UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the quarterly period ended August 31, 1996
Commission File Number: 17598
CONSYGEN, INC.
(Exact name of registrant as specified in its charter)
Texas 76-0260145
----- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10201 South 51st Street, Suite 140, Phoenix, Arizona 85044
- ---------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(602) 496-4545
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (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) Yes [ ] No [X] and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
13,509,831 shares of Common Stock, $.003 par value, as of June 30, 1997
-----------------------------------------------------------------------
CONSYGEN, INC. AND SUBSIDIARIES
-------------------------------
INDEX
-----
Page
PART I FINANCIAL INFORMATION:
Consolidated Condensed Balance Sheets,
August 31, 1996 and May 31, 1996 2
Consolidated Condensed Statements of Operations - Three
Months Ended August 31, 1996 and August 31, 1995 3
Consolidated Condensed Statements of Cash Flows - Three
Months Ended August 31, 1996 and August 31, 1995 4
Notes to Consolidated Condensed Financial Statements 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II OTHER INFORMATION 10
SIGNATURES 13
PART I FINANCIAL INFORMATION
Item I. Financial Statements
C SQUARE VENTURES, INC.
(now known as ConSyGen, Inc.)
(A Development Stage Enterprise)
BALANCE SHEET
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
Aug. 31, 1996 May 31, 1996
------------- ------------
<S> <C> <C>
Furniture and Equipment:
Equipment $ 994 $ 994
Less: Accumulated Depreciation ( 994) ( 994)
------------------- -------------------
Total Assets $ 0 $ 0
=================== ===================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts Payable $ 6,800 $ 6,800
------------------- -------------------
Accrued Expenses 187,780 187,780
Total Current Liabilities 194,580 194,580
------------------- -------------------
Stockholders' Deficit:
Common Stock, $.003 par value;
authorized 16,666,667 shares,
issued and outstanding 4,444,667
shares 13,334 13,334
Additional Paid-In Capital 819,234 819,234
Deficit Accumulated in the
Development Stage (1,027,148) (1,027,148)
------------------- -------------------
Total Stockholders' Deficit ( 194,580) ( 194,580)
------------------- -------------------
Total Liabilities and Stockholders' Deficit $ 0 $ 0
=================== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
C SQUARE VENTURES, INC.
(now known as ConSyGen, Inc.)
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
(Unaudited)
For The
Three Months Ended
August 31,
1996 1995
Revenues $ - $ -
Costs and Expenses - 9,050
----------- -----------
Net Loss $ - $ ( 9,050)
=========== ===========
Loss Per Common Share $ (.00) $ (.00)
=========== ===========
Weighted Average Number
of Common Shares Outstanding 4,444,467 4,444,467
=========== ===========
The accompanying notes are an integral part of these financial statements.
C SQUARE VENTURES, INC.
(now known as ConSyGen, Inc.)
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For The
Three Months Ended
August 31,
1996 1995
Cash Flows from Operating Activities:
<S> <C> <C>
Net Loss $ - $ ( 9,050)
Adjustments to Reconcile Net Loss to
Net Cash Used by Operating Activities:
Depreciation and Amortization - 50
Changes in Operating Assets and Liabilities:
Increase in Accrued Expenses - 9,000
------------- -------------
Net Cash Used by Operating Activities - 0
------------- -------------
Net Increase (Decrease) in Cash - 0
Cash - Beginning of Period - -
------------- -------------
Cash - End of Period $ - $ -
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
C SQUARE VENTURES, INC.
(now known as ConSyGen, Inc.)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996
(Unaudited)
NOTE 1- Basis of Presentation
In the opinion of the Company, the accompanying unaudited
financial statements reflect all adjustments (which include only normal
recurring adjustments) necessary to present fairly the results of operations and
cash flows for the periods presented.
Results of operations for interim periods are not necessarily
indicative of the results of operations for a full year due to external factors
which are beyond the control of the Company.
NOTE 2 - Subsequent Events
On September 5, 1996, the Company, pursuant to an exchange
agreement, acquired 100% of the issued and outstanding shares of ConSyGen, Inc.
(a privately held Arizona corporation) ("ConSyGen-Arizona") directly from the
stockholders of ConSyGen-Arizona. Immediately prior to the acquisition, the
Company effected a 1 for 40 reverse split of its common stock. In connection
with the acquisition, the Company issued an aggregate of 9,275,000 shares of its
common stock in exchange for all of the issued and outstanding shares of
ConSyGen-Arizona. Upon the closing of the acquisition, the Company issued
3,850,000 shares of common stock to various consultants for services rendered.
