SHAREHOLDER
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<S> <C> <C> <C>
$6.00 -- $1,500,000 $600,000
</TABLE>
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(1) Our officers and directors and the selling shareholder are offering the
shares for sale. If any sales are made by broker/ dealers discounts or
commissions are not anticipated to exceed 10% of the offering price.
(2) Before deducting offering expenses payable by us estimated at $125,000.
THE DATE OF THIS PROSPECTUS IS .
<PAGE> 3
YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF THE COMMON STOCK. IN THIS PROSPECTUS, REFERENCES TO
THE "COMPANY," "E-STAR," "WE," "US" AND "OUR" REFER TO E-STAR HOLDINGS, INC. AND
ITS SUBSIDIARIES.
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Summary..................................................... 3
Disclosure Regarding Forward Looking Statements............. 6
Risk Factors................................................ 7
Use of Proceeds............................................. 13
Determination of Offering Price............................. 13
Dilution.................................................... 14
Security Holders............................................ 15
Dividend Policy............................................. 15
Plan of Operation........................................... 15
Business.................................................... 16
Management.................................................. 25
Executive Compensation...................................... 28
Principal and Selling Shareholders.......................... 29
Certain Relationships and Related Transactions.............. 31
Shares Available for Future Sale............................ 33
Description of Securities................................... 33
Plan of Distribution........................................ 34
Legal Matters............................................... 35
Experts..................................................... 35
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities................................ 35
Where You Can Find More Information......................... 37
Financial Statements........................................ F-1
</TABLE>
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2
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SUMMARY
Because this is only a summary, it does not contain all the information
that may be important to you. You should read the entire prospectus, especially
"Risk Factors," beginning on Page , and the Consolidated Financial Statements
and Notes, before deciding to invest in our common stock.
E-STAR HOLDINGS, INC.
Our subsidiaries were incorporated in 1999 for the purpose of acquiring,
consolidating and operating full-service car wash and fast lube operations,
while simultaneously utilizing the customer bases of these car wash and fast
lube operations to facilitate the expansion of our e-commerce virtual shopping
center, The Portal. To attract customers to our car wash facilities, we intend
to modify each acquired car wash into, or construct a new car wash as, a
sports-theme oriented All Star car wash, with each location to be endorsed by a
sports celebrity.
We are the parent company to two subsidiaries, All Star Car Wash, Inc., our
wholly-owned subsidiary, which will be primarily responsible for our car wash
and fast lube operations, and Radence Generation II, Inc., a 90% owned
subsidiary, which will be primarily responsible for our internet-based
operations. When used in this prospectus, the terms "we," "us" or the "company"
include All Star and Radence.
Full Service Car Wash Operations
We intend to acquire, consolidate and modify car wash and fast lube
operations, initially in the Greater New York metropolitan area. At some of our
car wash sites we also intend to operate fast lube operations or gas stations.
When we sometimes refer in this prospectus to car washes alone, we are also
referring to any fast lube operation or gas station we may operate together with
the car wash.
The Greater New York metropolitan area is presently estimated to have 1,152
car washes. With each car wash averaging annual gross revenues of $450,000, the
total New York metropolitan market is estimated at $518,400,000 of gross
revenues. We have commitments from seven of our founders to lend us an aggregate
of $12,052,000. See "Certain Relationships and Related Transactions". Based on
our estimates we believe that such $12,052,000 will be sufficient to acquire,
renovate and/or construct car washes, fast lubes/gas stations at between 10 and
20 locations. To acquire, renovate and/or construct additional car wash, fast
lube/gas station sites, we will have to secure additional financing. We cannot
assure you that we will be able to secure such additional financing or that our
estimates of the number of sites we can have in operation from the $12,052,000
to be loaned to us by our seven founders, will prove accurate.
We have acquired three sites and have contracted to acquire one more, for
our initial car wash, fast lube and gas station operations. We intend to
continue to identify, acquire and build additional prime car wash and fast lube
locations. We intend to select locations by carefully monitoring traffic volume,
local competition, neighborhood demographics, and, in the case of existing
locations whose operations we will continue, verified sales revenues. In the
event we succeed in establishing a significant market presence in the Greater
New York metropolitan area, and if we have sufficient funds available for future
expansion, we intend to expand our operations to other geographical areas within
the United States.
We intend to obtain endorsement agreements with well known athletes and
entertainers, each of whose names will be used to promote our car wash
locations, as well as the entire All Star chain. To further these sports and
entertainment efforts, we have retained Mr. Greg Buttle, former star of the New
York Jets football team and currently president of Unique Sports & Entertainment
Marketing, Inc., of East Meadow, New York, as a consultant and our vice
president for sports and entertainment marketing.
3
<PAGE> 5
Recent data (Power, Inc., May 1999) reveals that the top 50 national car
wash chains own only 599 of the country's 30,000 plus car washes, or less than
2%. We believe the recent entry into the car wash market of Wayne Huizenga's
AutoNation, Inc. signals the readiness for consolidation of this fragmented
industry and Huizenga's proposed 100 new AutoNation Neighborhood Service Centers
in the South over the next three years (as reported in Professional Car Washing
and Detailing Online News, 6/28/99) indicates the readiness of the national
market for significant roll-up and consolidation.
Virtual Shopping
A full service car wash cleaning, detailing and servicing typically takes
12 to 15 minutes and requires the driver to leave the vehicle. For this time
period the customer is a captive audience. We intend to make this waiting time
both entertaining for the customer and profitable for us, by encouraging our
patrons to access The Portals, which will be computer stations strategically
located at each of our full service car wash facilities. Each Portal will have
computers offering free internet access, directed through our own internet site,
HaggleHouse.com, as well as access to other valuable and entertaining automotive
related services. Through internet links accessed via The Portals, we hope that
our customers will be attracted to the ease of purchasing a wide variety of
merchandise, including, but not limited to, new and used cars, car insurance and
other automotive related items. Even though the purchases may not be completed
at the car wash itself, our customers will be able to complete the transactions
in the privacy of their homes or offices. We believe our car wash patrons will
constitute the customer base for a virtual shopping network that extends far
beyond the four walls of our car wash locations.
HaggleHouse.com.
The Portals at our car wash locations will be linked to our internet-based
HaggleHouse.com, an online, open market style internet trading site from which
our customers will be able to anonymously negotiate their own transactions for
merchandise of all sorts. Although we will try to make automotive products the
main products traded on our Haggle House internet site, we will also encourage
our car wash customers and others to purchase other merchandise and services
available on our Haggle House web site.
Haggle House Auto Mall.
We expect that our Haggle House Auto Mall will primarily feature
advertisements of their products and services by the local merchants in the area
where the particular car wash facility is located. We assume that the customers
of the car wash in that locality will be local residents who would be the most
likely patrons of those local advertisers.
We were incorporated in February 2000 under the laws of the State of
Nevada. Our executive offices are located at 165 EAB Plaza, West Tower, 6th
Floor, Uniondale, New York 11566, and our telephone number is (516) 522-2725.
4
<PAGE> 6
THE OFFERING
Common Stock offered............. 250,000 shares in our behalf and 100,000
shares in behalf of one of our shareholders
Offering price................... $6.00 per share
Common stock outstanding before
the offering..................... 5,051,000
Common stock to be outstanding
after the offering............... 5,301,000 shares(1)
Use of proceeds.................. We will receive net proceeds from the sale
of 250,000 shares of approximately
$1,375,000 if all 250,000 shares we are
offering are sold. We will not receive any
proceeds from the sale of 100,000 shares
offered by one of our shareholders. If we
pay commissions to brokers or dealers for
selling our shares, our estimated net
proceeds will be reduced by the amount of
those commissions we have to pay. We do not
intend to use such net proceeds for the
acquisition, consolidation, modification or
construction of car wash and fast-lube
operations or to further develop our
internet-based Portals. We expect to use
such proceeds only for working capital and
general corporate purposes, including
payment of salaries. We expect to secure
other funds to buy and construct our car
wash, fast lube/gas stations and to build
our internet business. See "Use of
Proceeds."
Risk factors..................... An investment in our common stock involves
a high degree of risk. See "Risk Factors,"
beginning on Page .
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(1) Assumes the sale of the 250,000 shares offered hereby by us.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. For example, statements included in this prospectus
regarding our financial position, business strategy and other plans and
objectives for future operations, and assumptions and predictions about future
acquisitions, demand for our services and products, supply, costs, marketing and
pricing factors are all forward-looking statements. When we use words like
"intend," "anticipate," "believe," "estimate," "plan" or "expect," we are making
forward-looking statements. We believe that the assumptions and expectations
reflected in such forward-looking statements are reasonable, based on
information available to us on the date hereof, but we cannot assure you that
these assumptions and expectations will prove to have been correct or that we
will take any action that we may presently be planning. We have disclosed
certain important factors that could cause our actual results to differ
materially from our current expectations under "Risk Factors" below and
elsewhere in this prospectus. You should understand that forward-looking
statements made in connection with this offering are necessarily qualified by
these factors. We are not undertaking to publicly update or revise any
forward-looking statement if we obtain new information or upon the occurrence of
future events or otherwise.
5
<PAGE> 7
RISK FACTORS
The purchase of the shares we are, and one of our shareholders is, offering
involves a high degree of risk, including, but not limited to, the risks
described below. Before purchasing the shares, you should consider carefully the
general investment risks enumerated elsewhere in this prospectus and the
following risk factors, as well as the other information contained in this
prospectus.
1. WE MAY NOT BE SUCCESSFUL IN RAISING THE MONEY WE WILL NEED TO ACQUIRE A
SIGNIFICANT NUMBER OF CAR WASH AND FAST LUBE/GAS STATION FACILITIES.
Our objective is to acquire or construct a significant chain of car wash
and fast lube/gas station facilities. We hope to build our proposed internet
auction and marketing business by attracting our car wash customers to The
Portals at those facilities. The amount of cash we will need to acquire,
renovate and/or construct a car wash facility, including in some cases land
acquisition costs, will depend on a great number of factors, but primarily on
financing (including purchase money financing) available. While we estimate that
we can acquire or build between ten and twenty car wash facilities (some with
fast lube/gas stations) with the proceeds of loans for $12,052,000 that seven of
our founders have promised to give us, we will need additional funds to acquire
or build more car wash and fast lube/gas station facilities. We cannot give you
any assurance that we can secure the funds we will need to build a larger chain
of such facilities. If we cannot secure those funds we will, at best, operate
only a small number of car wash and fast lube/gas station facilities. We intend
to use the proceeds we receive from this offering for our operating expenses,
including payment of salaries, and not for acquiring or building such car wash
facilities.
2. WE ARE A NEW BUSINESS AND THERE IS A RISK WE MAY NOT BE SUCCESSFUL.
We have never had any operating history. The operation of a new business is
always risky.
3. WE EXPECT TO INCUR LOSSES AND THERE IS A RISK WE MAY NEVER BECOME
PROFITABLE.
In order for us to become profitable, we will need to attract a large
number of customers to use our car washes and Portals. This will take time. We
expect to incur large initial expenses and may never become profitable. Our
future profitability is dependent on numerous factors including the acquisition
and modification costs of car washes, or constructing new car washes, the number
of customers using our car washes and the profitability of our satellite
businesses, primarily our internet trading and marketing subsidiary. If we fail
to become profitable you will lose part or all of your investment.
4. WE DETERMINED THE OFFERING PRICE OF $6.00 PER SHARE ARBITRARILY AND IT WILL
FLUCTUATE IF THE SHARES BECOME FREELY TRADEABLE AFTER THE OFFERING.
We determined the offering price arbitrarily. The offering price is not
indicative of the present or future value of our common stock. As a result, the
market price of our common stock after the offering may be more susceptible to
fluctuations than it otherwise might be. The market price will be affected by
our operating results, which could fluctuate greatly. These operating result
fluctuations could result from expenses of operating and expanding our
operations and other factors which are beyond our control. If our operating
results are below expectations, the market price of our common stock would
probably fall.
5. WE WILL NOT HAVE A LARGE NUMBER OF SHAREHOLDERS OR A LARGE NUMBER OF
OUTSTANDING SHARES AFTER THE OFFERING, WHICH MAY LIMIT YOUR ABILITY TO SELL
OR TRADE THE SHARES AFTER THE OFFERING.
Initially, there will be no established market for our common stock. After
the offering, we will encourage broker/dealers to match buy and sell orders for
our common stock on the OTC Bulletin
6
<PAGE> 8
Board. However, the trading markets on the OTC Bulletin Board lack the depth,
liquidity and orderliness necessary to maintain a liquid market. We do not
expect a liquid market for our common stock to develop for several years, if at
all. A public market having depth and liquidity depends on having enough buyers
and sellers at any given time. Because this is a relatively small offering, we
do not expect to have enough shareholders or outstanding shares available for
public trading to support an active trading market which could negatively affect
your ability to sell your shares and the price you could receive for your
shares.
6. WE ARE AUTHORIZED TO ISSUE PREFERRED STOCK WHICH, IF ISSUED, MAY ADVERSELY
AFFECT YOUR VOTING RIGHTS AND REDUCE THE MARKET PRICE OF OUR COMMON STOCK.
Our board of directors is authorized by our articles of incorporation to
issue shares of preferred stock without the consent of our shareholders. Our
preferred stock, when issued, may rank senior to common stock with respect to
voting rights, payment of dividends and amounts received by shareholders upon
liquidation, dissolution or winding up. Such preferences will be set by our
board of directors. The issuance of such preferred shares and the preferences
given the preferred shares, do not need the approval of our shareholders. The
existence of rights which are senior to common stock may reduce the price of our
common shares. We do not have any plans to issue any shares of preferred stock
at this time.
7. WE MAY NOT BE ABLE TO MANAGE GROWTH.
If we succeed in growing, growth will place significant burdens on our
management and on our operational and other resources. We will need to attract,
train, motivate, retain and supervise our senior managers and other employees
and develop a managerial infrastructure. If we are unable to do this, our
business venture may not be successful.
8. WE MAY NOT BE ABLE TO INTEGRATE BUSINESSES WE ACQUIRE AND WE MAY NOT
ACHIEVE OPERATING EFFICIENCIES.
Our future growth and profitability depend substantially on our ability to
operate and integrate acquired car wash facilities which we will continue to
operate. Our strategy is to achieve economies of scale and brand-name
recognition in part through acquisitions that increase our size. We cannot
assure you that our efforts to integrate acquired car wash operations will be
effective or that we will realize expected results. Our failure to achieve any
of these results could have a material adverse effect on our business and
results of operations.
9. WE FACE POTENTIAL LIABILITIES ASSOCIATED WITH ACQUISITIONS OF BUSINESSES.
The businesses we acquire may have liabilities that we do not discover or
may be unable to discover during our preacquisition investigations, including
liabilities arising from environmental contamination or prior owners'
non-compliance with environmental laws or other regulatory requirements and for
which we, as a successor owner or operator, may be responsible.
10. OUR CAR WASH BUSINESS MAY SUFFER UNDER CERTAIN WEATHER CONDITIONS.
Seasonal trends in some periods may affect our car wash business. In
particular, long periods of rain can adversely affect our car wash business as
people typically do not wash their cars during such periods. Conversely,
extended periods of warm, dry weather may encourage customers to wash their own
cars which can adversely affect our car wash business.
7
<PAGE> 9
11. CONSUMER DEMAND FOR OUR CAR WASH SERVICES IS UNPREDICTABLE.
Our financial condition and the results of our operations will depend
substantially on consumer demand for our car wash services. Our business depends
on consumers' choosing to employ our services to wash their cars rather than
washing their cars themselves or not washing their cars at all. We cannot assure
you that we will have any significant consumer demand for the car wash and other
services we will be offering.
12. WE MUST MAINTAIN OUR CAR WASH EQUIPMENT OR THE CAR WASH IN WHICH IT IS
LOCATED WILL BECOME INOPERABLE.
Although we undertake to keep our car washing equipment in proper operating
condition, the operating environment found in car washes results in frequent
mechanical problems. If we fail to properly maintain a car wash's equipment, the
car wash could become inoperable, resulting in a loss of revenue to us from the
inoperable location.
13. OUR BUSINESS WILL BE NEGATIVELY AFFECTED IF WE ARE UNABLE TO HIRE ENOUGH
EMPLOYEES.
The operation of a car wash is labor intensive requiring a number of
unskilled employees. If we are unable to hire enough employees we may not be
able to operate our car washes profitably.
14. OUR CAR WASH AND CAR SERVICES BUSINESS FACE GOVERNMENTAL REGULATION. SUCH
REGULATION COULD IMPEDE OUR OPERATIONS AND SLOW OUR GROWTH.
We are governed by federal, state and local laws and regulations, including
environmental regulations, that regulate the operation of our car wash centers
and other car services businesses. Car wash centers utilize cleaning agents and
waxes in the washing process that are then discharged in waste water along with
oils and fluids washed off of vehicles. Other car services, such as gasoline and
lubrication, use a number of oil derivatives and other regulated hazardous
substances. As a result, we are governed by environmental laws and regulations
dealing with, among other things:
- transportation, storage, presence, use, disposal and handling of
hazardous materials and hazardous wastes;
- discharge of storm water; and
- underground storage tanks.
If we were found to be in violation of applicable environmental laws and
regulations, we could be responsible for clean up costs, property damage and
fines or other penalties, any one of which could have a material adverse effect
on our financial condition and results of operations.
15. WE FACE SIGNIFICANT COMPETITION IN THE CAR CARE INDUSTRY.
The car care industry is highly competitive. Competition is based primarily
on location, facilities, customer service, available services and rates. Because
barriers to entry into the car care industry are relatively low, competition may
be expected to continually arise from new sources. In the car wash sector of our
business we also face competition from outside the car wash industry, such as
gas stations and convenience stores, that offer automated car wash services. In
some cases, these competitors may have significantly greater experience and
financial and operating resources than we do. In our car service businesses, we
face competition from a number of sources, including regional and national
chains, gasoline stations and companies and automotive companies and specialty
stores, both regional and national.
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<PAGE> 10
16. SINCE WE HAVE NOT YET INSTALLED OUR COMPUTERIZED OPERATING SYSTEMS, WE
CANNOT BE SURE THAT OUR SYSTEMS, INCLUDING OUR PROPOSED INTERNET BUSINESS,
WILL OPERATE EFFICIENTLY OR AT ALL.
We expect to install computerized operating systems for our bookkeeping and
accounting and to permit us to monitor all our facilities via the internet, and
to operate our proposed internet auction and marketing businesses. Since we have
not yet installed our computer operating systems we cannot assure you that they
will operate efficiently or at all.
17. WE WILL FACE RISKS ENCOUNTERED BY SMALL COMPANIES IN INTERNET-RELATED
BUSINESSES AND MAY BE UNSUCCESSFUL IN ADDRESSING THOSE RISKS.
We face risks frequently encountered by small companies in new and rapidly
evolving markets, including the market for online advertising and direct
marketing. We may not succeed in addressing these risks, and our business
strategy may not be successful. These risks include uncertainties about our
ability to:
- attract a larger number of consumers to our websites;
- sign up new internet advertising and marketing clients;
- add new and compelling content to our websites;
- manage our operations;
- adapt to potential decreases in online advertising rates;
- successfully introduce new products and services;
- continue to develop and upgrade our technology and to minimize technical
difficulties and system downtime;
- create and maintain the loyalty of our internet advertising and marketing
clients and website subscribers and visitors;
- develop new strategic relationships and alliances; and
- attract, retain and motivate qualified personnel.
18. WE FACE THE RISK OF UNCERTAIN PROTECTION OF OUR INTELLECTUAL PROPERTY
RIGHTS, PRIMARILY THE TRADE NAMES WE HOPE WILL GIVE US CONSUMER
RECOGNITION.
We hope to establish consumer recognition for our All Star car washes and
The Portal. To the extent we are successful we will have to rely on trademark
and copyright law, trade secret protection and confidentiality and/or license
agreements with employees, customers, partners and others to protect our
proprietary rights. We can give you no assurance that the steps we may take to
protect our proprietary rights will be adequate or that third parties will not
infringe or misappropriate our copyrights, trademarks, trade dress and similar
proprietary rights. In addition, we can give you no assurance that even if we
achieve consumer recognition for our trade names that other parties will not
assert infringement claims, in which case we may have to defend or protect our
intellectual property rights at significant cost.
19. IF THIRD PARTIES ACQUIRE DOMAIN NAMES THAT ARE SIMILAR TO OUR DOMAIN
NAMES, THEY COULD TAKE CUSTOMERS AWAY FROM OUR WEBSITE.
We currently hold many internet domain names, including HaggleHouse.com and
estarholdings.com. We may be unable to prevent third parties from acquiring
similar domain names, which could reduce the value of our trade names and take
customers away from our website. Domain names generally are regulated by
internet regulatory bodies. The regulation of domain names in the United
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States and in foreign countries is evolving. Regulatory bodies could establish
additional top level domains, appoint additional domain name registrars or
modify the requirements for holding domain names. The relationship between
regulations governing domain names and laws protecting trademarks and similar
intellectual property rights is unclear. Therefore, we may be unable to prevent
third parties from acquiring domain names that infringe on, or otherwise
decrease the value of, our intellectual property rights.
20. SECURITY AND PRIVACY BREACHES COULD SUBJECT US TO LITIGATION AND LIABILITY
AND DETER CONSUMERS FROM USING OUR WEBSITES.
We could be subject to litigation and liability if third parties penetrate
our network security or otherwise misappropriate our users' personal or credit
card information. This liability could include claims for unauthorized purchases
with credit card information, impersonation or other similar fraud claims. It
could also include claims for other misuses of personal information, such as for
unauthorized marketing purposes. The need to transmit confidential information
securely has been a significant barrier to electronic commerce and
communications over the internet. Any compromise of security could deter people
from using the internet in general or, specifically, from using the internet to
conduct transactions that involve transmitting confidential information, such as
purchases of goods or services. Also, our relationships with consumers may be
adversely affected if the security measures we use to protect their personal
information prove to be ineffective. We cannot predict whether events or
developments will result in a compromise or breach of the technology we use to
protect our customers' personal information.
Furthermore, our computer servers may be vulnerable to computer viruses,
physical or electronic break ins and similar disruptions. We may need to expend
significant funds and other resources to protect against a security breach or to
alleviate problems caused by any such breaches. We may be unable to prevent or
remedy all security breaches. If any of these breaches occur, we could lose
internet advertising and visitors to our websites.
21. WE MAY FACE THE RISK OF OUR INABILITY TO FULLY UTILIZE THE INTERNET
RESULTING FROM THE INCREASED USAGE AND POTENTIAL INSTABILITY OF THE
INTERNET AND THE WORLD WIDE WEB.
The usage of the World Wide Web for services such as those we offer will
depend in significant part on continued rapid growth in the number of households
and commercial, educational and government institutions with access to the
internet, in the level of usage by individuals and in the number and quality of
products and services designed for use on the internet. Because usage of the
internet as a source for information, products and services is a relatively
recent phenomenon, it is difficult to predict whether the number of users drawn
to the internet will continue to increase and whether any significant market for
usage of the internet for such purposes will continue to develop and expand. We
can give you no assurance that internet usage patterns will not decline as the
novelty of the medium recedes or that the quality of products and services
offered online will improve sufficiently to continue to support user interest.
Failure of the internet to stimulate user interest and be accessible to a broad
audience at moderate costs would jeopardize the markets for the internet portion
of our planned businesses.
Moreover, issues regarding the stability of the internet's infrastructure
remain unresolved. The rapid rise in the number of internet users and increased
transmission of audio, video, graphic and other multimedia content over the
internet has placed increasing strains on the internet's communications and
transmission infrastructures. Continuation of such trends could lead to
significant deterioration in transmission speeds and reliability of the internet
and could reduce the usage of the internet by businesses and individuals. In
addition, to the extent that the internet continues to experience significant
growth in the number of users and level of use without corresponding increases
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and improvements in the internet infrastructure, the internet may not be able to
support the demands placed upon it by such continued growth. Any failure of the
internet to support such increasing number of users due to inadequate
infrastructure or otherwise would seriously limit the development of the
internet as a viable source of local interactive content and service, which
could materially and adversely affect the acceptance of the internet portion of
our planned businesses which would, in turn, materially and adversely affect our
financial condition and results of operations.
22. WE FACE RISKS FROM POTENTIAL GOVERNMENT REGULATION AND OTHER LEGAL
UNCERTAINTIES RELATING TO THE INTERNET.
Laws and regulations that apply to internet communications, commerce and
advertising are becoming more prevalent. The adoption of such laws could create
uncertainty in use of the internet and reduce the demand for our services.
Recently, Congress enacted legislation regarding children's privacy on the
internet. Additional laws and regulations may be proposed or adopted with
respect to the internet, covering issues such as user privacy, freedom of
expression, pricing, content and quality of products and services, taxation,
advertising, intellectual property rights and information security. The passage
of legislation regarding user privacy or direct marketing on the internet may
reduce demand for our services on our planned internet business or limit our
ability to provide customer information to marketers. Furthermore, the growth of
electronic commerce may prompt calls for more stringent consumer protection
laws. For example, the European Union recently adopted a directive addressing
data privacy that may result in limits on the collection and use of consumer
information.
