<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[Mark One]
X Quarterly report under Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934
For the quarterly period ended June 30, 1999
OR
Transition report under Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934
For the transition period from to
Commission File Number 0-18707
TBM HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
Florida 59-2824411
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
136 Main Street, Westport, Connecticut 06880
(Address of principal executive offices) (zip code)
(203) 227-6140
(Registrant's telephone number, including area code)
Specialty Retail Group, Inc., 477 Madison Avenue, 14th Floor,
New York, New York 10022
(Former name, former address and formal fiscal year, if changed
since last report)
Indicate by check mark whether the issuer: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
The number of shares outstanding of the issuer's Common Stock, $.001 par value
per share, as of August 11, 1999, was 2,570,357, excluding 516 contingently
issuable shares held by an escrow agent.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
<PAGE> 2
INDEX
TBM HOLDINGS, INC.
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
as of June 30, 1999, and December 31, 1998............
Consolidated Statements of Operations for the six
months ended June 30, 1999; and twenty-six weeks
ended June 28, 1998...................................
Consolidated Statements of Cash Flows
for the three months ended June 30, 1999 and the
thirteen weeks ended June 28, 1998; and the six
months ended June 30, 1999 and twenty-six weeks
ended June 28, 1998...................................
Notes to Consolidated Financial Statements............
Item 2. Plan of Operation.....................................
Part II. Other Information
Item 2. Changes in Securities.................................
Item 4. Submission of Matters to a Vote of Security Holders...
Item 5. Other Information.....................................
Item 6. Exhibits and Reports on Form 8-K......................
Signature...............................................................
<PAGE> 3
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
TBM HOLDINGS, INC.
(FKA SPECIALTY RETAIL GROUP, INC.)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1999 1998
---------------- ----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 12,121,001 $ 1,652
Prepaid expenses 17,260 -
---------------- ----------------
Total current assets 12,138,261 1,652
FIXED ASSETS
Property and equipment, net - 2,023
OTHER ASSETS
Security deposits 3,300 -
---------------- ----------------
TOTAL ASSETS $ 12,141,561 $ 3,675
================ ================
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 44,414 $ 363,999
Corporation taxes payable 11,827 2,007
Demand loans payable to stockholders - 517,865
---------------- ----------------
Total current liabilities 56,241 883,871
OTHER LIABILITIES
Legal settlement 80,000 80,000
---------------- ----------------
Total liabilities 136,241 963,871
---------------- ----------------
Commitments and contingencies
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock; 15,000,000 shares authorized;
$.001 par value; Series A-1 preferred stock; 10,000,000 shares
authorized; 0 and 2,394,130 shares issued and outstanding - 2,394
Common Stock; 10,000,000 shares authorized; $.001 par value;
2,568,000 and 9,324,738 shares issued and outstanding 2,568 9,325
Additional paid - in capital 24,376,392 11,573,570
Accumulated deficit (12,373,640) (12,369,821)
Treasury stock - 0 and 240,500 common shares, at cost - (175,664)
---------------- ----------------
Total stockholders' equity (deficit) 12,005,320 (960,196)
---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 12,141,561 $ 3,675
================ ================
</TABLE>
<PAGE> 4
TBM HOLDINGS, INC.
(FKA SPECIALTY RETAIL GROUP, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS THIRTEEN SIX MONTHS TWENTY-SIX
ENDED WEEKS ENDED ENDED WEEKS ENDED
JUNE 30, JUNE 28, JUNE 30, JUNE 28,
1999 1998 1999 1998
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
RESULTS OF CONTINUING OPERATIONS:
Selling, general and administrative expenses $ 9,253 - $ 9,253 -
--------------- ---------------- ---------------- ---------------
Loss from operations (9,253) - (9,253) -
Investment income 37,278 37,278
--------------- ---------------- ---------------- ---------------
Income from continuing operations 28,025 - 28,025 -
Loss from discontinued operations 10,592 $ (57,269) (31,844) $ (184,745)
--------------- ---------------- ---------------- ---------------
Net income (loss) $ 38,617 $ (57,269) $ (3,819) $ (184,745)
=============== ================ ================ ===============
Income (loss) per share:
Income from continuing operations $ 0.06 $ - $ 0.12 $ -
Income (loss)from discontinued operations 0.02 (2.60) (0.14) (8.40)
--------------- ---------------- ---------------- ---------------
Net income (loss) $ 0.08 $ (2.60) $ (0.02) $ (8.40)
=============== ================ ================ ===============
Weighted average number of common shares
outstanding 446,333 22,000 234,167 22,000
=============== ================ ================ ===============
</TABLE>
<PAGE> 5
TBM HOLDINGS, INC.
(FKA SPECIALTY RETAIL GROUP, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS TWENTY-SIX
ENDED WEEKS ENDED
JUNE 30, JUNE 28,
1999 1998
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,819) $ (184,745)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 2,023 363
Gain on forgiveness of debt (23,924)
Changes in:
Other current assets (17,260) 22,801
Other assets (3,300) -
Accounts payable (56,577) (1,390)
Corporation taxes payable 9,820 (30,000)
---------------- ----------------
Net cash used in operating activities (93,037) (192,971)
---------------- ----------------
Cash flows from financing activities:
Proceeds from issuance of common stock 12,730,000 -
Costs of issuance of common stock (517,614) -
Loans from stockholders - 168,479
---------------- ----------------
Net cash provided by financing activities 12,212,386 168,479
---------------- ----------------
Net increase (decrease) in cash and cash equivalents 12,119,349 (24,492)
Cash and cash equivalents, beginning of period 1,652 29,416
---------------- ----------------
Cash and cash equivalents, end of period $ 12,121,001 $ 4,924
================ ================
</TABLE>
<PAGE> 6
TBM HOLDINGS, INC.
(FKA SPECIALTY RETAIL GROUP, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1999
NOTE A - BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements of TBM Holdings,
Inc. (collectively, the "Company") (formerly known as Specialty Retail Group,
Inc.) have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to Form
10-QSB.
With respect to the unaudited consolidated financial statements for the six
months ended June 30, 1999 and the twenty-six weeks ended June 28, 1998,
respectively, it is the Company's opinion that all necessary adjustments
(consisting of normal and recurring adjustments) have been included to present a
fair statement of results for the interim periods.
As discussed in Note E, the only current operations of the Company are related
to its plans to acquire a manufacturing business. On June 15, 1999, the Company
effected a 1:412.92 reverse stock split. This split has been given retroactive
effect throughout these financial statements.
These statements should be read in conjunction with the Company's financial
statements included in the Company's Annual Report on Form 10-KSB for the
transition period ended December 31, 1998. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations promulgated by the Securities and Exchange
Commission.
NOTE B - FISCAL YEAR:
The Company previously adopted a 52/53 week fiscal year ending on the Sunday
closest to June 30. Fiscal year June 28, 1998 consisted of 52 weeks. The Company
changed its fiscal year to a twelve month reporting period and its year end to
December 31 resulting in a short period beginning June 29, 1998 and ended
December 31, 1998.
NOTE C - COMMITMENTS AND CONTINGENCIES:
(1) TERMS AND PREFERENCES OF PREFERRED STOCK:
The Series A-1 preferred stock pays no dividends or interest and is not
convertible into common stock. It has a liquidation preference of $.001 per
share, is redeemable at $.001 per share and votes on the basis of one vote per
share with the holders of the common stock, as a single class, on all matters
presented to stockholders. In conjunction with an agreement to bring additional
cash into the Company (See Note E), all preferred stock was contributed to the
capital of the Company and has been returned to the status of authorized, but
unissued, preferred stock.
(2) LEGAL SETTLEMENT - ISSUANCE OF COMMON STOCK:
The Company was one of several defendants in a lawsuit with a former officer,
director and stockholder of the Company's predecessor corporation who alleged,
among other things, breach of contract, fraud, defamation, interference with
stock transfer rights, breach of fiduciary duties by certain former officers of
the Company, conspiracy to defraud, and interference with respect to a
termination payment of $1,400,000 pursuant to an employment agreement with the
Company. In August 1996, the Company settled this litigation without admitting
liability by issuing an aggregate of 1,574 (650,000 pre-split) shares of the
Company's common stock to the plaintiff and his designee. Accordingly, the
Company recorded a non-cash expense of $570,000 which appeared as "Legal
Settlement, non-cash" in the consolidated statements of operations for the 52
weeks ended June 30, 1996. Such non-cash expense was based on the market value
of the Company's common stock at the time of issuance. During the 52 weeks ended
June 29, 1997, the Company recorded an additional expense and liability of
$80,000.
<PAGE> 7
TBM HOLDINGS, INC.
(FKA SPECIALTY RETAIL GROUP, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1999
The Company also agreed to guarantee up to $160,000 for any shortfall from
$650,000 realized upon the sale by the holders of all of the 1,574 shares. The
Company may satisfy the guarantee by a cash payment or issuance to the holders
of an additional 516 common shares currently being held by an escrow agent. Such
shares have been issued, but are not included in the accompanying statements of
changes in capital deficit. The agreement further provides for the Company to
receive 67% of the excess over $650,000, if any, of proceeds received by the
plaintiff and his designee from market sales of the shares.
(3) LEASE COMMITMENTS:
The Company presently has no operating lease commitments. The Company currently
occupies office space on a month to month basis at $1,800 per month. Rent
expense totaled $1,800 for the six months ended June 30, 1999 and $0 for the
twenty-six weeks ended June 28, 1998.
NOTE D - STOCKHOLDERS' EQUITY
On June 15, 1999, the Company finalized an agreement whereby substantially all
of the Company's liabilities were paid, forgiven or converted to equity or stock
purchase options. In conjunction therewith, the Company effected a 1:412.92
reverse stock split (reducing its outstanding shares from 9,084,238 to 22,000),
changed its name from Specialty Retail Group, Inc. to TBM Holdings, Inc.,
dissolved its subsidiaries and revised its corporate articles of incorporation
and by-laws. Also, the Company completed a private placement of 2,546,000
restricted common shares at $5.00 per share for a total of $12,730,000. Expenses
related to the private placement of $517,614 result in net proceeds to the
Company of $12,212,386. It is the Company's plan to purchase a manufacturing
business and use the expertise of the Company's executives and consultants to
improve the operations and value of the business on a long-term basis.
As a result of the private placement, the federal net operating loss
carryforward in any one year will be severely limited in accordance with
Internal Revenue Code Section 382 regarding changes in ownership of more than
50%. As a result, any federal net operating loss carryforwards and the benefits
attributable to them will be insignificant.
<PAGE> 8
Item 2. Plan of Operation
On June 15, 1999, TBM Holdings, Inc., a Florida corporation (the
"Company"), completed a private placement of its Common Stock pursuant to which
the Company issued and sold 2,546,000 shares of Common Stock for aggregate
proceeds to the Company of $12,730,000 (the "Offering"). The Company intends to
use the net proceeds of the Offering to finance future business acquisitions of
one or more manufacturing companies in specifically targeted industries.
Pending an acquisition, the Company has invested the proceeds of the Offering
with Morgan Stanley & Company, as custodian, in short-term securities, money
market instruments and government securities.
Currently, the Company does not have an operating business and,
accordingly, does not have any revenues. The Company is solely engaged in
seeking an underperforming manufacturing company with approximately $50,000,000
to $250,000,000 in sales for possible acquisition. Upon an acquisition, the
Company intends to implement certain growth strategies to strengthen the
operation, performance and competitive position of the acquired company. Once an
initial company is acquired and operations and performance are improved, the
Company intends to acquire other companies in the same industry or complementary
manufacturing industries. As of the date hereof, the Company has not entered
into an agreement with any specific company nor identified any specific
acquisition that is likely to be consummated. No assurance of success with
respect to the Company's efforts to identify and acquire a manufacturing company
can be made.
The Company believes that its available cash, cash equivalents and
liquid investments will satisfy its cash requirements for its operations in the
next twelve months. Upon the identification of an acquisition candidate, the
Company may need to raise additional funds to consummate such acquisition. Until
an acquisition is consummated, the Company does not intend to conduct any
product research or development, purchase any plant or significant equipment or
make any significant changes in the number of employees.
The Company anticipates that until a business combination is completed
with an acquisition candidate, it will not generate revenues other than interest
income. For the current fiscal year, the Company anticipates incurring a loss as
a result of expenses associated with reporting obligations pursuant to the
Securities Exchange Act of 1934, as amended, and expenses associated with
locating and evaluating acquisition candidates.
Statements contained in this Form 10-QSB that are not purely historical
are forward-looking statements and are being provided in reliance upon the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995. All
forward-looking statements are made as of the date hereof and are based on
current management expectations and information available to the Company as of
such date. The Company assumes no obligation to update any forward-looking
statement. It is important to note that actual results could differ materially
from historical results or those contemplated in the forward-looking statements.
Forward-looking statements involve a number of risks and uncertainties and may
include trend information.
<PAGE> 9
PART II
OTHER INFORMATION
Item 2. Changes in Securities
Immediately prior to the closing of the Offering (as defined
below) on June 15, 1999, the Company's sole director authorized, and holders of
a majority of the outstanding voting stock of the Company approved, a
one-for-412.92 reverse stock split pursuant to which the 9,084,238 shares of
Common Stock of the Company issued and outstanding on June 15, 1999, were
combined and converted into 22,000 shares of Common Stock of the Company. The
number of authorized shares of Common Stock was reduced from 100,000,000 to
10,000,000. In addition, all of the Preferred Stock of the Company was returned
to authorized and unissued status. On June 15, 1999, the Company filed an
amendment to its Restated Articles of Incorporation with the Secretary of State
of the State of Florida to effectuate the one-for-412.92 reverse stock split of
the outstanding shares. Each outstanding certificate for shares of Common Stock
of the Company issued and outstanding on June 15, 1999, now represents the
number of shares into which it was converted and combined in the reverse stock
split.
On June 15, 1999, the Company sold 2,546,000 shares of Common
Stock, for $5.00 per share, for aggregate proceeds to the Company of $12,730,000
(the "Offering"). The shares were sold solely to accredited investors in
reliance on the exemption provided by Section 4(2) of the Securities Act of 1933
and Regulation D promulgated thereunder. There were no underwriters involved in
this sale; however, Winslow, Evans & Crocker, Inc. was retained as placement
agent and paid a fee of $30,000.
In connection with the Stock Purchase and Reorganization Agreement
among the Company, Seymour Zises, TBM Consulting Group, Inc. ("TBM Consulting")
and Colt Services, Inc. ("Colt"), the Company issued to TBM Consulting and Colt
and their respective designees, warrants to purchase an aggregate of 20% of the
Company's Common Stock on a fully diluted basis at $5.00 per share. The Company
also issued to Seymour Zises and his designee, warrants to purchase an aggregate
of 1% of the Common Stock on a fully diluted basis at 5.00 per share. The
warrants are exercisable upon the acquisition of an operating company. In
addition, the Company issued to certain creditors who had provided legal
services to the Company, options to purchase an aggregate of 33,000 shares of
Common Stock for $5.00 per share. The options are exercisable at any time, or
from time to time, prior to December 12, 1999.
Item 4. Submission of Matters to a Vote of Security Holders
By written consent, the holders of a majority of the outstanding
voting stock of the Company approved (i) the combination and conversion of
shares of Common Stock and the reduction of the number of authorized shares of
Common Stock as described in Item 2 above; (ii) changing the name of the Company
from Specialty Retail Group, Inc. to TBM Holdings, Inc.; and (iii) the execution
of the Stock Purchase and Reorganization Agreement among the Company, Seymour
Zises, TBM Consulting Group, Inc. and Colt Services, Inc. The number of
2
<PAGE> 10
shares voted in favor of each of these matters was 6,068,951, which represented
a majority of the outstanding voting stock of the Company.
Item 5. Other Information
Immediately prior to the Offering, the Board of Directors of the
Company approved the Amended and Restated Bylaws of the Company which are filed
as Exhibit 3.2 to this Form 10-QSB (the "Restated Bylaws"). The amendments
incorporated in the Restated Bylaws, among other things, conform certain
provisions of the prior Bylaws to current Florida corporate law and eliminate
certain other provisions of such prior Bylaws which by their terms are no longer
of any effect. In addition, the Restated Bylaws eliminate the standing Executive
Committee and provisional Minority Nominating Committee as Board committees. In
lieu of such committees, a standing Audit Committee and Compensation Committee
are required. The Audit Committee, to be comprised of two or more non-officer,
non-employee directors, is responsible for making recommendations on the
appointment of the Company's independent accountants, reviewing all matters
related to the audit of the Company's financial statements, and reviewing all
related party transactions for potential conflicts of interest. The Compensation
Committee, a majority of the members of which are required to be non-officer,
non-employee directors, is responsible for approving and recommending to the
Board the compensation arrangements and benefits for key management of the
Company and its subsidiaries, and the stock option, retirement and other similar
plans to be adopted by the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description
2.1 Stock Purchase and Reorganization Agreement dated as of June
15, 1999, by and among Specialty Retail Group, Inc., Seymour
Zises, TBM Consulting Group, Inc. and Colt Services, Inc.
(incorporated by reference to Exhibit 2.1 to Report on Form
8-K filed June 30, 1999). Pursuant to Item 601(b)(2) of
Regulation S-B, the Company agrees to furnish a supplementary
copy of any omitted schedule or exhibit to the Securities and
Exchange Commission upon request.
3.1 Articles of Incorporation of the Registrant as amended through
June 10, 1999, and filed with the Secretary of State of the
State of Florida on June 15, 1999.
3.2 Amended and Restated By-Laws of the Registrant effective June
15, 1999.
