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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
Freeman Technologies Corporation
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(Name of Small Business Issuer)
Delaware 13-4116848
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(State or Other Jurisdiction of I.R.S. Employer Identification Number
Incorporation or Organization)
50 Broadway, Suite 2300
New York, NY 10004
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(Address of Principal Executive Offices including Zip Code)
(212) 785-6200
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(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act: None
Securities to be Registered Under Section 12(g) of the Act: Common Stock
$.0001 Par Value
(Title of Class)
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PART I
ITEM 1. BUSINESS.
Freeman Technologies Corporation (the "Company") was incorporated on
April 11, 2000 under the laws of the State of Delaware to engage in any lawful
corporate undertaking, including, but not limited to, selected mergers and
acquisitions. The Company has been in the developmental stage since inception
and has no operations to date other than issuing shares to its original
shareholders.
The Company will attempt to locate and negotiate with a business entity
for the combination of that target company with the Company. The combination
will normally take the form of a merger, stock-for-stock exchange or
stock-for-assets exchange. In most instances the target company will wish to
structure the business combination to be within the definition of a tax-free
reorganization under Section 351 or Section 368 of the Internal Revenue Code of
1986, as amended.
No assurances can be given that the Company will be successful in
locating or negotiating with any target company.
The Company has been formed to provide a method for a foreign or
domestic private company to become a reporting ("public") company with a class
of registered securities.
ASPECTS OF A REPORTING COMPANY
There are certain perceived benefits to being a reporting company.
These are commonly thought to include the following:
* increased visibility in the financial community;
* provision of information required under Rule 144 for trading
of eligible securities;
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* compliance with a requirement for admission to quotation on
the OTC Bulletin Board maintained by Nasdaq or on the Nasdaq
SmallCap Market;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in subsequent raising of capital;
* compensation of key employees through stock options for which
there may be a market valuation;
* enhanced corporate image;
There are also certain perceived disadvantages to being a reporting
company. These are commonly thought to include the following:
* requirement for audited financial statements;
* required publication of corporate information;
* required filings of periodic and episodic reports with the
Securities and Exchange Commission;
* increased rules and regulations governing management,
corporate activities and shareholder relations.
COMPARISON WITH INITIAL PUBLIC OFFERING
Certain private companies may find a business combination more
attractive than an initial public offering of their securities. Reasons for this
may include the following:
* inability to obtain an underwriter;
* possible larger costs, fees, and expenses;
* possible delays in the public offering process;
* greater dilution of their outstanding securities.
Certain private companies may find a business combination less
attractive than an initial public offering of their securities. Reasons for this
may include the following:
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* no investment capital raised through a business combination;
* no underwriter support of after-market trading.
POTENTIAL TARGET COMPANIES
A business entity, if any, which may be interested in a business
combination with the Company may include the following:
* a company for which a primary purpose of becoming public is
the use of its securities for the acquisition of assets or
businesses;
* a company which is unable to find an underwriter of its
securities or is unable to find an underwriter of securities
on terms acceptable to it;
* a company which wishes to become public with less dilution of
its common stock than would occur upon an underwriting;
* a company which believes that it will be able to obtain
investment capital on more favorable terms after it has become
public;
* a foreign company which may wish an initial entry into the
United States securities market;
* a special situation company, such as a company seeking a
public market to satisfy redemption requirements under a
qualified Employee Stock Option Plan;
* a company seeking one or more of the other perceived benefits
of becoming a public company.
A business combination with a target company will normally involve the
transfer to the target company of the majority of the issued and outstanding
common stock of the Company, and the substitution by the target company of its
own management and board of directors.
No assurances can be given that the Company will be able to enter into
a business combination, as to the terms of a business combination, or as to the
nature of the target company.
The proposed business activities described herein classify the Company
as a "blank check" company. The Securities and Exchange Commission and certain
states have enacted statutes, rules and regulations limiting the sale of
securities of blank check companies. The Company will not issue or sell
additional shares or take any efforts to cause a market to develop in the
Company's securities until such time as the Company has successfully implemented
its business plan and it is no longer classified as a blank check company.
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The sole shareholders of the Company have executed and delivered a
"lock-up" agreement affirming that they will not sell or otherwise transfer
their respective shares except in connection with or following a business
combination resulting in the Company no longer being classified as a blank check
company.
The Company is voluntarily filing this Registration Statement with the
Securities and Exchange Commission and is under no obligation to do so under the
Securities Exchange Act of 1934. The Company will file all reports required of
it under the Exchange Act until a business combination has occurred. A business
combination will normally result in a change in control and management of the
Company. Since a benefit of a business combination with the Company would
normally be considered its status as a reporting company, it is anticipated that
the Company will continue to file reports under the Exchange Act following a
business combination. No assurance can be given that this will occur or, if it
does, for how long.
Patricia A. Meding is the sole officer and director of the Company and
the controlling shareholder of one of the Company's shareholders, Capital
Advisory Partners, LLC. The Company has no employees nor are there any other
persons than Ms. Meding who devote any of their time to its affairs. All
references herein to management of the Company are to Ms. Meding. The inability
at any time of Ms. Meding to devote sufficient attention to the Company could
have a material adverse impact on its operations.
GLOSSARY
"Blank Check" Company As used herein, a "blank check" company is a
development stage company that has no
specific business plan or purpose or has
indicated that its business plan is to
engage in a merger or acquisition with an
unidentified company or companies.
Business Combination Normally a merger, stock-for-stock exchange
or stock-for-assets exchange between the
Registrant and a target company.
The Company or The corporation whose common stock is the
the Registrant subject of this Registration Statement.
Exchange Act The Securities Exchange Act of 1934, as
amended.
Securities Act The Securities Act of 1933, as amended.
RISK FACTORS
The Company's business is subject to numerous risk factors, including
the following:
THE COMPANY HAS NO OPERATING HISTORY NOR REVENUE AND MINIMAL ASSETS.
The Company has had no operating history nor any revenues or earnings from
operations. The Company has no significant assets or financial resources. The
Company has
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operated at a loss to date and will, in all likelihood, continue to sustain
operating expenses without corresponding revenues, at least until the
consummation of a business combination. Capital Advisory Partners, LLC, one of
the Company's largest shareholders, has agreed to pay all expenses incurred by
the Company until a business combination occurs, without repayment by the
Company. To date, expenses of approximately $50,000 have been incurred by the
Company.
COMPANY HAS ONLY ONE DIRECTOR AND ONE OFFICER. The Company's
president, its sole officer, is Patricia A. Meding who is also its sole director
and the controlling shareholder of Capital Advisory Partners, LLC, one of its
largest shareholders. Because management consists of only one person, the
Company does not benefit from multiple judgments that a greater number of
directors or officers would provide and the Company will rely completely on the
judgment of its sole officer and director when selecting a target company. The
decision to enter into a business combination will likely be made without
detailed feasibility studies, independent analysis, market surveys or similar
information which, if the Company had more funds available to it, would be
desirable. Patricia A. Meding anticipates devoting only a limited amount of time
per month to the business of the Company. Patricia A. Meding has not entered
into a written employment agreement with the Company and she is not expected to
do so. The Company has not obtained key man life insurance on Patricia A.
Meding. The loss of the services of Patricia A. Meding would adversely affect
development of the Company's business and its likelihood of continuing
operations.
CONFLICTS OF INTEREST. Patricia A. Meding, the Company's president and
sole director, participates in other business ventures which may compete
directly with the Company. Additional conflicts of interest and non-arms length
transactions may also arise in the future. The Company has adopted a policy that
it will not enter into a business combination with any entity in which any
member of management serves as an officer, director or partner, or in which such
person or such person's affiliates or associates hold any ownership interest.
The terms of business combination may include such terms as Patricia A. Meding
remaining a director or officer of the Company. The terms of a business
combination may provide for a payment by cash or otherwise to Capital Advisory
Partners, LLC for the purchase or retirement of all or part of her common stock
of the Company by a target company or for services rendered incident to or
following a business combination. Patricia A. Meding would directly benefit from
such employment or payment. Such benefits may influence Patricia A. Meding's
choice of a target company. The Certificate of Incorporation of the Company
provides that the Company may indemnify officers and/or directors of the Company
for liabilities, which can include liabilities arising under the securities
laws. Therefore, assets of the Company could be used or attached to satisfy any
liabilities subject to such indemnification. See "ITEM 5. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS--Conflicts of Interest."
THE PROPOSED OPERATIONS OF THE COMPANY ARE SPECULATIVE. The success of
the Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified target company.
While business combinations with entities having established operating histories
are preferred, there can be no assurance that the Company will be successful in
locating candidates meeting such criteria. In the
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event the Company completes a business combination, the success of the Company's
operations will be dependent upon management of the target company and numerous
other factors beyond the Company's control. There is no assurance that the
Company can identify a target company and consummate a business combination.
PURCHASE OF PENNY STOCKS CAN BE RISKY. In the event that a public
market develops for the Company's securities following a business combination,
such securities may be classified as a penny stock depending upon their market
price and the manner in which they are traded. The Securities and Exchange
Commission has adopted Rule 15g-9 which establishes the definition of a "penny
stock," for purposes relevant to the Company, as any equity security that has a
market price of less than $5.00 per share or with an exercise price of less than
$5.00 per share whose securities are admitted to quotation but do not trade on
the Nasdaq SmallCap Market or on a national securities exchange. For any
transaction involving a penny stock, unless exempt, the rules require delivery
of a document to investors stating the risks, special suitability inquiry,
regular reporting and other requirements. Prices for penny stocks are often not
available and investors are often unable to sell such stock. Thus an investor
may lose his investment in a penny stock and consequently should be cautious of
any purchase of penny stocks.
THERE IS A SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND
COMBINATIONS. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with and acquisitions of business
entities. A large number of established and well-financed entities, including
venture capital firms, are active in mergers and acquisitions of companies which
may be merger or acquisition target candidates for the Company. Nearly all such
entities have significantly greater financial resources, technical expertise and
managerial capabilities than the Company and, consequently, the Company will be
at a competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, the Company will also
compete with numerous other small public companies in seeking merger or
acquisition candidates.
THERE IS NO AGREEMENT FOR A BUSINESS COMBINATION AND NO MINIMUM
REQUIREMENTS FOR BUSINESS COMBINATION. The Company has no current arrangement,
agreement or understanding with respect to engaging in a business combination
with a specific entity. There can be no assurance that the Company will be
successful in identifying and evaluating suitable business opportunities or in
concluding a business combination. No particular industry or specific business
within an industry has been selected for a target company. The Company has not
established a specific length of operating history or a specified level of
earnings, assets, net worth or other criteria which it will require a target
company to have achieved, or without which the Company would not consider a
business combination with such business entity. Accordingly, the Company may
enter into a business combination with a business entity having no significant
operating history, losses, limited or no potential for immediate earnings,
limited assets, negative net worth or other negative characteristics. There is
no assurance that the Company will be able to negotiate a business combination
on terms favorable to the Company.
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REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Pursuant to
the requirements of Section 13 of the Exchange Act, the Company is required to
provide certain information about significant acquisitions including audited
financial statements of the acquired company. These audited financial statements
must be furnished within 75 days following the effective date of a business
combination. Obtaining audited financial statements are the economic
responsibility of the target company. The additional time and costs that may be
incurred by some potential target companies to prepare such financial statements
may significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company. Acquisition prospects that do not have or
are unable to obtain the required audited statements may not be appropriate for
acquisition so long as the reporting requirements of the Exchange Act are
applicable. Notwithstanding a target company's agreement to obtain audited
financial statements within the required time frame, such audited financials may
not be available to the Company at the time of effecting a business combination.
In cases where audited financials are unavailable, the Company will have to rely
upon unaudited information that has not been verified by outside auditors in
making its decision to engage in a transaction with the business entity. This
risk increases the prospect that a business combination with such a business
entity might prove to be an unfavorable one for the Company.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company
has neither conducted, nor have others made available to it, market research
indicating that demand exists for the transactions contemplated by the Company.
Even in the event demand exists for a transaction of the type contemplated by
the Company, there is no assurance the Company will be successful in completing
any such business combination.
REGULATION UNDER INVESTMENT COMPANY ACT. In the event the Company
engages in business combinations which result in the Company holding passive
investment interests in a number of entities, the Company could be subject to
regulation under the Investment Company Act of 1940. In such event, the Company
would be required to register as an investment company and could be expected to
incur significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act could subject the Company to material
adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination
involving the issuance of the Company's common stock will, in all likelihood,
result in shareholders of a target company obtaining a controlling interest in
the Company. As a condition of the business combination agreement, Ms. Meding
and the other, shareholders of the Company, may agree to sell or transfer all or
a portion of their respective Company's common stock so as to provide the target
company with all or majority control. In addition, the Company could also issue
a controlling interest in connection with the acquisitions of the target
Company. The resulting change in control of the Company will likely result in
removal of the Company's present officer and director and a corresponding
reduction in or elimination of her respective participation in the future
affairs of the Company.
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POSSIBLE DILUTION OF VALUE OF SHARES UPON BUSINESS COMBINATION.
A business combination normally will involve the issuance of a significant
number of additional shares. Depending upon the value of the assets acquired in
such business combination, the per share value of the Company's common stock may
increase or decrease, perhaps significantly.
TAXATION. Federal and state tax consequences will, in all likelihood,
be major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as to
minimize the federal and state tax consequences to both the Company and the
target company; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free reorganization or
that the parties will obtain the intended tax-free treatment upon a transfer of
stock or assets. A non-qualifying reorganization could result in the imposition
of both federal and state taxes which may have an adverse effect on both parties
to the transaction.