Such shares were registered under the Securities Act of 1933, as amended,
pursuant to a Registration Statement on Form S-8. In addition, the Company
issued 150,000 shares of common stock to a consultant for services rendered.
These 4,000,000 shares were valued at $1.00 per share, which was management's
best estimate of fair market value at the time of issuance. The exchange
resulted in ConSyGen-Arizona's shareholders holding a larger portion of the
voting rights of the Company than was held by the Company's stockholders prior
to the acquisition (approximately 69% at closing). The transaction has been
treated as a reverse acquisition (purchase) with ConSyGen-Arizona being the
acquirer and the Company being the acquired company. Subsequent to the
acquisition, the Company changed its legal name to ConSyGen, Inc. (a Texas
Corporation).
During 1995, prior to the acquisition, ConSyGen-Arizona
entered into an agreement with a consultant, which was supplemented in June
1996, under which the consultant agreed to assist ConSyGen-Arizona in obtaining
financing. ConSyGen-Arizona issued 100,000 shares of its common stock to the
consultant as a retainer for services to be rendered. Such shares were valued at
$.50 per share and have been capitalized as debt issuance expense. In 1996 such
consultant assisted ConSyGen-Arizona in raising approximately $1,200,000 in a
private placement of debt. The debt bore interest at a rate of 10% per annum,
was unsecured, and was to be repaid in one year. As additional consideration to
the lenders, ConSyGen-Arizona agreed to issue warrants to purchase an aggregate
of 1,000,000 shares of ConSyGen-Arizona's common stock at an exercise price of
$5.00 per share. The warrants become exercisable one year from the date of the
loan, have a term of two years and are callable upon 60 days notice. In
connection with ConSyGen-Texas' acquisition of ConSyGen-Arizona,
ConSyGen-Arizona terminated these warrants and ConSyGen-Texas reserved for
issuance new warrants to purchase 1,000,000 shares of ConSyGen-Texas common
stock on the same terms and conditions. In connection with the acquisition,
outstanding options to purchase 1,275,000 shares of ConSyGen-Arizona's common
C SQUARE VENTURES, INC.
(now known as ConSyGen, Inc.)
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996
(Unaudited)
NOTE 2 - Subsequent Events (Continued)
stock granted under its Non-Qualified Stock Option Plan were terminated and
ConSyGen-Texas adopted a new Non-Qualified Stock Option Plan and issued options
to purchase 1,275,000 shares of common stock at an exercise price of $1.00 per
share. Such consultant had loaned the Company $84,000 at December 31, 1996. This
$84,000 loan was repaid by the Company in March 1997.
Following the loan transaction, the Company's consultant
transferred common stock of ConSyGen-Texas held by it to the lenders in exchange
for ConSyGen-Arizona's debt. As a result of this transaction, ConSyGen-Arizona's
obligation to repay the lenders was extinguished and ConSyGen-Arizona became
obligated to repay such consultant. On September 5, 1996, ConSyGen-Texas and the
consultant agreed that ConSyGen-Texas would issue an aggregate of 200,000 shares
of its common stock to such consultant, of which 173,648 shares were in
cancellation of ConSyGen-Arizona's debt acquired by the consultant from the
lenders and 26,352 shares were as payment for services.
In March 1997, ConSyGen-Texas raised $1,000,000 before
deducting finder's fees of $100,000 through a private placement of convertible
notes (the "Notes") in the principal amount of $1,000,000. The Notes are
unsecured, bear interest at the rate of 6% per annum, are payable in March 2000,
and are convertible into common stock of ConSyGen-Texas. The principal amount of
the Notes is convertible into common stock of ConSyGen-Texas at a rate equal to
the lesser of (1) $10.85 per share (115% of the closing bid price of the common
stock on March 21, 1997); or (2) that price which is equal to 70% of the average
closing bid price of the common stock for the five trading days preceding the
date of conversion. ConSyGen-Texas is obligated to register the shares of common
stock issuable upon conversion of the Notes, under the Securities Act of 1933,
as soon as practicable after the closing date. ConSyGen-Texas is obligated to
pay certain penalties if the underlying shares are not registered under the
Securities Act of 1933 within 90 days of the date of Closing.
ConSyGen-Texas may compel conversion of the Notes at any time
after the expiration of six months after the effective date of the Registration
Statement. The Notes are redeemable, at a price equal to 130% of the principal
amount of the Notes, in the event that the price of ConSyGen-Texas' common stock
is less than the bid price on March 21, 1997.