10.1 Consulting and Management Services Agreement dated June 17,
1999, between the Registrant and TBM Consulting Group, Inc.
10.2 Consulting Agreement dated June 17, 1999, between the
Registrant and Colt Services, Inc.
3
<PAGE> 11
10.3 Consulting Agreement dated June 17, 1999, among the
Registrant, TBM Consulting Group, Inc. and Colt Services, Inc.
10.4 Employment Agreement dated June 17, 1999, between the
Registrant and William A. Schwartz.
10.5 Form of Indemnification Agreement between the Registrant and
each of its officers and directors.
10.6 Form of Warrant Agreement between the Registrant and each of
Seymour Zises, TBM Consulting Group, Inc. and Colt Services,
Inc. and their respective designees.
27 Financial Data Schedule
(b) A report on Form 8-K was filed on June 30, 1999. No other reports
on Form 8-K were filed.
4
<PAGE> 12
SIGNATURE
In accordance with the requirements of the Securities Exchange Act of
1934, as amended, the Company has caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
TBM HOLDINGS, INC.
Date: August 11, 1999 By: /s/ William A. Schwartz
----------------------------------------
William A. Schwartz, President and
Principal Financial Officer
5
<PAGE> 1
Exhibit 3.1
RESTATED
ARTICLES OF INCORPORATION
OF
INSTITUTE FOR LABORATORY MEDICINE, INC.
Pursuant to the provisions of the Florida Business Corporation Act, the
undersigned corporation adopts the following:
Restated Article of Incorporation, which amendments to the Corporation's
Articles of Incorporation, as amended, contained therein were adopted by the
shareholders of the Corporation on June 15, 1991, in a manner prescribed by the
Florida Business Corporation Act. The number of votes cast by the common
stockholders, the only group entitled to vote, was sufficient for approval.
1. The name of the Corporation is: INSTITUTE FOR LABORATORY MEDICINE,
INC.
2. The Articles of Incorporation of the Corporation were hereby amended
to read in their entirety as follows:
ARTICLE 1
Name
The name of the corporation is Institute for Laboratory Medicine, Inc.
<PAGE> 2
ARTICLE 2
Purpose
The purpose or purposes of the Corporation shall be to engage in any
lawful act or activity for which corporations may be organized under the
Florida Business Corporation Act.
ARTICLE 3
Capital Stock
The total amount of capital stock which this Corporation has the authority
to issue is as follows:
100,000,000 shares of common stock, .001 par value per share; and
15,000,000 shares of preferred stock, $.001 par value per share.
4,000,000 shares of the preferred stock shall be designated "Series A
Preferred Stock" and shall have the powers, preferred rights, qualifications,
limitations and restrictions as follows:
Dividends. No dividends or other distributions may be made in respect of
the Series A Preferred Stock.
<PAGE> 3
(ii) Redemption. The Series A Preferred Stock shall be redeemable, in
whole or in part, at the option of the holders thereof, at any time or from
time to time, at a redemption price equal to $.001 per share.
(iii) Liquidation. Upon dissolution, liquidation or winding up of the
Corporation, the holders of the Series A Preferred Stock shall be entitled to
receive, before any distribution is made to the holders of shares of common
stock of the Corporation, the sum of $.001 per share and no more.
(iv) Voting. Each share of Series A Preferred Stock shall entitle the
holder thereof to one vote on all matters as to which shareholders of the
Corporation have a right to vote as provided in these Amended and Restated
Articles of Incorporation and/or under applicable law. On all matters presented
to a vote of shareholders of Corporation, holders of the Series A Preferred
Stock and the Common Stock shall vote together as a single class.
With respect to the remainder of the Corporation's preferred stock other
than the Series A Preferred Stock, the Board of Directors is authorized,
subject to limitations prescribed by law and the provisions of this Article 3,
to provide for the issuance of the shares of such preferred stock in series,
and to establish from time to time the number of shares to be included in each
series, and to fix the designation, powers, preferences
-3-
<PAGE> 4
and relative, participating, optional or other special rights of the shares of
each series and the qualifications, limitations or restrictions thereof;
provided, however, that the Board of Directors shall not alter the powers,
preferences and relative rights of the Series A Preferred Stock without the
affirmative vote of the holders of a majority of all of the issued and
outstanding shares of Series A Preferred Stock.
The authority of the Board with respect to each series of preferred stock,
other than the Series A Preferred Stock, shall include, but not be limited to,
determination of the following:
A. The number of shares constituting the series and distinctive
designation of the series;
B. The dividend rate on the shares of the series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payments of dividends on
shares of the series;
C. Whether the series will have voting rights, and, if so, the terms of
the voting rights;
D. Whether the series will have conversion privileges, and, if so, the
terms and conditions of the
-4-
<PAGE> 5
conversion, including provision for adjustment of the conversion rate
in such events as the Board of Directors determines;
E. Whether or not the shares of the series will be redeemable; and, if
so, the terms and conditions of 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 the series shall have a sinking fund for the redemption or
purchase of shares of the series, and, if so, the terms and amount of
the sinking fund;
G. The rights of the shares of the series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation,
and the relative rights or priority, if any, of payment of shares of
the series; and
H. Any other relative terms, rights, preferences and limitations, if any,
of the series as the Board of Directors may lawfully fix under the
laws of the
-5-
<PAGE> 6
State of Florida as in effect at the time of the creation of such
series.
ARTICLE 4
Registered Office and Agent
The street address of the registered office of this Corporation is 2699
South Bayshore Drive, Coconut Grove, Florida 33133, and the name of the
registered agent of the Corporation is Joel Bernstein.
ARTICLE 5
Sale of Assets Other Than in Regular Course of Business
Section 1. For a period of eighteen (18) months after the date of these
Amended and Restated Articles of Incorporation, the sale, lease, exchange or
disposal of all or substantially all of those assets of the corporation used or
usable by the corporation in the operation of its clinical laboratories (but not
including cash, cash equivalents, obligations of or insured by the United States
government its agencies or instrumentalities, repurchase and reverse repurchase
agreements and other financial instruments or assets or related agreements),
shall be deemed to be the sale, lease, exchange or disposal, as the case may be,
of all, or substantially all, of the assets of the Corporation for purposes of
determining the applicability of Section 607.1202 of
-6-
<PAGE> 7
the Florida General Corporation Act, regardless of the relative value of such
assets compared to the value of the total assets of the Corporation.
Section 2. During the eighteen (18) month period described in Section 1
of this Article 5, the affirmative vote of the holders of not less than 80% of
the total voting power of all outstanding shares of voting stock of the
Corporation shall be required to authorize any transaction requiring the vote
of shareholders pursuant to Section 1 of this Article 5.
ARTICLE 6
Affiliated Transaction
The corporation shall not be governed by Section 607.0901 of the Florida
Business Corporation Law.
ARTICLE 7
Annual and Special Meetings of Shareholders
Annual meetings of the shareholders of the Corporation may be called by a
majority of the members of the Board of Directors or by a committee of the Board
of Directors which has been duly empowered by the Board of Directors to call
annual meetings. Special meetings of the shareholders of the Corporation for any
purpose may be called at any time by a majority of the members of the Board of
Directors or by a committee of the Board of Direc-
-7-
<PAGE> 8
tors which has been duly empowered by the Board of Directors to call special
meetings. Annual and special meetings may not be called by any other person
except as provided by law.
ARTICLE 8
Right to Amend or Repeal Article
The Corporation reserves the right to amend, alter, to change or repeal
any provision contained in these Amended and Restated Articles of Incorporation
or any amendment hereto, in the manner now or hereafter prescribed by statute,
and all rights and powers herein conferred on shareholders are granted subject
to this reserved power. Notwithstanding the foregoing, the provisions set forth
in Articles 5 and this Article 8, to the extent it relates to Article 5, may
not be repealed or amended in any respect unless such repeal or amendment is
approved by the affirmative vote of the holders of not less than 80% of the
total voting power of all outstanding shares of voting stock of the Corporation.
ARTICLE 9
Indemnification of Directors, Officers and
Other Authorized Representatives
Section 1. Indemnification in Accordance with Bylaws. The Corporation
shall indemnify its officers, Directors, employees and agents against
liabilities, damages, settlements and
-8-
<PAGE> 9
expenses (including attorneys' fees) incurred in connection with the
Corporation's affairs, and shall advance such expenses to any such officers,
directors, employees and agents to the full extent permitted by law, and as
more particulary set forth in the Corporation's Bylaws. Such indemnification
provisions of the Corporation's Bylaws may be enacted and modified from time to
time by resolution of the Corporation's Board of Directors.
Section 2. Effect of Modification. Any repeal or modification of any
provision of this Article 9 by the shareholders of the Corporation shall not
adversely affect any right to protection of a Director, officer, employee or
agent of the Corporation existing at the time of the such repeal or
modification.
Section 3. Liability Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as the Director, officer, employee or agent to
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against liability under the provision of
this Article 9.
-9-
<PAGE> 10
Section 4. No Rights of Subrogation. Indemnification hereunder and under
the Bylaws shall be a personal right and the Corporation shall have no liability
under this Article 9 to any insurer or any person, corporation, partnership,
association, trust or other entity (other than the heirs, executors or admin-
istrators of such person) by reason of subrogation, assignment or succession by
any other means to the claim of any person to indemnification hereunder or under
the Corporation's Bylaws.
ARTICLE 10
Exercise of Corporate Powers
All corporate powers shall be exercised solely by or under the authority
of, and the business and affairs of the corporation shall be managed solely
under the direction of the Board of Directors.
ARTICLE 11
Severability
In the event any provision (including any provision within a single
article, section, paragraph or sentences) of these Articles should be determined
by a court of competent jurisdiction to be invalid, prohibited or unenforceable
for any reason, the remaining provisions and parts hereof shall not be in
-10-
<PAGE> 11
any way impaired and shall remain in full force and effect and enforceable to
the fullest extent permitted by law.
Dated: June 15 , 1991 INSTITUTE FOR LABORATORY
------------- MEDICINE, INC.
By: /s/ LAURENCE LURIE
--------------------------
Laurence Lurie, President
/s/ PETER SAYET
--------------------------
Peter Sayet, Secretary
The principal office address is 18350 N.W. 2nd Ave., Suite 401, Miami, FL 33169.
-11-
<PAGE> 12
STATE OF FLORIDA)
)
COUNTY OF DADE )
The undersigned, a notary public, do hereby certify that on this 15 day of
June, 1991, personally appeared before me Laurence Lurie, who, being by me
first duly sworn, declared that he is the President of Institute for Laboratory
Medicine, Inc., that he signed the foregoing document as President of the
Corporation, and that the statements therein contained are true.
My commission expires [sig]
-----------------------
Notary Public, State of
Florida
-12-
<PAGE> 13
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
INSTITUTE FOR LABORATORY MEDICINE, INC.
* * * * * *
Article 3 of the Articles of Incorporation of INSTITUTE FOR LABORATORY
MEDICINE, INC. was amended by the Corporation's Board of Directors, without
shareholder approval (which approval is not required pursuant to F.S. Section
607.0602 and the Articles of Incorporation of Institute for Laboratory
Medicine, Inc.) on June 18, 1991. The Corporation is filing these Articles of
Amendment to Articles of Incorporation pursuant to F.S. 607.0602.
1. The name of the Corporation is Institute for Laboratory Medicine, Inc.
2. Article 3 of the Articles of Incorporation of Institute for Laboratory
Medicine, Inc. is hereby amended to add the following:
There is hereby established a series of Series A-1 Preferred Stock of
10,000,000 shares with the following powers, preferred rights, qualifications,
limitations and restrictions:
(i) Dividends. No dividends or other distributions may be made in
respect of the Series A-1 Preferred Stock.
(ii) Redemption. The Series A-1 Preferred Stock shall be redeemable,
in whole or in part, at the option of the holders thereof, at any time or from
time to time at a redemption price equal to $.001 per share.
(iii) Liquidation. Upon dissolution, liquidation or winding up of the
Corporation, the holders of the Series A-1
<PAGE> 14
Preferred Stock shall be entitled to receive before any distribution is made
to the holders of shares of common stock of the Corporation, the sum of $.001
per share and no more.
(iv) Voting. Each share of Series A-1 Preferred Stock shall entitle
the holder thereof to one vote on all matters to which shareholders of the
Corporation have a right to vote as provided in these Amended and Restated
Articles of Incorporation and/or under applicable law. On all matters presented
to a vote of shareholders of Corporation, holders of the Series A-1 Preferred
Stock and the Common Stock shall vote together as a single class.
The Board of Directors shall not alter the powers, preferences and relative
rights of the Series A-1 Preferred Stock without the affirmative vote of the
holders of a majority of all the issued and outstanding shares of Series A-1
Preferred Stock.
3. The foregoing Amendment to Articles of Incorporation was duly adopted
by the Board of Directors on June 18, 1991.
IN WITNESS WHEREOF, the undersigned officers and directors of this
Corporation have executed these Articles of Incorporation on June 18, 1991.
/s/ LAURENCE M. LURIE
-----------------------------
Laurence M. Lurie, President
and Director
/s/ PETER H. SAYET
-----------------------------
Peter H. Sayet, Secretary and
Director
This document was prepared
and filed by:
Joel Bernstein, Esq.
Schrank & Bernstein
2699 South Bayshore Drive, Suite 9000
Miami, FL 33133
-2-
<PAGE> 15
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
INSTITUTE FOR LABORATORY MEDICINE, INC.
Article 3 of the Articles of Incorporation of Institute for Laboratory
Medicine, Inc. (the "Corporation") was amended by the Corporation's Board of
Directors, without shareholder approval (which approval is not required pursuant
to F.S. Section 607.1002(6) and the Articles of the Incorporation of the
Corporation) on August 31, 1991. The Corporation is filing these Articles of
Amendment to the Articles of Incorporation pursuant to F.S. Section 607.1006.
1. The name of the Corporation is Institute for Laboratory Medicine, Inc.
2. Article 3 of the Corporation's Articles of Incorporation is amended to
delete the authorization for and all references to, Series A Preferred Stock, no
shares of which series have been issued.
3. The foregoing Amendment to the Corporation's Articles of Incorporation
was adopted by the Board of Directors on August 31, 1991.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed
these Articles of Incorporation on October 29, 1991.
/s/ STUART A. SEIDMAN
---------------------------
Stuart A. Seidman, Director
<PAGE> 16
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
INSTITUTE FOR LABORATORY MEDICINE, INC.
* * * * * *
Article 1 of the Articles of Incorporation of Institute For Laboratory
Medicine, Inc. (the "Corporation") was amended by the shareholders of the
Corporation on June 30, 1993, in a manner prescribed by F.S. Section 607.1003.
The number of votes cast by the Common Stockholders and the Series A-1 Preferred
Stockholders, the only shareholders entitled to vote, voting together as a
group, was sufficient for approval. The Corporation is filing these Articles of
Amendment to Articles of Incorporation pursuant to F.S. Section 607.1006.
1. The name of the Corporation is Institute For Laboratory Medicine, Inc.
2. Article 1 of the Corporation's Articles of Incorporation is amended to
read in its entirety as follows:
ARTICLE
Name
The name of the Corporation is Specialty Retail Group, Inc.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed
these Articles of Incorporation on June 30, 1993.
/s/ RUSS FEIN
--------------------------
Russ Fein
Vice President-Finance
Chief Financial Officer
<PAGE> 17
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
SPECIALTY RETAIL GROUP, INC.
The name of the Corporation is Specialty Retail Group, Inc. On June 4,
1999, the shareholders of Specialty Retail Group, Inc. (the "Corporation")
approved two Amendments to the Restated Articles of Incorporation in a manner
prescribed by Florida Business Corporation Act Sections 607.0704 and 607.1003.
The number of votes cast by the Common Shareholders and the Series A-1
Preferred Shareholders, the only shareholders entitled to vote, voting together
as a group, was sufficient for approval. The Corporation is filing these
Articles of Amendment to Restated Articles of Incorporation pursuant to Florida
Business Corporation Act Sections 607.0704 and 607.1003. The Amendments are as
follows:
1. Article I of the Corporation's Articles of Incorporation is
amended to read in its entirety as follows:
"The name of the Corporation is TBM Holdings Inc."
2. Article 3 of the Corporation's Articles of Incorporation is
amended to change the number of shares of Common Stock, $.001 par value per
share, which the Corporation is authorized to issue from 100,000,000 shares to
10,000,000 shares and the 9,084,238 issued and outstanding shares of Common
Stock are hereby combined and converted into 22,000 shares of Common Stock.
This amendment does not adversely affect the rights and preferences of
the holders of outstanding shares of any class or series.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed these Articles of Amendment to Articles of Incorporation on June 10,
1999.
/s/ SEYMOUR W. ZISES
----------------------
Name: Seymour W. Zises
Title: Sole Director
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED
THROUGH JUNE 15, 1999
AMENDED AND RESTATED BYLAWS
OF
TBM HOLDINGS, INC.
(A FLORIDA CORPORATION)
ARTICLE I
IDENTIFICATION
1.1 Name. The name of the corporation is TBM Holdings, Inc.
1.2 Registered Office. The registered office of the Corporation
shall be located in Tallahassee, Florida. The Corporation may have other
offices, within or without the State of Florida, as the Board of Directors
may determine from time to time or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 Annual Meeting. An annual meeting of the shareholders of
the Corporation shall be held each year on such date and time in the first
six months of the Corporation's fiscal year as shall be designated by the
Board of Directors, the chairman, if any, or the president of the
Corporation, or in the absence of such designation, on the first Tuesday of
the seventh month of the fiscal year, if not a legal holiday, and if a legal
holiday, then on the next succeeding business day, or on such other date and
at such time as shall be fixed by the Board of Directors, the chairman, if
any, or the president and stated in the notice of the meeting. At such
meeting, the shareholders shall elect by plurality vote directors and
transact such other business as may properly come before the meeting.