We intend our services to be available on the internet in many states and
possibly in foreign countries, and these states or foreign countries may claim
that we are required to qualify to do business in their jurisdictions. Our
failure to qualify in any such jurisdictions, if we were required to do so,
could subject us to taxes and penalties and could restrict our ability to
enforce contracts in those jurisdictions.
23. OUR OPERATIONS ARE DEPENDENT SUBSTANTIALLY ON THE SERVICES OF OUR
EXECUTIVE OFFICERS.
Our operations are dependent substantially on the services of our executive
officers, particularly Jeffrey Leader, our vice president for car wash
operations, and Sean Michtavy, our vice president for systems operations. If we
lose Mr. Leader's or Mr. Michtavy's services, the loss could have a material
adverse effect on our business and results of operations. We do not maintain key
man life insurance policies on our executive officers.
24. WE ARE CONTROLLED BY OUR FOUNDERS AND PURCHASERS OF OUR SHARES WILL HAVE
NO INFLUENCE IN MANAGING OUR AFFAIRS.
Assuming the sale of all the 350,000 shares we and one selling shareholder
are offering, our founders own or have the right to vote approximately 93% of
our outstanding stock, giving them total influence over our affairs. Their
influence would affect important functions, including the election of our
directors and our ability to enter into transactions with affiliates and related
parties and the approval or prevention of any proposed merger, sale of assets or
other business combination. Their influence, thus, could prevent us from doing
things that would increase our common stock's price, or force us to do things
that could lower our common stock's price.
25. WE WILL HAVE BROAD DISCRETION IN THE USE OF THE NET PROCEEDS RECEIVED BY
US FROM THIS OFFERING AND THERE IS A RISK THAT WE MIGHT USE THEM
INEFFECTIVELY.
We will have broad discretion over how we use the net proceeds that we
receive from this offering, and we could spend those proceeds in ways with which
you might not agree. We cannot
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assure you that we will use these proceeds effectively. We plan to use the
proceeds from this offering received by us for the purposes stated in the "Use
of Proceeds" section of this prospectus. Our business strategy includes
purchases, modification and construction of car wash facilities, and, if we
cannot secure other funds for that purpose we may use a substantial portion of
the offering proceeds received by us to buy, modify or construct only a few car
wash facilities we have not yet identified. See "Use of Proceeds."
26. WE MAY NOT SELL MANY OF THE SHARES OFFERED THEREBY RAISING INSUFFICIENT
CAPITAL FOR OUR IMMEDIATE NEEDS.
There is no minimum number of shares that we are required to sell in this
offering. Regardless of the number of shares we sell purchasers will not be
entitled to a refund of their payments. In the event that we sell less than the
250,000 shares we propose to sell in this offering, we may not be able to
develop our business and compete in the marketplace as aggressively as if more
shares were sold.
27. YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN THE SHARES YOU
PURCHASE.
Purchasers of the shares being sold in the offering will experience
immediate and substantial dilution in the net tangible book value of their
shares. See "Dilution." In addition, we will seek to raise additional funds
after this offering. If we raise additional funds through the issuance of equity
securities, you may experience significant additional dilution in the shares you
purchase.
28. WE MAY NOT MAINTAIN ADEQUATE GENERAL LIABILITY AND COMMERCIAL INSURANCE OR
PRODUCT LIABILITY INSURANCE TO PROTECT US FROM CLAIMS MADE AGAINST US
WHICH ARE GENERALLY COVERED BY SUCH INSURANCE.
Although we plan to carry general liability, product liability and
commercial insurance, we can give you no assurance that the insurance we secure
will be adequate to protect us against any general, commercial and/or product
liability claims. Any general, commercial and/or product liability claim which
is not covered by such policies, or is in excess of the limits of liability of
such policies, could have a material adverse effect on our financial condition.
We can give you assurance that we will be able to secure or maintain this
insurance on reasonable terms.
29. WE MAY BECOME SUBJECT TO PENNY STOCK REGULATIONS WHICH COULD NEGATIVELY
AFFECT YOUR ABILITY TO SELL OUR COMMON STOCK OR THE PRICE YOU COULD
RECEIVE.
The SEC has adopted rules that regulate broker/dealer practices in
connection with transactions in "penny stocks." Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on Nasdaq). Prior
to a transaction in a penny stock, a broker/dealer is required to:
- deliver a standardized risk disclosure document prepared by the SEC that
provides information about penny stocks and the nature and level of risks
in the penny stock market;
- provide the customer with current bid and offer quotations for the penny
stock;
- explain the compensation of the broker/dealer and its salesperson in the
transaction;
- provide monthly account statements showing the market value of each penny
stock held in the customer's account; and
- make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written
agreement to the transaction.
These requirements may have the effect of reducing the level of trading
activity for a stock that becomes subject to the penny stock rules. If our
shares become subject to the penny stock rules, you
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may find it more difficult to sell your shares and you may receive a lessor
price for your shares in any such sale.
30. OUR OUTSTANDING COMMON STOCK MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR
SHARES WHICH YOU ARE BUYING.
We have 4,951,000 shares of our common stock presently issued and
outstanding which will not be sold in this offering. We cannot predict the
effect, if any, that sales of these outstanding shares or the availability of
those shares for sale, will have on the market prices of our common stock.
31. SINCE WE HAVE NEVER PAID ANY DIVIDENDS ON OUR COMMON STOCK AND DO NOT
INTEND TO DO SO IN THE FORESEEABLE FUTURE, YOU WILL ONLY REALIZE AN
ECONOMIC GAIN ON YOUR INVESTMENT FROM AN APPRECIATION, IF ANY, IN THE
MARKET PRICE OF OUR COMMON STOCK.
We have never paid, and have no intentions in the foreseeable future to
pay, any dividends on our common stock. Therefore, if you purchase any shares in
this offering, in all likelihood, you will only realize a profit on your
investment if the market price of our common stock increases in value.
USE OF PROCEEDS
We estimate that the net proceeds to be received by us from the sale of the
shares of common stock offered hereby, and after deducting $125,000 estimated
offering expenses, will be approximately $1,375,000 if the maximum number of
250,000 shares offered by us are sold. If we pay commissions to broker/dealers
for effecting sales of our shares, the net proceeds we receive will be further
reduced by the amount of the commissions we pay. We intend to use such net
proceeds primarily for our working capital and general corporate purposes,
including payment of salaries. However, if the opportunity arises for us to
acquire, modify or construct a car wash facility and we have not secured other
funds for that purpose, we may use a portion of the net proceeds we receive from
this offering for such purpose. We will not receive any proceeds from the sale
of 100,000 shares offered hereby by one of our shareholders.
DETERMINATION OF OFFERING PRICE
We have determined the initial $6.00 offering price of the shares
arbitrarily. Such offering price is not based on the general condition of the
equities market or the valuations of other companies in our market segment.
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DILUTION
Our net tangible book value at February 29, 2000, is $846,456 or $0.17 per
share of common stock. Net tangible book value per share represents the amount
of total tangible assets less liabilities, divided by 5,051,000, the number of
shares of common stock outstanding at April 7, 2000. See "Description of Capital
Stock." After giving effect to the sale of 250,000 shares (in the event that all
of the shares offered by us are sold), the as adjusted net tangible book value
at April 7, 2000, would be $2,221,456 or $0.42 per share. This represents an
immediate increase in net tangible book value of $0.25 per share to the existing
shareholders and an immediate dilution of $5.58 per share to new investors. The
following table illustrates this per share dilution:
<TABLE>
<S> <C>
Public offering price per share of common stock offered
hereby.................................................... $6.00
Net tangible book value per share before offering........... $0.17
Increase per share attributable to new investors............ $0.25
As adjusted net tangible book value per share after
offering.................................................. $0.42
Dilution per share to new investors......................... $5.58
</TABLE>
The following tables summarize the relative investments of investors
pursuant to this offering and our current shareholders, based on a per share
offering price of $6.00 before deduction of offering expenses, and assuming the
sale of only the 250,000 shares offered by us.
<TABLE>
<CAPTION>
CURRENT PUBLIC
MINIMUM SHAREHOLDERS INVESTORS TOTAL
------- ------------ ---------- ----------
<S> <C> <C> <C>
Number of Shares of Common Stock Purchased........... 5,051,000 250,000 5,301,000
Percentage of Outstanding Common Stock after
Offering........................................... 95.28 4.72 100
Gross Consideration Paid............................. $1,103,000 $1,500,000 $2,603,000
Percentage of Consideration Paid..................... 42.37 57.63 100
Average Consideration Per Share of Common Stock...... $ 0.22 $ 6.00
</TABLE>
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SECURITY HOLDERS
At April 7, 2000, there were 12 record holders of our common stock.
DIVIDEND POLICY
We have not paid, and have no current plans to pay, dividends on our common
stock. Even if we were to elect to pay any dividends, we may incur indebtedness
in the future, the terms of which may prohibit or effectively restrict dividend
payments.
PLAN OF OPERATION
The proceeds that we will receive from the sale of the 250,000 shares we
are offering, assuming that all such 250,000 shares are sold, will be used only
for our working capital and general corporate purposes, including payment of
salaries. We will need to raise additional funds in the next twelve months to
execute our plans for acquiring, renovating and/or building car washes, and
acquiring land for some of the car washes that we hope to build. Assuming that
the $12,052,000 that seven of our founders have promised to lend us is received
by us, we estimate that with the proceeds of such loans we can acquire or build
between ten and twenty facilities. While we hope to proceed to acquire or build
car wash and fast lube/gas station facilities as quickly as possible we cannot
at this time estimate the exact number that we will be able to acquire and/or
build in the next twelve months.
As we acquire or build car wash and fast lube/gas station facilities we
will have to employ enough unskilled employees to perform the car wash services
and we will also have to employ supervisory and executive personnel to operate
the car wash and fast lube/gas station facilities and/or other proposed business
enterprises.
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BUSINESS
The following description of our business should be read in conjunction
with the information included elsewhere in this prospectus. This description
contains certain forward looking statements that involve risks and
uncertainties. See "Disclosure Regarding Forward Looking Statements" and "Risk
Factors" elsewhere in this prospectus.
OVERVIEW
Our subsidiaries were incorporated in 1999 for the purpose of acquiring,
consolidating and operating full service car wash and fast lube operations,
while simultaneously utilizing the customer bases of those car wash, fast lube
operations to facilitate the initiation and expansion of our e-commerce virtual
shopping center, The Portal. Some of our car wash facilities will also have gas
stations or just fast lube operations. To attract customers to our facilities,
we intend to modify each acquired car wash into, or construct a new car wash as,
a sportstheme oriented All Star car wash, with each location to be endorsed by a
sports celebrity.
Car washes are categorized in five ways: home wash, full-service wash, self
service wash, exterior wash and stationary automatic wash. In the United States,
home washing accounts for 47.6%, full service washing accounts for 17.2%, self
service washing accounts for 15.2%, exterior washing accounts for 10.4%, and
stationary automatic washing accounts for 9.5%.
We intend to operate most of our All Star wash locations as full service
wash facilities. In full service locations, interior cleaning and detailing are
offered to the customer, together with conveyor, drive through washing and
waxing, with each wash taking approximately 12 to 15 minutes. At a full service
wash, the customer must leave the automobile while the entire car is being
cleaned, inside and out. We intend to make this waiting time both entertaining
for the customer and profitable for us, by encouraging our customers to access
The Portals, computer stations strategically located in the car wash facility.
Each Portal will have computers offering free internet access, directed through
our own internet site, HaggleHouse.com, as well as access to other valuable and
entertaining automotive related services. Through The Portal internet links,
customers will be attracted to the ease of purchasing the widest variety of
merchandise, including, but not limited to, new and used cars, car insurance and
other automotive items. Even though the purchases may not be completed at the
car wash itself, our customers will be able to complete the transactions in the
privacy of their home or office.
ACQUISITION AND CONSOLIDATION STRATEGY
We have acquired three sites on Long Island, NY, at which we intend to
renovate or build car wash and fast lube operations. One is in Oceanside, one in
Copiague and one in Commack. In both Oceanside and Commack we have purchased
leases in which we are granted options to buy the properties. In Coppiague we
have purchased a twenty year lease. In Oceanside we have also entered into two
contracts to purchase adjacent properties. The Oceanside and Commack properties
were previously operated as gas stations and the Copiague property as a car
wash. We are not continuing any of the businesses operated at those locations
before we purchased them. We have filed plans, or are preparing plans for
filing, with the municipal authorities at those three locations for construction
of our new car wash and fast lube/gas station facilities. We have also entered
into a contract to acquire a parcel of land in Sayville, on which a gas station
had been operated. We plan to renovate the existing buildings for use as a car
wash, fast lube and gas station facility. Sayville is also a community on Long
Island.
We have commitments from seven of our founders to lend us an aggregate of
$12,052,000. See "Certain Relationships and Related Transactions". Based on our
estimates we believe that such $12,052,000 will be sufficient to acquire,
renovate and/or construct car washes, fast lubes and at some
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sites gas stations, at between 10 and 20 locations. To acquire, renovate and/or
construct additional car wash, fast lube/gas station sites, we will have to
secure additional financing. We cannot assure you that we will be able to secure
such additional financing or that our estimates of the number of sites we can
have in operation from the $12,052,000 to be loaned to us by seven of our
founders, will prove accurate.
THE PORTAL
The Portal will be a computer station designed for state-of-the-art user
friendliness and flexibility. There will be a Portal in a prominent location at
each of our full service car washes, set up so that a typical customer can come
in and shop on the internet while waiting for their car to be finished. Examples
of Portal services are as follows:
- Real time accurate inventories of cars for sale at our listed dealers'
locations;
- Easy search-and-find software by model and price;
- Pictures and window stickers of cars for sale;
- Demo scheduling (drop off at car wash or visit the lot);
- Inventories of used cars for sale by private sellers, with pictures and
demo scheduling;
- Car rentals for pick up and drop off at our car wash facility, or home
delivery;
- One-touch automobile parts purchasing -- drop off at our car wash or home
delivery, including:
- Tires and wheels;
- After market accessories, such as car top covers, grill and
headlight protectors, fog lights and bicycle racks; and
- Standard maintenance items, such as blades, rugs and lights;
- Full range of automobile insurance;
- Automobile club memberships;
- Car wash membership plans and discounts; and
- Other merchandising, including discounts at local establishments near and
surrounding our car wash site.
HaggleHouse.com
We anticipate that many of our customers will use their free time at the
car wash to utilize The Portal. Once logged in to The Portal, that customer will
be directed to our website, HaggleHouse.com, which is an open marketplace where
people may buy, sell and trade merchandise with no immediate online purchase
commitments. We believe HaggleHouse.com will be attractive to our customers
because it allows users to bid anonymously. All we do is provide the buyers,
sellers and traders with the technology and resources to conduct their
transactions. We will generate revenue from the website by the payment to us by
users of a fee for each transaction consummated, as well as through our online
advertisements.
As with all e-commerce, the greater the number of "hits" to a website, the
greater amount of money that site may charge for advertisements. We believe that
a significant additional advantage in acquiring an increasing number of full
service car washes is that it will increase the number of users of
HaggleHouse.com, thereby increasing the revenue the website may generate for us.
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HaggleHouse Auto Mall
At HaggleHouse.com, we anticipate a user being able to buy, sell or trade
any item -- large or small, from yo-yos to yachts. However, the HaggleHouse Auto
Mall will be the premier location on our HaggleHouse.com website. The
HaggleHouse Auto Mall will be a set of locally based, online shopping malls
which will take advantage of the physical, brick and mortar presence of our car
wash and fast lube locations to create a network of opportunities for
neighborhood merchants and shoppers alike. Each HaggleHouse Auto Mall will
service an area surrounding a given All Star car wash facility. We believe
neighborhood store owners and merchants will be able to make use of the
HaggleHouse Auto Mall as an inexpensive way to advertise their merchandise and
special promotions to the community of users of All Star facilities, as well as
to other neighborhood internet users who will have discovered the convenience of
shopping through the HaggleHouse Auto Mall. As in a physical shopping mall,
HaggleHouse Auto Mall advertisers will be able to select locations of various
sizes and with more or less prominent "locations" in order to advertise their
merchandise. The more prominent the location and the larger the size, the higher
the "rent" an advertiser will pay to us for the location in the virtual mall. In
this way, we believe, HaggleHouse.com will generate revenue for us at the same
time that it is a marketing and sales tool for merchants in the automotive
industry, some of with whom we hope to develop mutually profitable strategic
partnerships. We intend our HaggleHouse Auto Mall to deliver real time
information, as well as offer the following features:
- It will portray vehicles in virtual space, allowing many viewers to
participate, with no geographic boundaries, in a real time auction.
- It will deliver full 30 frame per second video and stills.
- It will have flexibility of scale, to accommodate a great or small number
of users.
- It will facilitate viewing automobiles, appraising automobiles,
electronic payments, credit approvals, participation in negotiating deals
and previewing inventory.
- It will incorporate credit and finance features.
- The system will be a true interactive virtual world, including sound,
animation, panoramas, and an ability to interact with other participants.
DEALERSHIP AGREEMENTS -- In all geographical areas in which we have a
presence, we intend to form strategic cross marketing partnerships and alliances
with regional new and used car dealerships. The companies we hope to form such
alliances with will be those who we believe have achieved and maintain the
strongest public image through traditional advertising media. We have formed a
strategic alliance with the Major Automotive Group in the Greater New York
Metropolitan area. Major Automotive has eight locations in the New York
metropolitan area for the sale of new and used cars. We intend to engage in
co-operative advertising and cross marketing with Major, as well as dealer
advertising in The Portal and prominent advertising banners and headlines in the
HaggleHouse Auto Mall. Mr. Bruce Bendell, one of our directors, and one of our
founders and principal stockholders, is Major's president (See "Certain
Relationships and Related Transactions").
PROPOSED ANONYMOUS BUYING AND SELLING OF AUTOMOBILES AT THE HAGGLEHOUSE
AUTO MALL
(i) Buyers. A buyer chooses a region to search. Our database stores items
for sale to be searched regionally. This allows buyers to be able to "drive"
electronically to a "nearby" location to see items before committing to a
purchase. After a region is chosen, categories of items will be listed and the
buyer will be able to determine if the cars are listed by a private seller or by
one of our affiliated dealers. Buyers are then able to search for new or used
cars based on make, model and year. The search results are then displayed (four
or five on a page). If an ad has a picture, it will be displayed; if not, a box
with "picture not available" is displayed. A comparison is also offered to the
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buyer so the buyer can view two similar items side-by-side to make a better
decision. The buyer is then able to ask the seller a question, make an offer,
store car information, or get the seller's code name, which permits the seller
to remain anonymous. By choosing one of these options, the buyer is required to
register in our system. Our system will require the buyer to enter certain of
his or her personal information and answer a questionnaire specifically designed
to determine the qualification of the lead. The buyer will choose on the
questionnaire the means by which dealers and sellers can contact the buyer (by
fax, HaggleHouse message bin only, e-mail, phone). After the buyer confirms all
of the information on the confirmation page, he/she is asked to choose a login
name (code name) and a password. The login name is meant to hide the identity of
the buyer to the sellers. Code names of buyers will be different from the code
names of sellers to assure anonymity. If the buyers have any questions, they are
able to click a link and open a form. The form allows the buyer to fill in
his/her code name and questions. Of course, as soon as the buyer indicates any
interest, the buyer is registered by our system as someone who has buying
interest in the region. This is the information that will be forwarded to
participating dealers. This bonus feature benefits the buyer as a shopping
service. By inquiring about an automobile, the buyer could get a response from
every member dealer with a better or similar deal.
The buyer can also offer or "bid" on the car immediately and the
information will be sent to the dealer or private seller directly. The buyer may
click on a link that opens another form that has fields to enter the buyer's
code name and offered amount. The buyers are told they will receive a response
within 24 hours in our system via a message box. Each buyer will get their own
message box and at login have the ability to check their messages. The buyer
also has the ability to store a vehicle in his/her message box for further
consideration and comparisons. The item under consideration is stored there for
30 days and is removed automatically when 30 days expire or when the ad is
removed by the seller.
If the buyer is happy with the initial listed guaranteed price, or is happy
with a response, he/she can click on the "get ID" icon that will allow the buyer
to identify the seller by code name.
(ii) Individual Private Sellers. For a seller to post an ad in our system
we will require registration. The seller logs into our system via a "to place an
ad" link from our home page. This page will offer a form that requests all of
the information our company needs: name, address, e-mail address, day phone,
evening phone and credit card information. After reviewing the confirmation
page, the seller chooses a code name and a password. The following page is the
ad form. Each seller fills in his/her code names and the vehicle make, model,
price and year. There is an additional notes field that allows the seller to
type in a detailed description of the auto, including options, transmission,
mileage and color. On this page we also offer the ability for the seller to post
a picture. In the event we take the picture at one of our car wash locations, a
diskette with the picture on it will be given to the seller to place the ad at
home. We may also offer that posting through The Portal. Once the ad is posted,
the private seller will begin receiving e-mails with questions and offers. The
seller then responds to the buyer's individual message box by logging into our
site and clicking a "respond to message" link. If an offer was given and the
seller is happy with the offer, the seller may execute the sale by clicking on
the "Sell" button. At this point, the seller will be given the real identity of
the buyer via a link from the member seller's area. The seller is given the
contact information that the buyer offered in his/her questionnaire. An e-mail
is also automatically sent to the buyers, letting them know that their offer has
been accepted and the seller will be contacting them shortly. The seller will
also be identified to the buyer in this e-mail.
Our fees are paid by sellers only. Buyers are free to roam and haggle as
much as they want, at no charge. We will offer a few different packages for
posting an ad. Sellers may pay per ad posted or for a "booth." Booths will come
in varying sizes, allowing sellers to list only a few items or a great number of
items. Of course, sellers may opt to use banners or advertisements. An ad will
cost a
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percentage of the amount of the item for sale. These charges will be collected
at the time of registration when credit card information is given.
(iii) Commercial Sellers -- Dealers. At HaggleHouse, we intend to make a
dealer's job just a little bit easier. We do not sell cars. We leave that to the
professionals. We generate leads to help a dealer's business grow. A registered
HaggleHouse dealer may choose the package that best suits its need. Unlike
individual private sellers, dealers may list as many cars from their inventory
as they want to list, at no charge. Buyers from our All Star Car Wash locations
in that area, as well as buyers who are using the internet to shop, will have
immediate access to dealers' listings. If they are interested, we send them to
the dealer and that is where the negotiation starts.
If a dealer wants priority service in receiving a buyer's leads and access
to our special advertising opportunities, we can do that as well. Our three tier
option package lets dealers design the service they want.
- TIER 1 -- This is open to all dealers -- free of charge. All they need to
do is register in our Tier 1 Group and they will be informed of any and
all leads in their region. We guarantee to e-mail them a buyer's contact
information within four hours of our receipt of such information.
- TIER 2 -- For a fixed fee per month, a dealer receives priority service.
We guarantee to e-mail the dealer information on any activity within
thirty minutes of such activity. We also offer a special picture-taking
service, as well an inventory management program which will allow dealers
to maintain up-to-date records of the vehicles in their inventory.
- TIER 3 -- For a fixed fee per month, a dealer receives the highest
priority service. Not only will we e-mail the dealer information on any
activity within thirty minutes of such activity, our telemarketing team,
based upon the personal information provided us by a buyer in his
questionnaire, will pre-qualify the lead, customized to the individual
Tier 3 dealer's specifications. When a dealer signs up for this service,
they receive five free bonus monthly banner advertisements or headlines.
We also offer a special picture taking service, as well an inventory
management program which will allow dealers to maintain up-to-date
records of the vehicles in their inventory.
Growth of the Internet and Online Commerce
Over the past several years, the internet has emerged as a powerful and
efficient new medium, enabling people worldwide to exchange information,
communicate and conduct business electronically. The number of people using the
internet continues to expand rapidly. The internet has become the fastest
growing communications medium in history, according to the eAdvertising Report,
a publication prepared by Advertising Age and eMarketer. The eAdvertising Report
states that the internet reached 50 million Americans in only five years, as
compared to 13 years for television, 38 years for radio and 10 years for cable
television.
Businesses have recognized the online commerce opportunity and are
increasingly using the internet to sell and distribute products and services. As
online commerce and the number of people using the internet grow, advertisers
and direct marketers are increasingly using the internet to locate customers,
advertise products or services and facilitate transactions. The eAdvertising
Report estimates that approximately $1.5 billion was spent by U.S. companies on
internet advertising worldwide in 1998, and this amount is expected to grow to
approximately $2.6 billion by the end of 1999 and to approximately $8.9 billion
in 2002. According to the eAdvertising Report, internet advertising spending
will account for approximately 1.2% of the total advertising spending in 1999
and this amount is predicted to grow to 3.4% in 2002.
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<PAGE> 22
Our Management Information System
The technology that operates The Portal will not only allow a customer real
time access to products and services, it will also permit us real time
monitoring of the car wash site. From the moment the car enters the facility,
such technology will allow us to capture and make use of servicing, tracking and
accounting services that will identify the user and maximize the possibility of
our providing such user valuable additional services. It will allow monitoring
of performance and conditions at each local facility by several means:
- Financial performance monitoring through data links with the point of
sale system and the accounting system database.
- Facility efficiency, environmental, and throughput monitoring through
data links with the tunnel controller hardware.