YEAR 2000 PROBLEM MAY ADVERSELY AFFECT THE COMPANY. Many existing
computer programs use only two digits to identify a year in such program's date
field. These programs were designed and developed without consideration of the
impact of the change in the century for which four digits will be required to
accurately report the date. If not corrected, many computer applications could
fail or create erroneous results by or following the year 2000 ("Year 2000
Problem"). The Company does not have operations and does not maintain computer
systems. Before the Company enters into any business combination, it may inquire
as to the status of any target company's Year 2000 Problem, the steps such
target company has taken or intends to take to correct any such problem and the
probable impact on such target company of any computer disruption. However,
there can be no assurance that the Company will not enter into a business
combination with a target company that has an uncorrected Year 2000 Problem or
that any planned Year 2000 Problem corrections will be sufficient. The extent of
the Year 2000 Problem of a target company may be impossible to ascertain and any
impact on the Company will likely be impossible to predict.
ITEM 2. PLAN OF OPERATION
SEARCH FOR TARGET COMPANY
The Company intends to enter into a business combination with a target
company in exchange for the Company's securities. The Company has not engaged in
any negotiations with any specific entity regarding the possibility of a
business combination with the Company. The Company has entered into an agreement
with Capital Advisory Partners, LLC, a shareholder of the Company, to supervise
the search for target companies as potential candidates for a business
combination. The agreement will continue until such time as the Company has
effected a business combination. Capital Advisory Partners, LLC has agreed to
pay all expenses of the Company without repayment until such time as a business
combination is effected. Patricia A. Meding, who is the sole officer and
director of the Company, is the sole officer and director and controlling
shareholder of Capital Advisory Partners, LLC.
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Capital Advisory Partners, LLC may only locate potential target
companies for the Company and is not authorized to enter into any agreement with
a potential target company binding the Company. The Company's agreement with
Capital Advisory Partners, LLC is not exclusive and Capital Advisory Partners,
LLC has entered into agreements with other companies similar to the Company on
similar terms. Capital Advisory Partners, LLC may provide assistance to target
companies incident to and following a business combination, and receive payment
for such assistance from target companies.
Capital Advisory Partners, LLC owns 800,000 shares of the Company's
common stock for which it paid $80.00, or $.0001, par value, per share.
Capital Advisory Partners, LLC has entered, and anticipates that it
will enter, into agreements with other consultants to assist it in locating a
target company and Capital Advisory Partners, LLC may share its stock in the
Company with or grant options on such stock to such referring consultants and
may make payment to such consultants from its own resources. There is no minimum
or maximum amount of stock, options, or cash that Capital Advisory Partners, LLC
may grant or pay to such consultants. Capital Advisory Partners, LLC is solely
responsible for the costs and expenses of its activities in seeking a potential
target company, including any agreements with consultants, and the Company has
no obligation to pay any costs incurred or negotiated by Capital Advisory
Partners, LLC.
Capital Advisory Partners, LLC anticipates that it may seek to locate a
target company through solicitation. Such solicitation may include newspaper or
magazine advertisements, mailings and other distributions to law firms,
accounting firms, investment bankers, financial advisors and similar persons,
the use of one or more World Wide Web sites and similar methods. No estimate can
be made as to the number of persons who may be contacted or solicited. To date
Capital Advisory Partners, LLC has not made any solicitations, does not
anticipate that it will do so, and expects to rely on referrals from consultants
in the business and financial communities for referrals of potential target
companies.
MANAGEMENT OF THE COMPANY
The Company has no full time employees. Patricia A. Meding is the sole
officer and director of the Company. Ms. Meding is also the controlling
shareholder of Capital Advisory Partners, LLC, one of the Company's largest
shareholders. Patricia A. Meding, as president of the Company, has agreed to
allocate a portion of her time to the activities of the Company without
compensation. Potential conflicts may arise with respect to the limited time
commitment by Ms. Meding and the potential demands of the Company's activities.
The amount of time spent by Ms. Meding on the activities of the Company
is not predictable. Such time may vary widely from an extensive amount when
reviewing a target company and effecting a business combination to an
essentially quiet time when activities of management focus elsewhere, or some
amount in between. It is impossible to predict with any precision the exact
amount of time Ms. Meding will actually be required to spend to locate a
suitable target company. Ms. Meding estimates that the business plan of the
Company can be
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implemented by devoting approximately 10 to 25 hours per month over the course
of several months but such figure cannot be stated with precision.
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in a business entity which desires
to seek the perceived advantages of a corporation which has a class of
securities registered under the Exchange Act. The Company will not restrict its
search to any specific business, industry, or geographical location and the
Company may participate in a business venture of virtually any kind or nature.
Management anticipates that it will be able to participate in only one potential
business venture because the Company has nominal assets and limited financial
resources. See PART F/S, "FINANCIAL STATEMENTS." This lack of diversification
should be considered a substantial risk to the shareholders of the Company
because it will not permit the Company to offset potential losses from one
venture against gains from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Management believes
(but has not conducted any research to confirm) that there are business entities
seeking the perceived benefits of a company having a class of securities
registered under the exchange act. Such perceived benefits may include
facilitating or improving the terms on which additional equity financing may be
sought, providing liquidity for incentive stock options or similar benefits to
key employees, increasing the opportunity to use securities for acquisitions,
providing liquidity for shareholders and other factors. Business opportunities
may be available in many different industries and at various stages of
development, all of which will make the task of comparative investigation and
analysis of such business opportunities difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business entities with any cash or other assets. However,
management believes the Company will be able to offer owners of acquisition
candidates the opportunity to acquire a controlling ownership interest in a
reporting company without incurring the cost and time required to conduct an
initial public offering. Management has not conducted market research and is not
aware of statistical data to support the perceived benefits of a business
combination for the owners of a target company.
The analysis of new business opportunities will be undertaken by, or
under the supervision of an officer and director of the Company who is not a
professional business analyst. In analyzing prospective business opportunities,
management may consider such matters as the available technical, financial and
managerial resources; working capital and other financial requirements; history
of operations, if any; prospects for the future; nature of present and
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expected competition; the quality and experience of management services which
may be available and the depth of that management; the potential for further
research, development, or exploration; specific risk factors not now foreseeable
but which then may be anticipated to impact the proposed activities of the
Company; the potential for growth or expansion; the potential for profit; the
perceived public recognition or acceptance of products, services, or trades;
name identification; and other relevant factors. This discussion of the proposed
criteria is not meant to be restrictive of the Company's virtually unlimited
discretion to search for and enter into potential business opportunities.
The Company is subject to all of the reporting requirements included in
the Exchange Act. Included in these requirements is the duty of the Company to
file audited financial statements as part of or within 60 days following the due
date for filing its Form 8-K which is required to be filed with the Securities
and Exchange Commission within 15 days following the completion of the business
combination. The Company intends to acquire or merge with a company for which
audited financial statements are available or for which it believes audited
financial statements can be obtained within the required period of time. The
Company may reserve the right in the documents for the business combination to
void the transaction if the audited financial statements are not timely
available or if the audited financial statements provided do not conform to the
representations made by the target company.
The Company will not restrict its search for any specific kind of
business entities, but may acquire a venture which is in its preliminary or
development stage, which is already in operation, or in essentially any stage of
its business life. It is impossible to predict at this time the status of any
business in which the Company may become engaged, in that such business may need
to seek additional capital, may desire to have its shares publicly traded, or
may seek other perceived advantages which the Company may offer.
Following a business combination the Company may benefit from the
services of others in regard to accounting, legal services, underwritings and
corporate public relations. If requested by a target company, management may
recommend one or more underwriters, financial advisors, attorneys, accountants,
public relations firms or other consultants to provide such services.
A potential target company may have an agreement with a consultant or
advisor providing that services of the consultant or advisor be continued after
any business combination. Additionally, a target company may be presented to the
Company only on the condition that the services of a consultant or advisor be
continued after a merger or acquisition. Such preexisting agreements of target
companies for the continuation of the services of attorneys, accountants,
advisors or consultants could be a factor in the selection of a target company.
TERMS OF A BUSINESS COMBINATION
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. On the
consummation of a transaction, it is likely that the present management and
shareholders of the Company will no longer be in control of the
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Company. In addition, it is likely that the Company's officer and director will,
as part of the terms of the acquisition transaction, resign and be replaced by
one or more new officers and directors.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, it will be undertaken
by the surviving entity after the Company has entered into an agreement for a
business combination or has consummated a business combination and the Company
is no longer considered a blank check company. The issuance of additional
securities and their potential sale into any trading market which may develop in
the Company's securities may depress the market value of the Company's
securities in the future if such a market develops, of which there is no
assurance.
While the terms of a business transaction to which the Company may be a
party cannot be predicted, it is expected that the parties to the business
transaction will desire to avoid the creation of a taxable event and thereby
structure the acquisition in a tax-free reorganization under Sections 351 or 368
of the Internal Revenue Code of 1986, as amended.
With respect to negotiations with a target company, management expects
to focus on the percentage of the Company which target company shareholders
would acquire in exchange for their shareholdings in the target company.
Depending upon, among other things, the target company's assets and liabilities,
the Company's shareholders will in all likelihood hold a substantially lesser
percentage ownership interest in the Company following any merger or
acquisition. The percentage of ownership may be subject to significant reduction
in the event the Company acquires a target company with substantial assets. Any
merger or acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the Company's
shareholders at such time.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require certain
representations and warranties of the parties thereto, will specify certain
events of default, will detail the terms of closing and the conditions which
must be satisfied by the parties prior to and after such closing and will
include miscellaneous other terms.
Capital Advisory Partners, LLC will pay all expenses in regard to its
search for a suitable target company. The Company does not anticipate expending
funds itself for locating a target company. Patricia A. Meding, the sole officer
and director of the Company, will provide her services without charge or
repayment by the Company. To date, Capital Advisory Partners, LLC has incurred
expenses on behalf of the Company aggregating approximately $50,000, including
incorporation and accounting expenses. The Company will not borrow any funds to
make any payments to the Company's management, its affiliates or associates.
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The Board of Directors has passed a resolution which contains a policy
that the Company will not seek a business combination with any entity in which
the Company's officer, director, shareholders or any affiliate or associate
serves as an officer or director or holds any ownership interest.
UNDERTAKINGS AND UNDERSTANDINGS REQUIRED OF TARGET COMPANIES
As part of a business combination agreement, the Company intends to
obtain certain representations and warranties from a target company as to its
conduct following the business combination. Such representations and warranties
may include (i) the agreement of the target company to make all necessary
filings and to take all other steps necessary to remain a reporting company
under the Exchange Act (ii) imposing certain restrictions on the timing and
amount of the issuance of additional free-trading stock, including stock
registered on Form S-8 and (iii) giving assurances of ongoing compliance with
the Securities Act, the Exchange Act, the General Rules and Regulations of the
Securities and Exchange Commission, and other applicable laws, rules and
regulations.
A prospective target company should be aware that the market price and
volume of its securities, when and if listed for secondary trading, may depend
in great measure upon the willingness and efforts of successor management to
encourage interest in the Company within the United States financial community.
The Company does not have the market support of an underwriter that would
normally follow a public offering of its securities. Initial market makers are
likely to simply post bid and asked prices and are unlikely to take positions in
the Company's securities for their own account or customers without active
encouragement and a basis for doing so. In addition, certain market makers may
take short positions in the Company's securities, which may result in a
significant pressure on their market price. The Company may consider the ability
and commitment of a target company to actively encourage interest in its
securities following a business combination in deciding whether to enter into a
transaction with such company.
A business combination with the Company separates the process of
becoming a public company from the raising of investment capital. As a result, a
business combination with the Company normally will not be a beneficial
transaction for a target company whose primary reason for becoming a public
company is the immediate infusion of capital. The Company may require assurances
from the target company that it has or that it has a reasonable belief that it
will have sufficient sources of capital to continue operations following the
business combination. However, it is possible that a target company may give
such assurances in error, or that the basis for such belief may change as a
result of circumstances beyond the control of the target company.
Prior to completion of a business combination, the Company will
generally require that it be provided with written materials regarding the
target company containing such items as a description of products, services and
company history; management resumes; financial information; available
projections, with related assumptions upon which they are based; an explanation
of proprietary products and services; evidence of existing patents, trademarks,
or service marks, or rights thereto; present and proposed forms of compensation
to management; a
<PAGE>
description of transactions between such company and its affiliates during
relevant periods; a description of present and required facilities; an analysis
of risks and competitive conditions; a financial plan of operation and estimated
capital requirements; audited financial statements, or if they are not
available, unaudited financial statements, together with reasonable assurances
that audited financial statements would be able to be produced within a
reasonable period of time not to exceed 75 days following completion of a
business combination; and other information deemed relevant.
COMPETITION
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's combined extremely limited financial resources
and limited management availability, the Company will continue to be at a
significant competitive disadvantage compared to the Company's competitors.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to
acquire any properties. The Company currently uses the offices of management at
no cost to the Company. Management has agreed to continue this arrangement until
the Company completes an acquisition or merger.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth each person known by the Company to be the
beneficial owner of five percent or more of the Company's Common Stock, all
directors individually and all directors and officers of the Company as a group.
Except as noted, each person has sole voting and investment power with respect
to the shares shown.