2.2 Special Meetings. Unless otherwise prescribed by law or by
the Articles of Incorporation of the Corporation, a special meeting of the
shareholders shall be held on call of a majority of the members of the Board
of Directors, the chairman, if any, or the president. Only business within
the purpose or purposes of the special meeting notice may be conducted at a
special shareholders' meeting.
2.3 Place of Meetings. Both annual and special meetings of
shareholders shall be held at the principal office of the Corporation, or at
such other place, either within or without the
<PAGE> 2
State of Florida, as shall be designated by the body calling the meeting and
stated in the notice of meeting or in a duly executed waiver of notice
thereof.
2.4 Notice. Written or printed notice, stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than
ten (10) nor more than sixty (60) days before the meeting, either personally
or by first class mail, by or at the direction of the President, the
Secretary or the person calling the meeting to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mail addressed to the
shareholder at such shareholder's address as it appears on the stock transfer
books of the Corporation, with postage thereon prepaid.
2.5 Notice of Adjourned Meeting. When a meeting is adjourned to
another time or place, it shall not be necessary to give any notice of the
adjourned meeting if the date, time and place to which the meeting is
adjourned are announced at the meeting before the adjournment is taken, and
at the adjourned meeting, any business may be transacted that might have been
transacted on the original date of the meeting. If, however, after the
adjournment, a new record date for the adjourned meeting is or must be fixed
by law, a notice of the adjourned meeting shall be given as provided in this
section to each shareholder of record on the new record date entitled to vote
at such adjourned meeting.
2.6 Closing of Transfer Books and Fixing Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or entitled to receive a
distribution or in order to make a determination of shareholders for any
other purpose, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be
not more than seventy (70) days before the meeting or action requiring a
determination of shareholders. For the purpose of determining those
shareholders entitled to take action without a meeting, such record date
shall be at least ten (10) days prior to the action requiring a determination
of shareholders. For the purpose of determining those shareholders entitled
to notice of and to vote at an annual or special meeting, such record date
shall be at least ten (10) days before the meeting. Notwithstanding the
foregoing, so long as the Corporation is subject to Section 14 of the
Securities Exchange Act of 1934, as amended, and the regulations promulgated
thereunder relating to proxy solicitations (the "Proxy Rules"), the record
date fixed by the Board of Directors for any annual or special meeting of the
shareholders or any action by the shareholders to be taken by written consent
without a meeting shall comply as necessary with the Proxy Rules.
Once a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date for the adjourned meeting.
2.7 Shareholder Quorum and Voting. A majority of the shares
entitled to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of shareholders, unless otherwise required by law or the
Articles of Incorporation. When a specified item of business is
- 2 -
<PAGE> 3
required to be voted on by a class or series of stock, a majority of the
shares of such class or series shall constitute a quorum for the transaction
of such items of business by that class or series, unless otherwise required
by law or the Articles of Incorporation. If a quorum exists, action on a
matter other than the election of directors, is approved if the votes cast
favoring the action exceed the votes cast opposing the action, unless a
greater number of affirmative votes is required by law or the Articles of
Incorporation.
2.8 Voting of Shares. Except as otherwise provided by law or
the Articles of Incorporation, each outstanding share, regardless of class,
shall be entitled to one (1) vote on each matter submitted to a vote or
action of the shareholders.
2.9 Waiver of Notice. A shareholder may waive any notice
required by law, the Articles of Incorporation or these Bylaws before or
after the date and time stated in the notice. The waiver must be in writing,
be signed by the shareholder entitled to the notice, and be delivered to the
Corporation for inclusion in the minutes or filing with the corporate
records. Neither the business to be transacted at nor the purpose of any
regular or special meeting of shareholders need be specified in any written
waiver of notice.
A shareholder's attendance at a meeting waives objection to
lack of notice or defective notice of the meeting, unless the shareholder at
the beginning of the meeting objects to holding the meeting or transacting
business at the meeting; or waives objection to consideration of a particular
matter at the meeting that is not within the purposes described in the
meeting notice, unless the shareholder objects to considering the matter when
presented.
2.10 Proxies. A shareholder or such shareholder's
attorney-in-fact or other person entitled to vote on behalf of such
shareholder by statute, may vote the shareholder's shares in person or by
proxy. Every proxy must be signed by the shareholder or his
attorney-in-fact. An appointment of a proxy is effective when received by the
secretary or other officer or agent authorized to tabulate votes. An
appointment is valid for up to eleven (11) months from the date thereof,
unless a longer period is expressly provided in the appointment form. An
appointment of a proxy is revocable by the shareholder executing it, unless
the appointment conspicuously states that it is irrevocable and the
appointment is coupled with an interest.
2.11 Action by Shareholders Without a Meeting. Except as may
otherwise be provided in the Articles of Incorporation, action required or
permitted by law to be taken at an annual or special meeting of shareholders
may be taken without a meeting, without prior notice and without a vote, if
one or more written consents describing the action taken are dated and signed
by the holders of not less than the minimum number of votes of each voting
group that would be necessary to authorize or take such action at a meeting
at which all voting groups entitled to vote thereon were present and voted.
To be effective, the written consents must be delivered to the Corporation by
delivery to its principal office in Florida, its principal place of business,
the corporate secretary or another officer or agent of the Corporation having
custody of the records in which proceedings of meetings of shareholders are
recorded. No written consent shall be effective to take the corporate action
referred to therein unless, within 60 days of the
- 3 -
<PAGE> 4
earliest dated consent delivered in the manner required by law, written
consents signed by the requisite number of holders required to take the
action are delivered to the Corporation as herein provided.
Within ten (10) days after obtaining such authorization by
written consent, notice shall be given to those shareholders who have not
consented in writing or who are not entitled to vote on the action. The
notice shall fairly summarize the material features of the authorized action
and, if the action be a merger or other action for which dissenters' rights
are provided by law, the notice shall contain a clear statement of the right
of shareholders dissenting therefrom to be paid the fair value of their
shares upon compliance with the applicable provisions of law regarding the
rights of dissenting shareholders.
ARTICLE III
DIRECTORS
3.1 Function. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall
be managed under the direction of, its Board of Directors, subject to any
limitations now or hereafter set forth in the Articles of Incorporation.
3.2 Compensation. The Board of Directors shall have the
authority to fix from time to time the compensation of directors.
3.3 Standards for Directors. A director shall perform his
duties as a director, including his duties as a member of any committee of
the Board upon which he may serve, in good faith; in a manner he reasonably
believes to be in the best interests of the Corporation, and with the care
an ordinarily prudent person in a like position would exercise under similar
circumstances.
In performing his duties, a director shall be entitled to rely on
information, opinions, reports or statements, including financial statements
and other financial data, in each case prepared or presented by:
(a) One or more officers or employees of the Corporation whom
the director reasonably believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants or other persons as to
matters which the director reasonably believes to be within such person's
professional or expert competence; or
(c) A committee of the Board upon which he does not serve, duly
designated in accordance with the provisions of the Articles of Incorporation
or these Bylaws, as to matters within its designated authority, which
committee the director reasonably believes merits competence.
- 4 -
<PAGE> 5
A director shall not be considered to be acting in good faith if
he has knowledge of the matter in question that would cause such reliance
described above to be unwarranted.
3.4 Number. The Board of Directors shall consist of not less
than one (1) director nor more than fifteen (15) directors, the exact number
of directors to be determined from time to time by the Board of Directors, or
in the absence of such determination, shall be that number of directors
elected at the preceding annual meeting plus the number, if any, elected
since such meeting to fill a vacancy created by an increase in the size of
the Board of Directors. The number of directors may be increased or
decreased in the same manner or by amendment to these Bylaws, but no such
decrease shall have the effect of shortening the term of any incumbent
director.
3.5 Election and Term. Directors shall be elected by plurality
vote. At each annual meeting of the shareholders, the shareholders entitled
to vote thereon shall elect directors to hold office until the next
succeeding annual meeting and until their respective successors shall have
been duly elected and qualified or until their earlier resignation or removal.
3.6 Vacancies. Any vacancy occurring on the Board of Directors,
including a vacancy created by reason of an increase in the number of
directors, may be filled by the affirmative vote of a majority of the
remaining directors, though less than a quorum of the Board of Directors. A
director elected to fill a vacancy shall hold office only until the next
election of directors by the shareholders.
3.7 Removal of Directors. The shareholders may remove one or
more directors with or without cause at a meeting of the shareholders,
provided that the notice of the meeting states that the purpose, or one of
the purposes of the meeting, is the removal of such director or directors.
3.8 Quorum. A majority of the number of directors then fixed in
the manner provided in these Bylaws shall constitute a quorum for the
transaction of business, unless otherwise provided in the Articles of
Incorporation or these Bylaws. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors, unless the act of a greater number is required by law,
the Articles of Incorporation or these Bylaws.
3.9 Place of Meetings. Meetings of the Board of Directors,
regular or special, may be held within or without the State of Florida.
3.10 Regular Meetings. Each newly elected Board of Directors
may hold a regular organizational meeting to elect officers and to transact
such other business immediately following the annual meeting of the
shareholders, and no notice of such meeting shall be necessary for any
purpose, or such meeting may be held at such other place, date and time as
may be fixed in a notice of meeting given in accordance with the notice
requirements for a special meeting. Other regular meetings of the Board of
Directors may be held upon such notice,
- 5 -
<PAGE> 6
or without notice, and at such time and place as shall from time to time be
determined by the Board of Directors.
3.11 Special Meetings. Special meetings of the Board of
Directors may be called by the chairman of the Board, if any, the president
or the secretary or by a majority of the directors then in office on at least
two (2) days' notice to each director, given either by mail, facsimile
transmission, telegram, e-mail or other form of recorded communication or
orally, in person or by telephone.
3.12 Waiver of Notice. Notice of a meeting of the Board of
Directors need not be given to any director who signs a waiver of notice
either before or after the meeting. Neither the business to be transacted at
nor the purpose of any regular or special meeting need be specified in the
notice or waiver of notice of such meeting. Attendance of a director at a
meeting shall constitute a waiver of notice of such meeting and a waiver of
any and all objections to the place of the meeting, the time of the meeting
or the manner in which it has been called or convened, except when a director
states, at the beginning of the meeting or promptly upon arrival at the
meeting, any objection to the transaction of business because the meeting is
not lawfully called or convened.
A majority of the directors present, whether or not a quorum
exists, may adjourn any meeting of the Board of Directors to another time and
place. Notice of any such adjourned meeting shall be given to the directors
who were not present at the time of the adjournment and, unless the time and
place of the adjourned meeting are announced at the time of the adjournment,
to the other directors.
3.13 Participation by Conference Telephone or other Means. The
Board of Directors may permit any or all directors to participate in a
regular or special meeting by, or conduct the meeting through the use of,
any means of communications by which all directors participating may
simultaneously hear one another during the meeting. Participation in this
manner constitutes presence in person at a meeting.
3.14 Action Without a Meeting. Unless the Articles of
Incorporation provide otherwise, any action required or permitted to be
taken at a meeting of the Board of Directors or a committee thereof may be
taken without a meeting if the action is taken by all members of the Board of
Directors or of the committee. The action must be evidenced by one or more
written consents describing the action taken and signed by each director or
committee member. Action taken in this manner is effective when the last
director or committee member signs the consent, unless the consent specifies
a different effective date.
ARTICLE IV
COMMITTEES OF THE BOARD
4.1 Designation. The Board of Directors shall have such
standing committees as are provided in these Bylaws and may, by resolution
adopted by a majority of the full Board of
- 6 -
<PAGE> 7
Directors, constitute one or more other standing or special committees, each
such committee to have two or more members who serve at the pleasure of the
Board of Directors. A majority of the members of the Board may designate one or
more directors as alternate members of any such committee who may act in the
place and stead of any absent member or disqualified member at any meeting of
the committee. Any such committee shall have and may exercise the powers and
authority of the Board of Directors to the extent provided in these Bylaws or in
the resolution of the Board, as in effect from time to time, constituting the
committee or dealing with the scope of its powers, provided, however, that no
such committee shall be entitled to take any action prohibited by law from time
to time.
4.2 Committee Action. The provisions of these Bylaws which
govern meetings of the Board of Directors, notice and waiver of notice of
such meetings, and quorum and voting requirements thereof shall apply to
committees and their members as well. Each committee shall keep records of
its acts and proceedings and report the same to the Board of Directors as and
when required by the Board. Any member of a Committee may be removed from a
committee at any time, with or without cause, by the affirmative vote of a
majority of the members of the Board.
4.3 Standing Committees. The Corporation shall have the
following standing committees:
(a) Compensation Committee. The Compensation Committee shall
be composed of at least three directors, at least a majority of whom shall
not be officers or employees of the Corporation. The Compensation Committee
shall be responsible for approving and recommending as necessary to the Board
of Directors the compensation arrangements for key management personnel of
the Corporation and the Corporation's subsidiaries and affiliates. The
Compensation Committee shall also be responsible for making recommendations
to the Board of Directors with respect to the adoption of any incentive
compensation, retirement or other similar plans benefiting the directors,
officers and other key employees of the Corporation and the Corporation's
subsidiaries and affiliates. This Committee shall also be responsible for
reviewing and considering any loans or other financial accommodations to be
made to key management personnel of the Corporation, ensuring that they are
in compliance with applicable law and any policies pertaining thereto
promulgated by the Corporation.
(b) Audit Committee. The Audit Committee shall be composed of
two or more directors who are not officers or employees of the Corporation. The
Audit Committee shall be responsible for (i) recommending to the Board the firm
to be appointed by the Corporation as its independent auditors; (ii) consulting
with the Corporation's auditors on the plan of audit; (iii) reviewing with the
Corporation's auditors the proposed audited financial statements of the
Corporation and its consolidated subsidiaries, and accompanying management
letter, if any, and reporting on the same to the Board; and (iv) reviewing with
the Corporation's auditors periodically the adequacy of the Corporation's
internal controls and where necessary, consulting with the Corporation's Chief
Financial Officer and other financial personnel regarding same. The Audit
Committee shall also be responsible for reviewing all related party transactions
to which
- 7 -
<PAGE> 8
the Corporation is a party for potential conflicts of interest and making
appropriate recommendations to the Board regarding same.
ARTICLE V
OFFICERS
5.1 Designation; Election. A president, a secretary and when
deemed necessary by the Board of Directors, a chairman of the board, one or
more vice presidents, a treasurer and other officers, assistant officers and
agents, shall be elected by the Board of Directors to hold office until their
respective successors are duly elected and qualified or until their earlier
resignation or removal.
5.2 Duties. The officers of the Corporation shall have the
following duties:
(a) Chairman of the Board. If designated as chief executive
officer of the Corporation, the chairman of the board shall have the duties
and authority customarily vested in a chief executive officer of a
corporation, including general and active management of the business and
affairs of the Corporation, subject to the direction of the Board of
Directors. The chairman shall also preside at all meetings of the
shareholders and Board of Directors. The chairman shall have and perform
such other duties as may from time to time be assigned by the Board of
Directors.
(b) President. If the chairman of the board has not been
designated as the chief executive officer of the Corporation or no chairman
of the board has been appointed, the Board of Directors may, but shall not be
required to designate the president as the chief executive officer of the
Corporation, in which event the president shall have general and active
management of the business and affairs of the Corporation, subject to the
direction of the Board of Directors and shall preside at all meetings of the
shareholders and Board of Directors. In the event that a chairman of the
board has been appointed and designated by the Board of Directors as chief
executive officer of the Corporation, the president shall be responsible for
the day to day management of the Corporation. The president shall also
perform such other duties and have such other authority and powers as these
Bylaws may provide or as the Board of Directors or chairman may prescribe
from time to time.
(c) Vice Presidents. Vice presidents, when elected, shall
have the respective powers and perform the respective duties as the Board or
the president may from time to time assign and shall perform such other
duties as may be prescribed by these Bylaws. At the request of the
president, or in case of his absence or inability to act, the vice president
designated by the Board or the president, shall perform the duties of the
president and, when so acting, shall have all the powers of, and be subject
to all the restrictions upon, the president.
(d) Secretary. The secretary shall attend all meetings of
the Board of Directors and all meetings of the shareholders and record all
votes, actions and the minutes of all proceedings in a book to be kept for
that purpose and shall perform like duties for the committees
- 8 -
<PAGE> 9
of the Board when required. The secretary shall also give, or cause to be
given, notice of all meetings of the shareholders and where required,
meetings of the Board of Directors and shall be the principal officer of the
Corporation responsible for authenticating the corporate records. The
secretary shall also perform such other duties as these Bylaws may provide or
the Board of Directors or the president may assign from time to time.
(e) Assistant Secretary. Assistant secretaries, when
elected in the order determined by the Board of Directors, shall, in the
absence or disability of the secretary, perform the duties and have the
authority and exercise the powers of the secretary. They shall also perform
such other duties and have such other powers as the Board of Directors may
from time to time prescribe or as the president or secretary may from time to
time delegate.
(f) Treasurer. The treasurer shall be the financial officer
of the Corporation, charged with overall oversight of its fiscal affairs. In
such capacity, the treasurer shall cause to be prepared the financial
statements of the Corporation and shall make reports in respect thereof and
the Corporation's financial condition, whenever requested by the Board of
Directors. The treasurer shall have general oversight of the other financial
personnel of the Corporation and the administration of the Corporation's
funds and other valuables. In furtherance thereof, such officer shall
arrange for all funds and other valuables of the Corporation to be deposited
in the name and to the credit of the Corporation in depositories designated
by the Board of Directors. The treasurer shall perform such other duties and
have such other authority and powers as the Board of Directors may from time
to time prescribe or as the president may from time to time delegate.