In June 1997, the Company raised approximately $1,000,000, net
of a finder's fee, through the private sale of 120,000 shares of common stock at
a price of $9.00 per share. The Company has agreed to use its best efforts to
register the shares for resale under the Securities Act of 1933, within 120 days
of the closing.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
ConSyGen, Inc., a Texas corporation ("ConSyGen-Texas'), was
incorporated on September 28, 1988 as C Square Ventures, Inc. ConSyGen-Texas was
formed for the purpose of obtaining capital in order to take advantage of
domestic and foreign business opportunities which may have profit potential. On
March 16, 1989, ConSyGen-Texas (then C Square Ventures, Inc.) completed an
initial public offering.
Acquisition of ConSyGen, Inc.
ConSyGen-Texas entered into an agreement, dated as of August
28, 1996, to acquire 100% of the issued and outstanding shares of ConSyGen,
Inc., a privately held Arizona corporation ("ConSyGen-Arizona") (f/k/a
International Data Systems, Inc.). Immediately prior to the acquisition
transaction, ConSyGen-Texas effected a 1-for-40 reverse split of its common
stock. ConSyGen-Texas closed the acquisition of ConSyGen-Arizona on September 5,
1996. As a result of the acquisition, ConSyGen-Arizona became a wholly-owned
subsidiary of ConSyGen-Texas. The transaction has been treated as a reverse
acquisition (purchase), with ConSyGen-Arizona being the acquirer and
ConSyGen-Texas being the acquired company.
In connection with the acquisition, ConSyGen-Texas issued an
aggregate of 9,275,000 shares of its common stock directly to the stockholders
of ConSyGen-Arizona, in exchange for all of the issued and outstanding shares of
ConSyGen-Arizona. Upon the closing of the acquisition, ConSyGen-Texas issued an
additional 3,850,000 shares of common stock to various consultants for services
rendered. Such shares were registered under the Securities Act of 1933, as
amended, pursuant to a Registration Statement on Form S-8. In addition,
ConSyGen-Texas issued 150,000 shares of common stock to a consultant for
services rendered. Following the closing of the acquisition, ConSyGen-Arizona's
stockholders held a larger portion of the voting rights of ConSyGen-Texas than
was held by the ConSyGen-Texas stockholders prior to the acquisition
(approximately 69% at closing). In connection with the acquisition, outstanding
options to purchase 1,275,000 shares of ConSyGen-Arizona's common stock granted
under its Non-Qualified Stock Option Plan were terminated and ConSyGen-Texas
adopted a new Non-Qualified Stock Option Plan and issued options to purchase
1,275,000 shares of common stock at an exercise price of $1.00 per share. In
addition, ConSyGen-Arizona terminated warrants to purchase 1,000,000 shares of
its common stock in connection with the acquisition, and ConSyGen-Texas reserved
for issuance replacement warrants to purchase 1,000,000 shares of its common
stock at an exercise price of $5.00 per share.
ConSyGen-Texas and its wholly-owned subsidiary,
ConSyGen-Arizona, are hereafter collectively referred to as the "Company".
Description of Business of ConSyGen, Inc.
ConSyGen-Texas' business consists solely of the business of
its wholly owned subsidiary, ConSyGen-Arizona. ConSyGen-Arizona was incorporated
in Arizona on October 11, 1979. Until 1995, ConSyGen-Arizona licensed its
proprietary computer software, which was used in the hotel and airline
industries, and also provided software maintenance services. In 1996,
ConSyGen-Arizona discontinued its practice of software licensing and providing
software maintenance services. ConSyGen-Arizona is currently engaged in the
business of rendering automated software conversion services, although it has
not yet generated any operating revenue from its conversion business this year.
ConSyGen-Arizona uses its proprietary toolsets to provide fully automated
conversions of mainframe hardware applications to open
systems. ConSyGen-Arizona also uses its toolsets to convert software so that it
is Year 2000 compliant. The company's ConSyGen 2000 toolset is a fully-automated
toolset that automatically corrects dates in both source code and data to be
compliant for the Year 2000 and beyond. The company's ConSyGen Conversion
toolset automatically converts software to run on a different hardware platform.
For example, the company can automatically convert software running on older
BULL, IBM, Unisys, etc., mainframes so that it can run on the new Client/Server
platforms (often called downsizing).