<TABLE>
<CAPTION>
Name and Address Amount of Beneficial Percentage
of Beneficial Owner Ownership of Class
- ------------------- -------------------------- ----------
<S> <C> <C>
Capital Advisory Partners, LLC (1) 800,000 shares 20%
50 Broadway, Suite 2300
New York, New York
Kilkenny Group, LLC 800,000 shares 20%
420 East 79th Street
New York, NY 10021
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Rathgar LLC 800,000 shares 20%
215 Forest Haven Drive
Slingerlands, NY 12159
Finglass, LLC 800,000 shares 20%
2535 Bethany Church Road
Alpharetta, GA 30004
Monkstown LLC 800,000 shares 20%
404 Crabapple Springs Court
Woodstock, GA 3-188
All Executive Officers
and Directors as a Group (1 Person) 800,000 shares 20%
</TABLE>
(1) Patricia A. Meding is the controlling shareholder and sole director
and officer of Capital Advisory Partners, LLC. Capital Advisory Partners, LLC
has agreed to provide certain assistance to the Company in locating potential
target companies, and to pay all costs of the Company until a business
combination, without reimbursement. See "PLAN OF OPERATIONS GENERAL BUSINESS
PLAN". As the controlling shareholder, sole director and officer of Capital
Advisory Partners, LLC, Ms. Meding is deemed to be the beneficial owner of the
common stock of the Company owned by Capital Advisory Partners, LLC.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The Company has one Director and Officer as follows:
Name Age Positions and Offices Held
Patricia A. Meding 52 President, Secretary, Director
There are no agreements or understandings for the officer or director
to resign at the request of another person and the above-named officer and
director is not acting on behalf of nor will she act at the direction of any
other person.
Set forth below are all positions and offices held by Ms. Meding with
the Company held, during the period which she has served as such, and her
business experience at least during the last five years:
Ms. Meding has been a Director of the Company since April 11, 2000.
Since 1986, Ms. Meding has been Chairman and a Director of MarketView Financial
Group, Inc., a privately-held merchant/investment banking firm, and its
predecessor company, Charles W. McLaughlin, Inc. Ms. Meding is a co-founder,
principal and Chairman of Forte Communications, Inc., a full-service media
consulting company founded in 1991. Ms. Meding is a co-founder, officer and
director of Capital Advisory Partners, LLC, a privately-held, Atlanta-based
venture capital firm organized in January 1999. Ms. Meding is a co-founder,
officer and director of Capstone Financial Management, LLC, a privately-held,
Atlanta based full-service financial management firm organized in May 1999. From
1990 to 1994, she was the founder of Meding Associates, Inc., which provided
consulting services primarily to American Diversified Enterprises, Inc., a
privately-held, family-owned company. Ms. Meding graduated from Marymount
Manhattan College with B.A. in 1975 and graduated from New York University
Bellevue School of Nursing in 1968.
<PAGE>
CURRENT BLANK CHECK COMPANIES
Patricia A. Meding, the president of the Company, is currently involved
with other blank check companies, and is involved in creating additional
companies similar to this one. The initial business purpose of each of these
companies was or is to engage in a business combination with an unidentified
company or companies and each was or will be classified as a blank check company
until completion of a business combination.
Target companies will be located for the Company and other identical
blank check companies in chronological order of the date of formation of such
blank check companies or, in the case of blank check companies formed on the
same date, alphabetically. However, certain blank check companies may differ
from the Company in certain items such as place of incorporation, number of
shares and shareholders, working capital, types of authorized securities,
preference of a certain blank check company name by management of the target
company, or other items. It may be that a target company may be more suitable
for or may prefer a certain blank check company formed after the Company. In
such case, a business combination might be negotiated on behalf of the more
suitable or preferred blank check company regardless of date of formation.
The following chart summarizes certain information concerning blank
check companies with which Ms. Meding is or has been involved which will file or
has filed a registration statement on Form 10-SB. In most instances that a
business combination is transacted with one of these companies, it is required
to file a Current Report on Form 8-K describing the transaction. Reference is
made to the Form 8-K filed for any company listed below for detailed information
concerning the business combination entered into by that company.
<TABLE>
<CAPTION>
Registration
Form/Effective
Date/File
Corporation Number Status
<S> <C> <C>
Blue Capital Associates, Inc.(1) Form 10-SB Has not entered into an
Pending; to be assigned agreement for a business
combination
Castle Hill Associates, Inc.(1) Form 10-SB Has not entered into an
Pending; to be assigned agreement for a business
combination
DLD Group, Inc.(1) Form 10-SB Has not entered into an
Pending; to be assigned agreement for a business
combination
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Grand Enterprises, Inc.(1) Form 10-SB Has not entered into an
Pending; to be assigned agreement for a business
combination
</TABLE>
(1) Patricia A. Meding is the sole officer and director, and is also deemed to
be a beneficial shareholder.
RECENT TRANSACTIONS BY BLANK CHECK COMPANIES
Not applicable.
CONFLICTS OF INTEREST
Patricia A. Meding, the Company's sole officer and director, has
organized and expects to organize other companies of a similar nature and with a
similar purpose as the Company. Consequently, there are potential inherent
conflicts of interest in acting as an officer and director of the Company. In
addition, insofar as Ms. Meding is engaged in other business activities, she may
devote only a portion of her time to the Company's affairs.
A conflict may arise in the event that another blank check company with
which Ms. Meding is affiliated also actively seeks a target company. It is
anticipated that target companies will be located for the Company and other
blank check companies in chronological order of the date of formation of such
blank check companies or, in the case of blank check companies formed on the
same date, alphabetically. However, other blank check companies may differ from
the Company in certain items such as place of incorporation, number of shares
and shareholders, working capital, types of authorized securities, or other
items. It may be that a target company may be more suitable for or may prefer a
certain blank check company formed after the Company. In such case, a business
combination might be negotiated on behalf of the more suitable or preferred
blank check company regardless of date of formation.
Patricia A. Meding is the principal of Capital Advisory Partners, LLC,
a Georgia Limited Liability Company located in Atlanta, Georgia. As such,
demands may be placed on the time of Ms. Meding which will detract from the
amount of time she is able to devote to the Company. Ms. Meding intends to
devote as much time to the activities of the Company as required. However,
should such a conflict arise, there is no assurance that Ms. Meding would not
attend to other matters prior to those of the Company. Ms. Meding estimates that
the business plan of the Company can be implemented in theory by devoting
approximately 10 to 25 hours per month over the course of several months but
such figure cannot be stated with precision.
Ms. Meding is the president, director and a controlling shareholder of
Capital Advisory Partners, LLC, a Georgia Limited Liability Company, which owns
800,0000 shares of the Company's common stock. At the time of a business
combination, some or all of the shares of common stock owned by Capital Advisory
Partners, LLC . Capital Advisory Partners, LLC. may be purchased by the target
company or retired by the Company. The amount of common stock
<PAGE>
sold or continued to be owned by Capital Advisory Partners, LLC cannot be
determined at this time.
The terms of business combination may include such terms as Ms. Meding
remaining a director or officer of the Company. The terms of a business
combination may provide for a payment by cash or otherwise to Capital Advisory
Partners, LLC for the purchase or retirement of all or part of its common stock
of the Company by a target company or for services rendered incident to or
following a business combination. Ms. Meding would directly benefit from such
employment or payment. Such benefits may influence Ms. Meding's choice of a
target company. However, Ms. Meding's beneficial and economic interest in all
blank check companies with which she is currently involved is identical.
The Company will not enter into a business combination, or acquire any
assets of any kind for its securities, in which management of the Company or any
affiliates or associates have any interest, direct or indirect.
There are no binding guidelines or procedures for resolving potential
conflicts of interest. Failure by management to resolve conflicts of interest in
favor of the Company could result in liability of management to the Company.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities
Act of 1933 and the Securities Exchange Act of 1934, management believes the
Company will not be subject to regulation under the Investment Company Act of
1940 insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business combinations
which result in the Company holding passive investment interests in a number of
entities the Company could be subject to regulation under the Investment Company
Act of 1940. In such event, the Company would be required to register as an
investment company and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940. Any violation of such Act would subject the
Company to material adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION.
The Company's officer and director does not receive any compensation for her
services rendered to the Company, has not received such compensation in the
past, and is not accruing any compensation pursuant to any agreement with the
Company. However, the officer and director of the Company anticipates receiving
benefits as a beneficial shareholder of the Company, and as the officer and
director and controlling shareholder of Capital Advisory Partners, LLC. See
"ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS Conflicts
of Interest".
<PAGE>
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Company for the
benefit of its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company consists of 100,000,000
shares of common stock, par value $.0001 per share, of which there are 4,000,000
issued and outstanding and 20,000,000 shares of preferred stock, par value
$.0001 per share, of which none have been designated or issued. The following
statements relating to the capital stock set forth the material terms of the
Company's securities; however, reference is made to the more detailed provisions
of, and such statements are qualified in their entirety by reference to, the
Certificate of Incorporation and the By-laws, copies of which are filed as
exhibits to this registration statement.
COMMON STOCK
Holders of shares of common stock are entitled to one vote for each
share on all matters to be voted on by the stockholders. Holders of common stock
do not have cumulative voting rights. Holders of common stock are entitled to
share ratably in dividends, if any, as may be declared from time to time by the
Board of Directors in its discretion from funds legally available therefor. In
the event of a liquidation, dissolution or winding up of the Company, the
holders of common stock are entitled to share pro rata all assets remaining
after payment in full of all liabilities. All of the outstanding shares of
common stock are fully paid and non-assessable.
Holders of common stock have no preemptive rights to purchase the
Company's common stock. There are no conversion or redemption rights or sinking
fund provisions with respect to the common stock.
PREFERRED STOCK
The Board of Directors is authorized to provide for the issuance of
shares of preferred stock in series and, by filing a certificate pursuant to the
applicable law of Delaware, to establish from time to time the number of shares
to be included in each such series, and to fix the designation, powers,
preferences and rights of the shares of each such series and the qualifications,
limitations or restrictions thereof without any further vote or action by the
shareholders. Any shares of preferred stock so issued would have priority over
the common stock with respect to dividend or liquidation rights. Any future
issuance of preferred stock may have the effect of delaying, deferring or
preventing a change in control of the Company without further action by the
shareholders and may adversely affect the voting and other rights of the holders
of common stock. At present, the Company has no plans to issue any preferred
stock nor adopt any series, preferences or other classification of preferred
stock.
<PAGE>
The issuance of shares of preferred stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of preferred stock might impede
a business combination by including class voting rights that would enable the
holder to block such a transaction, or facilitate a business combination by
including voting rights that would provide a required percentage vote of the
stockholders. In addition, under certain circumstances, the issuance of
preferred stock could adversely affect the voting power of the holders of the
common stock. Although the Board of Directors is required to make any
determination to issue such stock based on its judgment as to the best interests
of the stockholders of the Company, the Board of Directors could act in a manner
that would discourage an acquisition attempt or other transaction that some, or
a majority, of the stockholders might believe to be in their best interests or
in which stockholders might receive a premium for their stock over the then
market price of such stock. The Board of Directors does not at present intend to
seek stockholder approval prior to any issuance of currently authorized stock,
unless otherwise required by law or stock exchange rules. The Company has no
present plans to issue any preferred stock.
DIVIDENDS
Dividends, if any, will be contingent upon the Company's revenues and
earnings, if any, capital requirements and financial conditions. The payment of
dividends, if any, will be within the discretion of the Company's Board of
Directors. The Company presently intends to retain all earnings, if any, for use
in its business operations and accordingly, the Board of Directors does not
anticipate declaring any dividends prior to a business combination.
TRADING OF SECURITIES IN SECONDARY MARKET
The National Securities Market Improvement Act of 1996 limited the
authority of states to impose restrictions upon sales of securities made
pursuant to Sections 4(1) and 4(3) of the Securities Act of companies which file
reports under Sections 13 or 15(d) of the Exchange Act. Upon effectiveness of
this registration statement, the Company will be required to, and will, file
reports under Section 13 of the Exchange Act. As a result, sales of the
Company's common stock in the secondary market by the holders thereof may then
be made pursuant to Section 4(1) of the Securities Act (sales other than by an
issuer, underwriter or broker) without qualification under state securities
acts.
Following a business combination, a target company will normally wish
to cause the Company's common stock to trade in one or more United States
securities markets. The target company may elect to take the steps required for
such admission to quotation following the business combination or at some later
time.
In order to qualify for listing on the Nasdaq SmallCap Market, a
company must have at least (i) net tangible assets of $4,000,000 or market
capitalization of $50,000,000 or net income for two of the last three years of
$750,000; (ii) public float of 1,000,000 shares with a market value of
$5,000,000; (iii) a bid price of $4.00; (iv) three market makers; (v) 300
shareholders and (vi) an operating history of one year or, if less than one
year, $50,000,000 in market
<PAGE>
capitalization. For continued listing on the Nasdaq SmallCap Market, a company
must have at least (i) net tangible assets of $2,000,000 or market
capitalization of $35,000,000 or net income for two of the last three years of
$500,000; (ii) a public float of 500,000 shares with a market value of
$1,000,000; (iii) a bid price of $1.00; (iv) two market makers; and (v) 300
shareholders.
If, after a business combination, the Company does not meet the
qualifications for listing on the Nasdaq SmallCap Market, the Company may apply
for quotation of its securities on the OTC Bulletin Board. In certain cases the
Company may elect to have its securities initially quoted in the "pink sheets"
published by the National Quotation Bureau, Inc.
To have its securities quoted on the OTC Bulletin Board a company must:
(1) be a company that reports its current financial information to the
Securities and Exchange Commission, banking regulators or insurance regulators;
and (2) has at least one market maker who completes and files a Form 211 with
NASD Regulation, Inc.
The OTC Bulletin Board is a dealer-driven quotation service. Unlike the
Nasdaq Stock Market, companies cannot directly apply to be quoted on the OTC
Bulletin Board, only market makers can initiate quotes, and quoted companies do
not have to meet any quantitative financial requirements. Any equity security of
a reporting company not listed on the Nasdaq Stock Market or on a national
securities exchange is eligible.