(g) Assistant Treasurer. Assistant treasurers, in the order
determined by the Board of Directors, shall, in the absence or disability of
the treasurer, perform the duties and have the authority and exercise the
powers of the treasurer. Any assistant treasurer shall also perform such
other duties and have such other powers as the Board of Directors may from
time to time prescribe or the president or treasurer may from time to time
delegate.
(h) Other Officers. Such other officers as are appointed
shall exercise such duties and have such powers as the Board may assign.
5.3 Transfer of Authority. In case of the absence or
disqualification of any officer of the Corporation or for any other reason
that the Board may deem sufficient, the Board may transfer the powers or
duties of that officer to any other officer or to any director or employee of
the Corporation, provided that a majority of the entire Board approves.
5.4 Resignations; Removal. An officer may resign at any time by
delivering notice to the Corporation. A resignation is effective when the
notice is delivered, unless the notice specifies a later effective date. Any
officer or agent elected or appointed by the Board of Directors may be
removed by the Board of Directors at any time with or without cause.
- 9 -
<PAGE> 10
Removal of an officer shall be without prejudice to the
contract rights, if any, of the officer so removed. The election or
appointment of an officer or agent shall not of itself create any such
contract rights.
5.5 Vacancies. Any vacancy, however occurring, in any office
may be filled by the Board of Directors, unless the Bylaws shall have
expressly reserved such powers to the shareholders.
ARTICLE VI
CAPITAL STOCK
6.1 Certificates Representing Shares. The shares of the
Corporation shall be represented by certificates, provided that the Board may
provide by resolution or resolutions that some or all of any or all classes or
series of its stock shall be uncertificated shares. Any such resolution shall
not apply to shares represented by a certificate until such certificate is
surrendered to the Corporation. Notwithstanding the adoption of such a
resolution by the Board, every holder of stock represented by certificates shall
be entitled to have a certificate signed by, or in the name of the Corporation
by the chairman or a vice-chairman of the Board, if any, or the president or a
vice president, and by the treasurer or an assistant treasurer or the secretary
or an assistant secretary of the Corporation representing the number of shares
registered in certificated form. Any or all the signatures on the certificate
may be a facsimile. In case 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.
Certificates for shares shall have noted thereon any information required to be
set forth by law in the manner therein required.
Within a reasonable time after the issue or transfer of
shares without certificates, the Corporation shall send the shareholder a
written statement of the information required to be set forth on certificated
shares.
6.2 Consideration and Payment. The Board of Directors may
authorize shares to be issued for consideration consisting of any tangible or
intangible property or benefit to the Corporation, including cash, promissory
notes, services performed, promises to perform services evidenced by a
written contract, or securities of the Corporation or of another corporation
or entity. No certificate shall be issued for any shares until the full
amount of the consideration has been paid or delivered.
6.3 Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost or destroyed. When authorizing
such issue of a new certificate, the Board of Directors, in its discretion
and as a condition precedent to the issuance thereof, may prescribe such
terms and conditions as it deems expedient, and may require such indemnities
as it deems adequate
- 10 -
<PAGE> 11
(including, without limitation, a surety bond), to protect the Corporation
from any claim that may be made against it with respect to any such
certificate alleged to have been lost or destroyed.
6.4 Transfer of Shares. The Corporation or its transfer agent
shall register a transfer of a stock certificate, issue a new stock
certificate and cancel the old certificate, in the case of a certificated
security, upon presentation for transfer of the certificated security duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer if there has been compliance with any applicable tax
law relating to the collection of taxes and after the Corporation or its
agent has discharged any duty to inquire into any adverse claims of which the
Corporation or agent has notice. In the case of an uncertificated security,
the Corporation or its transfer agent shall register a transfer of an
uncertificated security after complying with all necessary requirements
imposed on an issuer under Article 8 of the Uniform Commercial Code of the
State of Florida in respect of such transfer and registration.
Notwithstanding the foregoing, no transfer of a certificated or
uncertificated security shall be effected by the Corporation or its transfer
agent if such transfer is prohibited by law (including federal or applicable
state securities laws), by the Articles of Incorporation or a bylaw of the
Corporation or by any shareholders or other agreement to which the shares to
be transferred are subject.
ARTICLE VII
CORPORATE RECORDS
7.1 Corporate Records. The Corporation shall keep as permanent
records minutes of the proceedings of its shareholders, Board of Directors
and committees of directors. The Corporation shall also maintain accurate
accounting records.
The Corporation or its agent shall maintain a record of its
shareholders in a form that permits preparation of a list of the names and
addresses of all shareholders in alphabetical order by class of shares
showing the number and series of shares held by each.
The Corporation shall maintain the foregoing records in
written form or in any other form capable of being converted into written
form within a reasonable time.
7.2 Financial Information. Not later than 120 days after the
close of each fiscal year, the Corporation shall furnish to its shareholders
annual financial statements which may be consolidated or combined statements
of the Corporation and one or more of its subsidiaries.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Distributions and Reserves.
(a) Declaration and Payment. Subject to law and the Articles
of Incorporation, dividends and other distributions may be declared by the Board
of Directors at any
- 11 -
<PAGE> 12
regular or special meeting and may be paid in cash, in property, or in shares
of the Corporation. The declaration and payment shall be at the discretion of
the Board of Directors.
(b) Reserves. By resolution the Board of Directors may
create such reserve or reserves out of any funds of the Corporation available
for distributions as the directors from time to time, in their discretion,
think proper to provide for contingencies, or to equalize dividends, or to
repair or maintain any property of the Corporation, or for any other purpose
they think beneficial to the Corporation. The Directors may modify or abolish
any such reserve in the manner in which it was created.
8.2 Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
8.3 Seal. The corporate seal, shall have inscribed thereon the
name of the Corporation, the year of incorporation and the words, "Corporate
Seal, Florida."
ARTICLE IX
INDEMNIFICATION
9.1 Indemnity. The Corporation shall indemnify to the maximum
extent required or permitted by applicable law, any person who was, is or is
threatened to be made a party to any threatened, pending or completed action,
suit or other type of proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal (each, a "proceeding"),
including a proceeding by or in the right of the Corporation, by reason of
the fact that such person is or was a director, officer, employee or agent of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, agent or similar functionary of another
corporation, partnership, joint venture, trust, employee benefit plan, other
enterprise or other entity (an "Other Organization"), against judgments,
penalties (including excise and similar taxes), fines, settlements and
expenses (including attorneys' fees and court costs) (collectively,
"liability") actually and reasonably incurred by the person in such a
proceeding.
No indemnification shall be permitted hereunder unless
mandatory in accordance with applicable law or authorized in the specific
case upon a determination made in accordance with applicable law that
indemnification is proper in the circumstances because the proposed
indemnitee has met the applicable standard of conduct to permit such
indemnification.
9.2 Expenses. Reasonable expenses incurred by a director or
officer in defending a proceeding may be paid or reimbursed by the
Corporation in advance of the final disposition of such proceeding and
without a determination of entitlement to indemnity as required by law, after
the Corporation receives a written undertaking by the affected director or
officer to repay such amount in the event that it shall be ultimately
determined that such director or officer has not met the applicable standard
of conduct or if it is ultimately determined that indemnification of such
director or officer against expenses in connection with such proceeding is
prohibited by law.
- 12 -
<PAGE> 13
9.3 Insurance. The Corporation may purchase and maintain
insurance on behalf of any person so serving the Corporation or at the
request of the Corporation against any liability asserted against such person
and incurred by such person in such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power to
indemnify or advance expenses to such person against such liability pursuant
to law.
9.4 Merger, etc. For purposes of this Article 9, references to
the "Corporation" include any domestic or foreign predecessor entity of the
Corporation in a merger, conversion or other transaction to the extent
permitted by applicable law.
ARTICLE X
CONTROL-SHARE ACQUISITIONS
Section 607.0902 (control-share acquisitions) of the Florida
Business Corporation Act does not apply to control share acquisitions of
shares of the Corporation and, without in any way limiting the generality of
the foregoing, shareholders of the Corporation shall not have the rights
provided in Subsection (11)(a) of said Section 607.0902.
ARTICLE XI
AMENDMENT
These Bylaws may be repealed or amended, and new bylaws may be
adopted by either the Board of Directors or the shareholders, but the Board
of Directors may not amend or repeal any Bylaw adopted by shareholders if the
shareholders specifically provide that such Bylaw is not subject to amendment
or repeal by the directors.
- 13 -
<PAGE> 1
EXHIBIT 10.1
CONSULTING AND MANAGEMENT SERVICES AGREEMENT
AGREEMENT entered into as of the 17th day of June, 1999, by and between
TBM Holding, Inc., a Florida corporation with its principal office located at
136 Main Street, Westport, Connecticut 06880 ("Holdings"), and TBM Consulting
Group, Inc., a North Carolina corporation ("Consulting") with its principal
office located at 4004 Ben Franklin Boulevard, Durham, North Carolina 27704.
W I T N E S S E T H:
WHEREAS, Consulting is engaged in the business of providing consulting
and management services with respect to the operation of manufacturing
businesses by combining on-site and central office capabilities, which
include administrative, contracting, negotiations, personnel oversight,
financial and budget services and educational resources directed at promoting
quality and efficient management and operations to manufacturing businesses;
and
WHEREAS, Holdings currently is a publicly traded corporation that is
focusing on developing manufacturing companies utilizing the Toyota
Production System and Kaizen Growth Strategy (the "Company") and in
connection therewith, requires consulting and management services of the type
provided by Consulting; and
WHEREAS, Holdings desires to engage the services of Consulting to
provide consulting and management services for the Company; and
WHEREAS, Consulting desires to and is fully committed to provide such
services, on the terms and conditions as hereinafter set forth.
NOW THEREFORE, in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is mutually agreed as
follows:
1. APPOINTMENT. Holdings hereby engages the services of Consulting
to consult with and provide certain management services to the Company
subject to the terms and conditions set forth herein, and Consulting accepts
such engagement and agrees to provide services in accordance with the terms
of this Agreement.
2. OBLIGATIONS OF CONSULTING. Consulting covenants and agrees that
it will provide certain consulting and management to the Company which shall
include the following:
<PAGE> 2
(a) Management and Consulting Services.
(i) Consulting agrees to provide regular and customary
Kaizen consulting to Holdings on a priority basis (meaning that if Consulting
is at full capacity Holdings' needs will be given preference). The amount of
consulting will be appropriate for the size of Holdings' operating business.
Consulting will utilize its proven client launch model for implementing the
Toyota Production System and converting to a high-performance culture of
employee involvement.
(ii) Consulting agrees to make available the services of
Mr. William Schwartz to act as President and Chief Operating Officer of the
Company as provided under the Employment Agreement entered as of the date
hereof between Holdings and Mr. Schwartz. Consulting shall have no liability
in the event of Mr. Schwartz's breach of such Employment Agreement.
(iii) Consulting agrees to provide the services of Mr.
Anand Sharma to act as Chairman and Chief Executive Officer of Holdings.
Holdings and Consulting acknowledge that Mr. Sharma will remain an employee
of Consulting, but will provide such time and services to Holdings to be
actively involved and provide leadership in his capacity as Chairman and
Chief Executive Officer. Neither Consulting nor Mr. Sharma shall be
separately compensated for providing such services unless otherwise agreed to
by the Company and the Compensation Committee of its Board of Directors.
(iv) Consulting further agrees to provide the services of
Mr. William Sample to Holdings to work on the Company's acquisition
strategy. Prior to the time that Holdings consummates its first acquisition of
an operating company, Consulting will cause Mr. Sample to be available not less
than fifty (50%) percent of his business time to Holdings and Consulting will
cause Mr. Sample to provide such services as reasonably requested by Holdings'
Chief Operating Officer or its Board of Directors. During this period,
Holdings will pay compensation to Consulting in respect to Mr. Sample's
services at the rate of $70,000 per annum plus fifty (50%) percent of Mr.
Sample's benefits and bonus compensation. Following Holdings first acquisition
of an operating company, Consulting will make available Mr. Sample to spend his
full and exclusive business time to Holdings to act in such a capacity as will
be determined by the Chief Operating Officer or Board of Directors of Holdings.
At that time, Mr. Sample will enter into an employment agreement with Holdings,
become a full time employee of Holdings and will be compensated appropriately
for the position assumed. If for any reason Mr. Sample is unable to provide
his full business time to Holdings or if Holdings requests that another
individual assume a key role with the Company, Consulting agrees to provide the
services of another proven and qualified individual to act in such capacity.
(b) Staff. Subject to the requirements of applicable federal
and state law, Consulting shall, on the terms and conditions specified in
this Agreement, employ or engage and
- 2 -
<PAGE> 3
make available to the Company, on a non-exclusive basis, consulting personnel
on a temporary basis (hereinafter referred to collectively as "Staff") as may
be reasonably necessary to fill operating positions within the Company in an
efficient manner (e.g., plant manager, vice president of operations). The
hiring, firing, disciplining, and determination of compensation and benefits
of such Staff in connection with services provided to or on behalf of the
Company shall be within the sole discretion of Consulting; provided, however,
that Consulting shall, at Holdings' written request, remove from the Company
any Staff member who does not perform to the reasonable satisfaction of
Holdings.
(c) Investment Commitment.
(i) The Board of Directors of Consulting, TBM Capital II,
LLC and certain chief executive officers or presidents of Consulting's
clients have committed to provide no less than $2,000,000 of capital to
Holdings pursuant to and on the same terms and conditions of other
third-party investors investing in the Holdings' private placement which is
scheduled to close on or about May 26, 1999. Consulting and its Board of
Directors have fully considered this commitment and have authorized
Consulting's investment and participation in Holdings.
(ii) In the future, Consulting will use Holdings as its
exclusive investment vehicle for principal investments for Consulting and its
employees. Consulting hereby agrees that for a five (5) year period
commencing as of the date of this Agreement, it will not sponsor, form or
assist in the formation of a similar investment or operating entity to
Holdings. Notwithstanding the foregoing, Holdings acknowledges that
Consulting continues to have some follow-on activities with respect to the
Alexander Doll Company.
3. TERM. This Agreement shall commence upon the date hereof and
shall continue in effect for an initial period of five (5) years, unless
terminated pursuant to Section 9 hereof. Thereafter, this Agreement shall be
renewed automatically on the same terms and conditions for successive twelve
(12) month periods, unless either party notifies the other of its intent not
to extend by giving at least ninety (90) days' written notice prior to
expiration of the initial or any extended term of this Agreement.
4. COMPENSATION TO CONSULTING.
(a) In exchange for the services described in Section 2(a)(i),
during the Term of this Agreement, Holdings shall pay a monthly fee to
Consulting in an amount equal to the regular Consulting published pricing as set
forth on Schedule 1 attached hereto which Schedule may be modified from time to
time to reflect Consulting's then pricing.
(b) In exchange for the services, if any, provided in Section
2(b), Holdings will pay to Consulting its share of Consulting's actual staff
cost (including salary, bonus and
- 3 -
<PAGE> 4
benefits) for the staff used by Holdings based upon the term of temporary
employment by Holdings.
(c) The parties agree that at the end of the initial term of
this Agreement, they will review the scope of services being provided by
Consulting which may result in adjustments to meet the service requirements
of Holdings; the fees payable to Consulting shall be increased or decreased
depending on whether the scope of services provided by Consulting is
increased or decreased.
5. CONFIDENTIAL INFORMATION. Consulting shall maintain the full and
complete confidentiality of all of Holdings' records, financial information
and confidential and proprietary information except to the extent that
disclosure is required by law or is already in the public domain. Such
information, including documents, negotiations, terms and materials related
to this Agreement, shall not be made available by Consulting to outside
organizations, institutions or individuals; provided, however, Consulting may
disclose to third parties the fact that Consulting has entered into this
Agreement.
6. COMPLIANCE WITH SECURITY REGULATIONS. Consulting agrees that it
will conduct its activities and operations in compliance with all applicable
local, state and federal laws including, without limitation, all securities
laws, and consistent with the goals and values of Holdings' business as
communicated in writing. Consulting's employees and representatives shall be
required to comply with and observe such rules. Holdings agrees to provide
Consulting with copies of all such rules as well as reasonable advance notice
of changes to the same.
7. PERSONNEL RELATIONSHIPS.
(a) Other than as specifically provided herein, persons
employed or contracted for by Consulting shall in no event be considered as
the employees, agents or servants of Holdings, and Consulting shall have the
full responsibility for wages, vacation pay, sick leave, retirement benefits,
social security, worker compensation, disability insurance, employment
insurance, severance pay or employee records of any kind for each of its
personnel.
(b) Persons employed or retained by Consulting may be dismissed
by Consulting as Consulting deems appropriate, in its sole and absolute
discretion. Upon written request from Holdings setting forth the basis for
such request, any Consulting employee or contractor who, in Holdings'
reasonable opinion, is incompatible with the goals of Holdings and/or
Holdings' staff will be removed by Consulting promptly following such request.
8. HOLDINGS - CONSULTING RELATIONSHIP. Consulting and Holdings are
not and shall not be considered employer or employee of one another, nor as
joint ventures or partners with one another and nothing herein shall be
construed to authorize either party to act as agent for the other. Each of
the parties agrees to disclose in their respective dealings that they are
separate
- 4 -
<PAGE> 5
entities. There shall be no liability on the part of either party to any
person for any debts, liabilities or obligations incurred by or on behalf of
the other party and the businesses conducted by such other party. It is
understood that there are no agreements, commitments, representations or
warranties between the parties, except those expressly set forth herein.