- Physical monitoring via a selectable Extranet based video and audio link.
- Customer satisfaction feedback through The Portal system.
Together, these means will give management an accurate, real time window into
the ongoing operation, enabling immediate and effective decision making.
We anticipate that each retail location will have a main computerized point
of sale (POS) system that facilitates transactions with customers. This POS
system is connected to the car wash tunnel control system and authorizes wash
operations based on customer sales transactions. Each retail location may also
include other transaction POS system facilities to be used for other services
offered, including lube centers and gasoline dispensers. Each customer
transaction will generate financial and inventory data that will be stored and
processed locally on a real time basis, to permit basic business operation, as
well as to gather customer demographics and to promote customer loyalty.
We intend the business data gleaned from the POS systems at each retail
location will be consolidated at our administrative headquarters. This will
allow management to be able to effect price changes, special promotions and
other decisions from our headquarters. This same technology will create real
time reports on the car wash system as a whole, as well as on individual
facilities. Reports on growth, turnover time, retained customers, car wash
efficiency, profit center performance and much more will be generated with a
touch of a button.
The data provided to our headquarters will have come from several different
sources and must be converted so that it can be merged on a single system at our
headquarters, further allowing for the merged version to be sent back to retail
locations. We believe our management information system is designed to
accomplish this task.
The data storage concept of the management information system is that of a
shared architecture (SA) database, whereby a universal and consistent database
format is designed to accommodate present applications and future technology.
The structure of this database includes standardized tags attached to each piece
of data defining its content and application. Any application can read from or
store data in the shared architecture database by using transformers, which read
these tags and translate the data between the application structures and the
shared architecture database.
For example, one of the pieces of data stored in the SA database is the
customer's name. This might be in the form of two fields, "Last Name" and "First
Name". These will be the standard data "tags" for those pieces of information.
In the POS system this same information may be called "Given Name" and
"Surname". In order to connect the POS with the SA, a small program called a
transformer is used that automatically changes the tag of "Surname" to "Last
Name" and "Given
21
<PAGE> 23
Name" to "First Name". Similarly, our accounting system might call these same
pieces of information "Name 1" and "Name 2". A similar transformer will connect
these with the SA tags.
Portal Competition
The Portal will be competing, in general, with all other internet commerce
providers for the attention of the e-commerce customer base, and in particular,
with other well established auction and bidding sites, such as E-bay.com and
Priceline.com. We will be competing, among other things, on the basis of name
recognition, availability of inventory on The Portal, the maintenance of the
security and anonymity we guarantee our users and the ability of our users to
easily navigate our sites. Due to the limited barriers to entry to the
e-commerce industry, we cannot give you any assurance that we will not encounter
significant increased competition in the future, which could limit our ability
to maintain or increase market share or maintain our profit margins (if any).
The industry in which we compete is characterized by developments requiring
rapid adaptation to provide competitive products and services. We believe that
increased competition within the online retail market could result in reduced
market share and increased spending on marketing and product development, which
could have a materially adverse effect on our financial condition and operating
results. Most of our competitors have significantly greater financial, technical
and marketing resources and greater name recognition than we do. We cannot
assure you that we will be able to compete effectively with current or future
competitors.
FULL SERVICE CAR WASH OPERATIONS
We intend to acquire, consolidate, modify and build car wash operations,
initially in the Greater New York metropolitan area, and to have approximately
one third of these locations also equipped with fast lube and/or gasoline
stations. We expect that some of the gasoline stations will also have
convenience stores. The Greater New York metropolitan area is presently
estimated to have 1,152 car washes. With each car wash averaging annual gross
revenues of $450,000, the total metropolitan market is estimated at $518,400,000
of gross revenues. Our management has targeted for potential acquisition up to
200 existing and potential car washes and fast lube locations in the Greater New
York metropolitan area. Thereafter, we intend to continue to identify, acquire
and build additional prime car wash and fast lube/gas station locations. We
intend to select locations by carefully monitoring traffic volume, local
competition, neighborhood demographics, and, in the case of existing locations,
verified sales volume and price. In the event we succeed in establishing a
significant market presence in the Greater New York Metropolitan area, we intend
to expand our operations up the Northeastern corridor into New England and other
geographical areas within the United States. We can give you no assurance as to
the number of such facilities we will actually be able to acquire, build or
operate in the future, whether within or outside the Greater New York
Metropolitan Area.
We intend to obtain endorsement agreements with various athletes and
entertainers, each of whose names will be used to promote one or more car wash
locations, as well as the entire All Star chain, with all locations consolidated
under the "All Star" name. To further these sports entertainment efforts, we
have retained Mr. Greg Buttle, former star of the New York Jets football team
and currently President of Unique Sports & Entertainment Marketing, Inc., of
East Meadow, New York, as a consultant and our vice president for sports and
entertainment marketing.
The technology that operates The Portal will not only allow a customer real
time access to products and services, it will also permit us real time
monitoring of the car wash site. From the moment the car enters the facility,
such technology will allow us to capture and make use of servicing, tracking and
accounting services that will identify the user and maximize the possibility of
22
<PAGE> 24
our providing such user valuable additional services. It will allow monitoring
of performance and conditions at each local facility by several means:
- Financial performance monitoring through data links with the point of
sale system and the accounting system database.
- Facility efficiency, environmental, and throughput monitoring through
data links with the tunnel controller hardware.
- Physical monitoring via a selectable extranet based video and audio link.
- Customer satisfaction feedback through the kiosk system.
Together, these means will give management an accurate, real time window into
the ongoing operation, enabling immediate and effective decision making.
The core concept of the management information system is that of a shared
architecture database. All of the management data is stored at a single
location. A universal and consistent database format is designed to accommodate
present and future technology. The structure of this database includes
standardized tags attached to each piece of data defining its content and
application.
This same technology will create real time reports on the car wash system
as a whole, as well as on individual branches. Reports on growth, turnover time,
retained customers, car wash efficiency, profit center performance and much more
will be generated with a touch of a button. We will also provide the customer
with a Portal generated reminder of their visit. This reminder may be in the
form of literature that the customer printed out while at the car wash, which
they may review later, or it may be an internet password so that the customer
can continue their internet shopping and browsing at home.
The Car Care
Throughout the entire time the customer is using The Portal station, his or
her car is in the process of being attended to by our employees. On the
interior, the car is vacuumed, windows are cleaned, ashtrays are emptied, and
the dashboard is dusted. On the exterior, the car is washed, hand toweled dry
and the tires are cleaned. We intend to offer a wide range of service options,
from "Rookie" (exterior wash only), to "All Star" (full service wash, plus
undercarriage wash, rust inhibitor, hot wax, clear-coat protectant, mat cleaning
and Wheel Brite), to the top of the line "MVP" (an "All Star", plus Armor-all
interior and tires, air freshener and triple polish). In order to provide the
best wash, we intend that our facilities will use only the highest quality
equipment.
The Quick Lube/Oil Change
Statistics reported by Auto Laundry News (March 1999) demonstrate that
there has been a recent trend towards combining full service car washes and
quick lube facilities over the past several years. The average combined car
wash/quick lube operation reports annual sales of 13,068 fast lubes/oil changes
at an average price of $30.88 per car. This means that the combined operation
brings in over $400,000 per year in quick lube revenue. The same reports
indicate that average net profit from a lube operation is approximately 25% of
the cost of the price charged.
We estimate that one of every three of our car washes will also have a
quick lube facility which will offer multi point oil changes, draining and
flushing transmission fluid, draining and flushing brake fluid, draining and
flushing power steering fluid, flushing and filling the radiator, fuel injection
cleaning and (in some locations) state inspection. All Star operations will not
become repair services, a direction which, we believe, increases overhead and
complicates delivery of high-quality service. Instead, we intend to forge
reciprocal partnerships with local vendors of high quality repairs.
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<PAGE> 25
The Detailing Station
According to Auto Laundry News (January 1999), the average detail shop run
in combination with a full service car wash processes 2,066 cars with an average
price of $125.69 per car. This means that the total average revenue for this
type of detailing operation is $259.67. Standard services provided by detailers
include, in most locations, hand washing, machine waxing, carpet shampooing,
upholstery cleaning, leather and vinyl interior dressing, deodorizing and engine
cleaning. We intend to also offer a number of other services, such as paint
touch-up, paintless dent removal and windshield repair, to name a few.
The Cash-and-Carry Store
Like most car wash operations, we anticipate our All Star locations will
feature the sale of automobile related products. However, this will serve as
just one aspect of our "retail boutique" concept. Relying on the sports
entertainment theme being used for our All Star car washes and on the celebrity
stars and event oriented merchandising we intend it to generate (such as
basketball events and competitions at the site, hosted by our own all stars), as
well as day to day retail operations, we intend to feature sports items,
memorabilia and merchandise, and a sports photo gallery, including autographed
copies of photographs signed by our All Star team of professional athletes.
We hope our retail operations will also play to the mid-week audience
(typically mothers with children) and the portion of the weekend audience
(typically fathers with children) that will be attracted to children's games,
novelty and collectible items (e.g., Beanie Babies, Milkie Pens, Pokemon cards
and other fad items). We intend to offer these items at reasonable market prices
because our objective will be to have the children lead the parents to our car
washes.
We also intend that all of our car washes will feature enhanced food
services by replacing the industry's traditional coffee pot with high-end
vending machines for cappuccino and other revenue-producing quick-food items. In
addition, we intend all of our washes will offer free advertising coffee mugs
and free coffee all day to professionals in the taxi and livery business, as
well as a low cost breakfast buffet for them while they wait for their car to be
washed.
Car Care Competition
The extent and kind of competition that we face varies. The car wash
industry is highly competitive. Competition is based primarily on location,
facilities, customer service, available services and rates. Because barriers to
entry into the car wash industry are relatively low, competition may be expected
to continually arise from new sources not currently competing with us. In this
sector of our business we also face competition from outside the car wash
industry, such as gas stations and convenience stores that offer automated car
wash services. In some cases, these competitors may have significantly greater
financial and operating resources than we do. In our car service businesses, we
face competition from a number of sources, including regional and national
chains, gasoline stations and companies and automotive companies and specialty
stores, both regional and national.
EMPLOYEES
We presently employ 42 people on a full time basis, including two executive
officers. We also have 2 part time employees. Forty of these people are or will
be managers or assistant managers and other employees at our facilities. We
anticipate adding additional employees as we acquire additional car washes and
as further needs arise.
LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings, nor do we know of
any claims against us that could have a material adverse effect on us or on our
operations.
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<PAGE> 26
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Our directors and executive officers are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Daniel Boucher.............. 54 President, Chief Executive Officer and Director
Jeffrey Leader.............. 45 Vice President -- Car Wash Operations,
Treasurer, Secretary and Director
Sean Michtavy............... 26 Vice President -- Systems Operations and
Director
Greg Buttle................. 45 Vice President -- Sports and Marketing
Bruce Bendell............... 46 Director
Michael A. Civin, Ph.D. .... 53 Director
Abraham Samuel Marrache..... 49 Director
Isaac Samuel Marrache....... 44 Director
Ely Sakhai.................. 48 Director
Harvey Glicker.............. 56 Director
Howard S. Edelstein......... 49 Director
</TABLE>
Daniel Boucher holds an M.A. in Communications and Media and a B.A. in
Liberal Arts from the University of Akron in Akron, Ohio. Since 1993, Mr.
Boucher has served as the Publisher and General Manager of Buy-Lines Press. In
that capacity, he has produced three weekly advertising periodicals that are
distributed from newsstands with combined circulation of in excess of 100,000
readers. He has also overseen the publication of the Korean and Spanish language
versions of Buy-Lines. From 1992 to mid 1993, Mr. Boucher was the General
Manager for Danieli & O'Keefe Associates, a computer technology industry. In
1991, he was the Vice President of Market Services, Eastern Regions for
InfoWorld, an international data group trade publication.
Jeffrey Leader has a B.A. in Business from Brooklyn College (1976). From
1992 until his recent employment with us, Mr. Leader was a principal of Enge
Collection, a garment manufacturer.
Sean Michtavy has an A.A. degree from Rancho Santiago Canyon College
(1997). Before serving as Vice President of our Radence Generation II subsidiary
in 1999, Mr. Michtavy worked as a systems analyst and programmer at Budd Van
Lines from 1998 to 1999. From 1992 to 1998, Mr. Michtavy was Western Regional
Sales Representative and Information Systems Assistant for Budd Van Lines in
Rancho Cucamonga, California.
Greg Buttle has a B.S. from Penn State University (1976) where he was
captain of the football team and an All-America linebacker. From 1976 to 1985
Mr. Buttle was a linebacker on the New York Jets football team. He was selected
to the NFL Rookie of the Year team, was selected as an all pro linebacker in the
1979-80 season, served as defensive captain and was a player representative to
the Players Association. From 1989 to the present Mr. Buttle has served as
president and chief executive officer of Unique Sports Entertainment and
Marketing, Inc., which organizes and implements celebrity driven events such as
celebrity golf tournaments, sports award dinners, celebrity fashion shows and
celebrity fund raising events. Mr. Buttle also has other diverse business
interests.
Bruce Bendell holds a B.A. in Accounting and Economics from Queens College
(1975). Mr. Bendell has been in the automotive business since 1972. Most
recently, from 1985 to the present, Mr. Bendell has been the president of Major
Automotive Group, a group of automobile dealerships with annual sales of over
$200 million. During this period, he has also been President of Major Fleet and
Leasing Corporation, a full service automobile leasing and financing company.
Since 1995, he has been Chairman of Fidelity Holdings, Inc., a publicly-traded
company involved in the ownership of
25
<PAGE> 27
retail auto dealerships and providers of telecommunications services. In
addition, Mr. Bendell has held memberships in numerous professional and civic
associations and organizations. He is a Director of the Queens Chamber of
Commerce; a Director of Long Island City Business Development; a Director of the
Board of Managers for the Long Island City YMCA; a member of the Queens District
Attorney's Business Advisory Council; and Chairman of the Bell Atlantic Customer
Advisory Board.
Michael A. Civin, Ph.D. holds an A.B. cum laude in General Studies from
Harvard (1968), an M.A. in English from the University of Oregon (1971), an M.A.
(1985) and Ph.D. (1988) in Psychology from the Derner Institute at Adelphi
University, and a Post Doctoral Certificate in Psychoanalysis and Psychotherapy
from the Derner Institute at Adelphi University. He is a New York State licensed
Clinical Psychologist. Dr. Civin has been an Associate Clinical Professor of
Psychology at the Derner Institute since 1993, and has been on the faculty of
the Post Doctoral Program in Psychoanalysis and Psychotherapy at Derner since
1998. He was the Founder and Director of the M.A. in General Psychology at
Derner from 1995 to 1999. From 1989 to 1994, he was an Associate Professor of
Psychology at New York Institute of Technology and was Director of that
institution's Masters Program in Professional Studies. Since 1994, Dr. Civin has
been the Director of Clinical Training at the Baldwin Council against Drug
Abuse. He is currently President and Chief Executive Officer of Clocktower
Psychological Services in Roslyn, New York. In 1975 he founded an independent
management consulting firm, MC Management Consulting. From that date to the
present, Dr. Civin has consulted for dozens of businesses nationwide and
internationally. Dr. Civin has published numerous scholarly papers and is an
internationally recognized authority on use of the internet. His book on
internet psychology, Male Female Email, is published by The Other Press.
Abraham Samuel Marrache holds an M.A., with honors, in Jurisprudence from
Oxford University in England and a Diploma in International Studies from the
University of Geneva in Switzerland. A British national, Mr. Marrache has been,
since 1996, a consultant to Chase Manhattan Bank in Spain, a representative for
the Euromony Publishing Group, a member of Impax Capital Corporation, a British
based corporation providing corporate finance advisory and strategic consulting
services, particularly in the environmental utilities sector, and a partner of
Marrache Freres Limited, a partnership which originates, structures and finances
corporate acquisitions. In 1996, he was President Designate of Chemical Banque
Suisse of Geneva, Switzerland. From 1991 to 1996, he was the Head of Private
Banking and the Promoter/President of Chemical Ahorro, S.G.I.I.C., of Madrid,
Spain. Between 1985 and 1996, he served as the Managing Director and Deputy
Manager of Chemical Bank, Madrid Branch, in Madrid, Spain. Mr. Marrache is the
translator from English to Spanish of "Introduction to the Eurocurrency Markets"
and the author of numerous articles on banking and jurisprudence. He is the
winner of the Justas Castellanas, 1993 literary prize. He is a member of the
Honourable Society of the Inner Temple of England and Wales, the Honorary
President of Associations of Oxford University Alumni of Spain and Venezuela,
and a Patron of the Salvador de Madariaga Foundation in Spain.
Isaac Samuel Marrache holds degrees from the University of London, School
of Oriental and African Studies, and an LLM from the University of London, the
London School of Economics and Political Science. Mr. Marrache is the founder
and for the past seventeen years has been the senior partner of Marrache & Co.,
a firm of barristers and solicitors, with offices in Gibraltar and London,
England. He has been a Freeman and Liveryman of the City of London, a member of
the International Bar Association and the Gibraltar Lawyers Association, a
Notary Public of Gibraltar and a Commissioner for Oaths of the Inner Temple of
England and Wales. He is a retired Sub-Lieutenant of the Royal Navy Reserves. He
is the co-author of the law digest on Gibraltar which appears in the
Martindale-Hubble directory, as well as author of numerous legal books and a
contributor to legal publications.
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<PAGE> 28
Mr. Abraham Samuel Marrache and Mr. Isaac Samuel Marrache are brothers.
Ely Sakhai is a civil engineering graduate of Columbia University. He has
been engaged in the art gallery business in New York City for the last fifteen
years. He is President and Director of ACOR, a company which plans to pursue new
oil and gas leases in Australia, Canada and the United States.
Dr. Harvey Glicker holds a BS in Biology and Physics from Hunter College
(1965), and a Doctor of Dental Surgery with a John Kolmer honors award in
medical science from Temple University (1969). He obtained a specialist
certification in periodontics from New York University in 1973. Dr. Glicker
previously held staff positions at Long Island Jewish Medical Center and North
Shore University Hospital, both on Long Island. He has an established
periodontal practice on Long Island for over 25 years. Dr. Glicker has been
involved with the venture capital development of numerous private and public
companies, including Fidelity Holdings, Inc. (FKHG), Muse Technologies, Inc.
(MUZE), Preferred Voice (PFVI), Visual Data Corp. (VDAT), Edulink, Inc. (MYIQ),
US Home and Garden Corp. (USHG), World Communication Group, United Medical
Corp., Travel Link Services, Paramotor, Inc., Millennium Vu, Laser Medical and
Innercircle Pharmacal, Inc.
Howard S. Edelstein holds a BA from Queens College and a JD from Hofstra
University. For more than the past five years he has been a practicing attorney
in New York City. Mr. Edelstein has also been a partner in several real estate
partnerships (JDH Realty Group and BCR Associates, among others) that have both
managed and developed properties in New York, Florida and Georgia. He has
managed residential and commercial real estate, including multi unit residential
buildings in Manhattan and single use commercial properties with tenants as
varied as Bell Atlantic, Kinko's, and Sun Trust Bank. He is a licensed real
estate broker, as well as a past arbitrator for both the New York Civil Court
and the American Arbitration Association.
All directors hold office until the next annual meeting of stockholders and
the election and qualification of their successors. Directors currently receive
no compensation for serving on the Board of Directors.
BOARD COMMITTEES
Messrs. Daniel Boucher, Bruce Bendell and Ely Sakhai serve as the Executive
Committee of the Board of Directors. The Board of Directors does not have an
Audit or Compensation Committee and the functions of such committees are
currently performed by the entire Board of Directors.
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<PAGE> 29
EXECUTIVE COMPENSATION
Mr. Daniel Boucher, our chief executive officer, received no compensation
from us in 1999. None of our other executive officers except Mr. Sean Michtavy
received any compensation from us in 1999 and in 1999 we paid Mr. Michtavy less
than $100,000.
EMPLOYMENT AGREEMENTS
Our subsidiary corporations have entered into the following employment and
consulting agreements. The agreements with Messrs. Leader and Michtavy require
them to devote full time to our affairs, while the agreement with Mr. Buttle is
a consulting agreement which requires him to devote an average of fourteen hours
a week to our affairs.
<TABLE>
<CAPTION>
NO. OF SHARES OF
COMMON STOCK TO BE
GRANTED OVER TERM OF
AGREEMENT WITHOUT COST
BASE ANNUAL TO EMPLOYEE OR
NAME TERM SALARY CONSULTANT
---- ------- ----------- ----------------------
<S> <C> <C> <C>
Jeffrey Leader......................... 3 years $85,000 None
Sean Michtavy.......................... 5 years 75,000 35,000
Greg Buttle............................ 3 years 72,000 30,000
</TABLE>
Mr. Michtavy's base annual salary increases each year with a base annual salary
of $150,000 in the fifth year of his contract. Mr. Leader's base annual salary
increases based on the number of car washes we acquire, up to $175,000 if we
acquire 29 car washes. The agreements with Messrs. Leader and Michtavy provide
for cost of living salary adjustments and additional compensation based on
increases in our earnings per share.
Mr. Daniel Boucher is employed by us part time. We pay him at the following
hourly rate for the time he devotes to our affairs: $100 in cash plus shares of
our common stock having a market value of $100 at the time such services are
rendered. Either we or Mr. Boucher can terminate such employment arrangement at
any time. As of the date of this prospectus we have already issued 1,000 shares
to Mr. Boucher.
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<PAGE> 30
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information as of April 7, 2000 with
respect to the beneficial ownership of our common stock by (i) each of our
current directors (ii) each of our officers, (iii) all of our directors and
officers as a group, (iv) each person known by us to own beneficially more than
five per cent (5%) of the outstanding shares of our common stock and (v) the
selling shareholder.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE ------------------------
NAME AND ADDRESS OF OF BENEFICIAL SHARES BEFORE AFTER
BENEFICIAL OWNER OWNERSHIP** OFFERED* OFFERING OFFERING**(1)
------------------- ----------------- -------- -------- -------------
<S> <C> <C> <C> <C>
Daniel Boucher*.................... 1,000 -- *** ***
Jeffrey Leader*.................... 90,000 -- 1.8 1.7
Sean Michtavy*..................... 15,000 -- *** ***
Greg Buttle........................ 5,000 -- *** ***
1900 Hempstead Turnpike
East Meadow, NY
Bruce Bendell...................... 1,000,000(2) -- 19.8 18.9
43-40 Northern Blvd.
Long Island City, NY
Michael A. Civin, Ph.D............. -- -- -- --
46 Sea Cliff Avenue
Seacliff, NY
Abraham Samuel Marrache............ --(3) -- -- --
Fortress House
9 Cathedral Square
Gibraltar
Isaac Samuel Marrache.............. 3,000,000(2)(3) -- 59.4 56.5
74 Ragged Staff
Queensway Quay
Gibraltar
Ely Sakhai......................... 750,000 -- 14.8 14.1
818 Third Avenue
New York, New York
Harvey Glicker..................... -- -- -- --
700 Hillside Avenue
New Hyde Park, New York
Howard S. Adelstein................ -- -- -- --
590 Madison Avenue
New York, New York
The Millennium III Trust........... 750,000(2)(3) -- 14.8 14.1
5 Cannon Lane
Gibraltar
Brockport Trading Limited.......... 1,250,000(3) -- 24.7 23.6
292A Main Street
Gibraltar
Knightdale Enterprises Limited..... 750,000(3) -- 14.8 14.1
292A Main Street
Gibraltar
</TABLE>
29
<PAGE> 31
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE ------------------------
NAME AND ADDRESS OF OF BENEFICIAL SHARES BEFORE AFTER
BENEFICIAL OWNER OWNERSHIP** OFFERED* OFFERING OFFERING**(1)
------------------- ----------------- -------- -------- -------------
<S> <C> <C> <C> <C>
The Millennium I Trust............. 250,000(2)(3) -- 4.9 4.7
5 Cannon Lane
Gibraltar
Millennium Capital Group........... 100,000(4) 100,000 2.0 --
330 Motor Parkway
Suite 201
Hauppaugue, NY
4,861,000(1)(2)(3) -- 96.2 91.7
All officers and directors as a
group (11 persons)...............
</TABLE>
- ---------------
* The address of these persons is at our offices, 165 EAB Plaza, West Tower,
6th Floor, Uniondale, New York 11566
** The number of shares of common stock beneficially owned by each person or
entity is determined under rules promulgated by the Securities and Exchange
Commission. Under such rules, beneficial ownership includes any shares as to
which the person or entity has sole or shared voting power or investment
power. Unless otherwise indicated, each person or entity referred to above
has sole voting and investment power with respect to the shares listed. The
inclusion herein of any shares deemed beneficially owned does not constitute
an admission of beneficial ownership of such shares.
*** Less than 1%.
(1) Assuming sale of all the 350,000 shares offered hereby.
(2) Does not include the 750,000 shares owned by the Millennium III Trust and
the 250,000 shares owned by The Millennium I Trust. Mr. Bruce Bendell is the
grantor and members of his immediate family are the indirect income
beneficiaries of The Millennium III Trust and of The Millennium I Trust, but
Mr. Bendell does not exercise any voting or investment power over the shares
held by such trusts, such power belonging exclusively to the trustee. The
trustee is not an affiliate of Mr. Bendell but is an affiliate of Isaac
Samuel Marrache, who, as a result of his shared control of the trustee, may
be deemed to have shared voting and investment power over the 1,000,000
shares owned by such two trusts.