Material Changes in Results of Operations
During the quarter ended August 31, 1996, the Company
continued its search for suitable potential merger or acquisition candidates. As
described above, the Company entered into an agreement, dated as of August 28,
1996, to acquire all of the issued and outstanding shares of ConSyGen, Inc., an
Arizona corporation. The acquisition was closed on September 5, 1996.
For the quarters ended August 31, 1996 and 1995, the Company
had no operating revenue. The Company had no income/loss for the quarter ended
August 31, 1996, compared with a net loss of $9,050 for the quarter ended August
31, 1995. The Company had no operating expenses for the quarter ended August 31,
1996, compared with operating expenses of $9,050 for the quarter ended August
31, 1995, consisting primarily of professional fees, office expense, telephone
expenses and travel expenses all relating to the Company's search for and
negotiations with potential merger or acquisition candidates, and compliance
with reporting requirements associated with the Company's status as a public
company.
For the nine months ended February 28, 1997, the Company
incurred net losses of approximately $6.7 million on a consolidated basis (after
giving effect to the acquisition), compared with a loss for the year ended May
31, 1996 of $36,000 on an unconsolidated basis (before giving effect to the
acquisition). Approximately $5.2 million of the losses incurred for the nine
months ended February 28, 1997 was attributable to common stock issued in
payment of services rendered.
Material Changes in Financial Conditions, Liquidity and
Capital Resources
The Company's operations have been and continue to be
conducted on a severely curtailed basis. Management of the Company has been
funding the Company's cash needs through the accrual of consulting fees and by
making direct loans. The Company is currently experiencing, and has in the past
experienced, a severe working capital deficiency and has historically incurred
substantial and recurring losses. At this time, the Company is not generating
any revenue. The consolidated Company (after giving effect to the acquisition)
continues however to incur substantial costs and expenses in connection with its
business operations and the development of its software. At June 30, 1997, the
consolidated Company will need to raise additional capital within approximately
two to three months. If the Company is unable to raise additional capital or
generate significant revenue within the next two to three months, the Company
will not be able to fund its continuing operations and continue as a going
concern, in which case there would be a material adverse effect on the Company,
its business and the price of its common stock.
The Company's cash balances were $0 at August 31, 1996 and May
31, 1996. The Company had a working capital deficit of approximately $195,000 at
August 31, 1996 and May 31, 1996. At February 28, 1997, the Company had a
working capital deficit of approximately $1,147,000 on a consolidated basis
(after giving effect to the acquisition), compared with a working capital
deficit at May 31, 1996 of $195,000 on an unconsolidated basis (before giving
effect to the acquisition). The $952,000 increase in the working capital deficit
since May 31, 1996 was primarily attributable to increased notes and loans
payable of the consolidated Company.
To remedy the working capital deficit, the Company is actively
seeking to raise capital through a private offering of equity and or debt
securities and has increased its marketing efforts, including establishing
strategic alliances, in order to have its services marketed to a wide range of
customers. Since February 28, 1997, the Company has raised approximately $2.1
million through the private sale of convertible debt and equity securities,
which the Company has been using to fund its continuing operations. There can be
no assurance that the Company will in the future be able to raise sufficient
funds to continue its operations. Nor can there be any assurance that the
Company will be able to internally generate sufficient funds to continue its
operations. The failure of the Company to raise sufficient additional funds,
either through additional financing or continuing operations, will have a
material adverse effect on the Company. The issuance of additional equity
securities and or rights to acquire equity securities will dilute the interest
of the current stockholders of the Company.
As of June 1997, the Company has committed to spend
approximately $200,000 for capital expenditures, consisting of $170,000 for
computer equipment and $30,000 for furniture and fixtures. The Company will fund
these expenditures out of currently available cash.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The National Association of Securities Dealers, Inc. ("NASD") in
December 1996 advised the Company that it is conducting a routine review of
trading in ConSyGen-Texas' common stock following the acquisition of
ConSyGen-Arizona. The NASD made a written inquiry of the Company to which the
Company responded in writing in January 1997. The NASD made inquiry with respect
to, among other things, a private placement by ConSyGen-Arizona, the acquisition
of ConSyGen-Arizona by ConSyGen-Texas, and issuances of common stock by the
Company during 1996. The NASD has not yet responded in writing to the Company's
written response. The outcome of the NASD review could have a material adverse
effect on the Company and the price of and trading market for the Company's
common stock.