9. TERMINATION. This Agreement may be terminated prior to the
expiration of the initial term or any extended term, only as follows, and
such termination shall not affect any rights or obligations arising prior to
the effective date of termination:
(a) Default. In the event of a non-monetary, material breach
of this Agreement, the non-breaching party must first give at least thirty
(30) days' prior written notice to the breaching party detailing the nature
of such breach. Thereafter, provided that the breaching party shall not have
cured such breach within such thirty (30) day period, or with respect to any
breach that is not curable within such thirty (30) day period, shall have not
commenced diligently to cure such breach within such thirty (30) day period
and thereafter shall have not prosecuted to completion the cure of such
breach with the exercise of due diligence, the non-breaching party may, after
the expiration of such thirty (30) day period, terminate this Agreement upon
not less than five (5) days' prior written notice provided, however, that to
be effective the notice of termination must be given within thirty (30) days
of the expiration of the cure period set forth in this Section 9(a). This
remedy shall be in addition to any other remedy available at law or in equity.
(b) Non-Payment. In the event of Holdings' failure to pay any
monies when due, Consulting may terminate this Agreement by giving at least
twenty (20) days' prior written notice of termination.
(c) Bankruptcy. Either party may terminate this Agreement
immediately or upon such notice as it may select following the bankruptcy of
the other party. For the purpose of this Section, "bankruptcy" shall mean:
(i) the filing of a voluntary or involuntary petition for
bankruptcy or similar relief from creditors,
(ii) insolvency,
(iii) the appointment of a trustee or receiver, or
(iv) any similar occurrence reasonably indicating an
imminent inability to perform substantially all of such party's duties under
this Agreement.
(d) Notwithstanding the foregoing, Holdings may terminate this
Agreement in the event of a sale of all or substantially all of the assets of
the Company or a sale of a majority
- 5 -
<PAGE> 6
of the voting stock of Holdings in a single transaction or a series of
coordinated transactions, but only if there are no longer any representatives
of Consulting on the Board of Directors of Holdings or if Consulting or its
representatives are no longer managing the business operations of Holdings.
10. FORCE MAJEURE. Notwithstanding anything contained in this
Agreement to the contrary, if any obligation to be performed by any party
hereto (but specifically excluding payment obligations under this Agreement)
is rendered impossible to perform due to any cause beyond such party's
control, including, without limitation, an act of God, civil disturbance,
riot, fire or casualty, or governmental order or rule, such party, for so
long as such condition exists, shall be excused from such performance,
provided it promptly provides the other party with written notice of its
inability to perform, stating the reason for such inability and provided that
such party takes all appropriate and reasonable steps, as soon as reasonably
practicable upon termination of such condition, to perform, and provided that
if after thirty (30) days from the termination of such condition, if the
party has still not resumed performance, the other party may, at its option,
terminate this Agreement by giving thirty (30) days' prior written notice to
the other to that effect.
11. BINDING EFFECT. Consulting shall not assign this Agreement
without the prior written consent of Holdings which shall not be unreasonably
withheld or delayed. This Agreement shall be binding upon the parties
hereto, its shareholders and upon all successors or assignees in interest.
12. NOTICES. All notices to be given or otherwise made under this
Agreement shall be deemed to be sufficient only if contained in a written
instrument, delivered in person or by registered, certified, or Express Mail
or by next business day commercial delivery service, postage and other
delivery charges prepaid, addressed to such party at the address set forth
below, or at such other addresses as may hereafter be designated in writing
by like notice from one party to this Agreement to the other party. All such
notices shall be deemed given and effective upon delivery or tender for
delivery during regular business hours at the address set forth below (if
delivered in person), one (1) business day after being deposited with such
commercial delivery service or the U.S. Mail (if sent by commercial delivery
service or Express Mail) or five (5) calendar days after being deposited in
the U.S. Mail (if not sent by Express Mail).
In the case of Consulting:
TBM Consulting Group, Inc.
4004 Ben Franklin Boulevard
Durham, NC 27704
Attention: Chairman
- 6 -
<PAGE> 7
In the case of Holdings:
TBM Holdings, Inc.
136 Main Street
Westport, CT 06880
Attention: Chief Operating Officer
With a copy to:
Levett, Rockwood & Sanders P.C.
33 Riverside Avenue
Westport, CT 06880
Attention: Cheryl L. Johnson, Esq.
13. AFFILIATES. As used in this Agreement, the term "Affiliate"
means (i) any person or entity, directly or indirectly, owning or controlling
50% or more of the voting stock (or other equitable interests) of or having
the ability to elect or appoint 50% or more of the directors (or other
persons with comparable powers) of Consulting or Holdings, as the case may
be, (ii) any person or entity of which Consulting or Holdings, as the case
may be, directly or indirectly owns or controls 50% or more of the voting
stock (or other equitable interests) or ability to elect or appoint 50% or
more of the directors (or other persons with comparable powers) or (iii) any
person or entity that is, directly or indirectly, owned or controlled by a
person or entity directly or indirectly, owning or controlling 50% or more of
the voting stock (or other equitable interests) or ability to elect or
appoint 50% or more of the directors (or other persons with comparable
powers) of Consulting or Holdings, as the case may be. No Affiliate of
either party shall have any liability under this Agreement. For purposes of
this Agreement, Consulting and Holdings are not deemed to be Affiliates.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
15. ENTIRE AGREEMENT. This Agreement (including all Schedules
attached hereto, which Schedules are hereby made a part hereof) contains the
entire agreement of the parties and there are no other agreements,
commitments, representations or warranties between the parties, except as
expressly set forth herein. This Agreement may not be canceled or modified
except in a writing signed by both parties. All continuing covenants,
duties and obligations herein contained shall survive the expiration or
termination of this Agreement.
16. AUTHORITY. Each party warrants and represents to the other, upon
which warranty and representation the other has relied in the execution of
this Agreement, that the execution of this Agreement and the transactions
contemplated hereby, are within each party's authority, have
- 7 -
<PAGE> 8
been duly authorized by Holdings' Board of Directors and Consulting's Board
of Directors and any other necessary corporate or partnership action, as the
case may be, that the persons executing this Agreement on behalf of such
party have been duly authorized to do so by all appropriate actions, that
this Agreement constitutes a valid and enforceable obligation of each party
in accordance with its terms and that the execution, delivery and performance
of the obligations of such party under this Agreement will not (i) contravene
any provision of its charter, By-Laws, or other similar agreement as the case
may be, (ii) cause or result in a breach of any of the terms, covenants,
provisions or conditions of, or constitute a default under, any note, bond,
debenture, indenture, agreement, contract, license, permit or other
obligation or understanding (whether written or otherwise) to which such
party is now a party or (iii) knowingly violate any existing order, writ,
injunction or decree of any court, administrative agency or other
governmental body or any other federal, state, county, municipal or other
governmental law, ordinance, rule or regulation applicable to such party.
17. GOVERNING LAW. This Agreement shall be deemed to have been made
and entered into in Connecticut and shall be interpreted in accordance with
the laws of the State of Connecticut without regard to conflict of laws
principles. This Agreement may be enforced in the state and federal courts
located in the State of Connecticut. Each of the parties to this Agreement
submits to the jurisdiction of said courts and agrees that process may be
served upon it by registered or certified mail addressed as provided in the
manner set forth for notices under this Agreement.
18. ARBITRATION. Except for an action for injunctive relief, any
disputes or controversies arising under this Agreement shall be settled by
arbitration in Connecticut in accordance with the rules of the American
Arbitration Association relating to the arbitration of the resolution of
commercial disputes. The determination and findings of such arbitrators
shall be final and binding on all parties and may be enforced, if necessary,
in the courts of the State of Connecticut. The compensation and expenses of
the arbitrators and any administrative fees or costs associated with the
arbitration proceedings shall be borne by the party or parties who have been
found to have breached this Agreement or caused the damages incurred by the
prevailing party.
- 8 -
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as
of the date and year first hereinabove written.
TBM CONSULTING GROUP, INC.
By: /s/Anand Sharma
-------------------------------------
Name: Anand Sharma
Title: President and Chief Executive Officer
TBM HOLDINGS, INC.
By: /s/William Schwartz
-------------------------------------
Name: William Schwartz
Title: President and Chief Operating Officer
- 9 -
<PAGE> 1
EXHIBIT 10.2
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of June 17, 1999 by and between TBM
HOLDINGS, INC., a Florida corporation (the "Company"), and COLT SERVICES,
INC., a Connecticut corporation (the "Consultant").
W I T N E S S E T H:
WHEREAS, the Consultant has worked extensively and been instrumental in
developing and sponsoring the Company's recent business opportunity;
WHEREAS, the Company desires the Consultant to serve as a senior level
advisor to the Company in providing general board level advice and monitoring
the Company as a director; and
WHEREAS, the Company acknowledges that while the Consultant brings
desired and appropriate expertise in providing general board level advice, it
understands that the Consultant does not have the personnel and other
resources required to execute assignments and transactions and is being
compensated only as a director and board level advisor. Therefore, this
Agreement provides the terms under which the Consultant will provide advice
to the Company through general board level participation.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I. TERMS.
1.01. Any reference to the Company or the Consultant includes
a reference to their duly authorized agents except that, with respect to the
Company, the Consultant for this purpose is not deemed to be an agent.
ARTICLE 2. ENGAGEMENT OF THE CONSULTANT.
2.01. The Company hereby engages the Consultant, and the
Consultant hereby agrees, for the period beginning on the date hereof and
ending upon the termination of this Agreement, to provide advice to the
Company regarding the implementation of the Company's Business Plan. The
Consultant will attend board meetings and be available for consultation and
discussion with and advice to the Company's senior management. The
Consultant will provide advice regarding strategy and achievement of
objectives, senior level staffing, financing, financial structure, public
company issues, and other such matters as is mutually agreed to by the
parties hereto.
<PAGE> 2
2.02. The Consultant and the Company shall observe and comply
with the provisions of this Agreement and all applicable laws and regulations
in effect from time to time in any and all jurisdictions where the Company
and the Consultant perform services until its appointment shall be terminated
as hereinafter provided.
2.03. The Consultant shall devote as much time as is necessary
and appropriate to the performance of its duties hereunder as it sees fit,
provided, however that the Consultant shall be entitled to the compensation
as provided in Article 3 whether or not called upon by the Company to render
any services hereunder. The functions and duties which the Consultant
undertakes hereunder shall not be exclusive, and the Consultant will perform
similar functions and duties for others and others may perform similar
functions and duties for the Company.
2.04. The Consultant shall keep or cause to be kept such
books, records and statements as may be necessary to give a complete record
of all transactions carried out by the Consultant on behalf of the Company
and support given to the Company in relation to all matters which are the
responsibility of the Consultant hereunder (including, without limitation,
all amounts expended on behalf of the Company) and shall permit the Company
to inspect such books, records and statements at all reasonable times and
shall provide them with such information and explanations as they may
reasonably require.
ARTICLE 3. CONSULTING FEES.
In consideration of the advice to be provided by the Consultant
hereunder during the term hereof, the Company shall pay the Consultant a
consulting fee of $12,500/month in advance on the first day of each month
beginning upon the Company's acquisition of its first operating company
("Initial Acquisition"). At the request of the Consultant and upon the
consent of the Company's Board of Directors, the consulting fee may be paid
in shares of the Company's common stock. The Company shall not withhold any
applicable state, federal or local employment or income taxes from such
payments; each of the Company and the Consultant acknowledging that the
Consultant is an independent contractor. From the date hereof, the
Consultant agrees that neither it nor any of its employees, agents,
shareholders or principals will hold themselves out as or characterize
themselves as an employee of the Company for any purpose.
2
<PAGE> 3
ARTICLE 4. TERM.
4.01. This Agreement shall commence on the date first set
forth above and shall continue for so long as Colt, Colt Capital, LLC or its
affiliates, successors or assigns maintain an equity interest in the Company.
4.02. Notwithstanding the foregoing, the Company may terminate
this Agreement in the event of a sale of all or substantially all of the
assets of the Company or a sale of a majority of the voting stock of the
Company in a single transaction or a series of coordinated transactions, but
only if there are no longer any representatives of the Consultant on the
Company's Board of Directors or if representatives of TBM Consulting Group,
Inc. are no longer managing the business operations of the Company.
4.03. On termination of this Agreement, the powers, duties,
discretion and/or functions delegated by the Company to the Consultant
hereunder shall automatically be withdrawn and revoked.
ARTICLE 5. EXPENSES.
5.01. The Company shall reimburse the Consultant for all
pre-approved expenses it incurs in connection with the services performed.
5.02. The Company will provide the Consultant office space and
administrative services in Westport, Connecticut for which the Consultant
will pay rent for the actual office it uses (gross rent per square feet x
size of office) but not for any use of staff and common facilities.
ARTICLE 6. MISCELLANEOUS.
6.01. Neither of the parties hereto, either during the
continuance of this Agreement or after its termination, shall disclose to any
person (except with the written authority of the other party or unless
ordered to do so by a court of competent jurisdiction) any information
relating to the business, assets, finances or other affairs of a confidential
nature of the other party of which it may have become possessed during the
period of this Agreement and each party shall use its reasonable endeavors to
prevent any such disclosure as aforesaid.
6.02. The Consultant shall have no liability to the Company
for any advice or other services rendered hereunder except such as may arise
from the Consultant willful misconduct and gross negligence. The Company
shall indemnify and save harmless the Consultant, its officers, directors,
employees and stockholders from and against any and all
3
<PAGE> 4
losses, liabilities, expenses (including, without limitation, reasonable fees
and disbursements of counsel), claims, liens, or other obligations whosoever
which the Consultant may suffer or incur by virtue of or as a result of its
consultancy with the Company.
6.03. This Agreement contains the entire understanding of the
parties hereto. This Agreement shall be binding upon the successors,
permitted assigns, administrators and legal representatives of the parties
hereto. This Agreement may not be assigned by the Company or the Consultant
without the consent of the other party hereto.
6.04. No oral modification or waiver of this Agreement, or
any part hereof, shall be valid or effective unless in writing and signed by
the party or parties sought to be charged therewith; and no waiver of any
breach or condition of this Agreement shall be deemed to be a waiver of any
other subsequent breach or condition, whether of like or different nature.
6.05. This Agreement may be executed simultaneously in two or
more counterparts, each of which is deemed an original, but all of which
together shall constitute one and the same instrument.
6.06. All notices, requests, demands and other communications
hereunder shall be in writing, shall be effective upon receipt and shall be
sent by certified mail, or by cable or telex confirmed by such mail, to the
following addresses:
If to the Consultant: Colt Services, Inc.
1 Sea Spray Road
Westport, CT 06880
If to the Company: TBM Holdings, Inc.
136 Main Street
Westport, CT 06880
provided, however, that any of the parties hereto may, from time to time,
give to the other notice of some other address to which communications to it
shall be sent, in which event notice to such party shall be sent to such
address.
6.07. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut (without giving effect
to the principles of conflicts of laws thereof). In the event that any
action to enforce this Agreement or to seek remedies as a result of a breach
of this Agreement is brought in the State or Federal Courts of Connecticut,
to the extent allowable by applicable law, the prevailing party in any such
action shall be entitled to be reimbursed for all costs of enforcement and
litigation, including, without limitation, all attorneys' fees.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
TBM HOLDINGS, INC.
By: /s/Anand Sharma
-----------------------------------
Name: Anand Sharma
Title: Chief Executive Officer
COLT SERVICES, INC.
By: /s/Daniel A. Levinson
-----------------------------------
Name: Daniel A. Levinson
Title: President
5
<PAGE> 1
EXHIBIT 10.3
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of June 17, 1999 by and between TBM
HOLDINGS, INC., a Florida corporation (the "Company"), and COLT SERVICES,
INC., a Connecticut corporation ("Colt") and TBM CONSULTING GROUP, INC., a
North Carolina company ("TBM" and together with Colt the "Consultants").
W I T N E S S E T H:
WHEREAS, the Consultants have worked together extensively and both have
been instrumental in developing and sponsoring the Company's current business
opportunity and both bring skills critical to implementing the Company's
business plan; and
WHEREAS, the Company desires the Consultants to serve as its senior
level advisors in providing advice as to analyzing, pursuing and consummating
merger, acquisition, divestiture, financing, refinancing, and
recapitalization transactions and the like ("Transactions"); provided,
however, that the Company acknowledges that while the Consultants bring
desired and appropriate expertise in advising as to Transactions, it
understands that the Consultants do not have the personnel and other
resources required to execute Transactions (which will be supplied or
arranged by the Company).
NOW, THEREFORE, the parties agree as follows:
ARTICLE I. TERMS.
1.01. Any reference to the Company or the Consultants includes
a reference to their duly authorized agents except that, with respect to the
Company, the Consultants for this purpose are not deemed to be an agent.
ARTICLE 2. ENGAGEMENT OF THE CONSULTANTS.
2.01. The Company hereby engages the Consultants, and each of
the Consultants hereby agrees, for the period beginning on the date hereof
and ending upon the termination of this Agreement, to provide consulting
services to the Company regarding the implementation of the Company's
Business Plan. The Consultants will provide advice, input, judgment,
contacts and referrals in good faith to the Company and its senior management
regarding the pursuit and consummation of Transactions, including advice
regarding generating deal flow; screening, initial acquisition and follow-on
acquisition opportunities; reviewing offering proposals and projections;
reviewing draft business plans and financing books for desired Transactions;
meeting with potential acquisition targets; review of due diligence material;
advising as to deal structure and implications; assistance with negotiations,
legal
<PAGE> 2
process and closing process; and to perform such other services as is
mutually agreed to by the parties hereto.