(3) Includes (a) 750,000 shares owned by Knightdale Enterprises Limited, over
which shares Isaac Samuel Marrache may be deemed to have shared investment
and voting power; and (b) all of the shares owned by The Millennium III
Trust, Brockport Trading Limited, and the Millennium I Trust, because Mr.
Isaac Samuel Marrache and his brother (not Abraham Samuel Marrache) each own
an interest in the trustee of such trusts and therefore Mr. Isaac Samuel
Marrache may be deemed to have shared voting and investment power over our
shares held by such trusts. Mr. Isaac Samuel Marrache disclaims any
beneficial interest in any of these shares except that Mr. Isaac Samuel
Marrache, Mr. Abraham Samuel Marrache and other members of their families
are among the class of persons who could be designated by the trustees of a
trust having control of Knightdale Enterprises Limited, as the beneficial
owners of the 750,000 shares owned by Knightdale Enterprises Limited.
(4) Does not include 150,000 shares issuable upon exercise of year
options we intend to grant to Millennium Capital Group, exercisable at $1.50
per share, but only in the event that we sell all 250,000 shares offered by
us hereby. Such options, if granted, will be granted for services performed
for us by the officers of Millennium Capital Group prior to this offering.
30
<PAGE> 32
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FOUNDERS
We have sold shares of our common stock to some of our officers, directors
and other persons, all of whom we consider to be our founders, at prices
significantly lower than the $6.00 per share price at which we are now offering
our common stock.
Prior to our incorporation in February 2000, we sold an aggregate of
1,100,000 preincorporation shares to the following four persons in the following
amounts at a price of five cents per share.
<TABLE>
<CAPTION>
NO. OF SHARES
-------------
<S> <C>
Bruce Bendell.............................................. 250,000
The Millennium I Trust..................................... 250,000
Brockport Trading Limited.................................. 500,000
Millennium Capital Group................................... 100,000
</TABLE>
The $55,000 aggregate purchase price for those 1,100,000 shares was paid to and
used by our subsidiaries which were then already incorporated.
In February and April 2000 we sold an aggregate of 3,930,000 shares of our
common stock to the following seven persons in the following amounts, at a price
of 26 2/3 cents per share.
<TABLE>
<CAPTION>
NO. OF SHARES
-------------
<S> <C>
Bruce Bendell.............................................. 750,000
The Millennium III Trust................................... 750,000
Brockport Trading Limited.................................. 750,000
Knightdale Enterprises Limited............................. 750,000
Ely Sakhai................................................. 750,000
Jeffrey Leader............................................. 90,000
Joseph Snyder.............................................. 90,000
</TABLE>
These seven persons have also agreed that, at our option, they will lend to our
subsidiaries up to $2,300,000 each in the cases of Messrs. Bendell and Sakhai
and The Millennium III Trust, Brockport Trading and Knightdale Enterprises, and
up to $276,000 each in the cases of Messrs. Leader and Snyder. We intend to use
the proceeds of such loans to purchase existing car washes and fast lube/gas
stations, or to construct them at sites we will acquire. Each loan will be
repayable five years after it is made and bear interest at the rate of 6% per
annum, which interest is payable on the maturity dates of the loans. In
consideration for such persons making such loans to our subsidiaries, we will
grant such lenders five year warrants entitling them to purchase one share of
our common stock for every two dollars loaned by such person to us. The exercise
prices of those warrants will be as follows:
(a) if at the time the warrant is issued our common stock is listed
for trading on a national or regional securities exchange or on Nasdaq, at
a price which is 30% below the average closing prices of our common stock,
as quoted on such exchange or on Nasdaq, for twenty consecutive trading
days prior to the date we receive the loan for which such warrant is
issued,
(b) otherwise, at an exercise price of $1.25 per share for the first
tranche of such loans made to us; at $1.75 per share for the second
tranche, with the exercise price increasing by 50 cents for each successive
tranche of such loans made to us.
31
<PAGE> 33
At our option the warrant holders can be compelled to exercise their
warrants but only for the purpose of reducing (or satisfying) the then unpaid
balance of, and unpaid accrued interest on, the loans made to us by such warrant
holder and in connection with which such warrants were issued.
Mr. Bruce Bendell is one of our directors. He is the grantor and members of
his immediate family are the indirect income beneficiaries of both The
Millennium III Trust and The Millennium I Trust, although Mr. Bendell does not
exercise any voting or investment power over the shares of our common stock
owned by such trusts or over any securities of other companies owned by such
trusts. Such power is exercised exclusively by the trustee of such trusts, who
is not affiliated with Mr. Bendell.
Mr. Isaac Samuel Marrache, one of our directors, is the owner, together
with his brother (not Abraham Samuel Marrache), of trustees of The Millennium
III Trust and The Millennium I Trust and which acts as a trustee for Brockport
Trading Limited. Messrs. Abraham Samuel Marrache and Isaac Samuel Marrache and
other members of their families are among the class of persons who could be
designated by the trustees of the trust having control of Knightdale Enterprises
Limited as the beneficial owners of Knightdale Enterprises Limited.
Mr. Ely Sakhai is a director, and Mr. Jeffrey Leader is a vice president
and director of E-Star.
EMPLOYEES AND CONSULTANTS
We or our subsidiaries have entered into employment and consulting
agreements with Messrs. Greg Buttle and Sean Michtavy, and are about to enter
into a consulting agreement with Mr. Daniel Boucher, pursuant to the terms of
which we have issued shares of our common stock to such individuals as part of
the compensation paid by us to them. Under the terms of such agreements we are
obligated to issue additional shares of our common stock to such three persons
if they continue to be employed by us. Messrs. Boucher and Michtavy are
directors and executive officers of E-Star and Mr. Buttle is an officer of the
subsidiary of E-Star which will operate our car wash and fast lube/gas station
facilities. As of April 6, 2000, as part of their compensation we issued 15,000
shares to Mr. Michtavy, 5,000 shares to Mr. Buttle and 1,000 shares to Mr.
Boucher.
In addition Mr. Michtavy owns 10% of the outstanding capital stock of the
subsidiary that will operate our Haggle House internet business. We own the
other 90% of such subsidiary's outstanding common stock.
LOANS
We are indebted to Mr. Bruce Bendell, Brockport Trading Limited and the
Millennium III Trust, all founders of E-Star, in the aggregate amount of
$480,821 as of February 29, 2000. Such loans are repayable on demand and bear
interest at 6% per annum. We used the proceeds of such loans for our working
capital and general corporate purposes.
32
<PAGE> 34
SHARES ELIGIBLE FOR FUTURE SALE
All of the 4,951,000 presently outstanding shares of our common stock which
are not offered for sale by this prospectus, are restricted securities and may
not be sold except in compliance with Rule 144 under the Securities Act. In
general, under Rule 144 a person who has owned restricted shares of common stock
beneficially for at least one year is entitled to sell, within any three month
period, a number of shares that does not exceed the greater of (i) one percent
of the total number of outstanding shares of the same class or (ii) if the
shares are quoted on Nasdaq, or on a securities exchange, the average weekly
trading volume during the four calendar weeks preceding the sale. A person who
has not been an affiliate of E-Star for at least the three months immediately
preceding the sale and who has beneficially owned shares of our common stock for
at least two years is entitled to sell such shares under Rule 144 without regard
to any of these limitations.
We cannot predict the effect, if any, that sales of these outstanding
shares or the availability of those shares for sale, will have on the market
price of our common stock.
DESCRIPTION OF SECURITIES
COMMON STOCK
We are currently authorized to issue 100,000,000 shares of common stock,
par value $.001 per share, of which 5,056,000 shares are presently issued and
outstanding. If we sell and issue an additional minimum 250,000 shares in this
offering 5,301,000 shares will be outstanding.
The holders of our common stock are entitled to one vote per share for the
election of directors and with respect to all other matters to be voted on by
shareholders. Shares of common stock do not have cumulative voting rights.
Therefore, the holders of more than 50% of the shares voting for the election of
directors can elect all of the directors if they choose to do so and, in that
event, the holders of the remaining shares will not be able to elect any
directors. The holders of common stock are entitled to receive dividends when,
as and if declared by our Board of Directors out of legally available funds. In
the event of our liquidation, dissolution or winding up, the holders of common
stock are entitled to share ratably in all assets remaining available for
distribution to them after payment of liabilities and after provision has been
made for each class of stock, if any, having preference over the common stock.
Holders of shares of common stock, as such, have no conversion, preemptive or
other subscription rights, and there are no redemption provisions applicable to
the common stock.
PREFERRED STOCK
Our certificate of incorporation provides that we are authorized to issue
10,000,000 shares of "blank check" preferred stock, which may be issued from
time to time in one or more series upon authorization by our Board of Directors.
Our Board of Directors without further approval of our stockholders, is
authorized to fix any dividend rights, conversion rights, voting rights,
redemption rights and terms, liquidation preferences and any other rights,
preferences, privileges and restrictions applicable to each series of preferred
stock. The issuance of preferred stock, while providing us flexibility in
connection with possible acquisitions and other corporate purposes, could, among
other things, adversely affect the voting power of the holders of the common
stock. Under certain circumstances, the issuance of our preferred stock could
also make it more difficult for a third party to gain control of our company,
discourage bids for our common stock at a premium or otherwise adversely affect
the price of our common stock. To date, we have not issued any preferred stock.
33
<PAGE> 35
TRANSFER AGENT
The transfer agent for the common stock is , whose address is
.
PLAN OF DISTRIBUTION
ARBITRARY DETERMINATION OF OFFERING PRICE
We have determined the initial offering price of the shares arbitrarily.
The offering price is not indicative of the present or future value of our
common stock.
LIMITED STATE REGISTRATION
We will qualify or register the sales of the shares in a limited number of
states. We will not accept subscriptions from investors resident in other
states.
TERMS OF SALE OF THE SHARES
This is an initial public offering of up to 350,000 shares of our common
stock. We are offering to sell 250,000 shares and a selling shareholder is
offering to sell 100,000 shares.
We and the selling shareholder will be selling our shares on a "best
efforts" basis. The 100,000 shares it is offering will be sold by the selling
shareholder. However, the selling shareholder will not sell any shares until we
have sold all the 250,000 shares we are offering for sale. The 250,000 shares we
are offering will be sold by our officers and directors. No one has agreed to
buy any shares, and there is no assurance that any sales will be made. Even if
not all, or very few, of the 350,000 are sold, we will not refund any payments
for the shares. We and the selling shareholder have the right to accept or
reject any subscriptions for shares offered hereby in whole or in part. We will
reimburse our officers and directors for expenses incurred in connection with
the offer and sale of the shares. Our officers and directors are relying on Rule
3a4-1 of the Securities Exchange Act as a "safe harbor" from registration as a
broker/dealer in connection with the offer and sale of the shares. In order to
rely on such "safe harbor" provisions provided by Rule 3a4-1, an officer of
director must (1) not be subject to a statutory disqualification; (2) not be
compensated in connection with such selling participation by payment of
commissions or other remuneration based either directly or indirectly on such
transactions; (3) not be an associated person of a broker/dealer; and (4) (i)
restrict participation to transactions involving offer and sale of the shares,
(ii) perform substantial duties for E-Star after the close of the offering not
connected with transactions in securities, and not have been associated with a
broker or a dealer for the preceding 12 months, and not participate in selling
and offering of securities for any issuer more than once every 12 months, and
(iii) restrict participation to written communications or responses to inquiries
of potential purchasers. Our officers and directors intend to comply with the
guidelines enumerated in Rule 3a4-1.
USE OF A BROKER/DEALER
We may locate one or more broker/dealers who may offer and sell the shares
on terms acceptable to us. If we determine to use a broker/dealer, such
broker/dealer must be a member in good standing of the National Association of
Securities Dealers, Inc., and registered, if required, to conduct sales in those
states in which it would sell the shares. We and/or the selling shareholder
anticipate that we would not pay in excess of 10% as a sales commission for any
sales of the shares. If a broker/dealer were to sell shares, it is likely that
such broker/dealer would be deemed to be an underwriter of the shares as defined
in Section 2(11) of the Securities Act and we would be required to obtain a
no-objection position from the National Association of Securities Dealers, Inc.,
regarding
34
<PAGE> 36
the underwriting and compensation terms entered into between us and such
broker/dealer. In addition, we would be required to file a post-effective
amendment to the registration statement of which this prospectus is a part to
disclose the name of such selling broker/dealer and the agreed underwriting and
compensation terms. We currently have no agreements or understandings with any
broker/dealer to offer shares for sale.
LEGAL MATTERS
The legality of the common stock included in this prospectus has been
passed upon for us by Feder, Kaszovitz, Isaacson, Weber, Skala & Bass LLP, New
York, New York.
EXPERTS
Our consolidated financial statements as of February 29, 2000 included in
this prospectus were audited by Peter C. Cosmas Co., CPAs, Independent Certified
Public Accountants, as stated in their report appearing herein and are included
in reliance upon the report of that firm given on their authority as experts in
accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Subsection 1 of Section 78.037 of the Nevada Revised Statutes (the "Nevada
Law") empowers a corporation to eliminate or limit the personal liability of a
director or officer to the corporation or its stockholders for damages for
breach of fiduciary duty as a director or officer, but such a provision must not
eliminate or limit the liability of a director or officer for (a) acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law or (b) the payment of distributions in violation of Section 78.300 of the
Nevada Law.
Our articles of incorporation limit the personal liability of our directors
and officers for damages for breach of fiduciary duty in a manner identical in
scope to that permitted under the Nevada Law. Our articles of incorporation also
provide that any repeal or modification of that provision shall apply
prospectively only.
Subsection 1 of Section 78.7502 of the Nevada Law empowers a corporation to
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 or she 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 (an
"Indemnified Party"), against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by the
Indemnified Party in connection with such action, suit or proceeding if the
Indemnified Party acted in good faith and in a manner the Indemnified Party
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceedings, had no
reasonable cause to believe the Indemnified Party's conduct was unlawful.
Subsection 2 of Section 78.7502 of the Nevada Law empowers a corporation to
indemnify any Indemnified Party 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 such person acted in the capacity of an Indemnified Party against
expenses, including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by the Indemnified Party in connection with the defense or
settlement of such action or suit if the
35
<PAGE> 37
Indemnified Party acted under standards similar to those set forth above, except
that no indemnification may be made in respect of any claim, issue or matter as
to which the Indemnified Party shall have been adjudged to be liable to the
corporation or for amounts paid in settlement to the corporation unless and only
to the extent that the court in which such action or suit was brought determines
upon application that in view of all the circumstances the Indemnified Party is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
Section 78.7502 of the Nevada Law further provides that to the extent an
Indemnified Party has been successful on the merits or otherwise in the defense
of any action, suit or proceeding referred to in subsection (1) or (2) described
above or in the defense of any claim, issue or matter therein, the corporation
shall indemnify the Indemnified Party against expenses (including attorneys'
fees) actually and reasonably incurred by the Indemnified Party in connection
therewith.
Subsection 1 of Section 78.751 of the Nevada Law provides that any
discretionary indemnification under Section 78.7502 of the Nevada Law, unless
ordered by a court or advanced pursuant to Subsection 2 of Section 78.751, may
be made by a corporation only as authorized in the specific case upon a
determination that indemnification of the Indemnified Person is proper in the
circumstances. Such determination must be made (a) by the stockholders, (b) by
the board of directors of the corporation by majority vote of a quorum
consisting of directors who were not parties to the action, suit or proceeding,
(c) if a majority vote of a quorum of such disinterested directors so orders, by
independent legal counsel in a written opinion, or (d) by independent legal
counsel in a written opinion if a quorum of such disinterested directors cannot
be obtained.
Subsection 2 of Section 78.751 of the Nevada Law provides that a
corporation's articles of incorporation or bylaws or an agreement made by the
corporation may require the corporation to pay as incurred and in advance of the
final disposition of a criminal or civil action, suit or proceeding, the
expenses of officers and directors in defending such action, suit or proceeding
upon receipt by the corporation of an undertaking by or on behalf of the officer
or director to repay the amount if it is ultimately determined by a court that
he is not entitled to be indemnified by the corporation. Said Subsection 2
further provides that the provisions of that Subsection 2 do not affect any
rights to advancement of expenses to which corporate personnel other than
officers and directors may be entitled under contract or otherwise by law.
Subsection 3 of Section 78.751 of the Nevada Law provides that
indemnification and advancement of expenses authorized in or ordered by a court
pursuant to said Section 78.751 does not exclude any other rights to which the
Indemnified Party may be entitled under the articles of incorporation or any
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
for either an action in his official capacity or in another capacity while
holding his office. However, indemnification, unless ordered by a court pursuant
to Section 78.7502 or for the advancement of expenses under Subsection 2 of
Section 78.751 of the Nevada Law, may not be made to or on behalf of any
director or officer of the corporation if a final adjudication establishes that
his or her acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action. Additionally, the
scope of such indemnification and advancement of expenses shall continue as to
an Indemnified Party who has ceased to hold one of the positions specified
above, and shall inure to the benefit of his or her heirs, executors and
administrators.
Section 78.752 of the Nevada Law empowers a corporation to purchase and
maintain insurance or make other financial arrangements on behalf of an
Indemnified Party for any liability asserted against such person and liabilities
and expenses incurred by such person in his or her capacity as an Indemnified
Party or arising out of such person's status as an Indemnified Party whether or
not the corporation has the authority to indemnify such person against such
liability and expenses.
36
<PAGE> 38
Our bylaws provide for indemnification of Indemnified Parties substantially
identical in scope to that permitted under the Nevada Law. Such bylaws provide
that the expenses of our directors and officers incurred in defending any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, must be paid by us 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 such director or officer to repay all amounts so
advanced if it is ultimately determined by a court of competent jurisdiction
that the director or officer is not entitled to be indemnified by us.
We have not yet obtained a contract for insurance coverage under which we
and certain Indemnified Parties (including our directors and officers) are
indemnified under certain circumstances with respect to litigation and other
costs and liabilities arising out of actual or alleged misconduct of such
Indemnified Parties. We may secure such a contract of insurance after the
completion of this offering and in addition, we may enter into indemnification
agreements with our directors and officers that require us to indemnify such
directors and officers to the fullest extent permitted by applicable provisions
of Nevada law, subject to amounts paid by insurance.
The above described provisions relating to the indemnification of directors
and officers are sufficiently broad to permit the indemnification of such
persons in certain circumstances against liabilities (including reimbursement of
expenses incurred) arising under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors and officers, and to persons controlling our
company pursuant to the foregoing provisions, we have been informed that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
As of the date of this prospectus, in order for our common stock to be
quoted on the Bulletin Board, we will become subject to the reporting
requirements of the Securities and Exchange Act. In accordance with the
Securities and Exchange Act, we have and will continue to file reports, proxy
statements and other information with the Commission. Reports and other
information filed by us may be inspected and copied at the public reference
facilities of the Commission in Washington, D.C. Copies of such materials can be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549, at prescribed rates. In addition, the Commission maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. We intend to furnish our shareholders with annual reports containing
audited financial statements and such other periodic reports as we deem
appropriate or as may be required by law.
We will provide without charge to each person who receives this prospectus,
upon written or oral request of such person, a copy of any of the information
that is incorporated by reference unless the exhibits are themselves
specifically incorporated by reference. Such requests should be directed by mail
to Mr. Jeffrey Leader, Secretary, E-Star Holdings, Inc., 1765 EAB Plaza, West
Tower, 6th Floor, Uniondale, NY 11566, or by telephone at (516) 522-2725.
37
<PAGE> 39
We have filed with the Commission a registration statement on Form SB-2 and
all schedules and exhibits thereto under the Securities Act with respect to the
common stock offered by this prospectus. 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 Commission. For
further information with respect to us and this offering, reference is made to
such registration statement, including the exhibits filed therewith, which may
be inspected without charge at the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of the registration statement may
be obtained from the Commission at its principal office upon payment of
prescribed fees. Statements contained in this prospectus as to the contents of
any contract or other document are not necessarily complete and, where the
contract or other document has been filed as an exhibit to the registration
statement, each such statement is qualified in all respects by reference to the
applicable document filed with the Commission.
38
<PAGE> 40
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
E-Star Holdings, Inc.
We have audited the accompanying consolidated balance sheet of E-Star
Holdings, Inc. (a development stage enterprise) and subsidiaries as of February
29, 2000 and the related consolidated statement of operations, stockholders'
equity and cash flow from August 1, 1999 (inception date) to February 29, 2000
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of E-Star Holdings, Inc. (a
development stage enterprise) and subsidiaries as of February 29, 2000 and the
results of their operations and their cash flow from August 1, 1999 (inception
date) to February 29, 2000 in conformity with generally accepted accounting
principles.
Peter C. Cosmas Co. CPAs
New York, New York
March 28, 2000
F-1
<PAGE> 41
E-STAR HOLDINGS, INC. AND SUBSIDIARIES
(A DEVELOPMENTAL STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET
FEBRUARY 29, 2000
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and Cash equivalents................................. $1,041,095
Accounts Receivable....................................... 6,787
Deposits.................................................. 177,500
Prepaid expense........................................... 6,302
----------
Total current assets.............................. 1,231,684
Property and equipment, net................................. 209,357
Security deposits........................................... 12,705
----------
Total assets...................................... $1,453,746
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loans payable -- stockholders.......................... $ 485,104
Accounts payable....................................... 16,186
Accrued liabilities.................................... 106,000
----------
Total current liabilities......................... 607,290
Minority interest in consolidated subsidiary
Stockholders' equity
Common stock, par value $0.001; 100,000,000 shares
authorized ; 4,860,000 shares outstanding................. 4,860
Additional paid-in capital.................................. 1,002,751
Accumulated deficit......................................... (161,155)
----------
Total stockholders' equity........................ 846,456
----------
Total liabilities and stockholders' equity........ $1,453,746
==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
<PAGE> 42
E-STAR HOLDINGS, INC. AND SUBSIDIARIES
(A DEVELOPMENTAL STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF OPERATIONS
AUGUST 1, 1999 (INCEPTION DATE) TO FEBRUARY 29, 2000
<TABLE>
<S> <C>
Revenues.................................................... $ 41,087
Operating costs and expenses................................ 197,959
---------
Loss from operations................................... (156,872)
Interest expense............................................ 4,283
---------
Net loss.................................................... (161,155)
=========
Basic and diluted net loss per common share................. $ (0.25)
=========
Weighted average shares used in basic and diluted net loss
per share calculation..................................... 647,753
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 43
E-STAR HOLDINGS, INC. AND SUBSIDIARIES
(A DEVELOPMENTAL STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FEBRUARY 29, 2000
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------------ PAID IN ACCUMULATED STOCKHOLDERS
SHARES AMOUNT CAPITAL DEFICIT EQUITY
--------- ------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock, at
inception........................... 1,100,000 $1,100 $ 53,900 $ $ 55,000
Issuance of common stock, pursuant to
a private placement, net of
expense............................. 3,750,000 3,750 946,195 949,945
Stock based compensation.............. 10,000 10 2,656 2,666
Net Loss.............................. (161,155) (161,155)
--------- ------ ---------- --------- ---------
4,860,000 $4,860 $1,002,751 $(161,155) $ 846,456
========= ====== ========== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 44
E-STAR HOLDINGS, INC. AND SUBSIDIARIES
(A DEVELOPMENTAL STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF CASH FLOWS
AUGUST 1, 1999 (INCEPTION DATE) TO FEBRUARY 29, 2000
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss.................................................... $ (161,155)
Adjustments to reconcile net loss to cash used in operating
activities:
Depreciation and amortization.......................... 1,032
Stock based compensation............................... 2,666
Changes in operating assets and liabilities
Accounts receivable.................................... (6,787)
Prepaid expense........................................ (6,302)
Other assets........................................... (12,705)
Accounts payable....................................... 16,186
Accrued expenses....................................... 110,283
----------
Cash used in operating activities.................... (56,782)
----------
INVESTING ACTIVITIES
Purchase of property and equipment.......................... 21,148
Deposits on leasehold....................................... 177,500
Acquisition of leasehold.................................... 189,241
----------
Cash used in investing activities...................... (387,889)
----------
FINANCING ACTIVITIES
Proceeds from issuance of common stock, net................. 1,004,945
Proceeds from loans payable -- stockholders................. 480,821
----------
Cash provided by financing activities................ 1,485,766
----------
Net increase (decrease) in cash and cash equivalents........ 1,041,095
Cash and cash equivalents at beginning of period............ --
----------
Cash and cash equivalents at end of period.................. $1,041,095
==========
Supplemental Information:
Interest payments...................................... --
Income Tax payments.................................... --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 45
E-STAR HOLDINGS INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Description of Business
E-Star Holdings, Inc. (the "Company") was incorporated in Nevada for the
purpose of acquiring, consolidating and operating full-service car wash and fast
lube operations, while simultaneously utilizing its brick and mortar (presence)
to develop its customer base and expansion of its e-commerce virtual shopping
center, Cyber kiosk. Business activities through its subsidiaries began in
August 1999.