TRANSFER AGENT
It is anticipated that Continental Stock Transfer, Inc., New York, New
York will act as transfer agent for the common stock of the Company.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(A) MARKET PRICE. There is no trading market for the Company's Common
Stock at present and there has been no trading market to date. There is no
assurance that a trading market will ever develop or, if such a market does
develop, that it will continue.
The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require:
(i) that a broker or dealer approve a person's account for transactions
in penny stocks and
(ii) the broker or dealer receive from the investor a written agreement
to the transaction, setting forth the identity and quantity of the penny stock
to be purchased.
<PAGE>
In order to approve a person's account for transactions in penny
stocks, the broker or dealer must
(i) obtain financial information and investment experience and
objectives of the person; and
(ii) make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prepared by the Commission relating to the
penny stock market, which, in highlight form,
(i) sets forth the basis on which the broker or dealer made the
suitability determination and
(ii) that the broker or dealer received a signed, written agreement
from the investor prior to the transaction. Disclosure also has to be made about
the risks of investing in penny stocks in both public offerings and in secondary
trading, and about commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and the rights
and remedies available to an investor in cases of fraud in penny stock
transactions.
Finally, monthly statements have to be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks.
(B) HOLDERS. There are five holders of the Company's Common Stock. The
issued and outstanding shares of the Company's Common Stock were issued in
accordance with the exemptions from registration afforded by Section 4(2) of the
Securities Act of 1933 and Rule 506 promulgated thereunder.
(C) DIVIDENDS. The Company has not paid any dividends to date, and has
no plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there
are no disagreements with the findings of its accountants.
<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has sold securities which were
not registered as follows:
<TABLE>
<CAPTION>
Date Name Number of Shares Consideration
<S> <C> <C> <C>
5/10/00 Capital Advisory Partners, LLC 800,000 $80.00
5/10/00 Kilkenny Group, LLC 800,000 $80.00
5/10/00 Rathgar LLC 800,000 $80.00
5/10/00 Finglas LLC 800,000 $80.00
5/10/00 Monkstown LLC 800,000 $80.00
</TABLE>
All of the aforesaid sales were made pursuant to Section 4(2) of the
Securities Act of 1933, as amended and Rule 506 promulgated thereunder.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
the personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 (relating to
liability for unauthorized acquisitions or redemptions of, or dividends on,
capital stock) of the General Corporation Law of the State of Delaware, or (iv)
for any transaction from which the director derived an improper personal
benefit. The Company's Certificate of Incorporation contains such a provision.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE
SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC
POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
PART F/S
FINANCIAL STATEMENTS.
<PAGE>
Set forth below are the audited financial statements for the Company
from April 11, 2000 (date of inception) through April 30, 2000. The following
financial statements are attached to this report and filed as a part thereof.
<PAGE>
FREEMAN TECHNOLOGIES CORPORATION
------------
REPORT ON FINANCIAL STATEMENTS
------------
PERIOD FROM APRIL 11, 2000
(DATE OF INCEPTION)
THROUGH APRIL 30, 2000
<PAGE>
FREEMAN TECHNOLOGIES CORPORATION
I N D E X
PAGE
----
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 2
BALANCE SHEET
APRIL 30, 2000 3
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM APRIL 11, 2000 (DATE OF INCEPTION)
THROUGH APRIL 30, 2000 4
STATEMENT OF CASH FLOWS
PERIOD FROM APRIL 11, 2000 (DATE OF INCEPTION)
THROUGH APRIL 30, 2000 5
NOTES TO FINANCIAL STATEMENTS 6-7
* * *
-1-
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Freeman Technologies Corporation
We have audited the accompanying balance sheet of FREEMAN TECHNOLOGIES
CORPORATION as of April 30, 2000, and the related statements of changes in
stockholders' equity and cash flows for the period from April 11, 2000 (date of
inception) through April 30, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Freeman Technologies
Corporation as of April 30, 2000, and its cash flows for the period from April
11, 2000 (date of inception) through April 30, 2000, in conformity with
generally accepted accounting principles.
Roseland, New Jersey
May 4, 2000
-2-
<PAGE>
FREEMAN TECHNOLOGIES CORPORATION
BALANCE SHEET
APRIL 30, 2000
ASSETS
Current assets - cash $400
====
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities $ --
----
Stockholders' equity:
Preferred stock, $.0001 par value; 20,000,000 shares
authorized; none issued --
Common stock, $.0001 par value; 100,000,000 shares
authorized; 4,000,000 issued and outstanding 400
----
Total stockholders' equity 400
----
Total $400
====
See Notes to Financial Statements.
-3-
<PAGE>
FREEMAN TECHNOLOGIES CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM APRIL 11, 2000 (DATE OF INCEPTION)
THROUGH APRIL 30, 2000
Preferred Stock Common Stock
------------------- ----------------
Shares Amount Shares Amount Total
------ ------ ------ ------ -----
Proceeds from issuance of
common stock - $ - 4,000,000 $400 $400
---------- -------- --------- ---- ----
Balance, April 30, 2000 - $ - 4,000,000 $400 $400
========== ======== ========= ==== ====
See Notes to Financial Statements.
-4-
<PAGE>
FREEMAN TECHNOLOGIES CORPORATION
STATEMENT OF CASH FLOWS
PERIOD FROM APRIL 11, 2000 (DATE OF INCEPTION)
THROUGH APRIL 30, 2000
Financing activity - proceeds from sale of common stock $400
Cash, beginning of period --
----
Cash, end of period $400
====
See Notes to Financial Statements.
-5-
<PAGE>
FREEMAN TECHNOLOGIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1 - Operations and business risk factors:
Freeman Technologies Corporation (the "Company") was
incorporated on April 11, 2000 to seek, investigate and, if
such investigation warrants, acquire an interest in a business
entity which desires to seek the perceived advantages of a
corporation which has a class of securities registered under
the Securities Act of 1933. Generally, an issuer who has
registered securities under the Securities Act of 1933 becomes
subject to the periodic and annual reporting requirements of
the Securities Act of 1934 (and is often referred to as a
"reporting company"). The Company will not restrict its search
to any specific business industry or geographical location and
the Company may participate in a business venture of virtually
any kind or nature. Management anticipates that it will be
able to participate in only one potential business venture
because the Company has nominal assets and limited financial
resources. This lack of diversification should be considered a
substantial risk to the stockholders of the Company because it
will not permit the Company to offset potential losses from
one venture against gains from another.
The Company may seek a business opportunity with entities
which have recently commenced operations, or that wish to
utilize the public marketplace in order to raise additional
capital in order to expand into new products or markets,
develop a new product or service or for other corporate
purposes.
The Company anticipates that the selection of a business
opportunity in which to participate will be complex and
extremely risky. Management believes (but has not conducted
any research to confirm) that there are business entities
seeking the perceived benefits of a company having a class of
securities registered under the Securities Act of 1933. Such
perceived benefits may include facilitating or improving the
terms on which additional equity financing may be sought,
providing liquidity for incentive stock options or similar
benefits to key employees, increasing the opportunity to use
securities for acquisitions, providing liquidity for
stockholders and other factors. Business opportunities may be
available in many different industries and at various stages
of development, all of which will make the task of comparative
investigation and analysis of such business opportunities
difficult and complex.
The Company has, and will continue to have, no capital with
which to provide the owners of business entities with any cash
or other assets. However, management believes the Company will
be able to offer owners of acquisition candidates the
opportunity to acquire a controlling ownership interest in a
reporting company without incurring the cost and time required
to conduct an initial public offering. Management has not
conducted market research and is not aware of statistical data
to support the perceived benefits of a business combination
for the owners of a target company.
Note 2 - Summary of significant accounting policies:
Use of estimates:
The preparation of financial statements requires management to
make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could
differ from those estimates.
-6-
<PAGE>
FREEMAN TECHNOLOGIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 2 - Summary of significant accounting policies (concluded):
Concentration of credit risk:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist of cash. Cash balances
are insured by the FDIC up to $100,000 per depositor.
Note 3 - Related party transaction:
The Company has entered into an agreement with Capital
Advisory Partners, LLC ("CAP") to supervise the search for
target companies as potential candidates for a business
combination. CAP owns 800,000 shares of the Company's common
stock. The agreement will continue until such time as the
Company has effected a business combination. CAP has agreed to
pay all expenses of the Company without repayment until such
time as a business combination is effected.
CAP has entered, and anticipates that it will enter, into
agreements with other consultants to assist it in locating a
target company and CAP may share its stock in the Company with
or grant options on such stock to such referring consultants
and may make payment to such consultants from its own
resources. There is no minimum or maximum amount of stock,
options, or cash that CAP may grant or pay to such
consultants. CAP is solely responsible for the costs and
expenses of its activities in seeking a potential target
company, including any agreements with consultants, and the
Company has no obligation to pay any costs incurred or
negotiated by CAP.
CAP anticipates that it may seek to locate a target company
through solicitation. Such solicitation may include newspaper
or magazine advertisements, mailings and other distributions
to law firms, accounting firms, investment bankers, financial
advisors and similar persons, the use of one or more World
Wide Web sites and similar methods. No estimate can be made as
to the number of persons who may be contacted or solicited. To
date CAP has not made any solicitations, does not anticipate
that it will do so, and expects to rely on referrals from
consultants in the business and financial communities for
referrals of potential target companies.
Patricia A. Meding, who is the sole officer and director of
the Company, is the sole officer, director and controlling
stockholder of CAP.
Note 4 - Preferred stock:
Shares of the Company's preferred stock have not been issued
as of April 30, 2000. Under the Company's Articles of
Incorporation, the Board of Directors, within certain
limitations and restrictions, can fix or alter preferred stock
dividend rights, dividend rates, conversion rights, voting
rights and terms of redemption including price and liquidation
preferences. As of April 30, 2000, the Board of Directors has
not yet fixed any terms to the preferred stock.
* * *
-7-
<PAGE>
INDEX TO EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
3.1 Certificate of Incorporation dated April 11, 2000.
3.2 By-Laws
3.3 Amendment Number 1 to the Bylaws
3.4 Specimen stock certificate
10.1 Agreement with Capital Advisory Partners, LLC
10.2 Lock up agreements
27 Financial Data Schedule
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this Registration Statement to be signed on its behalf by
the undersigned thereunto duly authorized.
FREEMAN TECHNOLOGIES CORPORATION
By: /s/ Patricia A. Meding
-----------------------------------------------
Patricia A. Meding, Director and President
May 18, 2000
<PAGE>
CERTIFICATE OF INCORPORATION
OF
FREEMAN TECHNOLOGIES CORPORATION
ARTICLE ONE
Name
The name of the Corporation is Freeman Technologies Corporation
ARTICLE TWO
Duration
The Corporation shall have perpetual existence.
ARTICLE THREE
Purpose
The purpose for which this Corporation is organized is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE FOUR
Shares
The total number of shares of stock which the Corporation shall have
authority to issue is 120,000,000 shares, consisting of 100,000,000 shares of
Common Stock having a par value of $.0001 per share and 20,000,000 shares of
Preferred Stock having a par value of $.0001 per share.
The Board of Directors is authorized to provide for the issuance of the
shares of Preferred Stock in series and, by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each series of
Preferred Stock shall include, but not be limited to, determination of the
following:
<PAGE>
A. The number of shares constituting that series and the distinctive
designation of that series;
B. The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on share of that series;
C. Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
D. Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
E. Whether or not the shares of that series shall be redeemable, and,
if so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
F. Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
G. The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and the
relative rights of priority, if any, of payment of shares of that series; and
H. Any other relative rights, preferences and limitations of that
series.
ARTICLE FIVE
Commencement of Business
The Corporation is authorized to commence business as soon as its
certificate of incorporation has been filed.
ARTICLE SIX
Principal Office and Registered Agent
The post office address of the initial registered office of the
Corporation and the name of its initial registered agent and its business
address is:
<PAGE>
United Corporate Services, Inc.
15 East North Street
Dover, Delaware 19901
Kent County
The initial registered agent is a resident of the State of Delaware.
ARTICLE SEVEN
Incorporator
Stacey R. Woloshin
Bondy & Schloss LLP
6 East 43rd Street, 25th Floor
New York, NY 10017
ARTICLE EIGHT
Pre-Emptive Rights
No Shareholder or other person shall have any pre-emptive rights
whatsoever.
ARTICLE NINE
By-Laws
The initial by-laws shall be adopted by the Shareholders or the Board
of Directors. The power to alter, amend, or repeal the by-laws or adopt new
by-laws is vested in the Board of Directors, subject to repeal or change by
action of the Shareholders.
ARTICLE TEN
Number of Votes
Each share of Common Stock has one vote on each matter on which the
share is entitled to vote.
ARTICLE ELEVEN
Majority Votes
A majority vote of a quorum of Shareholders (consisting of the holders
of a majority of the shares entitled to vote, represented in person or by proxy)
is sufficient for any action which requires the vote or concurrence of
Shareholders, unless otherwise required or permitted by law or the by-laws of
the Corporation.
<PAGE>
ARTICLE TWELVE
Non-Cumulative Voting
Directors shall be elected by majority vote. Cumulative voting shall
not be permitted.
ARTICLE THIRTEEN
Interested Directors, Officers and Securityholders
A. Validity. If Paragraph (B) is satisfied, no contract or other
transaction between the Corporation and any of its directors, officers or
securityholders, or any corporation or firm in which any of them are directly or
indirectly interested, shall be invalid solely because of this relationship or
because of the presence of the director, officer or securityholder at the
meeting of the Board of Directors or committee authorizing the contract or
transaction, or his participation or vote in the meeting or authorization.