2.02. The Consultants and the Company shall observe and comply
with the provisions of this Agreement and all applicable laws and regulations
in effect from time to time in any and all jurisdictions where the Company
and the Consultants perform services until each of their appointments shall
be terminated as hereinafter provided.
2.03. Each of the Consultants shall devote as much time as is
necessary and appropriate to the performance of its duties hereunder as it
sees fit.
2.04. The functions and duties which the Consultants undertake
hereunder shall not be exclusive, and the Consultants will perform similar
functions and duties for others and others may perform similar functions and
duties for the Company.
2.05. Each of the Consultants shall keep or cause to be kept
such books, records and statements as may be necessary to give a complete
record of all transactions carried out by such Consultant on behalf of the
Company and support given to the Company in relation to all matters which are
the responsibility of such Consultant hereunder (including, without
limitation, all amounts expended on behalf of the Company) and shall permit
the Company to inspect such books, records and statements at all reasonable
times and shall provide them with such information and explanations as they
may reasonably require.
ARTICLE 3. CONSULTING FEES.
3.01. In consideration of the services to be performed by the
Consultants hereunder the Company shall pay to the Consultants an aggregate
Completion Fee of one percent (1%) of enterprise value of any merger,
acquisition or divestiture and 1% of the face amount financed, refinanced or
committed in any financing, in each case up to a maximum of $600,000 per
Transaction (the "Completion Fee"). The Consultants hereby agree that Colt
is to receive an amount equal to 75% of the Completion Fee and TBM is to
receive an amount equal to 25% of the Completion Fee. At the request of the
Consultants (or any one of them) and upon the consent of the Company's Board
of Directors, the Completion Fee may be paid in shares of the Company's
common stock. At the discretion of the Company's Board of Directors, the
amount of the Completion Fee may be increased on a Transaction by Transaction
basis if the Consultants provide extraordinary service or value. If this
Agreement is terminated pursuant to the terms of Article 4, the Consultants
shall be entitled to a Completion Fee for all Transactions consummated prior
to termination and all Transactions initiated prior to termination and
completed within 24 months following the termination of this Agreement. From
the date hereof, each of the Consultants agree that neither it nor any of its
employees, agents, shareholders or principals will hold themselves out as or
characterize themselves as an employee of the Company for any purpose.
2
<PAGE> 3
ARTICLE 4. TERM.
4.01. The Term this Agreement shall commence on the date first
set forth above and shall continue until terminated as provided herein. This
Agreement shall not be terminated prior to the fifth anniversary of the
acquisition of the Company's first operating company. If this Agreement is
not terminated on or prior to the fifth anniversary of the acquisition of the
Company's first operating company, it will continue for successive 12-month
periods unless canceled by the Company upon at least 60 days' written notice
prior to the end of each such period.
4.02. Notwithstanding the foregoing, the Company may terminate
this Agreement in the event of a sale of all or substantially all of the
assets of the Company or a sale of a majority of the voting stock of the
Company in a single transaction or a series of coordinated transactions, but
only if there are no longer any representatives of Colt or TBM on the
Company's Board of Directors or if either Colt or TBM are no longer managing
the business operations of the Company; provided that the Consultants shall
be entitled to a termination payment, payable in full on the date of
termination, in an amount equal to the Completion Fee.
4.03. On termination of this Agreement, the powers, duties,
discretion and/or functions delegated by the Company to the Consultants
hereunder shall automatically be withdrawn and revoked.
ARTICLE 5. EXPENSES.
The Company shall reimburse the Consultants for all pre-approved
expenses they incur in connection with the services performed hereunder.
ARTICLE 6. MISCELLANEOUS.
6.01. Neither of the parties hereto, either during the
continuance of this Agreement or after its termination, shall disclose to any
person (except with the written authority of the other party or unless
ordered to do so by a court of competent jurisdiction) any information
relating to the business, assets, finances or other affairs of a confidential
nature of the other party of which it may have become possessed during the
period of this Agreement and each party shall use its reasonable endeavors to
prevent any such disclosure as aforesaid.
6.02. The Consultants shall have no liability to the Company
for any advice or other services rendered hereunder. The Company shall
indemnify and save harmless each of the Consultants, its officers, directors,
employees and stockholders from and against any and all losses, liabilities,
expenses (including, without limitation, reasonable fees and disbursements of
3
<PAGE> 4
counsel), claims, liens, or other obligations whosoever which the Consultants
may suffer or incur by virtue of or as a result of its consultancy with the
Company.
6.03. This Agreement contains the entire understanding of the
parties hereto. This Agreement shall be binding upon the successors,
permitted assigns, administrators and legal representatives of the parties
hereto. This Agreement may not be assigned by the Company or the Consultants
without the consent of the other party hereto.
6.04. No oral modification or waiver of this Agreement, or
any part hereof, shall be valid or effective unless in writing and signed by
the party or parties sought to be charged therewith; and no waiver of any
breach or condition of this Agreement shall be deemed to be a waiver of any
other subsequent breach or condition, whether of like or different nature.
6.05. This Agreement may be executed simultaneously in two or
more counterparts, each of which is deemed an original, but all of which
together shall constitute one and the same instrument.
6.06. All notices, requests, demands and other communications
hereunder shall be in writing, shall be effective upon receipt and shall be
sent by certified mail, or by cable or telex confirmed by such mail, to the
following addresses:
If to the Consultants: Colt Services, Inc.
1 Sea Spray Road
Westport, CT 06880
TBM Consulting Group, Inc.
4004 Ben Franklin Boulevard
Durham, NC 27704
If to the Company: TBM Holdings, Inc.
136 Main Street
Westport, CT 06880
provided, however, that any of the parties hereto may, from time to time,
give to the other notice of some other address to which communications to it
shall be sent, in which event notice to such party shall be sent to such
address.
6.07. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut (without giving effect
to the principles of conflicts of laws thereof). In the event that any
action to enforce this Agreement or to seek remedies as a result of a breach
of this Agreement is brought in the State or Federal Courts of Connecticut,
to the extent allowable by applicable law, the prevailing party in any such
action shall be entitled to be
4
<PAGE> 5
reimbursed for all costs of enforcement and litigation, including, without
limitation, all attorneys' fees.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
TBM HOLDINGS, INC.
By: /s/William A. Schwartz
--------------------------------------
William A. Schwartz
President
COLT SERVICES, INC.
By: /s/Daniel A. Levinson
--------------------------------------
Daniel A. Levinson
President
TBM CONSULTING GROUP, INC.
By: /s/Anand Sharma
--------------------------------------
Anand Sharma
President
5
<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
AGREEMENT (this "Agreement") made as of the 17th day of June, 1999,
between TBM Holdings, Inc., a Florida corporation with its principal offices
in Westport, Connecticut (the "Company"), and William Schwartz, an individual
residing in Westport, Connecticut (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is currently an owner and employee of TBM
Consulting Group, Inc., a North Carolina company ("Consulting") that provides
consulting and management services to manufacturing companies;
WHEREAS, the Company desires to retain the services of the Executive
and the Executive desires to be employed by the Company, for the term of this
Agreement upon the terms and conditions hereinafter described;
WHEREAS, Consulting does not object to the Executive's employment by
the Company and agrees to waive any conflicts-of-interest resulting therefrom
or agreements with respect to non-competition.
NOW THEREFORE, the parties agree as follows:
SECTION 1: EMPLOYMENT OF EXECUTIVE: DUTIES AND RESPONSIBILITIES
(1.1) Employment of Executive. The Company shall employ the Executive
and the Executive shall provide services to the Company subject to the terms
and conditions hereof.
(1.2) Term of Employment. The Executive's employment by the Company
hereunder shall be for the period commencing on June 17, 1999 and ending on
June 16, 2003 (as the
<PAGE> 2
same may be extended hereunder, the "Employment Period"), unless sooner
terminated pursuant to the provisions of Section 3.1 hereof. Thereafter,
unless either party gives notice to the contrary, the Employment Period shall
be automatically extended for a period of one year and shall be subject to
further such automatic extensions; provided, however, that not later than
sixty (60) days prior to the expiration of the Employment Period, either
party may give notice of non-extension to the other, in which case the
Employment Period shall not be extended and will terminate.
(1.3) Offices and Positions of Executive. During the Employment
Period, unless otherwise mutually agreed by the Company and the Executive,
the Executive shall be the President and Chief Operating Officer of the
Company.
(1.4) Duties and Responsibilities. During the Employment Period:
(a) The Executive shall perform customary duties and
responsibilities as are required by the By-laws of the Company together with
such other duties as the Board of Directors of the Company shall reasonably
assign to the Executive from time to time during the Employment Period.
(b) (i) During the period from the inception of this Agreement
until such time as the Company acquires its first manufacturing business in
accordance with the terms of the Business Plan prepared by Executive and
presented to the Company (the "Pre-Acquisition Period"), the Executive shall
spend approximately one-half of his business time to carrying out his duties
as President and Chief Operating Officer of the Company; provided, however,
that Executive shall spend at least 25 hours/week performing his duties for
the Company.
(ii) Thereafter (the "Post-Acquisition Period"), the
Executive shall devote his full business time to carrying out his
responsibilities as President and Chief Operating Officer of the Company
except as otherwise provided herein or as agreed by the parties. The
Executive
-2-
<PAGE> 3
covenants that during the Post-Acquisition Period his activities on behalf of
the Company shall be his primary business activity, involving all of his
working time during business hours, and that he will not be engaged as an
employee of any other business or company. If the initial acquisition is not
of sufficient size to justify full time involvement of the Executive, then
the working hours of the Executive will be adjusted accordingly. If at the
completion of the "Stabilize/Turnaround" phase of the Kaizen Growth Strategy,
the acquired manufacturing company has hired an operating President and Chief
Executive Officer and senior management team satisfactory to the Company's
Board of Directors and the Board of Directors determines that the acquired
manufacturing company is performing in accordance with the Business Plan and
the operating management team is capable of handling the operating and long
term strategic and growth needs of the business without the full time
assistance of the Executive, the Board of Directors may reduce the
Executive's time commitment at that time such that no less than one-half of
his business time will be carrying out the business of the Company and his
base salary will be reduced to 50% of his salary at that time reimbursed pro
rata to Consulting.
(c) The Executive will be able to spend such reasonable time as
is necessary to fulfill his board duties to Consulting and the Alexander Doll
Company as is not inconsistent with the foregoing paragraphs.
SECTION 2: COMPENSATION; REIMBURSEMENT; INDEMNIFICATION; BENEFITS
(2.1) Base Salary. During the Pre-Acquisition Period, the Company
shall reimburse Consulting for the Executive's salary in an amount equal to
One Hundred Thirty Thousand Dollars ($130,000) per annum plus 50% of the
Executive's benefits as set forth in Section 2.4 and Incentive Compensation.
During the Post-Acquisition Period, the Company shall pay to the Executive's
aggregate annual base salary (the "Base Salary") in an amount as may be from
time to time determined by the Board of Directors of the Company, but
(subject to the provisions of the next sentence) in no event at a rate of
less than Two Hundred Sixty Thousand Dollars ($260,000.00) per annum. If the
initial acquisition is not of sufficient size to justify the full time
-3-
<PAGE> 4
involvement of the Company, and the Executive's hours have been adjusted,
then his compensation shall be adjusted accordingly.
(2.2) Payment of Base Salary. Except as provided in Section 2.3
hereof, the Company shall pay the Base Salary due the Executive in equal
installments to be paid on at least a monthly basis less appropriate
withholding for federal taxes and deductions, and in accordance with the
policy of the Company as in effect from time to time for the payment of
salary to senior executive personnel.
(2.3) Incentive Compensation. In addition to the payment to the
Executive of the Base Salary and the other payments and benefits available to
the Executive under this Agreement, and except as otherwise provided in this
Section 2.3, as soon as reasonably possible after the last day of each fiscal
year during the term of the Employment Period, the Company's compensation
committee shall determine if to pay to the Executive incentive compensation
(the "Incentive Compensation") and the extent thereof.
(2.4) Other Benefits. The Executive shall be entitled to participate
in such employee benefits as are generally made available by the Company to
its key executive employees and as are more specifically provided in this
Agreement, which may include, without limitation, major medical, disability
coverage, sick pay benefits, vacation pay and participation in any retirement
plan or plans to the extent permitted by the terms thereof; provided,
however, that except as otherwise specifically provided in this Agreement the
Executive shall not be entitled to any performance related or any other
special compensation unless specifically authorized by the Company's Board of
Directors.
(2.5) Insurance.
(a) Keyman Life Insurance. In addition to any other payments or
benefits available to the Executive under this Agreement, during the
Employment Period the Company
-4-
<PAGE> 5
will arrange for the Executive to be covered at all times by, and shall pay
all premiums, on a policy or policies of life insurance on the life of the
Executive in the aggregate amount of Five Million Dollars ($5,000,000.00),
the disposition of the proceeds of which $5,000,000.00 shall be paid to the
Company.
(b) Other Insurance. The Executive shall be entitled to
participate in any Company major medical plan, business travel plan,
disability income plan and any other plan or insurance maintained by the
Company providing hospitalization, medical, disability or other similar
protection to the extent, in the manner, and according to the terms and
conditions applicable to senior executive personnel generally.
(2.6) Vacation. The Executive shall be entitled to a minimum of four
(4) weeks' paid vacation per year.
SECTION 3: TERMINATION OF EMPLOYMENT
(3.1) Termination of Employment Period. The Employment Period shall
terminate as provided in Section 1.2 or may terminate sooner as follows:
(a) Termination on Death. The Employment Period shall terminate
upon the death of the Executive.
(b) Termination by Company.
(i) Termination for Cause. The Company may terminate the
Employment Period for "cause" at any time upon ten (10) days' prior written
notice to the Executive stating the facts constituting such "cause." For the
purpose of this Section 3.1(b) the term "cause" shall mean gross incompetence,
gross negligence, gross insubordination, embezzlement, conviction of a felony
or any crime involving moral turpitude, willful misconduct of a material nature,
or any
-5-
<PAGE> 6
acts of fraud involving the Company or any acts that have a material adverse
effect on the reputation of the Company, by the Executive as determined in
good faith by the Board of Directors of the Company. In any such
determination, Executive shall not participate in the vote with respect
thereto.
(ii) Termination for Incapacity. The Company may
terminate the Employment Period if the Executive shall become mentally or
physically ill, disabled or otherwise incapacitated so as to render him
unable to perform substantially all of his duties hereunder for a period of
six (6) months during any twelve (12) month period by giving the Executive
thirty (30) days' prior written notice, subject to the Americans with
Disabilities Act.
(iii) Termination for Breach of Agreement. The Company may
terminate the Employment Period in the event of a breach by the Executive of the
terms and conditions hereof having a material adverse effect on the Company upon
thirty (30) days' prior written notice to the Executive stating the facts
constituting such breach, provided, however, that the Executive shall have ten
(10) days' after receipt by him of such notice to cure such state of affairs or
facts constituting a breach and thereby continue the Employment Period;
provided, however, that upon a subsequent substantially similar breach hereof by
the Executive, the Employment Period may be terminated by the Company without
affording the Executive an opportunity to cure.
(iv) Termination Without Cause. Exclusive of the
provisions of Sections 3.1(b)(i), (ii) and (iii) above, the Company may
terminate the Employment Period at any time by giving the Executive ninety
(90) days' prior written notice.
(3.2) Payments on Termination.
(a) Upon termination of the Employment Period by the Company for
the reasons stated in Section 3.1(b)(iv) hereof the Company shall continue to
pay to the Executive, for a period of one (1) year subsequent to such
termination, his Base Salary at the rate in effect at the
-6-
<PAGE> 7
time of such termination together with the benefits as are provided for in
Section 2.4 hereof (to the extent permitted under the terms of the plans and
applicable law). The Company shall continue to pay such amounts at the same
intervals as was the practice for the Company during the Employment Period.
(b) Upon any other termination of the Employment Period pursuant
to Section 3.1, the Company shall only be obligated to pay Executive amounts
accrued hereunder through the effective date of termination and Executive
will not be entitled to any severance payments.
(3.3) Change of Control. The Executive shall be entitled to terminate
his employment upon a change of control and shall be entitled to all of the
salary, benefits and other rights provided through this Agreement as though
the termination had been initiated by the Company without cause under Section
3.1(b)(iv) upon the occurrence of any of the following events: (a) the
acquisition after the beginning of the Employment Period in one or more
transactions, of beneficial ownership (within the meaning of Rule 13d-3(a)(1)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
by any person or entity (other than Executive or Chairman) or any group of
persons or entities (other than the Executive) who constitute a group (within
the meaning of Section 13d-5 of the Exchange Act) of any securities of the
Company such that as a result of such acquisition such person or entity or
group beneficially owns (within the meaning of Rule 13d-3(a)(1) under the
Exchange Act) more than 50% of the Company's then outstanding voting
securities entitled to vote on a regular basis for a majority of the Board of
Directors of the Company; or (b) the sale of all or substantially all of the
assets of the Company (including, without limitation, by way of merger,
consolidation, lease or transfer) in a transaction (except for a
sale-leaseback transaction) where the Company or the holders of common stock
of the Company do not receive (i) voting securities representing a majority
of the voting power entitled to vote on a regular basis for the Board of
Directors of the acquiring entity or of an affiliate which controls the
acquiring entity, or (ii) securities representing a majority of the equity
interest in the acquiring entity or of an affiliate that controls the
acquiring entity, if other than a corporation; provided, that if the
Executive becomes entitled to any payments (whether
-7-
<PAGE> 8
hereunder or otherwise) by reason of an event described in Internal Revenue
Code Section 280G (a "Parachute Event") that would constitute "excess
parachute payments" (as defined in Internal Revenue Code Section 280G) if
paid, then the Executive's entitlement to such payments shall be reduced by
such amount as will cause none of such payments to constitute excess
parachute payments, if, and only if, the net amount received by the Executive
by reason of the Parachute Event, after imposition of all applicable taxes
(including taxes under Internal Revenue Code Section 4999), would be greater
after such reduction than if such reduction were not made.