Item 2. Changes in Securities
As described in Part I under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations", ConSyGen-Texas
entered into an agreement, dated as of August 28, 1996, to acquire 100% of the
issued and outstanding shares of ConSyGen, Inc., a privately held Arizona
corporation ("ConSyGen-Arizona") (f/k/a International Data Systems, Inc.).
ConSyGen-Texas closed the acquisition of ConSyGen-Arizona on September 5, 1996.
Following the acquisition, ConSyGen-Texas' business consisted solely of the
business of ConSyGen-Arizona. In connection with the acquisition, ConSyGen-Texas
issued an aggregate of 9,275,000 shares of its common stock directly to the
stockholders of ConSyGen-Arizona in exchange for all of the issued and
outstanding shares of ConSyGen-Arizona. In addition, upon the closing of the
acquisition, ConSyGen-Texas issued 150,000 shares of common stock to a
consultant for services rendered and agreed to issue 200,000 shares to a
consultant in cancellation of indebtedness and as payment for services. In
connection with the acquisition, ConSyGen-Arizona terminated outstanding options
to purchase 1,275,000 shares of common stock granted under its Non-Qualified
Stock Option Plan, and ConSyGen-Texas adopted a new Non-Qualified Stock Option
Plan and issued options to purchase 1,275,000 shares of common stock to
employees of ConSyGen-Arizona. In addition, in connection with the acquisition,
ConSyGen-Arizona terminated warrants to purchase 1,000,000 shares of its common
stock, and ConSyGen-Texas reserved for issuance replacement warrants to purchase
1,000,000 shares of its common stock, on the same terms and conditions. On
September 3, 1996, ConSyGen-Texas agreed to issue 100,000 shares to a consultant
as a retainer for services to be rendered.
None of the foregoing shares of common stock, options or warrants were
registered under the Securities Act of 1933.
To the extent that the foregoing transactions constituted "sales"
within the meaning of the Securities Act, the securities issued in such
transactions were not registered under the Securities Act, as amended, in
reliance upon the exemption from registration set forth in Section 4(2) thereof,
relating to sales by an issuer not involving any public offering. Each of the
foregoing transactions, to the extent constituting "sales" within the meaning of
the Securities Act, were exempt under Section 4(2) thereof based on the
following facts: to the knowledge of the issuer, there was no general
solicitation, there were a limited number of purchasers, the purchasers were
provided with or had access to information about the issuer, and either the
purchasers or their respective representatives were sophisticated about business
and financial matters.
Item 3. Defaults Upon Senior Securities
The following defaults on the indebtedness of the Company (after giving
effect to the acquisition) existed at February 28, 1997.
The Company is in default under the terms of a note payable, in the
principal amount of $23,000, bearing interest at approximately 10% per annum and
due June 30, 1989. The Company did not repay the principal and interest due
under the terms of the note on the due date. The payee under the note has not
made demand on the Company for payment. As of February 28, 1997, the total
arrearage under the note was $45,000, consisting of $23,000 in principal and
approximately $22,000 of interest.
The Company is in default under the terms of a note payable, in the
principal amount of $100,000, bearing interest at 10% per annum and due July 31,
1996. The Company did not repay the principal and interest due under the terms
of the note on July 31, 1996, and interest has been accruing at the default rate
of
18% per annum since that date. The payee under the note has not made demand on
the Company for payment. As of February 28, 1997, the total arrearage under the
note was $128,000, consisting of $100,000 in principal and approximately $28,000
of interest.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT
2 Plan of Acquisition between the Registrant and the
stockholders of ConSyGen, Inc., an Arizona
corporation, dated August 28, 1996, filed as Exhibit 2
to the Registrant's Current Report on Form 8-K dated
September 5, 1996 and incorporated herein by
reference.
3.1 Articles of Incorporation of the registrant, as
amended.
3.2 By-Laws of the registrant, filed as Exhibit 3.B to the
Registrant's Registration Statement on Form S-18, File
No. 33-22900 - FW, and incorporated herein by
reference.
4.1 Specimen common stock certificate, filed as Exhibit
4.B to the Registrant's Registration Statement on Form
S-18, File No. 33-22900 - FW, and incorporated herein
by reference.
4.2 Form of Common Stock Purchase Warrant used in
connection with issuance of warrants to purchase an
aggregate of 1,000,000 shares of the Registrant's
Common Stock, $.003 par value.
4.3 Subscription Agreement between the Registrant and
Little Wing, L.P. for convertible debt of the
Registrant (including Summary of Terms).