B. Basis of Presentation
The Company and its subsidiaries have devoted their activities from
inception to February 29, 2000 to establish a new business. Planned principal
activities have not commenced and no significant revenues have been produced.
The Company has devoted its activities in raising capital, acquiring site
locations and training personnel. Thus the Company is considered a development
Stage Company under GAAP.
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany account and transactions have
been eliminated.
C. Cash and Cash Equivalents
The Company considers all highly liquid instruments with an original
maturity of three months or less when purchased to be cash equivalents. Cash
equivalents are carried at fair market value, which approximates cost.
D. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
E. Concentrations of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of its holdings of cash, cash
equivalents and marketable securities. Banking and investing with credit-worthy
financial institutions mitigates risks associated with cash, cash equivalents,
and marketable securities.
F. Property and Equipment
Fixed assets are stated at cost less accumulated depreciation and
amortization. Fixed assets are depreciated on a straight-line basis over the
estimated useful lives of the assets, which range from five to seven years.
Fixed assets purchased under capital leases are amortized on a straight-line
basis over the lesser of the estimated useful life of the asset or lease term.
Leasehold improvements are amortized using the straight-line method over the
term of the related lease or the estimated useful lives of the improvements,
whichever is less.
F-6
<PAGE> 46
E-STAR HOLDINGS INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
G. Impairment of Long-lived Assets
The Company evaluates the recoverability of its long-lived assets whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Impairment is measured by comparing the carrying value
of the long-lived assets to the estimated undiscounted future cash flows
expected to result from use of the assets and their ultimate disposition. In
circumstances where impairment is determined to exist, the Company writes down
the impaired asset to its fair value based on the present value of estimated
expected future cash flows.
H. Income taxes
The Company accounts for income taxes under the liability method. Under the
liability method, deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax basis of assets and
liabilities using the enacted tax rates and laws that are expected to be in
effect when the differences are recovered. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amounts expected to be
realized.
I. Revenue Recognition
Revenues are recognized when the services are provided.
J. Advertising Costs
The costs of advertising are expensed as incurred.
K. Net Loss Per Share
Net loss per share is calculated using the weighted average number of
common shares outstanding less the number of shares subject to repurchase.
Common stock that the company has the right to repurchase and shares associated
with outstanding stock options, warrants and convertible preferred stock are not
included in the calculation of diluted loss per share because they are
antidilutive.
L. Comprehensive Income (loss)
SFAS 130 requires the reporting of comprehensive income in addition to net
income from operations. Comprehensive income is a more inclusive financial
reporting methodology that includes disclosure of certain financial information
in the calculation of net income. The Company does not have any comprehensive
income as determined by SFAS 130.
M. Segment Information
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" establishes standards for reporting information about operating
segments in financial statements. Operating segments are defined as components
of an enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker, or chief decision
making group, in deciding how to allocate resources and in assessing
performance. The Company is a development stage enterprise and will establish
segment information when it begins operations.
F-7
<PAGE> 47
E-STAR HOLDINGS INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
N. New Accounting Pronouncements
SOP 98-1 requires all costs related to the development of internal use
software other than those incurred during the application development stage to
be expensed as incurred. Costs incurred during the application development stage
are required to be capitalized and amortized over the estimated useful life of
the software. SOP 98-1 does not impact the Company's financial position or
operating results.
SOP 98-5 requires costs of start-up activities and organization costs be
expensed as incurred. All of the Company start up cost has been expensed since
inception.
In December 1999, the Securities and Exchange Commission staff released
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements
("SAB No. 101"), which provided guidance on the recognition, presentation and
disclosure of revenue in financial statements. SAB No. 101 did not impact the
Company's revenue recognition policy.
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS No. 133") SFAS No. 133 is effective
for fiscal years beginning after June 15, 2000. SFAS No. 133 requires that all
derivative instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income. The Company does not expect that the
adoption of SFAS No. 133 will have a material impact on its financial statements
because the Company does not currently hold any derivative instruments.
2. BUSINESS COMBINATIONS
The Company's subsidiaries were formed prior to the incorporation of the
Company as the holding company of these subsidiaries. All the transaction of the
subsidiaries are reflected in the consolidated financial statements from the
inception of the subsidiaries in August 1999.
There in a 10% minority interest in Radiance Generation II Inc. which
corporation is responsible for the Company's internet based operations. Since
the subsidiary operated at a loss the minority's 10% share of the loss of $6,460
is not reflected in the statement of operations. Radiance has no net book value
so there is no value reflected on the consolidated balance sheet for minority
interest.
3. FIXED ASSETS
Fixed assets, at cost, consist of the following:
<TABLE>
<S> <C>
Computer equipment.......................................... $ 5,569
Machinery and equipment..................................... 15,579
Leasehold................................................... 189,241
210,389
Less accumulated depreciation............................... 1,032
--------
Total fixed assets................................ $209,357
========
</TABLE>
4. LOANS PAYABLE -- STOCKHOLDERS
Various stockholders loaned the Company $480,821, at an interest rate of
6%, including $4,283 accrued interest at February 29, 2000. The total balance
due is $485,104.
F-8
<PAGE> 48
E-STAR HOLDINGS INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. COMMITMENT AND CONTINGENCIES
The Company leases certain property under non-cancelable lease agreements.
Rent expense was $10,475 for the period ended February 29, 2000.
Future minimum payments consisted of the following at February 29, 2000.
<TABLE>
<S> <C>
2001.............................. $101,640
2002.............................. $ 72,000
2003.............................. $ 18,000
2004.............................. $ 0
2005.............................. $ 0
</TABLE>
6. INCOME TAXES
The Company has not recognized any income tax benefit in the accompanying
financial statements.
7. STOCKHOLDER'S EQUITY
The Company issued 1,100,000 shares of common stock for $55,000 as founders
stock.
The Company entered into five subscription agreements to raise $12,500,000.
The first $200,000 per subscription was to purchase 750,000 shares of common
stock for .26 2/3 per share. Net proceeds were $949,945. Each subscriber will
loan $2,300,000 to the Company as needed. Each loan will be repayable five years
after it is made and bear interest at the rate of 6% per annum, which interest
is payable on the maturity dates of the loan. In consideration for such persons
making such loans to the Company, the Company will grant such lenders five year
warrants entitling them to purchase one share of common stock for every two
dollars loaned by such person. The exercise prices of those warrants will be as
follows:
(a) If at the time the warrant is issued and the common stock is
listed for trading on a national or regional securities exchange or on
Nasdaq, at a price which is 30% below the average closing prices of the
common stock, as quoted on such exchange or on Nasdaq, for twenty
consecutive trading days prior to the date the Company receives the loan
for which such warrants is issued.
(b) Other wise, at an exercise price of $1.25 per share for the first
tranche of such loans made to us; at $1.75 per share for the second trench,
with the exercise price increasing by 50 cents for each successive tranche
of such loans made to the Company.
At the Company's option the warrant holders can be compelled to exercise
their warrants but only for the purpose of reducing (or satisfying) the then
unpaid balance of, and unpaid accrued interest on, the loans made to the Company
by such warrant holder and in connection with which such warrants were issued.
The Company has issued 25,000 shares of stock to an employee as a signing
bonus. Upon signing the employee vested in 10,000 shares and will vest in the
remaining shares at a rate of 5,000 a year for three years. Stock based
compensation amounting to $2,666 has been recorded.
F-9
<PAGE> 49
E-STAR HOLDINGS INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
8 EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with various Employees
and Directors of the Company. In addition to base salaries, the agreements
provide for a bonus based on Earning Per Share. The maximum bonus is 150% of
base compensation. Under the terms of such agreements the Company is obligated
to issue additional shares of common stock to three employees if they continue
to be employed by the company.
9. SUBSEQUENT EVENTS
The Company has entered into various contracts to purchase leaseholds and
real estate for future car wash sites.
The Company is filing a registration statement with the Securities and
Exchange Commission relating to a proposed public offering of up to 250,000
shares of the Company's common stock. The net proceeds of $1,375 million are
expected to be used for general corporate purposes, principally working capital
and capital expenditures.
F-10
<PAGE> 50
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection 1 of Section 78.037 of the Nevada Revised Statutes (the "Nevada
Law") empowers a corporation to eliminate or limit the personal liability of a
director or officer to the corporation or its stockholders for damages for
breach of fiduciary duty as a director or officer, but such a provision must not
eliminate or limit the liability of a director or officer for (a) acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law or (b) the payment of distributions in violation of Section 78.300 of the
Nevada Law.
The Articles of Incorporation of Registrant limit the personal liability of
its directors and officers for damages for breach of fiduciary duty in a manner
identical in scope to that permitted under the Nevada Law. The Articles of
Incorporation of Registrant also provide that any repeal or modification of that
provision shall apply prospectively only.
Subsection 1 of Section 78.7502 of the Nevada Law empowers a corporation to
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 or she 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 (an
"Indemnified Party"), against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by the
Indemnified Party in connection with such action, suit or proceeding if the
Indemnified Party acted in good faith and in a manner the Indemnified Party
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceedings, had no
reasonable cause to believe the Indemnified Party's conduct was unlawful.
Subsection 2 of Section 78.7502 of the Nevada Law empowers a corporation to
indemnify any Indemnified Party 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 such person acted in the capacity of an Indemnified Party against
expenses, including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by the Indemnified Party in connection with the defense or
settlement of such action or suit if the Indemnified Party acted under standards
similar to those set forth above, except that no indemnification may be made in
respect of any claim, issue or matter as to which the Indemnified Party shall
have been adjudged to be liable to the corporation or for amounts paid in
settlement to the corporation unless and only to the extent that the court in
which such action or suit was brought determines upon application that in view
of all the circumstances the Indemnified Party is fairly and reasonably entitled
to indemnity for such expenses as the court deems proper.
Section 78.7502 of the Nevada Law further provides that to the extent an
Indemnified Party has been successful on the merits or otherwise in the defense
of any action, suit or proceeding referred to in subsection (1) or (2) described
above or in the defense of any claim, issue or matter therein, the corporation
shall indemnify the Indemnified Party against expenses (including attorneys'
fees) actually and reasonably incurred by the Indemnified Party in connection
therewith.
Subsection 1 of Section 78.751 of the Nevada Law provides that any
discretionary indemnification under Section 78.7502 of the Nevada Law, unless
ordered by a court or advanced pursuant to Subsection 2 of Section 78.751, may
be made by a corporation only as authorized in the specific case upon a
determination that indemnification of the Indemnified Person is proper in the
II-1
<PAGE> 51
circumstances. Such determination must be made (a) by the stockholders, (b) by
the board of directors of the corporation by majority vote of a quorum
consisting of directors who were not parties to the action, suit or proceeding,
(c) if a majority vote of a quorum of such disinterested directors so orders, by
independent legal counsel in a written opinion, or (d) by independent legal
counsel in a written opinion if a quorum of such disinterested directors cannot
be obtained.
Subsection 2 of Section 78.751 of the Nevada Law provides that a
corporation's articles of incorporation or bylaws or an agreement made by the
corporation may require the corporation to pay as incurred and in advance of the
final disposition of a criminal or civil action, suit or proceeding, the
expenses of officers and directors in defending such action, suit or proceeding
upon receipt by the corporation of an undertaking by or on behalf of the officer
or director to repay the amount if it is ultimately determined by a court that
he is not entitled to be indemnified by the corporation. Said Subsection 2
further provides that the provisions of that Subsection 2 do not affect any
rights to advancement of expenses to which corporate personnel other than
officers and directors may be entitled under contract or otherwise by law.
Subsection 3 of Section 78.751 of the Nevada Law provides that
indemnification and advancement of expenses authorized in or ordered by a court
pursuant to said Section 78.751 does not exclude any other rights to which the
Indemnified Party may be entitled under the articles of incorporation or any
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
for either an action in his official capacity or in another capacity while
holding his office. However, indemnification, unless ordered by a court pursuant
to Section 78.7502 or for the advancement of expenses under Subsection 2 of
Section 78.751 of the Nevada Law, may not be made to or on behalf of any
director or officer of the corporation if a final adjudication establishes that
his or her acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action. Additionally, the
scope of such indemnification and advancement of expenses shall continue as to
an Indemnified Party who has ceased to hold one of the positions specified
above, and shall inure to the benefit of his or her heirs, executors and
administrators.
Section 78.752 of the Nevada Law empowers a corporation to purchase and
maintain insurance or make other financial arrangements on behalf of an
Indemnified Party for any liability asserted against such person and liabilities
and expenses incurred by such person in his or her capacity as an Indemnified
Party or arising out of such person's status as an Indemnified Party whether or
not the corporation has the authority to indemnify such person against such
liability and expenses.
The Bylaws of Registrant provide for indemnification of Indemnified Parties
substantially identical in scope to that permitted under the Nevada Law. Such
Bylaws provide that the expenses of directors and officers of Registrant
incurred in defending any action, suit or proceeding, whether civil, criminal,
administrative or investigative, must be paid by Registrant 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 such director or officer to repay
all amounts so advanced if it is ultimately determined by a court of competent
jurisdiction that the director or officer is not entitled to be indemnified by
Registrant.
The above-described provisions relating to the indemnification of directors
and officers are sufficiently broad to permit the indemnification of such
persons in certain circumstances against liabilities (including reimbursement of
expenses incurred) arising under the Act.
Insofar as indemnification for liabilities arising under the Act may be
permitted to the directors and officers of the Registrant, and to persons
controlling the Registrant pursuant to the foregoing provisions, the Registrant
has been informed that in the opinion of the Commission, such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
II-2
<PAGE> 52
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all estimated costs and expenses in
connection with the issuance and distribution of the securities being
registered, other than underwriting discounts. All such expenses will be paid by
the Company.
<TABLE>
<S> <C>
SEC Registration fee........................................ $ 555
Blue sky fees and expenses.................................. 10,000*
Edgarizing, printing and engraving expenses................. *
Legal fees and expenses..................................... 75,000*
Accounting fees and expenses................................ 15,000*
Miscellaneous............................................... *
--------
Total.................................................. $125,000*
========
</TABLE>
- ---------------
* Estimated
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
(a) (i) Prior to its incorporation in February 2000, the Registrant sold
an aggregate of 1,100,000 shares of its common stock to four founders at a price
of 5 cents per share.
(ii) In February and April 2000 the Registrant sold an aggregate of
3,930,000 shares of its common stock to seven founders at a price of 26 2/3
cents per share.
(iii) In the first four months of 2000 the Registrant issued an
aggregate of 21,000 shares of its common stock to two full time employees
and one part time consultant as part of the employment and consulting
compensation paid to them.
(b) There were no underwriters in such transactions nor were the securities
publicly offered. The class of persons to whom the shares were sold or issued
were founders of the Registrant, one full time employee of, and two part time
consultants to, the Registrant.
(c) See information in paragraph (a) above.
(d) All such sales and issuances were exempt from the registration
requirements of Section 5 of the Act pursuant to Section 4(2) of the Act as
transactions by an issuer not involving any public offering.
II-3
<PAGE> 53
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<C> <S>
3.1 Articles of Incorporation(1)
3.2 By-laws(1)
5 Opinion re legality(2)
10.1 Employment agreement with Jeffrey Leader(1)
10.2 Proposed employment agreement with Sean Michtavy(1)
10.3 Consulting Agreement with Greg Buttle(1)
25.1 Consent of Peter C. Cosmas Co., CPAs, certified public
accountants(2)
25.2 Consent of Feder Kaszovitz Isaacson Weber Skala & Bass LLP
(included in Exhibit 5)(2)
27 Financial Data Schedule(1)
</TABLE>
- ---------------
(1) Filed herewith.
(2) To be filed by amendment.
ITEM 28. UNDERTAKINGS
The Registrant hereby undertakes that it will:
1. File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(a) include any prospectus required by section 10(a)(3) of the
Securities Act;
(b) Reflect in the prospectus any facts of events which, individually
or together, represent a fundamental change in the information in the
registration statement; and
(c) include any additional or changed material information on the plan
of distribution.
2. For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
3. File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
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
and is, therefore, unenforceable.
In the event that a claim for indemnification against 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 it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-4
<PAGE> 54
POWER OF ATTORNEY
The Registrant and each person whose signature appears below hereby
appoints Daniel Boucher and Jeffrey Leader, and each of them, as
attorney-in-fact with full power of substitution, to execute in the name and on
behalf of the Registrant and each such person, individually and in each capacity
stated below, one or more amendments (including post-effective amendments) to
this Registration Statement as the attorney-in-fact acting in the premises deems
appropriate and to file any such amendment to this Registration Statement with
the Commission.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form SB-2 and it has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Uniondale, State of New York, on April 12, 2000.
E-STAR HOLDINGS, INC.
By: /s/ DANIEL BOUCHER
------------------------------------
Name: Daniel Boucher
Title: President and CEO
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 dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DANIEL BOUCHER President (Principal Executive April 12, 2000
- ------------------------------------------------ Officer)
Daniel Boucher
/s/ JEFFREY LEADER Vice President -- Operations, April 12, 2000
- ------------------------------------------------ Treasurer and Secretary
Jeffrey Leader (Principal Financial and
Accounting Officer)
/s/ BRUCE BENDELL Director April 12, 2000
- ------------------------------------------------
Bruce Bendell
/s/ MICHAEL A. CIVIN Director April 11, 2000
- ------------------------------------------------
Michael A. Civin
/s/ ABRAHAM SAMUEL MARRACHE Director April 12, 2000
- ------------------------------------------------
Abraham Samuel Marrache
/s/ ISAAC SAMUEL MARRACHE Director April 12, 2000
- ------------------------------------------------
Isaac Samuel Marrache
/s/ SEAN MICHTAVY Director April 11, 2000
- ------------------------------------------------
Sean Michtavy
</TABLE>
II-5
<PAGE> 55
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ELY SAKHAI Director April 12, 2000
- ------------------------------------------------
Ely Sakhai
/s/ HARVEY GLICKER Director April 12, 2000
- ------------------------------------------------
Harvey Glicker
/s/ HOWARD S. EDELSTEIN Director April 11, 2000
- ------------------------------------------------
Howard S. Edelstein
</TABLE>
II-6
<PAGE> 56
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<C> <S>
3.1 Articles of Incorporation(1)
3.2 By-laws(1)
5 Opinion re legality(2)
10.1 Employment agreement with Jeffrey Leader(1)
10.2 Proposed employment agreement with Sean Michtavy(1)
10.3 Consulting Agreement with Greg Buttle(1)
25.1 Consent of Peter C. Cosmas Co., CPAs, certified public
accountants(2)
25.2 Consent of Feder Kaszovitz Isaacson Weber Skala & Bass LLP
(included in Exhibit 5)(2)
27 Financial Data Schedule(1)
</TABLE>
- ---------------
(1) Filed herewith.
(2) To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1
STATE OF NEVADA
ARTICLES OF INCORPORATION
OF
E STAR HOLDING CORP.
The undersigned, desiring to form, organize and incorporate a
corporation under the laws of the State of Nevada, hereby adopts the following
Articles of Incorporation and certifies:
ARTICLE I
The name of this corporation shall be:
E STAR HOLDING CORP.
ARTICLE II
This corporation may engage in any activity or business permitted under
the laws of the State of Nevada, and shall enjoy all the rights and privileges
of a corporation granted by the laws of the State of Nevada.
ARTICLE III
The aggregate number of shares which the corporation shall have
authority to issue is One Hundred Ten Million (110,000,000) shares, divided
into:
10,000,000 Preferred Shares, having a par value of one tenth of
a cent ($.001) per share
and
100,000,000 Common Shares, having a par value of one tenth of a
cent ($.001) per share
A statement of the preferences, privileges, and restrictions granted to or
imposed upon the respective classes of shares or the holders thereof is as
follows:
A. Common Shares. The terms of the 100,000,000 Common Shares of the
corporation shall be as follows:
1
<PAGE> 2
(1) Dividends. Whenever cash dividends upon the Preferred Shares
of all series thereof at the time outstanding, to the extent of the preference
to which such shares are entitled, shall have been paid in full for all past
dividend periods, or declared and set apart for payment, such dividends, payable
in cash, stock, or otherwise, as may be determined by the Board of Directors,
may be declared by the Board of Directors and paid from time to time to the
holders of the Common Shares out of the remaining net profits or surplus of the
corporation.
(2) Liquidation. In the event of any liquidation, dissolution,
or winding up of the affairs of the corporation, whether voluntary or
involuntary, all assets and funds of the corporation remaining after the payment
to the holders of the Preferred Shares of all series thereof of the full amounts
to which they shall be entitled as hereinafter provided, shall be divided and
distributed among the holders of the Common Shares according to their respective
shares.
(3) Voting Rights. Each holder of a Common Share shall have one
vote in respect of each share of such stock held by him. There shall not be
cumulative voting.
B. Preferred Shares. Prior to the issuance of any of the Preferred
Shares, the Board of Directors shall determine the number of Preferred Shares to
then be issued from the Ten Million (10,000,000) shares authorized, and such
shares shall constitute a series of the Preferred Shares. Such series shall have
such preferences, limitations, and relative rights as the Board of Directors
shall determine and such series shall be given a distinguishing designation.
Each share of a series shall have preferences, limitations, and relative rights
identical with those of all other shares of the same series. Except to the
extent otherwise provided in the Board of directors' determination of a series,
the shares of such series shall have preferences, limitations, and relative
rights identical with all other series of the Preferred Shares. Preferred Shares
may have dividend or liquidation rights which are prior (superior or senior) to
the dividend and liquidation rights and preferences of the Common Shares and any
other series of the Preferred Shares. Also, any series of the Preferred Shares
may have voting rights.
ARTICLE IV
The corporation is to have perpetual existence.
ARTICLE V
The business and property of the corporation shall be managed by a Board
of Directors of not fewer than one (1) nor more than twenty-one (21) directors,
who shall be natural persons of full age, and who shall be elected annually by
the shareholders having voting rights, for the term of one year, and shall serve
until the election and acceptance of their duly qualified successors. In the
event of any delay in holding, or adjournment of, or failure to hold an annual
meeting, the terms of the sitting directors shall be automatically continued
indefinitely until their successor are elected and qualified. Directors need not
be residents of the State of Nevada nor shareholders. Any vacancies, including
vacancies resulting from an increase in the number of directors, may be filled
by the Board of Directors, though less than a quorum, for
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the unexpired term. The Board of Directors shall have full power, and it is
hereby expressly authorized, to increase or decrease the number of directors
from time to time without requiring a vote of the shareholders.
The initial Board of Directors shall consist of one (1) member, the name
and address of whom, subject to the provisions of the Articles of Incorporation,
the By-Laws, and the corporation laws of the State of Nevada, shall hold office
for the first year of the corporation's business and existence, or until his
successor is elected and has qualified is:
NAME ADDRESS
---- -------
Bruce Bendell c/o All Star Car Wash, Inc.
165 EAB Plaza
West Towers, 6th Floor
Uniondale, NY 11556-0165
ARTICLE VI
The private property of the shareholders of the corporation shall not be
subject to the payment of the corporation's debts to any extent whatsoever.
ARTICLE VII
The corporation hereby designates, as its Resident Agent, to accept
service or process within the State:
CSC Services of Nevada, Inc.
502 E. John Street, Room E
Carson City, Nevada 89706
ARTICLE VIII
The following indemnification provisions shall be deemed to be
contractual in nature and not subject to retroactive removal or reduction by
amendment.
(a) This corporation shall indemnify any director 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 or criminal, judicial,
administrative or investigative, by reason of the fact that he/she is or was
serving at the request of this corporation as a director or officer or member of
another corporation, partnership, joint venture, trust, or other enterprise,
against expenses (including attorneys' fees), judgments, fines, and amounts paid
in settlement, actually and reasonably incurred by him/her in connection with
such action, suit or proceeding, including any appeal thereof, if he/she acted
in good faith or in a manner he/she reasonably believed to be in, or not opposed
to, the best interests of this corporation, and with respect to any criminal
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action or proceeding, if he/she had no reasonable cause to believe his/her
conduct was unlawful. However, with respect to any action by or in the right of
this corporation to procure a judgment in its favor, no indemnification shall be
made in respect of any claim, issue, or matter as to which such person is
adjudged liable for negligence or misconduct in the performance of his/her duty
to the corporation unless, and only to the extent that, the court in which such
action or suit was brought determines, on application, that despite the
adjudication of liability, such person is fairly and reasonably entitled to
indemnity in view of all the circumstances of the case. Termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or in a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the party did not meet the applicable standard of conduct.
Indemnification hereunder may be paid by the corporation in advance of the final
disposition of any action, suit or proceeding, on a preliminary determination
that the director, officer, employee or agent met the applicable standard of
conduct.
(b) The corporation shall also indemnify any director or officer who
has been successful on the merits or otherwise, in defense of any action, suit,
or proceeding, or in defense of any claim, issue, or matter therein, against all
expenses, including attorneys' fees, actually and reasonably incurred by him/her
in connection therewith, without the necessity of an independent determination
that such director or officer met any appropriate standard of conduct.
(c) The indemnification provided for herein shall continue as to any
person who has ceased to be a director or officer, and shall inure to the
benefit of the heirs, executors, and administrators of such persons.
(d) In addition to the indemnification provided for herein, the
corporation shall have power to make any other or further indemnification,
except an indemnification against gross negligence or willful misconduct, under
any resolution or agreement duly adopted by the Board of Directors, or duly
authorized by a majority of the shareholders.