SECTION 4: ADDITIONAL COVENANTS
In consideration of the compensation, benefits and other accommodations
being extended by the Company to Executive in this Agreement, Executive
covenants and agrees with the Company as follows:
(4.1) Nondisclosure; New Developments.
(a) Executive covenants and agrees that except as specifically
required in the performance of his duties hereunder or as required by law,
and as shall be in the best interest of the Company, on and after the date
hereof, he will not disclose to any person or business entity, or use for his
personal benefit, gain or otherwise, any confidential or proprietary
information which he acquires or has acquired during his employment with the
Company, as to the financial position, business methods, systems, customers,
suppliers, techniques, development projects or results thereof, trade
secrets, inventions, knowledge and processes used or developed by the
Company, or any other proprietary or confidential information relating to or
dealing specifically with the Company. Excluded from Executive's obligations
of confidence is any part of such confidential information that can be
demonstrated to have been in the public domain prior to the date of this
Agreement. Upon termination of the Employment Period, Executive agrees to
deliver to the Company any drawings, documents, designs, records or other
written material regarding proprietary information of the Company then in his
possession. The foregoing shall be
-8-
<PAGE> 9
without prejudice to any rights or remedies of the Company under any state
law protecting trade secrets or information.
(b) Any discovery, invention, process, concept, work or
improvement made or discovered by the Executive while employed by the Company
in connection with or in any way affecting or relating to the business of the
Company (as then carried on or under active consideration) or capable of
being used or adapted for use therein or in connection therewith shall
forthwith be disclosed to the Company and shall belong to and be the absolute
property of the Company. The Executive, if and whenever required so to do by
the Company, shall at the expense of the Company apply or join with the
Company in applying for any applicable registration or protection in the
United States and in any other part of the world for any such discovery,
invention, process, concept, work or improvement and shall at the expense of
the Company execute all instruments and do all things necessary for vesting
such registration or protection in the Company absolutely and as sole
beneficial owner or in such other person as the Company may specify.
(4.2) Covenant Not To Compete. Executive covenants and agrees that
during the Employment Period, and for a period of two years following the
termination of the Employment Period, he will not directly or indirectly,
without the prior written consent of the Company, (i) engage directly or
indirectly for his own account or in any commercial capacity as an owner,
officer, director, partner, employee, consultant or representative of another
person or entity, within the continental United States, in any business
competitive with the business conducted by the Company at the time of
termination, or (ii) during the Employment Period and for a period of one (1)
year following the termination of the Executive's employment with the
Company, the Executive shall not solicit for employment, directly or
indirectly, any employee of the Company who was employed with the Company
within the one (1) year period immediately prior to such solicitation or
employment. This Section 4.2 shall not be applicable in the event that (x)
the Employment Period is terminated early by the Company, other than for
cause, or (y) the Employment Period is terminated by the Executive as a
result of material breach by the
-9-
<PAGE> 10
Company of its obligations hereunder. Notwithstanding anything to the
contrary contained herein, following the Executive's termination of
employment hereunder for any reason, the provisions of this Paragraph 4.2
shall not prohibit the Executive's re-employment by Consulting.
(4.3) Injunctive Relief. Executive acknowledges that any violation or
threatened violation of the provisions of Sections 4.1 or 4.2 will cause
irreparable injury to the Company, and the Executive hereby agrees that, in
addition to any other remedies available to Company, the Company shall be
entitled to temporary or permanent injunctive relief in connection with any
such violation or threatened violation.
SECTION 5: GENERAL PROVISIONS
(5.1) Non-Assignability. Neither this Agreement nor any obligation,
right or interest hereunder shall be assignable by the Executive, his
beneficiary or legal representatives without the prior written consent of the
Company; provided however, that nothing in this Section 4.1 shall preclude
the Executive from designating in writing a beneficiary or beneficiaries to
receive any compensation payable to him or any other benefit receivable by
him under this Agreement upon the death or incapacity of the Executive, nor
shall it preclude the executors, administrators or any other legal
representatives of the Executive or his Estate from assigning any rights
hereunder to the person or persons entitled thereto. Neither this Agreement
nor any right or obligation arising hereunder shall be assignable by the
Company, its successors, assigns, beneficiaries or legal representatives
either directly by assignment or by a merger, consolidation sale of assets or
other form of business combination, or disposition, without the prior written
consent of the Executive.
(5.2) Severability. This Agreement shall be deemed severable, and any
part hereof which may be held invalid by a court or other entity of competent
jurisdiction shall be deemed automatically excluded from this Agreement and
the remaining parts shall remain in full force and effect.
-10-
<PAGE> 11
(5.3) Merger. This Agreement contains the entire understanding of the
parties hereto and constitutes the only agreement between the Company and the
Executive regarding the employment of the Executive by the Company. This
Agreement supersedes all prior agreements, either express or implied, between
the parties hereto regarding the employment of the Executive by the Company.
(5.4) Amendment. None of the terms and conditions of this Agreement
shall be amended or modified unless expressly consented to in writing and
signed by each of the parties hereto.
(5.5) Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective heirs, other
legal representatives and permitted successors and assigns, as the case may
be.
(5.6) Governing Law. This Agreement shall be governed by and
construed under the internal laws of the State of Connecticut.
(5.7) Notices. All notices or other communications to be given by the
parties among themselves pursuant to this Agreement shall be in writing, and
shall be deemed to have been duly made if mailed by certified mail, hand
delivered or sent by overnight courier service to the Company at its
principal executive offices and to the Executive at his address as first set
forth above. Any of the parties hereto may change its respective address
upon written notice to the other given in the manner provided in this Section.
(5.8) Waiver. No waiver by any of the parties to this Agreement of
any condition, term or provision of this Agreement shall be deemed to be a
waiver of any preceding or subsequent breach of the same or any other
condition, term or provision hereof.
-11-
<PAGE> 12
(5.9) Arbitration. Except with respect to any injunctive relief
specifically provided for pursuant to this Agreement, any differences,
claims, or matters in dispute arising between the Executive and the Company
out of this Agreement or connected herewith shall be submitted to binding
arbitration under the commercial arbitration rules of the American
Arbitration Association or its successor and the determination of the
arbitrator shall be final and binding on the parties. The decision of the
arbitrator may be entered as a judgment in any court of the State of
Connecticut, or elsewhere.
-12-
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as at the date and year first above written.
/s/William A. Schwartz
--------------------------------------
William A. Schwartz
TBM HOLDINGS, INC.
By: /s/Anand Sharma
-----------------------------------
Anand Sharma
Its Chief Executive Officer
Agreement and waiver acknowledged
this 17th day of June, 1999.
TBM CONSULTING GROUP, INC.
By: /s/Anand Sharma
-----------------------------------
Anand Sharma
President
-13-
<PAGE> 1
EXHIBIT 10.5
INDEMNIFICATION AGREEMENT
AGREEMENT dated as of this 17th day of June, 1999, by and between TBM
Holdings, Inc., a Florida corporation (the "Company") and
__________________________ (the "Indemnitee").
WHEREAS, the Indemnitee is serving as a director and/or officer of the
Company and the Company, in order to induce the Indemnitee to continue his
service, wishes to set forth its indemnification obligations to the
Indemnitee;
NOW, THEREFORE, in consideration of the promises and conditions set
forth herein, including the Indemnitee's continued service to the Company,
the Company and Indemnitee hereby agree as follows:
1. Definitions. The following terms, as used herein, shall have the
following respective meanings:
"Covered Amount" means the aggregate amount of all Losses and Expenses
which, in type or amount, are not insured under any director's and officer's
liability insurance maintained by the Company from time to time.
"Covered Act" means any of the following, whether occurring on, prior
to or after the date of this Agreement: any breach of duty, neglect, error,
misstatement, misleading statement, omission or other act done or wrongfully
attempted by Indemnitee or any of the foregoing alleged by any claimant or
any claim against Indemnitee solely by reason of his being a director or
officer, or both, of the Company.
"Determination" means a determination, based on the facts known at the
time, made by:
(i) a majority vote of a quorum of disinterested directors of the
Company;
(ii) independent legal counsel in a written opinion prepared at the
request of a majority of a quorum of disinterested directors of the Company;
(iii) a majority of the disinterested stockholders of the Company; or
(iv) a final adjudication by a court of competent jurisdiction.
"Determined" shall have a correlative meaning.
"Excluded Claim" means any Loss or Expense:
<PAGE> 2
(i) based upon or attributable to Indemnitee's gaining in fact any
personal profit or advantage to which the Indemnitee is not entitled;
(ii) for the return by Indemnitee of any remuneration paid to
Indemnitee without the previous approval of the stockholders of the Company
which is illegal;
(iii) for an accounting of profits in fact made from the purchase or
sale by Indemnitee of securities of the Company within the meaning of Section
16 of the Securities Exchange Act of 1934, as amended, or any similar
provision of any state law;
(iv) resulting from Indemnitee's knowingly fraudulent, dishonest or
willful misconduct;
(v) the payment of which by the Company under this Agreement is not
permitted by applicable law; or
(vi) which is not within the Covered Amount.
"Expenses" means any reasonable expenses incurred by Indemnitee as a
result of a claim or claims made against him for any Covered Act including,
without limitation, counsel fees and costs of investigative, judicial or
administrative proceedings or appeals, but shall not include Fines.
"Fines" means any fine, penalty or, with respect to an employee benefit
plan, any excise tax or penalty assessed with respect thereto.
"Loss" means any amount which the Indemnitee is legally obligated to
pay as a result of a claim or claims made against him for any Covered Act
including, without limitation, damages and judgments and sums paid in
settlement of a claim or claims, but shall not include Fines.
2. Maintenance of Directors' and Officers' Liability Insurance.
(a) The Company hereby represents and warrants that it is
applying for a policy of directors, and officers, liability insurance and
that, subject to Section 2(c), it will use its best efforts to obtain such
liability insurance coverage.
(b) The Company hereby covenants and agrees that, so long as
Indemnitee shall continue to serve as a director or officer, or both, of the
Company and thereafter so long as the Indemnitee shall be subject to any
possible claim or threatened, pending or completed action, suit,
investigation or proceeding, whether civil, criminal or investigative, by
reason of the fact that the Indemnitee was a director or officer, or both, of
the Company, the Company, subject to Section 2 (c) , shall maintain in full
force and effect directors' and officers' liability insurance coverage.
2
<PAGE> 3
(c) The Company shall have no obligation to maintain directors'
and officers' liability insurance coverage if the Company determines in good
faith that such insurance is not reasonably available, the premium cost for
such insurance is disproportionate to the amount of coverage provided, or the
coverage provided by such insurance is limited by exclusions so as to provide
an insufficient benefit.
3. Indemnification. The Company shall indemnify the Indemnitee
fully and hold him harmless from the Covered Amount of any and all Losses and
Expenses subject, in each case, to the further provisions of this Agreement.
4. Excluded Coverage.
(a) The Company shall have no obligation to indemnify the
Indemnitee and hold him harmless from any Loss or Expense which has been
Determined to constitute an Excluded Claim.
(b) The Company shall have no obligation to indemnify
Indemnitee and hold him harmless from any Loss or Expense to the extent that
Indemnitee is indemnified by the Company pursuant to the Company's bylaws or
is otherwise indemnified (other than pursuant to any indemnification which
is, by its terms, secondary to any indemnification provided by the Company).
5. Indemnification Procedures.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any action, suit,
investigation or proceeding, the Indemnitee shall, if indemnification with
respect thereto may be sought from the Company under this Agreement, notify
the Company of the commencement or threat thereof.
(b) If, at the time of the receipt of such notice, the Company
has directors' and officers' liability insurance coverage in effect, the
Company shall give prompt notice of the commencement or the threat of
commencement of such action, suit, investigation or proceeding to the
insurers in accordance with the procedures set forth in the respective
policies in favor of Indemnitee. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all Losses and Expenses payable as a result of such action, suit,
investigation or proceeding in accordance with the terms of such policies.
(c) To the extent the Company does not, at the time of the
commencement of or the threat of commencement of such action, suit,
investigation or proceeding, have applicable directors' and officers'
liability insurance coverage, or if a Determination is made that any Expenses
arising out of such action, suit, investigation or proceeding will not be
payable under the directors' and officers' liability insurance coverage then
in effect, the Company shall be obligated to pay the Expenses of such action,
suit, investigation or proceeding as they are incurred and in advance of the
final disposition thereof and the Company shall be entitled to assume the
defense of such action, suit, investigation or proceeding, with counsel
reasonably
3
<PAGE> 4
satisfactory to Indemnitee, upon the delivery to Indemnitee of written notice
of its election so to do. After delivery of such notice, the Company will not
be liable to Indemnitee under this Agreement for any legal or other Expenses
subsequently incurred by the Indemnitee in connection with such defense other
than reasonable Expenses of investigation; provided, that Indemnitee shall
have the right to employ his counsel in any such action, suit, investigation
or proceeding but the fees and expenses of such counsel incurred after
delivery of such notice shall be at the Indemnitee's expense; and provided
further, that if (i) the employment of counsel by Indemnitee has been
previously authorized by the Company, (ii) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense or (iii) the Company shall not,
in fact, have employed counsel to assume the defense of such action, the fees
and expenses of such counsel employed by Indemnitee shall be at the expense
of the Company.
(d) All payments on account of the Company's indemnification
obligations under this Agreement shall be made within sixty (60) days of
Indemnitee's written request therefor unless a Determination is made that the
claims giving rise to Indemnitee's request are Excluded Claims or otherwise not
payable under this Agreement; provided, that all payments on account of the
Company's obligations under Section 5(c) of this Agreement prior to the final
disposition of any action, suit, investigation or proceeding shall be made
within twenty (20) days of Indemnitee's written request therefor and such
obligation shall not be subject to any such determination but shall be subject
to Section 5(e) of this Agreement.
(e) Indemnitee agrees that he will reimburse the Company for
all Losses and Expenses paid by the Company in connection with any action,
suit, investigation or proceeding against Indemnitee in the event and only to
the extent that a Determination shall have been made by a court in a final
adjudication from which there is no further right of appeal that the
Indemnitee is not entitled to be indemnified by the Company for such Expenses
because the claim is an Excluded Claim or because Indemnitee is otherwise not
entitled to payment under this Agreement.
6. Settlement. The Company shall have no obligation to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any
action, suit, investigation or proceeding effected without the Company's
prior written consent. The Company shall not settle any claim in any matter
which would impose any Fine or any obligation on Indemnitee without
Indemnitee's written consent. Neither the Company nor Indemnitee shall
unreasonably withhold their consent to any proposed settlement.
7. Rights Not Exclusive. The rights provided hereunder shall not be
deemed exclusive of any other rights to which the Indemnitee may be entitled
under the articles of incorporation or bylaws of the Company or any by-law,
agreement, vote of stockholders or of disinterested directors or otherwise,
both as to action in his official capacity and as to action in any other
capacity by holding such office, and shall continue after the Indemnitee
ceases to serve the Company as an officer or director.
4
<PAGE> 5
8. Enforcement.
(a) Indemnitee's right to indemnification shall be enforceable
by Indemnitee only in the courts of the State of Connecticut or in the United
States District Court for the District of Connecticut and shall be
enforceable notwithstanding any adverse Determination. In any such action, if
a prior adverse Determination has been made, the burden of proving that
indemnification is required under this Agreement shall be on Indemnitee. The
Company shall have the burden of proving that indemnification is not required
under this Agreement if no prior adverse Determination shall have been made.
(b) In the event that any action is instituted by Indemnitee
under this Agreement, or to enforce or interpret any of the terms of this
Agreement, Indemnitee shall be entitled to be paid all court costs and
expenses, including reasonable counsel fees, incurred by Indemnitee with
respect to such action, unless the court determines that each of the material
assertions made by Indemnitee as a basis for such action were not made in
good faith or were frivolous.
9. Severability. In the event that any provision of this Agreement
is determined by a court to require the Company to do or to fail to do an act
which is in violation of applicable law, such provision shall be limited or
modified in its application to the minimum extent necessary to avoid a
violation of law, and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with the terms
thereof.
10. Choice of Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Connecticut.
11. Consent to Jurisdiction. The Company and the Indemnitee each
hereby irrevocably consents to the jurisdiction of the courts of the State of
Connecticut and the United States District Court for the State of Connecticut
for all purposes in connection with any action or proceeding which arises out
of or relates to this Agreement and agree that any action instituted under
this Agreement shall be brought only in the courts of the State of
Connecticut or in the United States District Court for the State of
Connecticut.
12. Successor and Assigns. This Agreement shall be (i) binding upon
all successors and assigns of the Company (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law) and (ii) shall be binding on and inure to the benefit of
the heirs, personal representatives and estate of Indemnitee.
13. Amendment. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless made in a writing
signed by each of the parties hereto.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company and Indemnitee have executed this
Agreement as of the day and year first above written.
TBM HOLDINGS, INC.
By:
----------------------------
William A. Schwartz
President
-------------------------------
Indemnitee
6
<PAGE> 1
EXHIBIT 10.6
TBM HOLDINGS, INC.