B. Disclosure, Approval, Fairness. Paragraph (A) shall apply only if:
(1) The material facts of the relationship or interest of each
such director, officer or security holder are known or disclosed:
(a) to the Board of Directors or the committee and it
nevertheless authorizes or ratifies the contract or transaction by a majority of
the directors present, each such interested director to be counted in
determining whether a quorum is present but not in calculating the majority
necessary to carry the vote; or
(b) to the Shareholders and they nevertheless
authorize or ratify the contract or transaction by a majority of the shares
present, each such interested person to be counted for quorum and voting
purposes; or
(2) the contract or transaction is fair to the Corporation as
of the time it is authorized or ratified by the Board of Directors, the
committee or the Shareholders.
ARTICLE FOURTEEN
Indemnification and Insurance
A. Persons. The Corporation shall indemnify, to the extent provided in
Paragraphs (B), (D) or (F) and to the extent permitted from time to time by law:
(1) any person who is or was director, officer, agent or
employee of the Corporation, and
<PAGE>
(2) any person who serves or served at the Corporation's
request as a director, officer, agent, employee, partner or trustee of another
corporation or of a partnership, joint venture, trust or other enterprise.
B. Extent--Derivative Suits. In case of a suit by or in the right of
the Corporation against a person named in Paragraph (A) by reason of his holding
a position named in Paragraph (A), the Corporation shall indemnify him, if he
satisfies the standard in Paragraph (C), for expenses (including attorney's fees
but excluding amounts paid in settlement) actually and reasonably incurred by
him in connection with the defense or settlement of the suit.
C. Standard--Derivative Suits. In case of a suit by or in the right of
the Corporation, a person named in Paragraph (A) shall be indemnified only if:
(1) he is successful on the merits or otherwise, or (2) he acted in good faith
in the transaction which is the subject of the suit, and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation. However, he shall not be indemnified in respect of any claim, issue
or matter as to which he has been adjudged liable for negligence or misconduct
in the performance of his duty to the Corporation unless (and only to the extent
that) the court in which the suit was brought shall determine, upon application,
that despite the adjudication but in view of all the circumstances, he is fairly
and reasonably entitled to indemnity for such expenses as the court shall deem
proper.
D. Extent--Nonderivative Suits. In case of a suit, action or proceeding
(whether civil, criminal, administrative or investigative), other than a suit by
or in the right of the Corporation against a person named in Paragraph (A) by
reason of his holding a position named in Paragraph (A), the Corporation shall
indemnify him, if he satisfies the standard in Paragraph (E), for amounts
actually and reasonably incurred by him in connection with the defense or
settlement of the suit as:
(1) expenses (including attorneys' fees);
(2) amounts paid in settlement;
(3) judgments; and
(4) fines.
E. Standard--Nonderivative Suits. In case of a nonderivative suit, a
person named in Paragraph (A) shall be indemnified only if:
(1) he is successful on the merits or otherwise, or
(2) he acted in good faith in the transaction which is the subject of
the nonderivative suit, and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Corporation and , with respect to any
criminal action or proceeding, he had no reason to believe his conduct was
unlawful. The termination of a nonderivative suit by judgement, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person failed to satisfy
this Paragraph (E)(2).
<PAGE>
F. Determination That Standard Has Been Met. A determination that the
standard of Paragraph (C) or (E) has been satisfied may be made by a court of
law or equity or the determination may be made by:
(1) a majority of the directors of the Corporation (whether or
not a quorum) who were not parties to the action, suit or proceeding, or
(2) independent legal counsel (appointed by a majority of the
directors of the Corporation, whether or not a quorum, or elected by the
Shareholders of the Corporation) in a written opinion, or
(3) the Shareholders of the Corporation. G. Proration. Anyone
making a determination under Paragraph (F) may determine that a person has met
the standard as to some matters but not as to others, and may reasonably prorate
amounts to be indemnified.
H. Advance Payment. The Corporation may pay in advance any expenses
(including attorney's fees) which may become subject to indemnification under
paragraphs (A) - (G) if: (1) the Board of Directors authorizes the specific
payment and (2) the person receiving the payment undertakes in writing to repay
unless it is ultimately determined that he is entitled to indemnification by the
Corporation under Paragraphs (A) - (G).
I. Nonexclusive. The indemnification provided by Paragraphs (A) - (G)
shall not be exclusive of any other rights to which a person may be entitled by
law or by by-law, agreement, vote of Shareholders or disinterested directors, or
otherwise.
J. Continuation. The indemnification and advance payment provided by
Paragraphs (A) - (H) shall continue as to a person who has ceased to hold a
position named in paragraph (A) and shall inure to his heirs, executors and
administrators.
K. Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who holds or who has held any position named in Paragraph
(A) against any liability incurred by him in any such positions or arising out
of this status as such, whether or not the Corporation would have power to
indemnify him against such liability under Paragraphs (A) - (H).
L. Reports. Indemnification payments, advance payments, and insurance
purchases and payments made under Paragraphs (A) - (K) shall be reported in
writing to the Shareholders of the Corporation with the next notice of annual
meeting, or within six months, whichever is sooner.
M. Amendment of Article. Any changes in the General Corporation Law of
Delaware increasing, decreasing, amending, changing or otherwise effecting the
indemnification of directors, officers, agents, or employees of the Corporation
shall be incorporated by reference in this Article as of the date of such
changes without further action by the Corporation, its Board of Directors, of
Shareholders, it being the intention of this Article that directors, officers,
agents and employees of the Corporation shall be indemnified to the maximum
degree allowed by the
<PAGE>
General Corporation Law of the State of Delaware at all times.
ARTICLE FIFTEEN
Limitation On Director Liability
A. Scope of Limitation. No person, by virtue of being or having been a
director of the Corporation, shall have any personal liability for monetary
damages to the Corporation or any of its Shareholders for any breach of
fiduciary duty except as to the extent provided in Paragraph (B).
B. Extent of Limitation. The limitation provided for in this Article
shall not eliminate or limit the liability of a director to the Corporation or
its Shareholders (i) for any breach of the director's duty of loyalty to the
Corporation or its Shareholders (ii) for any acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law (iii) for
any unlawful payment of dividends or unlawful stock purchases or redemptions in
violation of Section 174 of the General Corporation Law of Delaware or (iv) for
any transaction for which the director derived an improper personal benefit.
IN WITNESS WHEREOF, the incorporator hereunto has executed this
certificate of incorporation on this 11th day of April, 2000.
/s/ Stacey R. Woloshin
------------------------------
Stacey R. Woloshin
<PAGE>
FREEMAN TECHNOLOGIES CORPORATION
BY-LAWS
ARTICLE I
The Stockholders
SECTION 1.1. ANNUAL MEETING. The annual meeting of the stockholders of
Freeman Technologies Corporation. (the "Corporation") shall be held on the third
Thursday in May of each year at 10:30 a.m. local time, or at such other date or
time as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting, for the election of directors and for the
transaction of such other business as may come before the meeting.
SECTION 1.2. SPECIAL MEETINGS. A special meeting of the stockholders
may be called at any time by the written resolution or request of two-thirds or
more of the members of the Board of Directors, the president, or any executive
vice president and shall be called upon the written request of the holders of
two-thirds or more in amount, of each class or series of the capital stock of
the Corporation entitled to vote at such meeting on the matters(s) that are the
subject of the proposed meeting, such written request in each case to specify
the purpose or purposes for which such meeting shall be called, and with respect
to stockholder proposals, shall further comply with the requirements of this
Article.
SECTION 1.3. NOTICE OF MEETINGS. Written notice of each meeting of
stockholders, whether annual or special, stating the date, hour and place where
it is to be held, shall be served either personally or by mail, not less than
fifteen nor more than sixty days before the meeting, upon each stockholder of
record entitled to vote at such meeting, and to any other stockholder to whom
the giving of notice may be required by law. Notice of a special meeting shall
also state the purpose or purposes for which the meeting is called and shall
indicate that it is being issued by, or at the direction of, the person or
persons calling the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle stockholders to receive payment for their stock,
the notice of such meeting shall include a statement of that purpose and to that
effect. If mailed, notice shall be deemed to be delivered when deposited in the
United States mail or with any private express mail service, postage or delivery
fee prepaid, and shall be directed to each such stockholder at his address, as
it appears on the records of the stockholders of the Corporation, unless he
shall have previously filed with the secretary of the Corporation a written
request that notices intended for him be mailed to some other address, in which
case, it shall be mailed to the address designated in such request.
SECTION 1.4. FIXING DATE OF RECORD. (a) In order that the Corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders, or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of
<PAGE>
Directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of,
or to vote at, a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or if notice is waived,
at the close of business on the day next preceding the day on which the meeting
is held. A determination of stockholders of record entitled to notice of, or to
vote at, a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting (to the
extent that such action by written consent is permitted by law, the Certificate
of Incorporation or these By-Laws), the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than ten days after the date upon which the resolution fixing
the record date is adopted by the Board of Directors. If no record date has been
fixed by the Board of Directors, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is required by law, shall be the first
date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation by delivery to its
registered office in its state of incorporation, its principal place of
business, or an officer or agent of the Corporation having custody of the book
in which proceedings of meetings of stockholders are recorded. Delivery made to
the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
law, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the Board of Directors adopts the resolution taking such
prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
SECTION 1.5. INSPECTORS. At each meeting of the stockholders, the polls
shall be opened and closed and the proxies and ballots shall be received and be
taken in charge. All questions touching on the qualification of voters and the
validity of proxies and the acceptance or rejection of votes, shall be decided
by one or more inspectors. Such inspectors shall be appointed by the Board of
Directors before or at the meeting, or, if no such appointment shall have been
made, then by the presiding officer at the meeting. If for any reason any of the
inspectors previously appointed shall fail to attend or refuse or be unable to
serve, inspectors in place of any so failing to attend or refusing or unable to
serve shall be appointed in like manner.
<PAGE>
SECTION 1.6. QUORUM. At any meeting of the stockholders, the holders of
a majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum of the stockholders for all purposes, unless the
representation of a larger number shall be required by law, and, in that case,
the representation of the number so required shall constitute a quorum. If the
holders of the amount of stock necessary to constitute a quorum shall fail to
attend in person or by proxy at the time and place fixed in accordance with
these By-Laws for an annual or special meeting, a majority in interest of the
stockholders present in person or by proxy may adjourn, from time to time,
without notice other than by announcement at the meeting, until holders of the
amount of stock requisite to constitute a quorum shall attend. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 1.7. BUSINESS. The chairman of the Board, if any, the
president, or in his absence the vice-chairman, if any, or an executive vice
president, in the order named, shall call meetings of the stockholders to order,
and shall act as chairman of such meeting; provided, however, that the Board of
Directors or executive committee may appoint any stockholder to act as chairman
of any meeting in the absence of the chairman of the Board. The secretary of the
Corporation shall act as secretary at all meetings of the stockholders, but in
the absence of the secretary at any meeting of the stockholders, the presiding
officer may appoint any person to act as secretary of the meeting.
SECTION 1.8. STOCKHOLDER PROPOSALS. No proposal by a stockholder shall
be presented for vote at a special or annual meeting of stockholders unless such
stockholder shall, not later than the close of business on the fifth day
following the date on which notice of the meeting is first given to
stockholders, provide the Board of Directors or the secretary of the Corporation
with written notice of intention to present a proposal for action at the
forthcoming meeting of stockholders, which notice shall include the name and
address of such stockholder, the number of voting securities that he holds of
record and that he holds beneficially, the text of the proposal to be presented
to the meeting and a statement in support of the proposal. Any stockholder who
was a stockholder of record on the applicable record date may make any other
proposal at an annual meeting or special meeting of stockholders and the same
may be discussed and considered, but unless stated in writing and filed with the
Board of Directors or the secretary prior to the date set forth herein above,
such proposal shall be laid over for action at an adjourned, special, or annual
meeting of the stockholders taking place sixty days or more thereafter. This
provision shall not prevent the consideration and approval or disapproval at the
annual meeting of reports of officers, directors, and committees, but in
connection with such reports, no new business proposed by a stockholder, qua
stockholder, shall be acted upon at such annual meeting unless stated and filed
as herein provided. Notwithstanding any other provision of these By-Laws, the
Corporation shall be under no obligation to include any stockholder proposal in
its proxy statement materials or otherwise present any such proposal to
stockholders at a special or annual meeting of stockholders if the Board of
Directors reasonably believes the proponents thereof have not complied with
Sections 13 or 14 of the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder; nor shall the Corporation be required to
include any stockholder proposal not required to be included in its proxy
materials to stockholders in accordance with any such section, rule or
regulation.
<PAGE>
SECTION 1.9. PROXIES. At all meetings of stockholders, a stockholder
entitled to vote may vote either in person or by proxy executed in writing by
the stockholder or by his duly authorized attorney-in-fact. Such proxy shall be
filed with the secretary before or at the time of the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy.
SECTION 1.10. VOTING BY BALLOT. The votes for directors, and upon the
demand of any stockholder or when required by law, the votes upon any question
before the meeting, shall be by ballot.
SECTION 1.11. VOTING LISTS. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares of stock registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof and may be inspected by any stockholder
who is present.
SECTION 1.12. PLACE OF MEETING. The Board of Directors may designate
any place, either within or without the state of incorporation, as the place of
meeting for any annual meeting or any special meeting called by the Board of
Directors. If no designation is made or if a special meeting is otherwise
called, the place of meeting shall be the principal office of the Corporation.