ARTICLE IX
No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director; provided, that the foregoing clause shall not apply to any
liability of a director for any action for which the Nevada Business Corporation
Act proscribes this limitation and then only to the extent that this limitation
is specifically proscribed.
ARTICLE X
In case the corporation enters into contracts or transacts business with
one or more of its directors, or with any firm of which one or more of its
directors are members, or with any other corporation or association of which one
or more of its directors are shareholders, directors, or officers, such
contracts or transactions shall not be invalidated or in any way affected by the
fact that such director or directors have or may have an interest therein which
is or might be
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adverse to the interest of this corporation, provided that such contracts or
transactions are in the usual course of business.
In the absence of fraud, no contract or other transaction between this
corporation and any other corporation or any individual or firm, shall in any
way be affected or invalidated by the fact that any of the directors of this
corporation is interested in such contract or transaction, provided that such
interest shall be fully disclosed or otherwise known to the Board of directors
in the meeting of such Board at which time such contract or transaction was
authorized or confirmed, and provided, however, that any such directors of this
corporation who are so interested may be counted in determining the existence of
a quorum at any meeting of the Board of Directors of this corporation which
shall authorize or confirm such contract or transaction, and any such director
may vote thereon to authorize any such contract or transaction with the like
force and effect as if he were not such director or officer of such other
corporation or not so interested.
The provisions of NRS 78.378 to 78.3793 (as currently numbered) or any
similar provisions hereinafter adopted shall not apply to this corporation.
ARTICLE XI
The name and the place of residence of the incorporator are as follows:
Name Address
---- -------
Glenn Wolfson Two World Trade Center
Suite 8746
New York, NY 10048-0203
IN WITNESS WHEREOF, I, the undersigned, for the purpose of forming a
corporation pursuant to the laws of the State of Nevada, have hereunto duly
executed the foregoing Articles of Incorporation to be filed in the Office of
the Secretary of the State of Nevada.
s/Glenn Wolfson
-----------------------------
Glenn Wolfson, Incorporator
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EXHIBIT 3.2
BY-LAWS
OF
E-Star Holdings, Inc.
-------------------------------------------
A NEVADA CORPORATION
ARTICLE ONE
OFFICES
Section 1.1. Registered Office - The registered office of this corporation shall
Be in Carson City, State of Nevada.
Section 1.2. Other Offices - The corporation may also have offices at such other
places both within and without the State of Nevada 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. - 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 Nevada as the directors shall determine. Special meetings of the
stockholders may be held at such time and place within or without the State of
Nevada 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 2001 , shall be held on the third Tuesday of 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 nor more than sixty 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
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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.
Section 2.9. 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 Ten (10). 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
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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. 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. ~ - 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 be 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.
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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 or telegraphed, it shall be deposited in the United States mail
or delivered to the telegraph company 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, telegraphing or
delivery as above provided shall be due, legal and personal notice to such
director .
Section 4.5. ~ - 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
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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.
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.
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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. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice 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.
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
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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.
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
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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 and of the financial condition of the
corporation.
Section 8.13. ~ - 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.
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
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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 o 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.
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
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<PAGE> 11
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 Nevada.
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 mayor 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 "Nevada... 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 Nevada from time to time against all
expenses, liability and loss (including moneys' 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 right 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.
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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 Nevada.
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 and 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.
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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated as of the ______ day of
February, 2000, is entered into by and between All-Star Car Wash, Inc., a Nevada
corporation ("Employer"), and Mr. Jeffrey Leader, residing at 10 Falcon Road
East Hills, NY 11576 ("Employee").
WITNESSETH:
WHEREAS, Employer desires to obtain the services of Employee; and
WHEREAS, Employee desires to enter into this Agreement and become
employed by Employer upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
Employment. For the term provided in Section 2, Employer hereby employs Employee
as its Vice President for Operations, and Employee hereby accepts that
employment, upon the terms and conditions hereinafter set forth.
Term of Employment. Employee's term of employment under this Agreement shall
commence as of February ___, 2000 and shall continue in effect through the third
anniversary of the date of the closing of the acquisition by Employer or any of
its subsidiary corporations of its first car wash (the "Original Term")
estimated to be on or before _________________ unless extended as provided in
the next sentence or unless terminated sooner as provided elsewhere in this
Agreement. Notwithstanding the foregoing, on the last day of the Original Term
(the "First Extension Date") and again on the one year anniversary of the First
Extension Date if the Original Term is extended as provided below (the "Second
Extension Date"), the term of this Agreement shall automatically be extended for
one additional year unless, not later than 90 days prior to the First Extension
Date or the Second Extension Date, as the case may be, Employer shall have given
written notice to Employee that this Agreement will not be extended.
Duties of Employee.
(a) Employee agrees, during the term of Employee's employment
hereunder, to devote his full professional and business time,
skills and best efforts, in accordance with Employer's policies
and procedures, to the supervision of all aspects of the daily
operation of the car wash businesses operated by the Company and
its subsidiaries, subject to such directions with respect
thereto as shall be given the Employee by the Board of Directors
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<PAGE> 2
of the Employer or the Board of Directors of E-Star Holding
Corp., of which corporation the Employer is a wholly owned
subsidiary, or by the presidents of either the Employer or of
E-Star Holding Corp. The Employee shall also perform such duties
not inconsistent with his position as an executive officer of
the Employer as shall be assigned to him by the president or the
Board of Directors of either the Employer or of E-Star Holding
Corp. Unless otherwise agreed to in advance by Employer,
Employee shall not accept any employment with any other person
or entity, become self-employed in any capacity, or engage in
any activities which are considered by Employer to be
detrimental to the business of Employer. Employee shall perform
his duties hereunder in such locations as Employer is conducting
business from time to time, it being acknowledged that Employer
intends to conduct its business throughout the United States,
and Employee shall undertake reasonable business travel as may
be necessary to perform his duties hereunder. Employee shall
have an office located within New York, New Jersey or
Connecticut (the "Tri-State Area"); provided that without
Employee's consent, Employee's office shall not be located
outside the Tri-State Area.
(b) Employee (i) represents that all activities performed on behalf
of Employer prior to the date hereof have been performed in
accordance with all applicable legal requirements and (ii)
covenants that all services to be performed by Employee pursuant
to his employment hereunder shall be performed in accordance
with all applicable legal requirements. Employee will also be
responsible for establishing and maintaining all appropriate
internal accounting controls in accordance with generally
accepted accounting principles for (i) Employer, (ii) Radence
Generation II, Ltd., a subsidiary of Employer, and (iii) each
car wash owned, directly or indirectly, by Employer or
subsidiary of Employer.
(c) The making of passive and personal investments by Employee shall
not be prohibited hereunder, provided such activities do not
interfere with the duties and services required to be rendered
by Employee for Employer hereunder, and are not competitive with
or detrimental to Employer's business.
Termination of Agreement. During the term of Employee's employment hereunder,
Employee's employment with Employer may not be terminated by Employer or
Employee for any reason or under any circumstances, except that Employer may
terminate this Agreement as follows:
1. Upon the death of Employee; provided, that Employer shall pay to
the estate of Employee the compensation which would otherwise be payable to
Employee for one hundred eighty (180) days after the date of death; including
without limitation additional compensation under Section 5 (b), and any bonus
amount under Section 5 (c), if applicable;
2. For "Cause", which for purposes of this Agreement shall mean
that:
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<PAGE> 3
(i) Employee shall have (A) committed fraud or embezzlement,
(B) materially breached any of the provisions of
Sections 9, 10, 11, 12 or 13 of this Agreement, or (C)
materially breached, or failed to perform and discharge,
his duties hereunder.
(ii) Employee shall have (A) been convicted of any felony,
(B) committed an act of moral turpitude, or (C) engaged
in conduct intended to result in substantial personal
enrichment of Employee at the expense or otherwise to
the detriment of Employer, its parent or any of its
affiliates or subsidiaries;
(iii) Employee shall have failed to comply on a timely basis
with a reasonable directive of the Board of Directors of
Employer or E-Star Holding Corp. not inconsistent with
the terms of this Agreement or the Employee's position
as an executive officer of Employer; or
(iv) Employee shall have engaged in misconduct which
materially injures the reputation, business, business
relationships of Employer, its parent, or any of its
affiliates, monetarily or otherwise.
Termination for Cause pursuant to Section 4(b)(i)(C) or 4(b)(ii)
shall be effective only if Employee's material breach or failure
to perform remains unremedied for thirty days after delivery by
the Board of Directors of Employer to Employee of a written
notice specifying the conduct for which this Agreement will be
terminated for Cause.
If Employee's employment is terminated upon the occurrence of
one or more of the events specified in this Section 4(b), then
Employee shall only be entitled to receive Employee's then
unpaid (i) Base Salary (as defined in Section 5(a) plus (ii) the
cost of living adjustment (as provided in Section 5(b), both
prorated to the effective date of termination, and shall not be
entitled to any other compensation or employment benefits for
any period after the effective date of termination, including
without limitation, any Additional Compensation pursuant to
Section 5(c).
3. Upon Employee's "disability", provided that Employer shall pay
to Employee the compensation which would otherwise be payable to Employee for
sixty (60) days from the effective date of termination of Employee's employment
hereunder due to his disability. For purposes of this Agreement, "disability"
means Employee's incapacity due to physical or mental illness, which renders
Employee unable to perform Employee's duties hereunder on a full time basis for
ninety (90) consecutive days, and, within ten (10) days after Employer notifies
Employee in writing that Employer intends to terminate Employee's employment in
accordance with this Section 4(c), Employee shall not have returned to the
performance of Employee's duties hereunder on a full-time basis for a period of
at least thirty (30) consecutive days.
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<PAGE> 4
4. Without cause by Employer by written notice specifying the
termination date, but subject to making the payment as required by Section 8.
5. In the event that on or prior to 60 days from the date hereof
Employer or a subsidiary of the Employer has not consummated the First
Acquisition (as that term is defined below) of a car wash.
Compensation.
1. Employer agrees to pay Employee, for all services rendered under
this Agreement, as base compensation, such annual salary as shall be determined
by the Board of Directors of Employer, from time to time, but in no event shall
compensation during the term of employment, for services rendered to Employer by
Employee and in consideration of Employee's covenants and agreements as set
forth herein, be less than a base salary ("Base Salary") of Eighty Five Thousand
Dollars ($85,000) per annum, less applicable withholding and other taxes;
provided, however that Employee's Base Salary shall be increased to (i) $95,000
upon Employer or its subsidiaries having closed the acquisition of eight car
washes, (ii) $105,000 upon Employer or its subsidiaries having closed the
acquisition of twelve car washes, (iii) $150,000 upon the Employer or its
subsidiaries having closed the acquisition of eighteen (18) car washes and (iv)
$175,000 upon Employer or its subsidiaries closing the acquisition of 29 car
washes. Such base compensation of $85,000 per annum shall commence on the date
of the closing of the acquisition by Employer or its subsidiary of its first car
wash (the "First Acquisition"). Such compensation will be paid to Employee at
such times as are consistent with Employer's general payroll practices.
2. Each of the amounts set forth in Section 5(a) above, shall be
increased on each January 1 commencing January 1, 2001 to an amount which shall
equal the Base Amount plus an amount equal to such Base Amount multiplied by the
percentage increase in the consumer price index from March 1, 2000 until such
January 1, as reported by the Bureau of Labor Statistics of the United States
Department of Labor for all urban consumers for the New York Northern New Jersey
- - Long Island, NY-NJ-LI-PA.
3. Employee's Base Salary during the term of Employee's employment
hereunder shall be supplemented by the Additional Compensation (defined below)
determined and payable in the manner set forth in this Section 5(c). No later
than March 31 of the first complete calendar year after the year in which the
First Acquisition occurs, and no later than March 31 of each succeeding calendar
year, including the calendar year immediately following the year in which this
Agreement expires or is terminated (other than any termination for cause),
E-Star Holding Corp.'s independent auditors (the "Auditor) shall calculate the
earnings per share of E-Star Holding Corp.'s common stock for the prior calendar
year (the "EPS"). Such calculation shall be made in accordance with generally
accepted accounting principles for the calculation of earnings per share of
common stock of a corporation, consistently applied. The Auditor shall then
compare such EPS with the EPS for the preceding year (such preceding year's EPS,
the "Base EPS"), which Base EPS shall be zero for the year in which the First
Acquisition occurs. The amount by which any year's EPS exceeds the Base EPS
shall be referred to hereinafter as "Increased Profits Per Share." All
calculations by the Auditor shall be final and binding on the parties hereto and
not subject to any challenge, except for manifest error. For
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<PAGE> 5
purposes of calculating the "Increased Profits Per Share", the Base EPS shall
never be deemed to be less than zero. Employee shall be entitled to such
additional compensation (the "Additional Compensation") as is equal to the
amount obtained by multiplying (i) the amount of Base Salary paid to Employee
for the calendar year preceding the year for which EPS was calculated by (ii)
the percentage from the table below that corresponds to Increased Profits Per
Share.
<TABLE>
<CAPTION>
Increased Profits Per Share
---------------------------
of Common Stock Percentage
--------------- ----------
<S> <C>
$.01 - $.10 5%
$.11 - $.20 10%
$.21 - $.30 20%
$.31 - $.40 30%
$.41 - $.50 40%
$.51 - $.60 50%
$.61 - $.70 70%
$.71 - $.80 90%
$.81 - $.90 110%
$.91 - $1.00 130%
over $1.00 150%
</TABLE>
The Additional Compensation shall be paid in equal installments
during the remaining portion of the calendar year in which the
calculation of such Additional Compensation was made, in
accordance with Employer's payroll practices and policies that
apply to the payment of Base Salary. In no event shall any
Additional Compensation that has not been paid to Employee on
the termination date be paid to Employee if his employment
hereunder is terminated for cause or if Employee terminates his
employment under this Agreement for any reason. In the event of
the death or disability of Employee, Employee (or his estate, as
the case may be) shall be entitled to receive Additional
Compensation under this Section 5(c) during the calendar year
immediately following the last full calendar year in which
Employee performed services to Employer pursuant to this
Agreement and shall be entitled to receive a portion of the
Additional Compensation for the year in which such death or
disability occurred calculated by multiplying (i) the amount of
Additional Compensation that Employee would otherwise have been
entitled to receive had he been employed for the full calendar
year by (ii) a fraction, the numerator of which shall be the
number of days in such calendar year prior to Employee's death
or disability and the denominator of which shall be 365.
Sale of Stock.
1. In consideration of Employee entering into this Agreement,
Employer shall cause E-Star Holding Corp. to sell to Employee an aggregate of
twenty thousand (20,000) shares of E-Star Holding Corp.'s common stock (the
"Initial Shares") as follows: seven thousand (7,000) shares immediately after
the First Acquisition; if Employee is then still employed by Employer
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<PAGE> 6
an additional six thousand (6,000) shares one year after the First Acquisition;
and if Employee is then still employed by Employer, the remaining six thousand
(6,000) shares two years after the First Acquisition. Such shares shall be sold
for thirty one and one fourth cents ($0.3125) each and payment for such shares
shall be made by Employee to E-Star Holding Corp. upon delivery thereof. All
such shares hall be "restricted securities", as such term is defined in Rule
144(a) promulgated under the Securities Act of 1933, as amended, and the
certificates evidencing such shares shall have the following legend endorsed
thereon:
THE SHARES OF STOCK REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MUST BE HELD
INDEFINITELY UNLESS REGISTERED UNDER
SUCH ACT OR UNLESS AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE.
2. Employee shall not be entitled to purchase any additional shares
because of any extension of this Employment Agreement.
Compensation-Fringe Benefits. Employee shall receive at least the following
additional benefits, which may be extended or increased, but not reduced, by
Employer in its discretion:
1. During the term of Employee's employment hereunder, Employee
shall be entitled to vacation with pay at such times and for such periods as are
consistent with policies of Employer.
2. During the term of Employee's employment hereunder, Employee
shall also be eligible to participate in any of Employer's medical, dental (if
any), life insurance, disability (if any) and any pension, profit sharing and
stock option plan, then in effect.
3. Employer shall reimburse Employee for business expenses
reasonably incurred in connection with his employment in accordance with
Employer's reimbursement practice upon presentation of adequate documentation.
4. Employer shall lease an automobile for the use of Employee (the
lease payments for such automobile will not exceed $500 per month) and, to the
extent paid by Employee, Employer shall reimburse Employee for gas, maintenance
and insurance with respect to the business use of such automobile, in accordance
with the policy for such payment, to be established by Employer.
Payment Upon termination. If Employer terminates Employee's employment hereunder
(other than pursuant to Section 4(a), (b), (c) or (e)), which termination shall
be by written notice specifying the date of termination, Employee shall be
entitled, as liquidated damages, to the following, in full payment for any
claims Employee may have for such termination,
(i) any accrued fringe benefits listed in Section 7, and
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<PAGE> 7
(ii) Base Salary payable to the Employee calculated as of the date of
such termination, to be paid until the earlier to occur of (i)
the third anniversary of the First Acquisition or (ii) the
second anniversary of the effective date of such termination,
payable in the same periodic installments as the Employee
received Base Salary prior to such termination. After such
termination Employee will not be entitled to receive Additional
Compensation as provided in Section 5(c) except to the extent
payable to the Employee after the termination of his employment
for the period before such termination of his employment, as in
such Section 5(c) provided.
Noncompetition. Employee covenants and agrees that during the term of his
employment hereunder and for a period of up to three (3) years from the later of
the (a) termination of this Agreement or (b) the termination of the Employee's
employment with the Employer (regardless of the reason for such termination of
employment), Employee shall not, directly or indirectly (i) enter into the
employ of or render any services to (A) any person, or entity engaged in any
enterprise that owns or operates one or more car washes within three (3) miles
of any location where the Employer or any of its subsidiaries operate a car wash
(a "Competitive Business") or (B) any entity or enterprise involved in the
consolidation of individual or group of car washes (a "Competitive Consolidating
Company"), (ii) engage in any Competitive Business or any Competitive
Consolidating Company for his own account; (iii) become associated with or
interested in any Competitive Business or any Competitive Consolidating Company
as an individual, partner, equity owner, creditor, director, manager, officer,
principal, agent, employee, director, consultant, advisor or in any other
relationship or capacity, or (iv) call on, solicit, take away, accept as a
client, agent or customer or attempt to call on, solicit, take away or accept as
a client, agent or customer, any individual, agent or entity that (A) was a
client, agent or customer of Employer (for the purposes of this Section 9 and
Sections 10, 11, 12, 13, 14 and 15, the term "Employer" includes the Employer's
parent and the Employer's and such parent's subsidiaries and any successor to
any such entity) during the twenty four (24) month period immediately preceding
any such act or (B) that was a client, agent or customer of Employer at any time
and with which Employee had direct or indirect contact in the scope of
Employee's employment by Employer. However, nothing in this Agreement shall
preclude Employee from investing in the securities of any corporation or other
business entity which is engaged in a Competitive Business or a Competitive
Consolidating Company if such securities are traded on a regional or national
stock exchange or quoted through an inter-dealer quotation system and if such
investment does not result in the Employee beneficially owning, at any time,
more than 1% of the publicly-traded equity securities of such competitor. Prior
to accepting employment or a consulting arrangement with any business or entity
competing with Employer, Employee shall notify Employer in writing of the name
of the prospective employer, clearly describing each of such prospective
employer's businesses and describing in detail the services to be performed by
the Employee in the proposed employment. Employer shall promptly notify Employee
whether it believes that such new employment will violate the restrictions
imposed upon Employee pursuant to the provisions of this Section 9. Employer's
response shall be made within forty-eight (48) hours after receipt of such
written notification from Employee, but the Employer's response made later than
48 hours if the delay is for reasonable cause, shall also be deemed to have been
timely made.
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<PAGE> 8
If Employer wishes to continue the restrictions of this Section 9 for a
further term, but not to exceed an additional two (2) years, Employer
shall pay to Employee compensation at the rate of the Base Salary and
the cost of living adjustments thereof, payable to Employee at the time
of the termination of Employee's employment pursuant to Sections 5(a)
and 5(b). In such event, the provisions of this Section 9 shall be
applicable for so long as such additional compensation payments
continue.
Confidential Data.
1. Employee further agrees that during the term of Employment
hereunder and at all times thereafter he will keep confidential and not,
directly or indirectly, divulge to anyone nor use or otherwise appropriate for
Employee's own benefit or the benefit of any third party, any material
information obtained or learned by him during the course of his employment with
Employer relating to the operational, financial, business, or other affairs of
the Employer, including but not limited to pricing, marketing, customer,
financial, mailing list, sales, technical, or other proprietary or non-public
information, as well as designs, procedures, plans, methods, strategies,
techniques of production or service, vendors, methods, confidential records,
formulas, computer software programs or any portions of logic comprising said
programs, clients, customers, financial planning and information, of Employer
("Confidential Data"). Employee hereby acknowledges and agrees that the
prohibitions against disclosure of the Confidential Data recited herein are in
addition to, and not in lieu of, any rights or remedies which Employer may have
available pursuant to the statutory laws and/or at common law to prevent the
disclosure of trade secrets or proprietary information, and the enforcement by
Employer of its rights and remedies pursuant to this Agreement shall not be
construed as a waiver of any other rights available or remedies which it may
possess in law or equity absent this Agreement.
2. This Agreement imposes no obligation upon Employee with respect
to Confidential Data which (i) at the time of disclosure or thereafter is
generally available to and known by the public (other than as a result of a
disclosure directly or indirectly by Employee or by any other person or entity
bound by a confidentiality agreement with Employer), (ii) was available to
Employee from a source other than Employer or its directors, officers,
employees, agents or advisors whom Employee reasonably believed was permitted to
divulge such information or (iii) subject to the next two sentences, is
disclosed in response to legal process. In the event Employee becomes legally
compelled (by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or similar process) to disclose any Confidential Data,
Employee shall provide Employer with prompt written notice of such requirement
so that Employer may seek a protective order or other appropriate remedy. In the
event that such protective order or other remedy is not obtained, Employee
agrees to furnish only that portion of the Confidential Data which is
specifically required and (at Employer's expense) to exercise best efforts to
obtain reliable assurance that confidential treatment will be accorded such of
the disclosed information that Employer so designates.
Non-solicitation of Employees. Employee covenants that during the term
of his employment hereunder and for a two (2) year period following the
termination of Employee's employment for any reason whatsoever, Employee shall
neither, directly or indirectly, induce or attempt to induce any employee of
Employer to terminate his or her employment with
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<PAGE> 9
Employer, and during said period Employee shall not directly or indirectly,
hire, employ or recruit or cause any other person or entity to hire, employ or
recruit any current or former officer, manager, supervisor or other significant
employee of Employer.
Property of Employer. Employee acknowledges that from time to time in
the course of providing services pursuant to this Agreement, Employee shall have
the opportunity to inspect and use Confidential Data and other property, both
tangible and intangible, of Employer, and Employee hereby agrees that the
Confidential Data and such other property and information shall remain the
exclusive property of Employer and Employee shall have no right or proprietary
interest in the Confidential Data or such property of Employer.
Developments and Discoveries of Employee. In consideration of employment of
Employee, any and all technical information, designs, procedures, plans,
methods, technique of production, services or sales development, inventions,
improvements, discoveries, processes, programs or systems, in the broadest sense
whether or not patentable, trademarkable, or registerable, discovered by
Employee, either alone or with others, during Employee's employment with
Employer or within one hundred and eighty (180) days thereafter and that (i) are
based in whole or in part upon Confidential Data, or (ii) are useful in, or
related to the business, work or interests of Employer or (iii) result from any
work that may be done by Employee for or on behalf of Employer (the
"Developments"), shall be fully disclosed by Employee to the President of
Employer promptly and in writing following their invention, development or
discovery. The Developments shall be the sole and exclusive property of Employer
as work for hire, and Employee hereby assigns and agrees to assign to Employer
his entire right, title and interest in and to each Development. Upon the
request of Employer, both during and after Employee's employment with Employer,
Employee shall cooperate with Employer and its designee(s) in the procurement
and maintenance, at Employer's expense and its discretion, of the patents,
trademarks, service marks, copyrights or other protections of assignments,
certificates or other Employer's rights in such Developments and shall execute,
acknowledge and deliver such assignments, certificates and other documents as
Employer may consider necessary or appropriate to vest properly all rights,
titles and interest therein in Employer. If a patent application, trademark, or
copyright registration is filed by Employee or on behalf of Employee within one
(1) year after termination or Employee's employment with Employer, and that
otherwise relates to a portion of Employer's business with which Employee was
involved during Employee's employment with Employer, it is to be conclusively
presumed that the Development was conceived by Employee during such period of
employment. Employee shall notify the President of Employer promptly and in
writing of any such application or registration and shall assign to Employer his
entire right, title and interest in and to such development and in and to such
application or registration.