$5.00 Warrant for the Purchase of Shares of
Common Stock of TBM Holdings, Inc.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, OR ANY STATE SECURITIES LAWS, BUT HAS BEEN ISSUED PURSUANT
TO AN EXEMPTION FROM SUCH REGISTRATION AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL
EITHER (I) THE HOLDER HEREOF SHALL HAVE RECEIVED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION
THEREOF UNDER THE ACT IS NOT REQUIRED OR (II) A REGISTRATION
STATEMENT UNDER THE ACT WITH RESPECT THERETO SHALL HAVE BECOME
EFFECTIVE UNDER THE ACT.
No. ___
FOR VALUE RECEIVED, TBM HOLDINGS, INC., a Florida corporation
(the "Company"), hereby certifies that ________________________ (the
"Holder"), is entitled, subject to the provisions of this Warrant, to
purchase from the Company in the aggregate, at the times specified herein
prior to the Expiration Date, a number of shares of the fully paid and
nonassessable shares of Common Stock equal to the number of Warrant Shares,
at a purchase price per share equal to the Exercise Price. On the Expiration
Date, this Warrant shall expire and become void. The number of Warrant
Shares are subject to adjustment from time to time as hereinafter set forth.
1. Definitions. The following terms, as used herein, have the
following meanings:
"Affiliate" means a Person or entity that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or under
common control with a Person.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in the State of Connecticut are required or
authorized by law to close.
<PAGE> 2
"Common Stock" means the common stock, par value $0.001 per
share, of the Company.
"Duly Endorsed" means duly endorsed in blank by the Person or
Persons in whose name a stock certificate is registered or accompanied by a
duly executed stock assignment separate from the certificate.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Date" means the date that is one hundred eighty days
from the date of the Operating Acquisition.
"Exercise Price" means $5.00 per share of the Warrant Shares.
"Expiration Date" means June 15, 2009.
"Person" means an individual, partnership, corporation, trust,
limited liability company, joint stock company, association, joint venture,
or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Operating Acquisition" means the Company's first acquisition of
an operating company after the date hereof.
"Securities Act" means the Securities Act of 1933.
"Warrant Shares" means 31,290 shares of Common Stock of the
Company, subject to adjustment from time to time as provided herein.
2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, the
Holder is entitled to exercise this Warrant in whole at any time or in part
from time to time after ten days' prior written notice to the Company given
after the Exercise Date and prior to the Expiration Date or, if such day is
not a Business Day, then on the next succeeding day that shall be a Business
Day, by presentation and surrender hereof to the Company with the Exercise
Subscription Form annexed hereto (the "Exercise Subscription Form"), duly
executed and accompanied by proper payment of the Exercise Price for the
number of Warrant Shares specified in such form.
(b) At the option of the Holder, the Exercise Price may
be paid in cash or by wire transfer of immediately available funds to an
account designated by the Company upon receipt of the Exercise Subscription
Form or by certified or official bank check or bank cashier's check payable
to the order of the Company, or by any combination of such cash, wire
2
<PAGE> 3
transfer or check. In addition, the Company shall permit all or part of the
Exercise Price to be paid with previously owned shares of Common Stock at the
option of the Holder. Upon receipt by the Company of this Warrant and the
Exercise Subscription Form, together with the applicable Exercise Price, at
the Company's office designated for such purpose (which office initially
shall be that set forth in Section 11 below), in proper form for exercise,
the Holder shall be deemed to be the holder of record of that number of the
Warrant Shares deliverable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such Warrant Shares shall not then be actually delivered to the
Holder. The Company shall pay any and all documentary, stamp or similar
issue or transfer taxes of the United States or any state thereof payable in
respect of the issue or delivery of such Warrant Shares. The Company shall
not be required, however, to pay any tax or other charge imposed in
connection with any transfer involved in the issue of any certificate for
Warrant Shares to a person other than the registered Holder hereof, and in
such case the Company shall not be required to issue or deliver any stock
certificate until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no tax or other charge is due.
If the Holder exercises this Warrant in part, this Warrant
shall be surrendered by the Holder to the Company and a new Warrant of the
same tenor and for the unexercised number of Warrant Shares which was not
surrendered shall be executed by the Company. The Company shall register the
new Warrant in the name of the Holder and deliver the new Warrant to the
Holder.
Upon surrender of this Warrant in conformity with the
foregoing provisions, the Company shall transfer to the Holder of this
Warrant appropriate evidence of ownership of any shares of Common Stock to
which the Holder is entitled, registered or otherwise placed in, or payable
to the order of the Holder or its nominee, and shall deliver such evidence of
ownership to the Holder or its nominee, together with an amount in cash in
lieu of any fraction of a share as provided in Section 5 below.
3. Restrictive Legend. Certificates representing any Warrant
Shares shall bear such restrictive legend as may, in the opinion of the
Company, be necessary or appropriate in light of the fact that such Warrant
Shares were not sold in a transaction registered under the Securities Act or
any state securities law.
4. Reservation of Shares. The Company hereby agrees that at
all times there shall be reserved for issuance and delivery upon exercise of
this Warrant such number of its authorized but unissued shares of Common
Stock or other securities of the Company from time to time issuable upon
exercise of this Warrant as will be sufficient to permit the exercise in full
of this Warrant. All such shares shall be duly authorized and, when issued
upon such exercise, shall be validly issued, fully paid and nonassessable,
free and clear of all liens, security interests, charges and other
encumbrances or restrictions on sale and free and clear of all preemptive
rights.
3
<PAGE> 4
5. Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon any
exercise hereof, the Company shall pay to the Holder an amount in cash equal
to such fraction multiplied by the Exercise Price.
6. No Transfer or Sale of Warrant; Loss of Warrant. Neither
this Warrant nor any rights hereunder shall be transferred or sold by the
Holder other than (i) by will or the laws of descent and distribution, or
(ii) to Affiliates, and any such transfer or sale shall be void and have no
force or effect.
Upon receipt by the Company of evidence satisfactory to it (in
the exercise of its reasonable discretion) of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction)
of satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date. All expenses and reasonable charges associated with
procuring such indemnity and all stamp tax and other governmental duties that
may be imposed in relation to any such substitution shall be borne by the
Holder. The provisions of this Section 6 are exclusive and shall preclude
(to the extent lawful) all other rights or remedies with respect to the
replacement of this Warrant if mutilated, lost, stolen or destroyed.
7. Rights of the Holder. Prior to the exercise of this
Warrant, the Holder shall not, by virtue hereof, be entitled to any rights of
a shareholder of the Company including, without limitation, the right to
vote, to receive dividends or other distributions or to receive any notice of
meetings of shareholders or any notice of any proceedings of the Company
except as may be specifically provided for herein.
8. Adjustment Provisions. The number of Warrant Shares shall
be subject to change or adjustment as follows:
(a) Stock Dividends, Subdivisions, Combinations. In case
the Company shall (i) pay a dividend on its Common Stock in shares of Common
Stock, (ii) subdivide its outstanding Common Stock, or (iii) combine its
outstanding Common Stock into a smaller number of shares of Common Stock,
then the number of shares of Common Stock purchasable upon exercise of this
Warrant immediately prior to the record date fixing shareholders to be
affected by such event shall be adjusted so that the Holder of this Warrant
shall thereafter be entitled to receive that kind and number of shares of
Common Stock or other securities of the Company that the Holder would have
owned or have been entitled to receive after the happening of any of the
events described above, had this Warrant been exercised immediately prior to
the happening of such event or any record date with respect thereto. An
adjustment made pursuant to this Section 8 shall become effective immediately
after the record date in the case of a dividend and shall become effective
immediately after the effective date in the case of a subdivision or
combination.
4
<PAGE> 5
(b) Reorganization or Reclassification. In case of any
capital reorganization or any reclassification of the capital stock of the
Company (whether pursuant to a merger or consolidation or otherwise), or in
the case of any sale, lease or conveyance of all, or substantially all, of
the property, assets, business, and goodwill of the Company as an entity,
this Warrant shall thereafter be exercisable for the number of shares of
stock or other securities or property receivable upon such capital
reorganization or reclassification of capital stock or sale of assets, as the
case may be, by a holder of the number of shares of Common Stock into which
this Warrant would have been exercisable immediately prior to such capital
reorganization or reclassification of capital stock; and, in any case,
appropriate adjustment shall be made in the application of the provisions
herein set forth with respect to the rights and interests thereafter of the
Holder of this Warrant to the end that the provisions set forth herein shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other securities or property thereafter deliverable upon
the exercise of this Warrant.
(c) Additional Capital Contributions. In the event the
Company shall offer for sale an additional 1,000,000 shares of Common Stock
at $5.00 per share within ten (10) days of signing a letter of intent
relating to the Operating Acquisition then appropriate adjustment shall be
made to the number of Warrant Shares which may be purchased under this
Agreement.
(d) Issuance of Capital Stock in Connection with
Operating Acquisition. In the event the Company shall issue additional
shares of its capital stock as consideration for the Operating Acquisition,
then appropriate adjustment shall be made to the number of Warrant Shares
which may be purchased under this Agreement.
(e) Other Action Affecting Capital Stock. In case at any
time or from time to time the Company shall take any action affecting its
capital stock as such, other than an action described in any of the foregoing
clauses (a), (b), (c) and (d), then, unless the Board of Directors of the
Company reasonably determines in good faith that such action will not have a
materially adverse effect upon the rights of the Holder of the Warrants, the
number of Warrant Shares shall be adjusted in such manner and at such time as
the Board of Directors of the Company may reasonably and in good faith
determine to be equitable in the circumstances.
(f) Notice of Adjustment. Whenever the number of Warrant
Shares is adjusted, the Company will forthwith cause a notice stating the
adjustment. Such notice shall show in detail the facts requiring such
adjustment.
9. Liquidation.
(a) Liquidating Dividends. If the Company declares or
pays a dividend upon the Common Stock payable otherwise than in cash out of
earnings or earned
5
<PAGE> 6
surplus (determined in accordance with generally accepted accounting
principles, consistently applied) except (i) for a stock dividend payable in
shares of Common Stock or (ii) a return of capital to investors in the event
the Company does not acquire an operating company within two years of the
date hereof (a "Liquidating Dividend"), it will give written notice by
registered mail, at least twenty (20) Business Days prior to the date on
which a record is taken for such Liquidating Dividend, or, if no record is
taken, the date as of which record holders of Common Stock entitled to such
Liquidating Dividend is determined. Such notice shall state that the Company
proposes to make a Liquidating Dividend, the date on which holders entitled
to receive the Liquidating Dividend will be determined and the approximate
amount of the Liquidating Dividend which the Company expects to make.
10. Registration Rights.
(a) Piggyback Registration. If, at any time the Company
proposes to register any of its securities under the Securities Act other
than the proposed Registration Statement on Form SB-2 or other similar
successor forms to register certain creditor options and (other than pursuant
to Form S-4 or Form S-8 or similar successor forms) it will give written
notice by registered mail, at least thirty (30) days prior to the filing of
each such registration statement, to the Holder of the Warrant Shares of its
intention to do so. If the Holder of the Warrant Shares notifies the Company
within twenty (20) days after receipt of any such notice of its desire to
include any such securities in such proposed registration statement, the
Company shall afford the Holder of the Warrant Shares the opportunity to have
any such Warrant Shares registered under such registration statement; except
that if the managing underwriter advises the Company that the inclusion of
all Warrant Shares held by the Holder proposed to be included in such
registration would interfere with the successful marketing (including
pricing) of the securities proposed to be registered by the Company, then the
securities to be included in such registration shall be included in the
following order:
(i) first, the securities proposed to be included in such
registration by the Company; and
(ii) second, the Warrant Shares held by the Holders
requested to be included in such registration.
Notwithstanding the provisions of this Section 10, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 10 (irrespective of whether a written request
for inclusion of any such securities shall have been made) to elect not to
file any such proposed registration statement, or to withdraw the same after
the filing but prior to the effective date thereof.
6
<PAGE> 7
(b) Covenants of the Company With Respect to
Registration. In connection with any registration under this Section 10, the
Company covenants and agrees as follows:
(i) The Company shall use its best efforts to have any
registration statements declared effective at the earliest possible time and
shall furnish the Holder desiring to sell Warrant Shares such number of
prospectuses as shall reasonably be requested.
(ii) The Company shall pay all costs, fees and expenses in
connection with all registration statements filed pursuant to this Section 10
(excluding fees and expenses of Holder's counsel and any underwriting or
selling commissions), including, without limitation, the Company's legal and
accounting fees, printing expenses and blue sky fees and expenses.
(iii) The Company will take all necessary action which may
be required in qualifying or registering the Warrant Shares included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder, provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(iv) The Company shall indemnify the Holder of the Warrant
Shares to be sold pursuant to any registration statement and each person, if
any, who controls such Holder within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage, expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
any of them may become subject under the Securities Act, the Exchange Act or
otherwise, arising from such registration statement to the same extent and
with the same effect as the provisions pursuant to which the Company agrees
to indemnify its managing underwriters, if any.
(v) The Holders of the Warrant Shares to be sold pursuant
to a registration statement, and their successors and assigns, shall
severally, and not jointly indemnify the Company, its officers and directors
and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 (a) of the Exchange Act,
against all loss, claim, damage or expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which they may become subject under the Securities
Act, the Exchange Act or otherwise, arising from information furnished by or
on behalf of such Holders, or their successors or assigns, for specific
inclusion in such registration statement.
(vi) Nothing contained in this Agreement shall be
construed as requiring the Holders to exercise their Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.
7
<PAGE> 8
(vii) The Company shall furnish to each Holder
participating in the offering and to each underwriter, if any, a signed
counterpart, addressed to such Holder or underwriter, of (i) an opinion of
counsel to the Company, dated the effective date of such registration
statement and (ii) a "cold comfort" letter dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, a letter dated the date of the closing under the
underwriting agreement) signed by the independent public accountants who have
issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered
to underwriters in underwritten public offerings of securities.
(viii) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below, copies of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda relating to discussions with
the Commission or its staff with respect to the registration statement and shall
permit each Holder to do such investigation, upon reasonable advance notice,
with respect to information contained in or omitted from the registration
statement as it deems reasonably necessary to comply with applicable securities
laws or rules of the NASD. Such investigation shall include access to books,
records and properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable extent and at
such reasonable times and as often as any Holder shall reasonably request.
11. Notices. Any notice, demand or delivery authorized by this
Warrant shall be in writing and shall be given to the Holder or to the
Company, as the case may be, at its address (or facsimile number) set forth
below, or such other address (or facsimile number) as shall have been
furnished to the party giving or making such notice, demand or delivery:
If to the Company: TBM Holdings, Inc.
136 Main Street
Westport, Connecticut 06880
Attn: William A. Schwartz
If to the Holder:
Each such notice, demand or delivery shall be effective (i) if given by
facsimile transmission, when such transmission to the facsimile number
specified herein and the appropriate answerback
8
<PAGE> 9
is received, or (ii) if given by U.S. mail, 72 hours after such communication
is deposited in the U.S. mails certified or registered mail, return receipt
requested with first class postage prepaid addressed as aforesaid, or (iii)
if given by any other means, when delivered at the address specified herein.
12. Applicable Law. This Warrant and all rights arising
hereunder shall be construed and determined in accordance with the internal
laws of the State of Connecticut, and the performance thereof shall be
governed and enforced in accordance with such laws.
13. Amendments; Waivers. Any provision of this Warrant may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Holder and the Company, or in the
case of a waiver, by the party against whom the waiver is to be effective.
No failure or delay by either party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
IN WITNESS WHEREOF, the Company has duly caused this Warrant to
be executed by its duly authorized officer and to be dated as of
_____________, 1999.
TBM HOLDINGS, INC.
By:
-------------------------
Name:
Title:
9
<PAGE> 10
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: TBM Holdings, Inc. (the "Company")
Reference is made to the Warrant issued to the undersigned by the
Company dated ________________, 1999 (the "Warrant").
1. The undersigned hereby irrevocably elects to exercise the Warrant
for the purchase of ____________ shares of common stock, par value $0.001 per
share, of the Company (the "Common Stock") at $5.00 per share of Common Stock
and herewith makes payment of $____________ (such payment being made in cash
or by wire transfer to an account to be designated by the Company upon
receipt of this Exercise Subscription Form or by certified or official bank
or bank cashier's check payable to the order of the Company), all on the
terms and conditions specified in the within Warrant, and surrenders the
Warrant and all right, title and interest therein to the Company.
2. The undersigned requests that a certificate for the shares of
Common Stock deliverable upon the exercise of this Warrant be registered or
placed in the name of ______________________________________ whose address is
_______________________________________________ and that such certificate be
delivered to ____________________ whose address is _________________________ .
3. If the number of shares of Common Stock deliverable upon the
exercise of this Warrant is less than all of the Warrant Shares (as defined
in the Warrant) purchasable under the Warrant, the undersigned requests that
a new Warrant representing the remaining balance of the Warrant Shares be
registered in the name of the undersigned and that such Warrant be delivered
to the undersigned at the address set forth below.
<PAGE> 11
Date:
-----------------------
HOLDER
By:
----------------------
Name:
Title:
[ADDRESS]
(Signature must conform in all respects
to the name of holder as specified on the
face of the Warrant.)
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule containing financial information extracted from Balance Sheet,
Statement of Operations, Statement of Cash Flows and Notes thereto incorporated
in Part 1, Item 1 of this Form 10-QSB and is qualified in its entirety by
reference to such financial statements
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 12,121,001
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,260
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,141,561
<CURRENT-LIABILITIES> 56,241
<BONDS> 0
0
0
<COMMON> 2,568
<OTHER-SE> 24,376,392
<TOTAL-LIABILITY-AND-EQUITY> 12,005,320
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,253
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 28,025
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> (31,844)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,819)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