SECTION 1.13. VOTING OF STOCK OF CERTAIN HOLDERS. Shares of capital
stock of the Corporation standing in the name of another corporation, domestic
or foreign, may be voted by such officer, agent, or proxy as the by-laws of such
corporation may prescribe, or in the absence of such provision, as the board of
directors of such corporation may determine. Shares of capital stock of the
Corporation standing in the name of a deceased person, a minor ward or an
incompetent person may be voted by his administrator, executor, court-appointed
guardian or conservator, either in person or by proxy, without a transfer of
such stock into the name of such administrator, executor, court-appointed
guardian or conservator. Shares of capital stock of the Corporation standing in
the name of a trustee may be voted by him, either in person or by proxy. Shares
of capital stock of the Corporation standing in the name of a receiver may be
voted, either in person or by proxy, by such receiver, and stock held by or
under the control of a receiver may be voted by such receiver without the
transfer thereof into his name if authority to do so is contained in any
appropriate order of the court by which such receiver was appointed. A
stockholder whose stock is pledged shall be entitled to vote such stock, either
in person or by proxy, until the stock has been transferred into the name of the
pledgee, and thereafter the pledgee shall be entitled to vote, either in person
or by proxy, the stock so transferred. Shares of its own capital stock belonging
to this Corporation shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding stock at
any
<PAGE>
given time, but shares of its own stock held by it in a fiduciary capacity may
be voted and shall be counted in determining the total number of outstanding
stock at any given time.
ARTICLE II
Board of Directors
SECTION 2.1. GENERAL POWERS. The business, affairs, and the property of
the Corporation shall be managed and controlled by the Board of Directors (the
"Board"), and, except as otherwise expressly provided by law, the Certificate of
Incorporation or these By-Laws, all of the powers of the Corporation shall be
vested in the Board.
SECTION 2.2. NUMBER OF DIRECTORS. The number of directors which shall
constitute the whole Board shall be not fewer than one nor more than five.
Within the limits above specified, the number of directors shall be determined
by the Board of Directors pursuant to a resolution adopted by a majority of the
directors then in office.
SECTION 2.3. ELECTION, TERM AND REMOVAL. Directors shall be elected at
the annual meeting of stockholders to succeed those directors whose terms have
expired. Each director shall hold office for the term for which elected and
until his or her successor shall be elected and qualified. Directors need not be
stockholders. A director may be removed from office at a meeting expressly
called for that purpose by the vote of not less than a majority of the
outstanding capital stock entitled to vote at an election of directors.
SECTION 2.4. VACANCIES. Vacancies in the Board of Directors, including
vacancies resulting from an increase in the number of directors, may be filled
by the affirmative vote of a majority of the remaining directors then in office,
though less than a quorum; except that vacancies resulting from removal from
office by a vote of the stockholders may be filled by the stockholders at the
same meeting at which such removal occurs provided that the holders of not less
than a majority of the outstanding capital stock of the Corporation (assessed
upon the basis of votes and not on the basis of number of shares) entitled to
vote for the election of directors, voting together as a single class, shall
vote for each replacement director. All directors elected to fill vacancies
shall hold office for a term expiring at the time of the next annual meeting of
stockholders and upon election and qualification of his successor. No decrease
in the number of directors constituting the Board of Directors shall shorten the
term of an incumbent director.
SECTION 2.5. RESIGNATIONS. Any director of the Corporation may resign
at any time by giving written notice to the president or to the secretary of the
Corporation. The resignation of any director shall take effect at the time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 2.6. PLACE OF MEETINGS, ETC. The Board of Directors may hold
its meetings, and may have an office and keep the books of the Corporation
(except as otherwise may be provided for by law), in such place or places in or
outside the state of incorporation as the Board from time to time may determine.
<PAGE>
SECTION 2.7. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held as soon as practicable after adjournment of the annual
meeting of stockholders at such time and place as the Board of Directors may
fix. No notice shall be required for any such regular meeting of the Board.
SECTION 2.8. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be held at places and times fixed by resolution of the Board of
Directors, or upon call of the chairman of the Board, if any, or vice-chairman
of the Board, if any, the president, an executive vice president or two-thirds
of the directors then in office. The secretary or officer performing the
secretary's duties shall give not less than twenty-four hours' notice by letter,
telegraph or telephone (or in person) of all special meetings of the Board of
Directors, provided that notice need not given of the annual meeting or of
regular meetings held at times and places fixed by resolution of the Board.
Meetings may be held at any time without notice if all of the directors are
present, or if those not present waive notice in writing either before or after
the meeting. The notice of meetings of the Board need not state the purpose of
the meeting.
SECTION 2.9. PARTICIPATION BY CONFERENCE TELEPHONE. Members of the
Board of Directors of the Corporation, or any committee thereof, may participate
in a regular or special or any other meeting of the Board or committee by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
SECTION 2.10. ACTION BY WRITTEN CONSENT. Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if prior or subsequent to such
action all the members of the Board or such committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of the proceedings of the Board or committee.
SECTION 2.11. QUORUM. A majority of the total number of directors then
in office shall constitute a quorum for the transaction of business; but if at
any meeting of the Board there be less than a quorum present, a majority of
those present may adjourn the meeting from time to time.
SECTION 2.12. BUSINESS. Business shall be transacted at meetings of the
Board of Directors in such order as the Board may determine. At all meetings of
the Board of Directors, the chairman of the Board, if any, the president, or in
his absence the vice-chairman, if any, or an executive vice president, in the
order named, shall preside.
SECTION 2.13. INTEREST OF DIRECTORS IN CONTRACTS. (a) No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of the Corporation's
directors or officers, are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board or
committee which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if: (1) The
<PAGE>
material facts as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of Directors or the
committee, and the Board or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or (2)
The material facts as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the stockholders; or (3) The contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified, by the
Board of Directors, a committee of the Board of Directors or the stockholders.
(b) Interested directors may be counted in determining the presence of a quorum
at a meeting of the Board of Directors or of a committee which authorizes the
contract or transaction.
SECTION 2.14. COMPENSATION OF DIRECTORS. Each director of the
Corporation who is not a salaried officer or employee of the Corporation, or of
a subsidiary of the Corporation, shall receive such allowances for serving as a
director and such fees for attendance at meetings of the Board of Directors or
the executive committee or any other committee appointed by the Board as the
Board may from time to time determine.
SECTION 2.15. LOANS TO OFFICERS OR EMPLOYEES. The Board of Directors
may lend money to, guarantee any obligation of, or otherwise assist, any officer
or other employee of the Corporation or of any subsidiary, whether or not such
officer or employee is also a director of the Corporation, whenever, in the
judgment of the directors, such loan, guarantee, or assistance may reasonably be
expected to benefit the Corporation; provided, however, that any such loan,
guarantee, or other assistance given to an officer or employee who is also a
director of the Corporation must be authorized by a majority of the entire Board
of Directors. Any such loan, guarantee, or other assistance may be made with or
without interest and may be unsecured or secured in such manner as the Board of
Directors shall approve, including, but not limited to, a pledge of shares of
the Corporation, and may be made upon such other terms and conditions as the
Board of Directors may determine.
SECTION 2.16. NOMINATION. Subject to the rights of holders of any class
or series of stock having a preference over the common stock as to dividends or
upon liquidation, nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote in the election of
directors generally. However, any stockholder entitled to vote in the election
of directors generally may nominate one or more persons for election as
directors at a meeting only if written notice of such stockholder's intent to
make such nomination or nominations has been given, either by personal delivery
or by United States mail, postage prepaid, to the secretary of the Corporation
not later than (i) with respect to an election to be held at an annual meeting
of stockholders, the close of business on the last day of the eighth month after
the immediately preceding annual meeting of stockholders, and (ii) with respect
to an election to be held at a special meeting of stockholders for the election
of directors, the close of business on the fifth day following the date on which
notice of such meeting is first given to stockholders. Each such notice shall
set forth: (a) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that the stockholder is a holder of record of stock of the Corporation entitled
to vote at such
<PAGE>
meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission, had the nominee been nominated, or
intended to be nominated, by the Board of Directors, and; (e) the consent of
each nominee to serve as a director of the Corporation if so elected. The
presiding officer at the meeting may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.
ARTICLE III Committees SECTION 3.1. COMMITTEES. The Board of Directors,
by resolution adopted by a majority of the number of directors then fixed by
these By-Laws or resolution thereto, may establish such standing or special
committees of the Board as it may deem advisable, and the members, terms, and
authority of such committees shall be set forth in the resolutions establishing
such committee.
SECTION 3.2. EXECUTIVE COMMITTEE NUMBER AND TERM OF OFFICE. The
Board of Directors may, at any meeting, by majority vote of the Board of
Directors, elect from the directors an executive committee. The executive
committee shall consist of such number of members as may be fixed from time to
time by resolution of the Board of Directors. The Board of Directors may
designate a chairman of the committee who shall preside at all meetings thereof,
and the committee shall designate a member thereof to preside in the absence of
the chairman.
SECTION 3.3. EXECUTIVE COMMITTEE POWERS. The executive committee may,
while the Board of Directors is not in session, exercise all or any of the
powers of the Board of Directors in all cases in which specific directions shall
not have been given by the Board of Directors; except that the executive
committee shall not have the power or authority of the Board of Directors to (i)
amend the Certificate of Incorporation or the By-Laws of the Corporation, (ii)
fill vacancies on the Board of Directors, (iii) adopt an agreement or
certification of ownership, merger or consolidation, (iv) recommend to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, or a dissolution of the Corporation or a
revocation of a dissolution, (v) declare a dividend, or (vi) authorize the
issuance of stock.
SECTION 3.4. EXECUTIVE COMMITTEE MEETINGS. Regular and special meetings
of the executive committee may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-Laws for regular and special meetings of the Board of Directors. Special
meetings of the executive committee may be called by any member thereof. Unless
otherwise indicated in the notice thereof, any and all business may be
transacted at a special or regular meeting of the executive meeting if a quorum
is present. At any meeting at which every member of the executive committee
shall be present, in person or by telephone, even though without any notice, any
business may be transacted. All action by the executive committee shall be
reported to the Board of Directors at its meeting next succeeding such action.
<PAGE>
The executive committee shall fix its own rules of procedure, and shall meet
where and as provided by such rules or by resolution of the Board of Directors,
but in every case the presence of a majority of the total number of members of
the executive committee shall be necessary to constitute a quorum. In every
case, the affirmative vote of a quorum shall be necessary for the adoption of
any resolution.
SECTION 3.5. EXECUTIVE COMMITTEE VACANCIES. The Board of Directors, by
majority vote of the Board of Directors then in office, shall fill vacancies in
the executive committee by election from the directors.
ARTICLE IV
The Officers
SECTION 4.1. NUMBER AND TERM OF OFFICE. The officers of the Corporation
shall consist of, as the Board of Directors may determine and appoint from time
to time, a chief executive officer, a president, one or more executive
vice-presidents, a secretary, a treasurer, a controller, and/or such other
officers as may from time to time be elected or appointed by the Board of
Directors, including such additional vice-presidents with such designations, if
any, as may be determined by the Board of Directors and such assistant
secretaries and assistant treasurers. In addition, the Board of Directors may
elect a chairman of the Board and may also elect a vice-chairman as officers of
the Corporation. Any two or more offices may be held by the same person. In its
discretion, the Board of Directors may leave unfilled any office except as may
be required by law. The officers of the Corporation shall be elected or
appointed from time to time by the Board of Directors. Each officer shall hold
office until his successor shall have been duly elected or appointed or until
his death or until he shall resign or shall have been removed by the Board of
Directors. Each of the salaried officers of the Corporation shall devote his
entire time, skill and energy to the business of the Corporation, unless the
contrary is expressly consented to by the Board of Directors or the executive
committee.
SECTION 4.2. REMOVAL. Any officer may be removed by the Board of
Directors whenever, in its judgment, the best interests of the Corporation would
be served thereby.
SECTION 4.3. THE CHAIRMAN OF THE BOARD. The chairman of the Board, if
any, shall preside at all meetings of stockholders and of the Board of Directors
and shall have such other authority and perform such other duties as are
prescribed by law, by these By-Laws and by the Board of Directors. The Board of
Directors may designate the chairman of the Board as chief executive officer, in
which case he shall have such authority and perform such duties as are
prescribed by these By-Laws and the Board of Directors for the chief executive
officer.
SECTION 4.4. THE VICE-CHAIRMAN. The vice-chairman, if any, shall have
such authority and perform such other duties as are prescribed by these By-Laws
and by the Board of Directors. In the absence or inability to act of the
chairman of the Board and the president, he shall preside at the meetings of the
stockholders and of the Board of Directors and shall have and exercise all of
the powers and duties of the chairman of the Board. The Board of Directors may
<PAGE>
designate the vice-chairman as chief executive officer, in which case he shall
have such authority and perform such duties as are prescribed by these By-Laws
and the Board of Directors for the chief executive officer.
SECTION 4.5. THE PRESIDENT. The president shall have such authority and
perform such duties as are prescribed by law, by these By-Laws, by the Board of
Directors and by the chief executive officer (if the president is not the chief
executive officer). The president, if there is no chairman of the Board, or in
the absence or the inability to act of the chairman of the Board, shall preside
at all meetings of stockholders and of the Board of Directors. Unless the Board
of Directors designates the chairman of the Board or the vice-chairman as chief
executive officer, the president shall be the chief executive officer, in which
case he shall have such authority and perform such duties as are prescribed by
these By-Laws and the Board of Directors for the chief executive officer.
SECTION 4.6. THE CHIEF EXECUTIVE OFFICER. Unless the Board of Directors
designates the chairman of the Board or the vice-chairman as chief executive
officer, the president shall be the chief executive officer. The chief executive
officer of the Corporation shall have, subject to the supervision and direction
of the Board of Directors, general supervision of the business, property and
affairs of the Corporation, including the power to appoint and discharge agents
and employees, and the powers vested in him by the Board of Directors, by law or
by these By-Laws or which usually attach or pertain to such office.