Equitable relief. Employee acknowledges that any breach of Section 9,
Section 10, Section 11 and/or Section 13 hereof cannot reasonably or adequately
be compensated with monetary damages in an action at law and that a breach of
any of such provisions contained in this Agreement will cause Employer
irreparable injury and damage. By reason thereof, Employee expressly
acknowledges and agrees that Employer shall be entitled, in addition to any
other remedies it may have under this Agreement or otherwise, to temporary,
preliminary and permanent injunctive and other equitable relief, without the
necessity of Employer posting of a bond and without Employer having to prove
irreparable injury, likelihood of ultimately
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<PAGE> 10
prevailing on the merits or a balancing of the equities in its favor, to prevent
or curtail any breach or threatened breach of any of such Sections of this
Agreement by Employee; provided, however, that no specification in this
Agreement of a specific legal or equitable remedy shall be construed as an
election of remedies or a waiver of any alternative remedies or a prohibition
against Employer pursuing other legal or equitable remedies in the event of a
breach of the terms hereof.
Blue Lining. In the event that any of the provisions Sections 9, 10, 11
and/or 13 are deemed unenforceable by a court of competent jurisdiction because
such unenforceable restriction is overly broad, then the Employer and the
Employee agree that such unenforceable restriction shall be reduced as to such
time, area and/or activity restricted which such court shall deem reasonable and
therefore enforceable.
Sale of Shares. During the term of Employee's employment hereunder,
Employee agrees not to, directly or indirectly, sell, transfer, assign or
otherwise transfer during any 12-month period in excess of 5,000 shares of
common stock of E-Star Holding Corp. (or any interest therein) that was issued
at any time to Employee pursuant to this Agreement; provided, however that the
foregoing restriction shall cease to be applicable at such time as such common
stock is listed on the Nasdaq National Market.
Withholding. In the event that Employee is eligible to receive or
benefit from any form of compensation or benefits hereunder, and if Employer
shall be required to withhold any amounts (the "Withholding Taxes") by reason of
any federal, state or local tax laws, rules or regulations in respect of such
compensation or benefit, Employer shall be entitled to deduct and withhold such
amounts from any payments, to be made to, or other compensation or benefits made
available to, Employee. In any event, Employee shall make available to Employer,
promptly when requested by Employer, sufficient funds to meet the requirements
of such withholding; and Employer shall be entitled to take and authorize such
steps as it may deem advisable in order to have such funds available to Employer
out of any funds or property due or to become due to Employee.
Reliance. Each party to this Agreement acknowledges that each of his/its
covenants contained herein is a material inducement to the other to complete and
to cause him/it to complete this Agreement.
Severability. In the event of any provision of this Agreement or any
word, phrase, clause, sentence or other sentence thereof (including without
limitation, the geographical and temporal restriction contained herein) should
be held to be unenforceable or invalid for any reason, such provision or portion
thereof shall be modified or deleted in such a manner so as to make this
Agreement as modified legal and enforceable to the fullest extent permitted
under applicable laws.
Amendments. This Agreement may be amended only by writing executed by
each of the parties hereto.
Entire Agreement. This Agreement sets forth the entire understanding of
the parties hereto concerning the subject matter hereof and specifically
supersedes all prior contracts,
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<PAGE> 11
agreements, arrangements, communications, discussion, representations and
warranties, whether oral or written, between the parties hereto.
Governing Law. This Agreement shall in all respects be governed by and
construed in accordance with the laws of the State of New York, without regard
to the principles or policies or conflicts of law of such state.
Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together will constitute one and the same instrument.
Waivers. Any waiver by any party of any violation of, breach of or
default under any provision of this Agreement by the other party shall be
effective only if in writing and no such waiver shall be construed as, or
constitute, a continuing waiver of such provision, or waiver of any other
violation of, breach of or default under any other provision of this Agreement.
The failure of any party to exercise any rights or privileges under this
Agreement shall not be deemed to be a waiver or extinguishment of such rights or
privileges, all of which shall continue to be exercisable.
Assignment. Employer shall at its sole discretion have the ability to
assign any of its rights or obligations hereunder without prior written consent
of Employee. Employee shall not assign any rights or delegate any duties
hereunder without prior written consent of Employer.
Successors and Assigns. This Agreement shall be binding upon, inure to
the benefit of, and maybe enforced by, each of the parties to this Agreement and
his/its heirs, administrators, executors, successors and permitted assigns.
Notices. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given, if delivered in person, by facsimile, by United States mail
(certified or registered, postage prepaid, return receipt requested) or by a
nationally recognized overnight courier service to the respective parties, to
his residence in the case of Employee or to its principal office in the case of
Employer, with copies to parties respective attorneys as follows: if to the
Employer, to Feder Kaszovitz Isaacson Weber Skala & Bass, LLP, 750 Lexington
Avenue, New York, NY 10022-1200, fax no. (212) 888-7776, Attn: Gabriel
Kaszovitz, Esq., and if to the Employee, to
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<PAGE> 12
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
the day and year first above written, intending to be legally bound:
ALL-STAR CAR WASH, INC.
By:
-------------------------
Name:
Title:
--------------------------
Jeffrey Leader
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<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated as of the 29th day of
February, 2000, is entered into by and between Radence Generation II, Ltd., a
Nevada corporation ("Employer"), and Mr. Sean Michtavy residing at 353 River
Road, Flanders, New Jersey 07836 ("Employee").
WITNESSETH:
WHEREAS, Employer desires to obtain the services of Employee; and
WHEREAS, Employee desires to enter into this Agreement and become
employed by Employer upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
Employment. For the term provided in Section 2, Employer hereby employs Employee
as its Executive Vice President, and Employee hereby accepts that employment,
upon the terms and conditions hereinafter set forth.
Term of Employment. Employee's term of employment under this Agreement shall
commence as of March 1, 2000 and shall continue in effect for five years.
Duties of Employee.
(a) Employee agrees, during the term of Employee's employment
hereunder, to devote his full professional and business time,
skills and best efforts, in accordance with Employer's policies
and procedures, to the supervision of all aspects of the daily
operation of the Employer's businesses, subject to such
directions with respect thereto as shall be given the Employee
by the Board of Directors of the Employer or the Board of
Directors of E-Star Holding Corp., of which corporation the
Employer is a 90% owned subsidiary, or by the presidents of
either the Employer or of E-Star Holding Corp. The Employee
shall also perform such duties not inconsistent with his
position as an executive officer of the Employer as shall be
assigned to him by the president or the Board of Directors of
either the Employer or of E-Star Holding Corp. Unless otherwise
agreed to in advance by Employer, Employee shall not accept any
employment with any other person or entity, become self-employed
in any capacity, or engage in any activities which are
considered by Employer to be detrimental to the business of
Employer. Employee shall perform his duties hereunder in such
locations as Employer is conducting business from time to time,
it being
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<PAGE> 2
acknowledged that Employer may conduct its business throughout
the United States, and Employee shall undertake reasonable
business travel as may be necessary to perform his duties
hereunder. Employee shall have an office located within New
York, New Jersey or Connecticut (the "Tri-State Area"); provided
that without Employee's consent, Employee's office shall not be
located outside the Tri-State Area.
(b) Employee (i) represents that all activities performed on behalf
of Employer prior to the date hereof have been performed in
accordance with all applicable legal requirements and (ii)
covenants that all services to be performed by Employee pursuant
to his employment hereunder shall be performed in accordance
with all applicable legal requirements.
(c) The making of passive and personal investments by Employee shall
not be prohibited hereunder, provided such activities do not
interfere with the duties and services required to be rendered
by Employee for Employer hereunder, and are not competitive with
or detrimental to Employer's business.
Termination of Agreement. During the term of Employee's employment hereunder,
Employee's employment with Employer may not be terminated by Employer or
Employee for any reason or under any circumstances, except that Employer may
terminate this Agreement as follows:
1. Upon the death of Employee; provided, that Employer shall pay to
the estate of Employee the compensation which would otherwise be payable to
Employee for one hundred eighty (180) days after the date of death; including
without limitation additional compensation under Section 5 (b), and any bonus
amount under Section 5 (c), if applicable;
2. For "Cause", which for purposes of this Agreement shall mean
that:
(i) Employee shall have (A) committed fraud or embezzlement,
(B) materially breached any of the provisions of
Sections 9, 10, 11, 12 or 13 of this Agreement, or (C)
materially breached, or failed to perform and discharge,
his duties hereunder.
(ii) Employee shall have (A) been convicted of any felony,
(B) committed an act of moral turpitude, or (C) engaged
in conduct intended to result in substantial personal
enrichment of Employee at the expense or otherwise to
the detriment of Employer or its parent or any of its
affiliates or subsidiaries;
(iii) Employee shall have failed to comply on a timely basis
with a reasonable directive of the Board of Directors of
Employer or E-Star Holding Corp. not inconsistent with
the terms of this Agreement or his position as an
executive officer of Employer; or
(iv) Employee shall have engaged in misconduct which
materially injures the reputation, business, business
relationships of Employer or of E-Star
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<PAGE> 3
Holding Corp. or any of their subsidiaries or other
affiliates, monetarily or otherwise.
Termination for Cause pursuant to Section 4(b)(i)(C) or 4(b)(ii)
shall be effective only if Employee's material breach or failure
to perform remains unremedied for thirty days after delivery by
the Board of Directors of Employer to Employee of a written
notice specifying the conduct for which this Agreement will be
terminated for Cause.
If Employee's employment is terminated upon the occurrence of
one or more of the events specified in this Section 4(b), then
Employee shall only be entitled to receive Employee's then
unpaid (i) Base Salary (as defined in Section 5(a)) plus (ii)
the cost of living adjustment (as provided in Section 5(b)),
both prorated to the effective date of termination, and shall
not be entitled to any other compensation or employment benefits
for any period after the effective date of termination,
including without limitation, any Additional Compensation
pursuant to Section 5(c).
3. Upon Employee's "disability", provided that Employer shall pay
to Employee the compensation which would otherwise be payable to Employee for
sixty (60) days from the effective date of termination of Employee's employment
hereunder due to his disability. For purposes of this Agreement, "disability"
means Employee's incapacity due to physical or mental illness, which renders
Employee unable to perform Employee's duties hereunder on a full time basis for
ninety (90) consecutive days, and, within ten (10) days after Employer notifies
Employee in writing that Employer intends to terminate Employee's employment in
accordance with this Section 4(c), Employee shall not have returned to the
performance of Employee's duties hereunder on a full-time basis for a period of
at least thirty (30) consecutive days.
4. Without cause by Employer by written notice specifying the
termination date, but subject to making the payment as required by Section 8.
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<PAGE> 4
Compensation.
1. Employer agrees to pay Employee, for all services rendered under
this Agreement, as base compensation, such annual salary as shall be determined
by the Board of Directors of Employer, from time to time, but in no event shall
compensation during the term of employment, for services rendered to Employer by
Employee and in consideration of Employee's covenants and agreements as set
forth herein, be less than the following base salary ("Base Salary"):
(a) from February 1, 2000 to December 31, 2000 at the rate
of $75,000 per annum;
(b) $95,000 for the year 2001;
(c) $105,000 for the year 2002;
(d) $125 for the year 2003;
(e) $150,000 for the year 2004, and for the month ending
January 31, 2005, at the rate of $150,000 per annum.
Such compensation will be paid to Employee at such times as are
consistent with Employer's general payroll practices.
2. Each of the amounts set forth in Section 5(a) above, shall be
increased on each January 1 commencing January 1, 2001 to an amount which shall
equal the Base Amount plus an amount equal to such Base Amount multiplied by the
percentage increase in the consumer price index from March 1, 2000 until such
January 1, as reported by the Bureau of Labor Statistics of the United States
Department of Labor for all urban consumers for the New York Northern New Jersey
- - Long Island, NY-NJ-LI-PA.
3. Employee's Base Salary during the term of Employee's employment
hereunder shall be supplemented by the Additional Compensation (defined below)
determined and payable in the manner set forth in this Section 5(c). No later
than March 31, 2002, and no later than March 31 of each succeeding calendar
year, including the calendar year immediately following the year in which this
Agreement expires or is terminated (other than any termination for cause),
E-Star Holding Corp.'s independent auditors (the "Auditor) shall calculate the
earnings per share of E-Star Holding Corp.'s common stock for the prior calendar
year (the "EPS"). Such calculation shall be made in accordance with generally
accepted accounting principles for the calculation of earnings per share of
common stock of a corporation, consistently applied. The Auditor shall then
compare such EPS with E-Star Holding Corp's EPS for the preceding year (such
preceding year's EPS, the "Base EPS"). The amount by which any year's EPS
exceeds the Base EPS shall be referred to hereinafter as "Increased Profits Per
Share." All calculations by the Auditor shall be final and binding on the
parties hereto and not subject to any challenge, except for manifest error. For
purposes of calculating the "Increased Profits Per Share", the Base EPS shall
never be deemed to be less than zero. Employee shall be entitled to such
additional compensation (the "Additional Compensation") as is equal to the
amount obtained by multiplying (i) the amount of Base Salary paid to Employee
for the calendar year preceding the year for
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<PAGE> 5
which EPS was calculated by (ii) the percentage from the table below that
corresponds to Increased Profits Per Share.
<TABLE>
<CAPTION>
Increased Profits Per Share
---------------------------
of Common Stock Percentage
--------------- ----------
<S> <C>
$.01 - $.10 5%
$.11 - $.20 10%
$.21 - $.30 20%
$.31 - $.40 30%
$.41 - $.50 40%
$.51 - $.60 50%
$.61 - $.70 70%
$.71 - $.80 90%
$.81 - $.90 110%
$.91 - $1.00 130%
over $1.00 150%
</TABLE>
The Additional Compensation shall be paid in equal installments
during the remaining portion of the calendar year in which the
calculation of such Additional Compensation was made, in
accordance with Employer's payroll practices and policies that
apply to the payment of Base Salary. In no event shall any
Additional Compensation that has not been paid to Employee on
the termination date be paid to Employee if his employment
hereunder is terminated for cause or if Employee terminates his
employment under this Agreement for any reason. In the event of
the death or Disability of Employee, Employee (or his estate, as
the case may be) shall be entitled to receive Additional
Compensation under this Section 5(c) during the calendar year
immediately following the last full calendar year in which
Employee performed services to Employer pursuant to this
Agreement and shall be entitled to receive a portion of the
Additional Compensation for the year in which such death or
disability occurred calculated by multiplying (i) the amount of
Additional Compensation that Employee would otherwise have been
entitled to receive had he been employed for the full calendar
year by (ii) a fraction, the numerator of which shall be the
number of days in such calendar year prior to Employee's death
or disability and the denominator of which shall be 365.
Sale of Stock. In consideration of Employee entering into this Agreement,
Employer shall cause E-Star Holding Corp. to sell to Employee an aggregate of
twenty five thousand (25,000) shares of E-Star Holding Corp.'s common stock (the
"Initial Shares") as follows: ten thousand (10,000) shares upon execution of
this Agreement; if Employee is then still employed by Employer, an additional
five thousand (5,000) shares on each of February 1, 2001, February 1, 2002 and
February 1, 2003. Such shares shall be sold for thirty one and one fourth cents
($0.3125) each and payment for such shares shall be made by Employee to Employer
upon delivery thereof. All such shares hall be "restricted securities", as such
term is defined in Rule 144(a) promulgated under the Securities Act of 1933, as
amended, and the certificates evidencing such shares shall have the following
legend endorsed thereon:
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<PAGE> 6
THE SHARES OF STOCK REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MUST BE HELD
INDEFINITELY UNLESS REGISTERED UNDER
SUCH ACT OR UNLESS AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE.
Compensation-Fringe Benefits. Employee shall receive at least the following
additional benefits, which may be extended or increased, but not reduced, by
Employer in its discretion:
1. During the term of Employee's employment hereunder, Employee
shall be entitled to vacation with pay at such times and for such periods as are
consistent with policies of Employer.
2. During the term of Employee's employment hereunder, Employee
shall also be eligible to participate in any of Employer's medical, dental (if
any), life insurance, disability (if any) and any pension, profit sharing and
stock option plan, then in effect.
3. Employer shall reimburse Employee for business expenses
reasonably incurred in connection with his employment in accordance with
Employer's reimbursement practice upon presentation of adequate documentation.
4. Employer shall pay Employee $500 per month for Employee's use of
Employee's automobile in the performance of Employee's duties as an Employee of
Employer.
Payment Upon termination. If Employer terminates Employee's employment hereunder
(other than pursuant to Section 4(a), (b) or (c)), which termination shall be by
written notice specifying the date of termination, Employee shall be entitled,
as liquidated damages, to the following, in full payment for any claims Employee
may have for such termination,
(i) any accrued fringe benefits listed in Section 7, and
(ii) Base Salary payable to the Employee calculated as of the date of
such termination, to be paid until the earlier to occur of (i)
the end of the five year term of this Agreement or (ii) the
second anniversary of the effective date of such termination,
payable in the same periodic installments as the Employee
received Base Salary prior to such termination. After such
termination Employee will not be entitled to receive Additional
Compensation as provided in Section 5(c) except to the extent
payable to the Employee after the termination of his employment
for the period before such termination of his employment, as in
such Section 5(c) provided.
Noncompetition. Employee covenants and agrees that during the term of his
employment hereunder and for a period of up to three (3) years from the later of
the (a) termination of this Agreement or (b) the termination of the Employee's
employment with the Employer (regardless of the reason for such termination of
employment), Employee shall not, directly or indirectly (i) enter into the
employ of or render any services to (A) any person, or entity engaged in any
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<PAGE> 7
enterprise that owns or operates one or more car washes within three (3) miles
of any location where All Star Car Wash, Inc. (a subsidiary of E-Star Holding
Corp.) or any of its subsidiaries operate a car wash (a "Competitive Business")
or (B) any entity or enterprise involved in the consolidation of individual or
group of car washes (a "Competitive Consolidating Company"), (ii) engage in any
Competitive Business or any Competitive Consolidating Company for his own
account; (iii) become associated with or interested in any Competitive Business
or any Competitive Consolidating Company as an individual, partner, equity
owner, creditor, director, manager, officer, principal, agent, employee,
director, consultant, advisor or in any other relationship or capacity, or (iv)
call on, solicit, take away, accept as a client, agent or customer or attempt to
call on, solicit, take away or accept as a client, agent or customer, any
individual, agent or entity that (A) was a client, agent or customer of Employer
(for the purposes of this Section 9 and Sections 10, 11, 12, 13, 14 and 15, the
term "Employer" includes the Employer's parent and the Employer's and such
parent's subsidiaries, and any successor to any such entity) during the twenty
four (24) month period immediately preceding any such act or (B) that was a
client, agent or customer of Employer at any time and with which Employee had
direct or indirect contact in the scope of Employee's employment by Employer.
However, nothing in this Agreement shall preclude Employee from investing in the
securities of any corporation or other business entity which is engaged in a
Competitive Business or a Competitive Consolidating Company if such securities
are traded on a regional or national stock exchange or quoted through an
inter-dealer quotation system and if such investment does not result in the
Employee beneficially owning, at any time, more than 1% of the publicly-traded
equity securities of such competitor. Prior to accepting employment or a
consulting arrangement with any business or entity competing with Employer,
Employee shall notify Employer in writing of the name of the prospective
employer, clearly describing each of such prospective employer's businesses and
describing in detail the services to be performed by the Employee in the
proposed employment. Employer shall promptly notify Employee whether it believes
that such new employment will violate the restrictions imposed upon Employee
pursuant to the provisions of this Section 9. Employer's response shall be made
within forty-eight (48) hours after receipt of such written notification from
Employee, but the Employer's response made later than 48 hours if the delay is
for reasonable cause, shall also be deemed to have been timely made.
If Employer wishes to continue the restrictions of this Section 9
for a further term, but not to exceed an additional two (2) years,
Employer shall pay to Employee compensation at the rate of the Base
Salary and the cost of living adjustments thereof, payable to
Employee at the time of the termination of Employee's employment
pursuant to Sections 5(a) and 5(b). In such event, the provisions of
this Section 9 shall be applicable for so long as such additional
compensation payments continue.
Confidential Data.
1. Employee further agrees that during the term of Employment
hereunder and at all times thereafter he will keep confidential and not,
directly or indirectly, divulge to anyone nor use or otherwise appropriate for
Employee's own benefit or the benefit of any third party, any material
information obtained or learned by him during the course of his employment with
Employer relating to the operational, financial, business, or other affairs of
the Employer, including but not limited to pricing, marketing, customer,
financial, mailing list, sales, technical, or other proprietary or non-public
information, as well as designs, procedures, plans, methods,
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<PAGE> 8
strategies, techniques of production or service, vendors, methods, confidential
records, formulas, computer software programs or any portions of logic
comprising said programs, clients, customers, financial planning and
information, of Employer ("Confidential Data"). Employee hereby acknowledges
and agrees that the prohibitions against disclosure of the Confidential Data
recited herein are in addition to, and not in lieu of, any rights or remedies
which Employer may have available pursuant to the statutory laws and/or at
common law to prevent the disclosure of trade secrets or proprietary
information, and the enforcement by Employer of its rights and remedies
pursuant to this Agreement shall not be construed as a waiver of any other
rights available or remedies which it may possess in law or equity absent this
Agreement.
2. This Agreement imposes no obligation upon Employee with respect
to Confidential Data which (i) at the time of disclosure or thereafter is
generally available to and known by the public (other than as a result of a
disclosure directly or indirectly by Employee or by any other person or entity
bound by a confidentiality agreement with Employer), (ii) was available to
Employee from a source other than Employer or its directors, officers,
employees, agents or advisors whom Employee reasonably believed was permitted to
divulge such information or (iii) subject to the next two sentences, is
disclosed in response to legal process. In the event Employee becomes legally
compelled (by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or similar process) to disclose any Confidential Data,
Employee shall provide Employer with prompt written notice of such requirement
so that Employer may seek a protective order or other appropriate remedy. In the
event that such protective order or other remedy is not obtained, Employee
agrees to furnish only that portion of the Confidential Data which is
specifically required and (at Employer's expense) to exercise best efforts to
obtain reliable assurance that confidential treatment will be accorded such of
the disclosed information that Employer so designates.
Non-solicitation of Employees. Employee covenants that during the term of his
employment hereunder and for a two (2) year period following the termination of
Employee's employment for any reason whatsoever, Employee shall neither,
directly or indirectly, induce or attempt to induce any employee of Employer, to
terminate his or her employment with Employer, any successor to Employer and,
during said period, Employee shall not directly or indirectly, hire, employ or
recruit or cause any other person or entity to hire, employ or recruit any
current or former officer, manager, supervisor or other significant employee of
Employer.
Property of Employer. Employee acknowledges that from time to time in the course
of providing services pursuant to this Agreement, Employee shall have the
opportunity to inspect and use Confidential Data and other property, both
tangible and intangible, of Employer and Employee hereby agrees that the
Confidential Data and such other property and information shall remain the
exclusive property of Employer, and Employee shall have no right or proprietary
interest in the Confidential Data or such property of Employer.
Developments and Discoveries of Employee. In consideration of employment of
Employee, any and all technical information, designs, procedures, plans,
methods, technique of production, services or sales development, inventions,
improvements, discoveries, processes, programs or systems, in the broadest sense
whether or not patentable, trademarkable, or registerable, discovered by
Employee, either alone or with others, during Employee's employment with
Employer or within one hundred and eighty (180) days thereafter and that (i) are
based in whole
8
<PAGE> 9
or in part upon Confidential Data, or (ii) are useful in, or related to the
business, work or interests of Employer, or (iii) result from any work that may
be done by Employee for or on behalf of Employer (the "Developments"), shall be
fully disclosed by Employee to the President of Employer promptly and in writing
following their invention, development or discovery. The Developments shall be
the sole and exclusive property of Employer as work for hire, and Employee
hereby assigns and agrees to assign to Employer his entire right, title and
interest in and to each Development. Upon the request of Employer, both during
and after Employee's employment with Employer, Employee shall cooperate with
Employer and its designee(s) in the procurement and maintenance, at Employer's
expense and its discretion, of the patents, trademarks, service marks,
copyrights or other protections of assignments, certificates or other Employer's
rights in such Developments and shall execute, acknowledge and deliver such
assignments, certificates and other documents as Employer may consider necessary
or appropriate to vest properly all rights, titles and interest therein in
Employer. If a patent application, trademark, or copyright registration is filed
by Employee or on behalf of Employee within one (1) year after termination or
Employee's employment with Employer, and that otherwise relates to a portion of
Employer's business with which Employee was involved during Employee's
employment with Employer, it is to be conclusively presumed that the Development
was conceived by Employee during such period of employment. Employee shall
notify the President of Employer promptly and in writing of any such application
or registration and shall assign to Employer his entire right, title and
interest in and to such development and in and to such application or
registration.
Equitable relief. Employee acknowledges that any breach of Section 9, Section
10, Section 11 and/or Section 13 hereof cannot reasonably or adequately be
compensated with monetary damages in an action at law and that a breach of any
of such provisions contained in this Agreement will cause Employer irreparable
injury and damage. By reason thereof, Employee expressly acknowledges and agrees
that Employer shall be entitled, in addition to any other remedies it may have
under this Agreement or otherwise, to temporary, preliminary and permanent
injunctive and other equitable relief, without the necessity of Employer posting
of a bond and without Employer having to prove irreparable injury, likelihood of
ultimately prevailing on the merits or a balancing of the equities in its favor,
to prevent or curtail any breach or threatened breach of any of such Sections of
this Agreement by Employee; provided, however, that no specification in this
Agreement of a specific legal or equitable remedy shall be construed as an
election of remedies or a waiver of any alternative remedies or a prohibition
against Employer pursuing other legal or equitable remedies in the event of a
breach of the terms hereof.