SECTION 4.7. THE EXECUTIVE VICE-PRESIDENTS. In the absence of the
chairman of the Board, if any, the president and the vice-chairman, if any, or
in the event of their inability or refusal to act, the executive vice-president
(or in the event there is more than one executive vice- president, the executive
vice-presidents in the order designated, or in the absence of any designation,
then in the order of their election) shall perform the duties of the chairman of
the Board, of the president and of the vice-chairman, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the chairman
of the Board, the president and the vice- chairman. Any executive vice-president
may sign, with the secretary or an authorized assistant secretary, certificates
for stock of the Corporation and shall perform such other duties as from time to
time may be assigned to him by the chairman of the Board, the president, the
vice- chairman, the Board of Directors or these By-Laws.
SECTION 4.8. THE VICE-PRESIDENTS. The vice-presidents, if any, shall
perform such duties as may be assigned to them from time to time by the chairman
of the Board, the president, the vice-chairman, the Board of Directors, or these
By-Laws.
SECTION 4.9. THE TREASURER. Subject to the direction of chief executive
officer and the Board of Directors, the treasurer shall have charge and custody
of all the funds and securities of the Corporation; when necessary or proper he
shall endorse for collection, or cause to be endorsed, on behalf of the
Corporation, checks, notes and other obligations, and shall cause the deposit of
the same to the credit of the Corporation in such bank or banks or depositary as
the Board of Directors may designate or as the Board of Directors by resolution
may authorize; he shall sign all receipts and vouchers for payments made to the
Corporation other than routine
<PAGE>
receipts and vouchers, the signing of which he may delegate; he shall sign all
checks made by the Corporation (provided, however, that the Board of Directors
may authorize and prescribe by resolution the manner in which checks drawn on
banks or depositories shall be signed, including the use of facsimile
signatures, and the manner in which officers, agents or employees shall be
authorized to sign); unless otherwise provided by resolution of the Board of
Directors, he shall sign with an officer-director all bills of exchange and
promissory notes of the Corporation; whenever required by the Board of
Directors, he shall render a statement of his cash account; he shall enter
regularly full and accurate account of the Corporation in books of the
Corporation to be kept by him for that purpose; he shall, at all reasonable
times, exhibit his books and accounts to any director of the Corporation upon
application at his office during business hours; and he shall perform all acts
incident to the position of treasurer. If required by the Board of Directors,
the treasurer shall give a bond for the faithful discharge of his duties in such
sum and with such sure ties as the Board of Directors may require.
SECTION 4.10. THE SECRETARY. The secretary shall keep the minutes of
all meetings of the Board of Directors, the minutes of all meetings of the
stockholders and (unless otherwise directed by the Board of Directors) the
minutes of all committees, in books provided for that purpose; he shall attend
to the giving and serving of all notices of the Corporation; he may sign with an
officer-director or any other duly authorized person, in the name of the
Corporation, all contracts authorized by the Board of Directors or by the
executive committee, and, when so ordered by the Board of Directors or the
executive committee, he shall affix the seal of the Corporation thereto; he may
sign with the president or an executive vice-president all certificates of
shares of the capital stock; he shall have charge of the certificate books,
transfer books and stock ledgers, and such other books and papers as the Board
of Directors or the executive committee may direct, all of which shall, at all
reasonable times, be open to the examination of any director, upon application
at the secretary's office during business hours; and he shall in general perform
all the duties incident to the office of the secretary, subject to the control
of the chief executive officer and the Board of Directors.
SECTION 4.11. THE CONTROLLER. The controller shall be the chief
accounting officer of the Corporation. Subject to the supervision of the Board
of Directors, the chief executive officer and the treasurer, the controller
shall provide for and maintain adequate records of all assets, liabilities and
transactions of the Corporation, shall see that accurate audits of the
Corporation's affairs are currently and adequately made and shall perform such
other duties as from time to time may be assigned to him.
SECTION 4.12. THE ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers shall respectively, if required by the Board of Directors,
give bonds for the faithful discharge of their duties in such sums and with such
sureties as the Board of Directors may determine. The assistant secretaries as
thereunto authorized by the Board of Directors may sign with the chairman of the
Board, the president, the vice-chairman or an executive vice-president,
certificates for stock of the Corporation, the issue of which shall have been
authorized by a resolution of the Board of Directors. The assistant treasurers
and assistant secretaries, in general, shall perform such duties as shall be
assigned to them by the treasurer or the secretary, respectively, or chief
executive officer, the Board of Directors, or these By-Laws.
<PAGE>
SECTION 4.13. SALARIES. The salaries of the officers shall be fixed
from time to time by the Board of Directors, and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a director of
the Corporation.
SECTION 4.14. VOTING UPON STOCKS. Unless otherwise ordered by the Board
of Directors or by the executive committee, any officer, director or any person
or persons appointed in writing by any of them, shall have full power and
authority in behalf of the Corporation to attend and to act and to vote at any
meetings of stockholders of any corporation in which the Corporation may hold
stock, and at any such meeting shall possess and may exercise any and all the
rights and powers incident to the ownership of such stock, and which, as the
owner thereof, the Corporation might have possessed and exercised if present.
The Board of Directors may confer like powers upon any other person or persons.
ARTICLE V
Contracts and Loans
SECTION 5.1. CONTRACTS. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
SECTION 5.2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
ARTICLE VI
Certificates for Stock and Their Transfer
SECTION 6.1. CERTIFICATES FOR STOCK. Certificates representing stock of
the Corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by the chairman of the Board, the
president, the vice-chairman or an executive vice-president and/or by the
secretary or an authorized assistant secretary and shall be sealed with the seal
of the Corporation. The seal may be a facsimile. If a stock certificate is
countersigned (i) by a transfer agent other than the Corporation or its
employee, or (ii) by a registrar other than the Corporation or its employee, any
other signature on the certificate may be a facsimile. In the event that any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent, or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue. All certificates for stock shall be
consecutively numbered or otherwise identified. The name of the person to whom
the shares of stock represented thereby are issued, with the number of shares of
stock and date of issue, shall be entered on the books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificates shall be
<PAGE>
issued until the former certificate for a like number of shares of stock shall
have been surrendered and canceled, except that, in the event of a lost,
destroyed or mutilated certificate, a new one may be issued therefor upon such
terms and indemnity to the Corporation as the Board of Directors may prescribe.
SECTION 6.2. TRANSFERS OF STOCK. Transfers of stock of the Corporation
shall be made only on the books of the Corporation by the holder of record
thereof or by his legal representative, who shall furnish proper evidence of
authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the secretary of the Corporation, and on
surrender for cancellation of the certificate for such stock. The person in
whose name stock stands on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation.
ARTICLE VII
Fiscal Year
SECTION 7.1. FISCAL YEAR. The fiscal year of the Corporation shall
begin on the first day of January in each year and end on the last day of
December in each year.
ARTICLE VIII
Seal
SECTION 8.1. SEAL. The Board of Directors shall approve a corporate
seal which shall be in the form of a circle and shall have inscribed thereon the
name of the Corporation.
ARTICLE IX
Waiver of Notice
SECTION 9.1. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of these By-Laws or under the provisions of the
Certificate of Incorporation or under the provisions of the corporation law of
the state of incorporation, waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Attendance of
any person at a meeting for which any notice is required to be given under the
provisions of these By-Laws, the Certificate of Incorporation or the corporation
law of the state of incorporation shall constitute a waiver of notice of such
meeting except when the person attends for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE X
Amendments
<PAGE>
SECTION 10.1. AMENDMENTS. These By-Laws may be altered, amended or
repealed and new By-Laws may be adopted at any meeting of the Board of Directors
of the Corporation by the affirmative vote of a majority of the members of the
Board, or by the affirmative vote of a majority of the outstanding capital stock
of the Corporation (assessed upon the basis of votes and not on the basis of
number of shares) entitled to vote generally in the election of directors,
voting together as a single class.
ARTICLE XI
Indemnification
SECTION 11.1. INDEMNIFICATION. The Corporation shall indemnify its
officers, directors, employees and agents to the fullest extent permitted by the
General Corporation Law of Delaware, as amended from time to time.
<PAGE>
AMENDMENT NUMBER 1
TO THE BYLAWS OF
FREEMAN TECHNOLOGIES CORPORATION
FREEMAN TECHNOLOGIES CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), acting pursuant to, and adopted in accordance with, Sections
109(a) and 228 of the General Corporation Law of the State of Delaware and
Section 10.1 of the By-Laws of the Corporation, does hereby amend its bylaws as
follows:
Article VII of the By-laws of FREEMAN TECHNOLOGIES CORPORATION is
hereby amended and replaced in its entirety by substituting in lieu of said
Article the following new Article:
ARTICLE VII
SECTION 7.1 FISCAL YEAR. The fiscal year of the Corporation shall begin
on the first day of May in each year and end on the last day of April in each
year.
IN WITNESS WHEREOF, the Corporation has caused this Amendment to be
signed by its President and attested by its Secretary this twentieth day of
April, 2000.
/s/ Patricia Meding, President
-------------------------------
Patricia Meding
Attest:
/s/ Patricia Meding, Secretary
- -------------------------------
Patricia Meding
<PAGE>
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
NUMBER SHARES
C O
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
FREEMAN TECHNOLOGIES CORPORATION
100,000,000 SHARES COMMON STOCK 20,000,000 SHARES PREFERRED STOCK
PAR VALUE $.0001 EACH PAR VALUE $.0001 EACH
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO ANY SHAREHOLDER WHO SO REQUESTS
THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR
OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS
This is to Certify that SPECIMEN is the owner of
----------------------
- --------------------------------------------------------------------------
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
FREEMAN TECHNOLOGIES CORPORATION
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized Attorney, upon surrender of this Certificate, properly
endorsed.
Witness, the seal of the Corporation and the signatures of its duly authorized
officers.
Dated:
- ------------------------------- -------------------------
SECRETARY/TREASURER PRESIDENT
<PAGE>
AGREEMENT between FREEMAN TECHNOLOGIES CORPORATION ("FTC") and CAPITAL ADVISORY
PARTNERS, LLC ("CAP")
WHEREAS FTC is a development stage company that has no specific
business plan and intends to merge, acquire or otherwise combine with an
unidentified company (the "Business Combination");
WHEREAS CAP assisted in the incorporation of FTC;
WHEREAS CAP is a shareholder of FTC and desires that FTC locate a
suitable target company for a Business Combination;
WHEREAS FTC desires that CAP assist it in locating a suitable target
company for a Business Combination;
NOW THEREFORE, it is agreed:
1.00 ACTIONS BY CAP. CAP agrees to assist in:
1.01 The preparation and filing with the Securities and Exchange
Commission of a registration statement on Form 10-SB for the common stock of
FTC;
1.02 The location and review of potential target companies for a
Business Combination and the introduction of potential candidates to FTC;
1.03 The preparation and filing with the Securities and Exchange
Commission of all required filings under the Securities Exchange Act of 1934
until FTC enters into a Business Combination;
2.00 PAYMENT OF FTC EXPENSES. CAP agrees to pay on behalf of FTC all
corporate, organizational and other costs incurred or accrued by FTC until
effectiveness of a Business Combination. CAP understands and agrees that it will
not be reimbursed for any payments made by it on behalf of FTC.
3.00 INDEPENDENT CONSULTANT. CAP is not now, and shall not be,
authorized to enter into any agreements, contracts or understandings on behalf
of FTC and CAP is not, and shall not be deemed to be, an agent of FTC.
4.00 USE OF OTHER CONSULTANTS. FTC understands and agrees that CAP
intends to work with consultants, brokers, bankers, or others to assist it in
locating business entities suitable for a Business Combination and that CAP may
share with such consultants or others, in its sole discretion, all or any
portion of its stock in FTC and may make payments to such consultants from its
own resources for their services. FTC shall have no responsibility for all or
any portion of such payments.
<PAGE>
5.00 CAP EXPENSES. CAP will bear its own expenses incurred in regard to
its actions under this agreement.
6.00 ARBITRATION. The parties hereby agree that any and all claims
(except only for requests for injunctive or other equitable relief) whether
existing now, in the past or in the future as to which the parties or any
affiliates may be adverse parties, and whether arising out of this agreement or
from any other cause, will be resolved by arbitration before the American
Arbitration Association within the City of New York.
7.00 COVENANT OF FURTHER ASSURANCES. The parties agree to take any
further actions and to execute any further documents which may from time to time
be necessary or appropriate to carry out the purposes of this agreement.
8.00 PRIOR AGREEMENTS. This agreement constitutes the entire agreement
between the parties and memorializes the prior oral agreement between the
parties and all understandings between the parties pursuant to such oral
agreements are recorded herein. The effective date herein is as of the earliest
date of the oral agreement between the parties.
9.00 EFFECTIVE DATE. The effective date of this agreement is as of
April 11, 2000.
IN WITNESS WHEREOF, the parties have approved and executed this
agreement.
FREEMAN TECHNOLOGIES CORPORATION
/s/ Patricia Meding
- -----------------------------------------
Patricia Meding, President
CAPITAL ADVISORY PARTNERS, LLC
/s/ Patricia Meding
- -----------------------------------------
Patricia Meding, Managing Member
<PAGE>
Capital Advisory Partners, LLC
50 Broadway, Suite 2300
New York, New York 10004
May 16, 2000
Freeman Enterprises, Inc.
50 Broadway, Suite 2300
New York, NY 10004
Re: Lock Up Agreement with Freeman Enterprises, Inc.
Gentlemen:
As part of the sale of the shares of Common Stock of Freeman
Enterprises, Inc. (the "Company") to the undersigned, Capital Advisory Partners,
LLC (the "Holder"), the Holder hereby represents, warrants, covenants and
agrees, for the benefit of the Company and any holders of record (the "third
party beneficiaries") of the Company's outstanding securities, including the
Company's Common Stock, $.0001 par value (the "Stock") at the date hereof and
during the pendency of this letter agreement that the Holder will not transfer,
sell, contract to sell, devise, gift, assign, pledge, hypothecate, distribute or
grant any option to purchase or otherwise dispose of, directly or indirectly,
its shares of Stock of the Company owned beneficially or otherwise by the Holder
except in connection with or following completion of a merger, acquisition or
other transaction by the Company resulting in the Company no longer being
classified as a blank check company as defined in the registration statement of
the Company filed on Form 10-SB.
Any attempted sale, transfer or other disposition in violation of this
letter agreement shall be null and void.
The Holder further agrees that the Company (i) may instruct its
transfer agent not to transfer such securities (ii) may provide a copy of this
letter agreement to the Company's transfer agent for the purpose of instructing
the Company's transfer agent to place a legend on the certificate(s) evidencing
the securities subject hereto and disclosing that any transfer, sale, contract
for sale, devise, gift, assignment, pledge or hypothecation of such securities
is subject to the terms of this letter agreement and (iii) may issue
stop-transfer instructions to its transfer agent for the period contemplated by
this letter agreement for such securities.
This letter agreement shall be binding upon the Holder, its agents,
heirs, successors, assigns and beneficiaries.
Any waiver by the Company of any of the terms and conditions of this
letter agreement in any instance must be in writing and must be duly executed by
the Company and the Holder and shall not be deemed or construed to be a waiver
of such term or condition for the future, or of any
<PAGE>
subsequent breach thereof.
The Holder agrees that any breach of this letter agreement will cause
the Company and the third party beneficiaries irreparable damage for which there
is no adequate remedy at law. If there is a reach or threatened breach of this
letter agreement by the Holder, the Holder hereby agrees that the Company and
the third party beneficiaries shall be entitled to the issuance of an immediate
injunction without notice to restrain the breach or threatened breach. The
Holder also agrees that the Company and all third party beneficiaries shall be
entitled to pursue any other remedies for such a breach or threatened breach,
including a claim for money damages.
Agreed and accepted this 16th day of May, 2000.
Capital Advisory Partners, LLC
By: /s/ Patricia A. Meding
-----------------------------------
Patricia A. Meding, Managing Member
<PAGE>
Finglas LLC
2535 Bethany Church Road
Alpharetta, Georgia 30004
May 16, 2000
Freeman Enterprises, Inc.
50 Broadway, Suite 2300
New York, NY 10004
Re: Lock Up Agreement with Freeman Enterprises, Inc.
Gentlemen:
As part of the sale of the shares of Common Stock of Freeman
Enterprises, Inc. (the "Company") to the undersigned, Finglas LLC (the
"Holder"), the Holder hereby represents, warrants, covenants and agrees, for the
benefit of the Company and any holders of record (the "third party
beneficiaries") of the Company's outstanding securities, including the Company's
Common Stock, $.0001 par value (the "Stock") at the date hereof and during the
pendency of this letter agreement that the Holder will not transfer, sell,
contract to sell, devise, gift, assign, pledge, hypothecate, distribute or grant
any option to purchase or otherwise dispose of, directly or indirectly, its
shares of Stock of the Company owned beneficially or otherwise by the Holder
except in connection with or following completion of a merger, acquisition or
other transaction by the Company resulting in the Company no longer being
classified as a blank check company as defined in the registration statement of
the Company filed on Form 10-SB.
Any attempted sale, transfer or other disposition in violation of this
letter agreement shall be null and void.
The Holder further agrees that the Company (i) may instruct its
transfer agent not to transfer such securities (ii) may provide a copy of this
letter agreement to the Company's transfer agent for the purpose of instructing
the Company's transfer agent to place a legend on the certificate(s) evidencing
the securities subject hereto and disclosing that any transfer, sale, contract
for sale, devise, gift, assignment, pledge or hypothecation of such securities
is subject to the terms of this letter agreement and (iii) may issue
stop-transfer instructions to its transfer agent for the period contemplated by
this letter agreement for such securities.
This letter agreement shall be binding upon the Holder, its agents,
heirs, successors, assigns and beneficiaries.
Any waiver by the Company of any of the terms and conditions of this
letter agreement in any instance must be in writing and must be duly executed by
the Company and the Holder and shall not be deemed or construed to be a waiver
of such term or condition for the future, or of any subsequent breach thereof.
<PAGE>
The Holder agrees that any breach of this letter agreement will cause
the Company and the third party beneficiaries irreparable damage for which there
is no adequate remedy at law. If there is a reach or threatened breach of this
letter agreement by the Holder, the Holder hereby agrees that the Company and
the third party beneficiaries shall be entitled to the issuance of an immediate
injunction without notice to restrain the breach or threatened breach. The
Holder also agrees that the Company and all third party beneficiaries shall be
entitled to pursue any other remedies for such a breach or threatened breach,
including a claim for money damages.
Agreed and accepted this 16th day of May, 2000.
Finglas LLC
By: /s/ Irwin Goodman
----------------------------------
Irwin Goodman, Managing Member
<PAGE>
Kilkenny Group LLC
420 E. 79th Street, Apt. 12-d
New York, New York 10021
May 16, 2000
Freeman Enterprises, Inc.
50 Broadway, Suite 2300
New York, NY 10004
Re: Lock Up Agreement with Freeman Enterprises, Inc.
Gentlemen:
As part of the sale of the shares of Common Stock of Freeman
Enterprises, Inc. (the "Company") to the undersigned, Kilkenny Group LLC (the
"Holder"), the Holder hereby represents, warrants, covenants and agrees, for the
benefit of the Company and any holders of record (the "third party
beneficiaries") of the Company's outstanding securities, including the Company's
Common Stock, $.0001 par value (the "Stock") at the date hereof and during the
pendency of this letter agreement that the Holder will not transfer, sell,
contract to sell, devise, gift, assign, pledge, hypothecate, distribute or grant
any option to purchase or otherwise dispose of, directly or indirectly, its
shares of Stock of the Company owned beneficially or otherwise by the Holder
except in connection with or following completion of a merger, acquisition or
other transaction by the Company resulting in the Company no longer being
classified as a blank check company as defined in the registration statement of
the Company filed on Form 10-SB.
Any attempted sale, transfer or other disposition in violation of this
letter agreement shall be null and void.
The Holder further agrees that the Company (i) may instruct its
transfer agent not to transfer such securities (ii) may provide a copy of this
letter agreement to the Company's transfer agent for the purpose of instructing
the Company's transfer agent to place a legend on the certificate(s) evidencing
the securities subject hereto and disclosing that any transfer, sale, contract
for sale, devise, gift, assignment, pledge or hypothecation of such securities
is subject to the terms of this letter agreement and (iii) may issue
stop-transfer instructions to its transfer agent for the period contemplated by
this letter agreement for such securities.
This letter agreement shall be binding upon the Holder, its agents,
heirs, successors, assigns and beneficiaries.
Any waiver by the Company of any of the terms and conditions of this
letter agreement in any instance must be in writing and must be duly executed by
the Company and the Holder and shall not be deemed or construed to be a waiver
of such term or condition for the future, or of any subsequent breach thereof.
<PAGE>
The Holder agrees that any breach of this letter agreement will cause
the Company and the third party beneficiaries irreparable damage for which there
is no adequate remedy at law. If there is a reach or threatened breach of this
letter agreement by the Holder, the Holder hereby agrees that the Company and
the third party beneficiaries shall be entitled to the issuance of an immediate
injunction without notice to restrain the breach or threatened breach. The
Holder also agrees that the Company and all third party beneficiaries shall be
entitled to pursue any other remedies for such a breach or threatened breach,
including a claim for money damages.
Agreed and accepted this 16th day of May, 2000.
Kilkenny Group LLC
By: /s/ Judith Adler
-----------------------------------
Judith Adler, Managing Member
<PAGE>
Monkstown LLC
404 Crabapple Springs Court
Woodstock, Georgia 30188
May 16, 2000
Freeman Enterprises, Inc.
50 Broadway, Suite 2300
New York, NY 10004
Re: Lock Up Agreement with Freeman Enterprises, Inc.
Gentlemen:
As part of the sale of the shares of Common Stock of Freeman
Enterprises, Inc. (the "Company") to the undersigned, Monkstown LLC (the
"Holder"), the Holder hereby represents, warrants, covenants and agrees, for the
benefit of the Company and any holders of record (the "third party
beneficiaries") of the Company's outstanding securities, including the Company's
Common Stock, $.0001 par value (the "Stock") at the date hereof and during the
pendency of this letter agreement that the Holder will not transfer, sell,
contract to sell, devise, gift, assign, pledge, hypothecate, distribute or grant
any option to purchase or otherwise dispose of, directly or indirectly, its
shares of Stock of the Company owned beneficially or otherwise by the Holder
except in connection with or following completion of a merger, acquisition or
other transaction by the Company resulting in the Company no longer being
classified as a blank check company as defined in the registration statement of
the Company filed on Form 10-SB.
Any attempted sale, transfer or other disposition in violation of this
letter agreement shall be null and void.
The Holder further agrees that the Company (i) may instruct its
transfer agent not to transfer such securities (ii) may provide a copy of this
letter agreement to the Company's transfer agent for the purpose of instructing
the Company's transfer agent to place a legend on the certificate(s) evidencing
the securities subject hereto and disclosing that any transfer, sale, contract
for sale, devise, gift, assignment, pledge or hypothecation of such securities
is subject to the terms of this letter agreement and (iii) may issue
stop-transfer instructions to its transfer agent for the period contemplated by
this letter agreement for such securities.
This letter agreement shall be binding upon the Holder, its agents,
heirs, successors, assigns and beneficiaries.
Any waiver by the Company of any of the terms and conditions of this
letter agreement in any instance must be in writing and must be duly executed by
the Company and the Holder and shall not be deemed or construed to be a waiver
of such term or condition for the future, or of any subsequent breach thereof.
<PAGE>
The Holder agrees that any breach of this letter agreement will cause
the Company and the third party beneficiaries irreparable damage for which there
is no adequate remedy at law. If there is a reach or threatened breach of this
letter agreement by the Holder, the Holder hereby agrees that the Company and
the third party beneficiaries shall be entitled to the issuance of an immediate
injunction without notice to restrain the breach or threatened breach. The
Holder also agrees that the Company and all third party beneficiaries shall be
entitled to pursue any other remedies for such a breach or threatened breach,
including a claim for money damages.
Agreed and accepted this 16th day of May, 2000.
Monkstown LLC
By: /s/ Ben Giacchino
---------------------------------
Ben Giacchino, Managing Member
<PAGE>
Rathgar LLC
215 Forest Haven Drive
Slingerlands, New York 12159
May 16, 2000
Freeman Enterprises, Inc.
50 Broadway, Suite 2300
New York, NY 10004
Re: Lock Up Agreement with Freeman Enterprises, Inc.
Gentlemen:
As part of the sale of the shares of Common Stock of Freeman
Enterprises, Inc. (the "Company") to the undersigned, Rathgar LLC (the
"Holder"), the Holder hereby represents, warrants, covenants and agrees, for the
benefit of the Company and any holders of record (the "third party
beneficiaries") of the Company's outstanding securities, including the Company's
Common Stock, $.0001 par value (the "Stock") at the date hereof and during the
pendency of this letter agreement that the Holder will not transfer, sell,
contract to sell, devise, gift, assign, pledge, hypothecate, distribute or grant
any option to purchase or otherwise dispose of, directly or indirectly, its
shares of Stock of the Company owned beneficially or otherwise by the Holder
except in connection with or following completion of a merger, acquisition or
other transaction by the Company resulting in the Company no longer being
classified as a blank check company as defined in the registration statement of
the Company filed on Form 10-SB.
Any attempted sale, transfer or other disposition in violation of this
letter agreement shall be null and void.
The Holder further agrees that the Company (i) may instruct its
transfer agent not to transfer such securities (ii) may provide a copy of this
letter agreement to the Company's transfer agent for the purpose of instructing
the Company's transfer agent to place a legend on the certificate(s) evidencing
the securities subject hereto and disclosing that any transfer, sale, contract
for sale, devise, gift, assignment, pledge or hypothecation of such securities
is subject to the terms of this letter agreement and (iii) may issue
stop-transfer instructions to its transfer agent for the period contemplated by
this letter agreement for such securities.
This letter agreement shall be binding upon the Holder, its agents,
heirs, successors, assigns and beneficiaries.
Any waiver by the Company of any of the terms and conditions of this
letter agreement in any instance must be in writing and must be duly executed by
the Company and the Holder and shall not be deemed or construed to be a waiver
of such term or condition for the future, or of any subsequent breach thereof.
<PAGE>
The Holder agrees that any breach of this letter agreement will cause
the Company and the third party beneficiaries irreparable damage for which there
is no adequate remedy at law. If there is a reach or threatened breach of this
letter agreement by the Holder, the Holder hereby agrees that the Company and
the third party beneficiaries shall be entitled to the issuance of an immediate
injunction without notice to restrain the breach or threatened breach. The
Holder also agrees that the Company and all third party beneficiaries shall be
entitled to pursue any other remedies for such a breach or threatened breach,
including a claim for money damages.
Agreed and accepted this 16th day of May, 2000.
Rathgar LLC
By: /s/ Dr. Stuart Erner
-------------------------------------
Dr. Stuart Erner, Managing Member
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<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> APR-11-2000
<PERIOD-END> APR-30-2000
<CASH> 400
<SECURITIES> 0
<RECEIVABLES> 0
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0
0
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