Blue Lining. In the event that any of the provisions Sections 9, 10, 11 and/or
13 are deemed unenforceable by a court of competent jurisdiction because such
unenforceable restriction is overly broad, then the Employer and the Employee
agree that such unenforceable restriction shall be reduced as to such time, area
and/or activity restricted which such court shall deem reasonable and therefore
enforceable.
Sale of Shares. During the term of Employee's employment hereunder, Employee
agrees not to, directly or indirectly, sell, transfer, assign or otherwise
transfer during any 12-month period in excess of 5,000 shares of the common
stock of E-Star Holding Corp. (or any interest therein) that was issued at any
time to Employee pursuant to this Agreement; provided, however that the
9
<PAGE> 10
foregoing restriction shall cease to be applicable at such time as such common
stock is listed on the Nasdaq National Market.
Withholding. In the event that Employee is eligible to receive or benefit from
any form of compensation or benefits hereunder, and if Employer shall be
required to withhold any amounts (the "Withholding Taxes") by reason of any
federal, state or local tax laws, rules or regulations in respect of such
compensation or benefit, Employer shall be entitled to deduct and withhold such
amounts from any payments, to be made to, or other compensation or benefits
made available to, Employee. In any event, Employee shall make available to
Employer, promptly when requested by Employer, sufficient funds to meet the
requirements of such withholding; and Employer shall be entitled to take and
authorize such steps as it may deem advisable in order to have such funds
available to Employer out of any funds or property due or to become due to
Employee.
Reliance. Each party to this Agreement acknowledges that each of his/its
covenants contained herein is a material inducement to the other to complete and
to cause him/it to complete this Agreement.
Severability. In the event of any provision of this Agreement or any word,
phrase, clause, sentence or other sentence thereof (including without
limitation, the geographical and temporal restriction contained herein) should
be held to be unenforceable or invalid for any reason, such provision or portion
thereof shall be modified or deleted in such a manner so as to make this
Agreement as modified legal and enforceable to the fullest extent permitted
under applicable laws.
Amendments. This Agreement may be amended only by writing executed by each of
the parties hereto.
Entire Agreement. This Agreement sets forth the entire understanding of the
parties hereto concerning the subject matter hereof and specifically supersedes
all prior contracts, agreements, arrangements, communications, discussion,
representations and warranties, whether oral or written, between the parties
hereto.
Governing Law. This Agreement shall in all respects be governed by and construed
in accordance with the laws of the State of New York, without regard to the
principles or policies or conflicts of law of such state.
Counterparts. This agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all of which together will
constitute one and the same instrument.
Waivers. Any waiver by any party of any violation of, breach of or default under
any provision of this Agreement by the other party shall be effective only if in
writing and no such waiver shall be construed as, or constitute, a continuing
waiver of such provision, or waiver of any other violation of, breach of or
default under any other provision of this Agreement. The failure of any party to
exercise any rights or privileges under this Agreement shall not be deemed to be
a waiver or extinguishment of such rights or privileges, all of which shall
continue to be exercisable.
10
<PAGE> 11
Assignment. Employer shall at its sole discretion have the ability to assign any
of its rights or obligations hereunder without prior written consent of
Employee. Employee shall not assign any rights or delegate any duties hereunder
without prior written consent of Employer.
Successors and Assigns. This Agreement shall be binding upon, inure to the
benefit of, and maybe enforced by, each of the parties to this Agreement and
his/its heirs, administrators, executors, successors and permitted assigns.
Notices. All notices, requests, demands, and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given, if delivered in person, by facsimile, by United States mail (certified or
registered, postage prepaid, return receipt requested) or by a nationally
recognized overnight courier service to the respective parties, to his residence
in the case of Employee or to its principal office in the case of Employer, with
copies to parties respective attorneys as follows: if to the Employer, to Feder
Kaszovitz Isaacson Weber Skala & Bass, LLP, 750 Lexington Avenue, New York, NY
10022-1200, fax no. (212) 888-7776, Attn: Gabriel Kaszovitz, Esq., and if to the
Employee, to
11
<PAGE> 12
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
the day and year first above written, intending to be legally bound:
RADENCE GENERATION II, LTD.
By:
---------------------------
Name:
Title:
----------------------------
Sean Michtavy
12
<PAGE> 1
EXHIBIT 10.3
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement"), dated as of the 1st day of
April, 2000, is entered into by and between All-Star Car Wash, Inc., a Nevada
corporation (the "Company"), and Mr. Greg Buttle residing at 1900 Hempstead
Turnpike, East Meadow, NY 11554 (the "Consultant").
WITNESSETH:
WHEREAS, Company desires to obtain the services of the Consultant on a
part time basis; and
WHEREAS, Consultant desires to enter into this Agreement to render
services to the Company upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
Employment. For the term provided in Section 2, the Company hereby employs the
Consultant on a part time basis as its Vice President for Sports and
Entertainment Marketing, and the Consultant hereby accepts that employment, upon
the terms and conditions hereinafter set forth.
Term of Employment. The Consultant's term of employment under this Agreement
shall commence as of April 1, 2000 and shall continue in effect through the
third anniversary of the date of the closing of the acquisition by the Company
or any of its subsidiary corporations of its first car wash (the "Original
Term") estimated to be on or before April 1, 2000 unless extended as provided in
the next sentence or unless terminated sooner as provided elsewhere in this
Agreement. Notwithstanding the foregoing, on the last day of the Original Term
(the "First Extension Date") and again on the one year anniversary of the First
Extension Date if the Original Term is extended as provided below (the "Second
Extension Date"), the term of this Agreement shall automatically be extended for
one additional year unless, not later than 90 days prior to the First Extension
Date or the Second Extension Date, as the case may be, the Company shall have
given written notice to the Consultant that this Agreement will not be extended.
1
<PAGE> 2
Duties of the Consultant.
(a) The Consultant agrees, during the term of the Consultant's
employment hereunder, to devote thirty five percent (35%) of his
regular working time, that is an average of not less than 14
hours per week, using his skills and best efforts, in accordance
with the Company's policies and procedures, to the promotion and
marketing of the car wash businesses operated by the Company and
its subsidiaries, subject to such directions with respect
thereto as shall be given the Consultant by the Board of
Directors of the Company or the Board of Directors of E-Star
Holding Corp., of which corporation the Company is a wholly
owned subsidiary, or by the presidents of either the Company or
of E-Star Holding Corp. The Consultant shall also perform such
duties not inconsistent with his position as an executive
officer of the Company, nor requiring more than the limited
amount of time that the Consultant is required to devote under
the terms of this Consulting Agreement, as shall be assigned to
him by the president or the Board of Directors of either the
Company or of E-Star Holding Corp. Unless otherwise agreed to in
advance by the Company, the Consultant shall not accept any
employment with any other person or entity, become self-employed
in any capacity, or engage in any activities which are
considered by the Company to be detrimental to the business of
the Company. The Consultant shall perform his duties hereunder
in such locations as the Company or its subsidiaries are
conducting business from time to time, it being acknowledged
that the Company and its subsidiaries intend to conduct business
throughout the United States, and shall undertake reasonable
business travel as may be necessary to perform his duties
hereunder.
(b) The Consultant covenants that all services to be performed by
the Consultant pursuant to his employment hereunder shall be
performed in accordance with all applicable legal requirements.
Termination of Agreement. During the term of the Consultant's employment
hereunder, the Consultant's employment with the Company may not be terminated by
the Company or the Consultant for any reason or under any circumstances, except
that the Company may terminate this Agreement as follows:
1. Upon the death of the Consultant; provided, that the Company
shall pay to the estate of the Consultant the compensation which would otherwise
be payable to the Consultant for one hundred eighty (180) days after the date of
death.
2. For "Cause", which for purposes of this Agreement shall mean
that:
(i) The Consultant shall have (A) committed fraud or
embezzlement, (B) materially breached any of the
provisions of Sections 8, 9, 10 or 12 of this Agreement,
or (C) materially breached, or failed to perform and
discharge, his duties hereunder.
2
<PAGE> 3
(ii) The Consultant shall have (A) been convicted of any
felony, (B) committed an act of moral turpitude, or (C)
engaged in conduct intended to result in substantial
personal enrichment of the Consultant at the expense or
otherwise to the detriment of the Company or any of its
affiliates or subsidiaries;
(iii) The Consultant shall have failed to comply on a timely
basis with a reasonable directive of the Board of
Directors of the Company not inconsistent with the terms
of this Agreement; or
(iv) The Consultant shall have engaged in misconduct which
materially injures the reputation, business, business
relationships of the Company or its affiliates,
monetarily or otherwise.
Termination for Cause pursuant to Section 4(b)(i)(C) or 4(b)(ii)
shall be effective only if the Consultant's material breach or
failure to perform remains unremedied for thirty days after
delivery by the Board of Directors of the Company to the
Consultant of a written notice specifying the conduct for which
this Agreement will be terminated for Cause.
If the Consultant's employment is terminated upon the occurrence
of one or more of the events specified in this subsection 4(b),
then the Consultant shall only be entitled to receive his then
unpaid salary (as defined in Section 5(a) prorated to the
effective date of termination), and shall not be entitled to any
other compensation or employment benefits for any period after
the effective date of termination.
3. Upon "disability" provided that the Company shall pay to the
Consultant the compensation which would otherwise be payable to the Consultant
for sixty (60) days from the effective date of termination of the Consultant's
employment hereunder due to his disability. For purposes of this Agreement,
"disability" means the Consultant's incapacity due to physical or mental
illness, which renders the Consultant unable to perform the Consultant's duties
hereunder for ninety (90) consecutive days, and, within ten (10) days after the
Company notifies the Consultant in writing that the Company intends to terminate
the Consultant's employment in accordance with this Section 4(c), the Consultant
shall not have returned to the performance of the Consultant's duties hereunder
on the part-time basis as provided in this Agreement for a period of at least
thirty (30) consecutive days.
4. In the event that on or prior to 60 days from the date hereof,
the Company or a subsidiary of the Company has not consummated the first
acquisition of a car wash.
Compensation.
The Company agrees to pay the Consultant for all services rendered under
this Agreement at the rate of $72,000 per year.
3
<PAGE> 4
E-Star's Common Stock
1. As further compensation to the Consultant, the Company shall
cause E-Star Holding Corp ("E-Star") to issue to the Consultant, at no cost to
the Consultant, an aggregate of thirty thousand (30,000) shares of E-Star's
common stock (the "Initial Shares") as follows: five thousand (5,000) shares
upon the execution of this Agreement and if the Consultant is then still
employed by the Company an additional five thousand (5,000) shares on each of
the next five half year anniversaries of the date this Agreement is executed by
both the Company and the Consultant. All such shares shall be "restricted
securities", as such term is defined in Rule 144(a) promulgated under the
Securities Act of 1933, as amended, and the certificates evidencing such shares
shall have the following legend endorsed thereon:
THE SHARES OF STOCK REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MUST BE HELD
INDEFINITELY UNLESS REGISTERED UNDER
SUCH ACT OR UNLESS AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE.
2. The Consultant shall not be entitled to receive any additional
shares because of any extension of this Consulting Agreement.
Compensation-Fringe Benefits. The Consultant shall receive the following
additional benefits, which may be extended or increased, but not reduced, by the
Company in its discretion:
1. During the term of the Consultant's employment hereunder, the
Consultant shall also be eligible to participate in any of the Company's
medical, dental (if any), life insurance, disability (if any) and any pension,
profit sharing and stock option plan, then in effect, but only if, and to the
extent, such participation is permitted by such plan.
2. The Company shall reimburse the Consultant for business expenses
reasonably incurred in connection with his employment in accordance with the
Company's reimbursement practice upon presentation of adequate documentation.
Noncompetition. The Consultant covenants and agrees that during the term of his
employment hereunder and for a period of up to three (3) years from the later of
the (a) termination of this Agreement or (b) the termination of the Consultant's
employment with the Company (regardless of the reason for such termination of
employment), the Consultant shall not, directly or indirectly (i) enter into the
employ of or render any services to (A) any person, or entity engaged in any
enterprise that owns or operates one or more car washes within three (3) miles
of any location where the Company or any of its subsidiaries operate a car wash
(a "Competitive Business") or (B) any entity or enterprise involved in the
consolidation of individual or group of car washes (a "Competitive Consolidating
Company"), (ii) engage in any Competitive Business or any Competitive
Consolidating Company for his own account; (iii) become associated with or
interested in any Competitive Business or any Competitive Consolidating Company
as an individual, partner, equity owner, creditor, director, manager, officer,
principal,
4
<PAGE> 5
agent, employee, director, consultant, advisor or in any other relationship or
capacity, or (iv) call on, solicit, take away, accept as a client, agent or
customer or attempt to call on, solicit, take away or accept as a client, agent
or customer, any individual, agent or entity that (A) was a client, agent or
customer of the Company or any of its subsidiaries during the twenty four (24)
month period immediately preceding any such act or (B) that was a client, agent
or customer of the Company or any of its subsidiaries at any time and with which
the Consultant had direct or indirect contact in the scope of the Consultant's
employment by the Company. However, nothing in this Agreement shall preclude the
Consultant from investing in the securities of any corporation or other business
entity which is engaged in a Competitive Business or a Competitive Consolidating
Company if such securities are traded on a regional or national stock exchange
or quoted through an inter-dealer quotation system and if such investment does
not result in the Consultant beneficially owning, at any time, more than 1% of
the publicly-traded equity securities of such competitor. Prior to accepting
employment or a consulting arrangement with any business or entity competing
with the Company, the Consultant shall notify the Company in writing of the name
of the prospective employer, clearly describing each of such prospective
employer's businesses and describing in detail the services to be performed by
the Consultant in the proposed employment. The Company shall promptly notify the
Consultant whether it believes that such new employment will violate the
restrictions imposed upon the Consultant pursuant to the provisions of this
Section 8. The Company's response shall be made within forty-eight (48) hours
after receipt of such written notification from the Consultant but the Company's
response made later than 48 hours if the delay is for reasonable cause, shall
also be deemed to have been timely made.
If the Company wishes to continue the restrictions of this Section 8 for
a further term, but not to exceed an additional two (2) years, the
Company shall pay to the Consultant compensation at the rate of the
annual salary payable to the Consultant at the time of the termination
of Employee's employment pursuant to Section 5. In such event, the
provisions of this Section 8 shall be applicable for so long as such
additional compensation payments continue.
Confidential Data.
1. The Consultant further agrees that during the term of employment
hereunder and at all times thereafter he will keep confidential and not,
directly or indirectly, divulge to anyone nor use or otherwise appropriate for
the Consultant's own benefit or the benefit of any third party, any material
information obtained or learned by him during the course of his employment with
the Company (for the purposes of this Section 9 and Sections 10, 11, 12, 13 and
14, the term "Company" includes the Company's parent and the Company's and such
parent's subsidiaries, and any successor to any such entity) relating to the
operational, financial, business, or other affairs of the Company, including but
not limited to pricing, marketing, customer, financial, mailing list, sales,
technical, or other proprietary or non-public information, as well as designs,
procedures, plans, methods, strategies, techniques of production or service,
vendors, methods, confidential records, formulas, computer software programs or
any portions of logic comprising said programs, clients, customers, financial
planning and information, of the Company or any of its subsidiaries
("Confidential Data"). The Consultant hereby acknowledges and agrees that the
prohibitions against disclosure of the Confidential Data recited herein are in
5
<PAGE> 6
addition to, and not in lieu of, any rights or remedies which the Company may
have available pursuant to the statutory laws and/or at common law to prevent
the disclosure of trade secrets or proprietary information, and the enforcement
by the Company of its rights and remedies pursuant to this Agreement shall not
be construed as a waiver of any other rights available or remedies which it may
possess in law or equity absent this Agreement.
2. This Agreement imposes no obligation upon the Consultant with
respect to Confidential Data which (i) at the time of disclosure or thereafter
is generally available to and known by the public (other than as a result of a
disclosure directly or indirectly by the Consultant or by any other person or
entity bound by a confidentiality agreement with the Company), (ii) was
available to the Consultant from a source other than the Company or its
directors, officers, employees, agents or advisors whom the Consultant
reasonably believed was permitted to divulge such information or (iii) subject
to the next two sentences, is disclosed in response to legal process. In the
event the Consultant becomes legally compelled (by deposition, interrogatory,
request for documents, subpoena, civil investigative demand or similar process)
to disclose any Confidential Data, the Consultant shall provide the Company with
prompt written notice of such requirement so that the Company may seek a
protective order or other appropriate remedy. In the event that such protective
order or other remedy is not obtained, the Consultant agrees to furnish only
that portion of the Confidential Data which is specifically required and (at the
Company's expense) to exercise best efforts to obtain reliable assurance that
confidential treatment will be accorded such of the disclosed information that
the Company so designates.
Non-solicitation of Employees. The Consultant covenants that during the term of
his employment hereunder and for a two (2) year period following the termination
of the Consultant's employment for any reason whatsoever, the Consultant shall
neither, directly or indirectly, induce or attempt to induce any employee of the
Company or of any successor to the Company, to terminate his or her employment
with the Company, and, during said period, the Consultant shall not directly or
indirectly, hire, employ or recruit or cause any other person or entity to hire,
employ or recruit any current or former officer, manager, supervisor or other
significant employee of the Company.
Property of The Company. The Consultant acknowledges that from time to time in
the course of providing services pursuant to this Agreement, the Consultant
shall have the opportunity to inspect and use Confidential Data and other
property, both tangible and intangible, of the Company and the Consultant hereby
agrees that the Confidential Data and such other property and information shall
remain the exclusive property of the Company and the Consultant shall have no
right or proprietary interest in the Confidential Data or such property of the
Company.
Developments and Discoveries of the Consultant. In consideration of employment
of the Consultant, any and all technical information, designs, procedures,
plans, methods, technique of production, services or sales development,
inventions, improvements, discoveries, processes, programs or systems, in the
broadest sense whether or not patentable, trademarkable, or registerable,
discovered by the Consultant, either alone or with others, during the
Consultant's employment with the Company or within one hundred and eighty (180)
days thereafter and that (i) are based in whole or in part upon Confidential
Data, or (ii) are useful in, or related to the business, work or interests of
the Company, or (iii) result from any work that may be done by the Consultant
for or on behalf of the Company (the "Developments"), shall be fully disclosed
6
<PAGE> 7
by the Consultant to the President of the Company promptly and in writing
following their invention, development or discovery. The Developments shall be
the sole and exclusive property of the Company as work for hire, and the
Consultant hereby assigns and agrees to assign to the Company his entire right,
title and interest in and to each Development. Upon the request of the Company,
both during and after the Consultant's employment with the Company, the
Consultant shall cooperate with the Company and its designee(s) in the
procurement and maintenance, at the Company's expense and its discretion, of the
patents, trademarks, service marks, copyrights or other protections of
assignments, certificates or other Company's rights in such Developments and
shall execute, acknowledge and deliver such assignments, certificates and other
documents as the Company may consider necessary or appropriate to vest properly
all rights, titles and interest therein in the Company. If a patent application,
trademark, or copyright registration is filed by the Consultant or on behalf of
the Consultant within one (1) year after termination or the Consultant's
employment with the Company, and that otherwise relates to a portion of the
Company's business with which he Consultant was involved during the Consultant's
employment with the Company, it is to be conclusively presumed that the
Development was conceived by the Consultant during such period of employment.
The Consultant shall notify the President of the Company promptly and in writing
of any such application or registration and shall assign to the Company his
entire right, title and interest in and to such development and in and to such
application or registration.
Equitable relief. The Consultant acknowledges that any breach of Section 9,
Section 10, Section 11 and/or Section 12 hereof cannot reasonably or adequately
be compensated with monetary damages in an action at law and that a breach of
any of such provisions contained in this Agreement will cause the Company
irreparable injury and damage. By reason thereof, the Consultant expressly
acknowledges and agrees that the Company shall be entitled, in addition to any
other remedies it may have under this Agreement or otherwise, to temporary,
preliminary and permanent injunctive and other equitable relief, without the
necessity of the Company posting of a bond and without the Company having to
prove irreparable injury, likelihood of ultimately prevailing on the merits or a
balancing of the equities in its favor, to prevent or curtail any breach or
threatened breach of any of such Sections of this Agreement by the Consultant;
provided, however, that no specification in this Agreement of a specific legal
or equitable remedy shall be construed as an election of remedies or a waiver of
any alternative remedies or a prohibition against the Company pursuing other
legal or equitable remedies in the event of a breach of the terms hereof.
Blue Lining. In the event that any of the provisions Sections 9, 10, 11, 12
and/or 13 are deemed unenforceable by a court of competent jurisdiction because
such unenforceable restriction is overly broad, then the Company and the
Consultant agree that such unenforceable restriction shall be reduced as to such
time, area and/or activity restricted which such court shall deem reasonable and
therefore enforceable.
Sale of Shares. During the term of the Consultant's employment hereunder, the
Consultant agrees not to, directly or indirectly, sell, transfer, assign or
otherwise transfer during any 12-month period in excess of 5,000 shares of
capital stock of the Company (or any interest therein) that was issued at any
time to the Consultant pursuant to this Agreement; provided, however that the
foregoing restriction shall cease to be applicable at such time as the Company's
common stock is listed on the Nasdaq National Market.
7
<PAGE> 8
Withholding. In the event that the Consultant is eligible to receive or benefit
from any form of compensation or benefits hereunder, and if the Company shall be
required to withhold any amounts (the "Withholding Taxes") by reason of any
federal, state or local tax laws, rules or regulations in respect of such
compensation or benefit, the Company shall be entitled to deduct and withhold
such amounts from any payments, to be made to, or other compensation or benefits
made available to, the Consultant. In any event, the Consultant shall make
available to the Company, promptly when requested by the Company, sufficient
funds to meet the requirements of such withholding; and the Company shall be
entitled to take and authorize such steps as it may deem advisable in order to
have such funds available to the Company out of any funds or property due or to
become due to the Consultant.
Reliance. Each party to this Agreement acknowledges that each of his/its
covenants contained herein is a material inducement to the other to complete and
to cause him/it to complete this Agreement.
Severability. In the event of any provision of this Agreement or any word,
phrase, clause, sentence or other sentence thereof (including without
limitation, the geographical and temporal restriction contained herein) should
be held to be unenforceable or invalid for any reason, such provision or portion
thereof shall be modified or deleted in such a manner so as to make this
Agreement as modified legal and enforceable to the fullest extent permitted
under applicable laws.
Amendments. This Agreement may be amended only by writing executed by each of
the parties hereto.
Entire Agreement. This Agreement sets forth the entire understanding of the
parties hereto concerning the subject matter hereof and specifically supersedes
all prior contracts, agreements, arrangements, communications, discussion,
representations and warranties, whether oral or written, between the parties
hereto.
Governing Law. This Agreement shall in all respects be governed by and construed
in accordance with the laws of the State of New York, without regard to the
principles or policies or conflicts of law of such state.
Counterparts. This agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and all of which together will
constitute one and the same instrument.
Waivers. Any waiver by any party of any violation of, breach of or default under
any provision of this Agreement by the other party shall be effective only if in
writing and no such waiver shall be construed as, or constitute, a continuing
waiver of such provision, or waiver of any other violation of, breach of or
default under any other provision of this Agreement. The failure of any party to
exercise any rights or privileges under this Agreement shall not be deemed to be
a waiver or extinguishment of such rights or privileges, all of which shall
continue to be exercisable.
8
<PAGE> 9
Assignment. The Company shall at its sole discretion have the ability to assign
any of its rights or obligations hereunder without prior written consent of the
Consultant. The Consultant shall not assign any rights or delegate any duties
hereunder without prior written consent of the Company.
Successors and Assigns. This Agreement shall be binding upon, inure to the
benefit of, and maybe enforced by, each of the parties to this Agreement and
his/its heirs, administrators, executors, successors and permitted assigns.
Notices. All notices, requests, demands, and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given, if delivered in person, by facsimile, by United States mail (certified or
registered, postage prepaid, return receipt requested) or by a nationally
recognized overnight courier service to the respective parties, to his residence
in the case of the Consultant or to its principal office in the case of the
Company, with copies to parties respective attorneys as follows: if to the
Company, to Feder Kaszovitz Isaacson Weber Skala & Bass, LLP, 750 Lexington
Avenue, New York, NY 10022-1200, fax no. (212) 888-7776, Attn: Gabriel
Kaszovitz, Esq., and if to the Consultant, to
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
the day and year first above written, intending to be legally bound:
ALL-STAR CAR WASH, INC.
By: s/Bruce Bendell
-----------------------
Name: Bruce Bendell
Title: Director
s/Greg Buttle
-----------------------
Greg Buttle
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1999
<PERIOD-END> FEB-29-2000
<CASH> 1,041,095
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,231,684
<PP&E> 0
<DEPRECIATION> 1,032
<TOTAL-ASSETS> 1,453,746
<CURRENT-LIABILITIES> 607,290
<BONDS> 0
1,007,611
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,453,746
<SALES> 0
<TOTAL-REVENUES> 41,087
<CGS> 0
<TOTAL-COSTS> 197,959
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,283
<INCOME-PRETAX> (161,155)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