4.4 Subscription Agreement between the Registrant and
Tonga Partners, L.P. for convertible debt of the
Registrant (including Summary of Terms).
10.1 Agreement between the Registrant and Carriage House
Capital, Inc., dated May 19, 1997, superseding letter
agreements (also filed as Exhibit 10.1 hereto) between
Carriage House Capital, Inc. and the Registrant's
wholly-owned subsidiary, dated June 14, 1996 and
October 26, 1995.
10.2 Consulting Agreement between Carriage House Capital,
Inc. and the Registrant dated July 10, 1996.
Item 6. Exhibits and Reports on Form 8-K - Continued
(a) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT
10.3 Consulting Agreement between Mikesco, Inc. and the
Registrant dated July 10, 1996.
10.4 Consulting Agreement between Concorda Corp. and the
Registrant dated July 10, 1996.
10.5 Consulting Agreement between Scarlett Investment
Group, Inc. and the Registrant dated July 10, 1996.
10.6 Consulting Agreement between The Canter Corporation
and the Registrant dated August 20, 1996.
10.7 Registrant's 1996 Non-Qualified Stock Option Plan.
10.8 Registrant's 1997 Non-Qualified Stock Option Plan.
10.9 Consulting Agreement between the Registrant and
Innovative Research Associates, Inc.
27 Financial Data Schedule.
(b) Reports on Form 8-K
Not applicable
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONSYGEN, INC.
--------------
Date: July 3, 1997 By: /s/Ronald I. Bishop
------------------------------- -------------------
Ronald I. Bishop, President
and Chief Executive Officer
Date: July 3, 1997 By: /s/Kenneth Harvey
------------------------------- -----------------
Kenneth Harvey, Controller
(Chief Accounting Officer)
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
<S> <C> <C>
2 Plan of Acquisition between the Registrant and the
stockholders of ConSyGen, Inc., an Arizona
corporation, dated August 28, 1996, filed as Exhibit 2
to the Registrant's Current Report on Form 8-K dated
September 5, 1996 and incorporated herein by
reference.
3.1 Articles of Incorporation of the registrant, as
amended. *
3.2 By-Laws of the registrant, filed as Exhibit 3.B to the
Registrant's Registration Statement on Form S-18, File
No. 33-22900 - FW, and incorporated herein by
reference.
4.1 Specimen common stock certificate, filed as Exhibit
4.B to the Registrant's Registration Statement on Form
S-18, File No. 33-22900 - FW, and incorporated herein
by reference.
4.2 Form of Common Stock Purchase Warrant used in
connection with issuance of warrants to purchase an
aggregate of 1,000,000 shares of the Registrant's
Common Stock, $.003 par value. *
4.3 Subscription Agreement between the Registrant and
Little Wing, L.P. for convertible debt of the
Registrant (including Summary of Terms). *
4.4 Subscription Agreement between the Registrant and
Tonga Partners, L.P. for convertible debt of the
Registrant (including Summary of Terms). *
10.1 Agreement between the Registrant and Carriage House
Capital, Inc., dated May 19, 1997, superseding letter
agreements (also filed as Exhibit 10.1 hereto) between
Carriage House Capital, Inc. and the Registrant's
wholly-owned subsidiary, dated June 14, 1996 and
October 26, 1995. *
10.2 Consulting Agreement between Carriage House Capital,
Inc. and the Registrant dated July 10, 1996. *
10.3 Consulting Agreement between Mikesco, Inc. and the
Registrant dated July 10, 1996. *
10.4 Consulting Agreement between Concorda Corp. and the
Registrant dated July 10, 1996. *
10.5 Consulting Agreement between Scarlet Investment Group,
Inc. and the Registrant dated July 10, 1996. *
10.6 Consulting Agreement between The Canter Corporation
and the Registrant dated August 20, 1996. *
10.7 Registrant's 1996 Non-Qualified Stock Option Plan. *
10.8 Registrant's 1997 Non-Qualified Stock Option Plan. *
10.9 Consulting Agreement between the Registrant and
Innovative Research Associates, Inc. *
27 Financial Data Schedule. *
</TABLE>
- -----------------
*Filed Herewith
EXHIBIT 3.1
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
C SQUARE VENTURES, INC.
Pursuant to the provisions of the Texas Business Corporation Act, the
undersigned corporation adopts the following amendment to the Corporation's
Articles of Incorporation, which amendment was adopted by the shareholders of
the Corporation on September 4, 1996 by the holders of the outstanding common
stock, the only voting group entitled to vote thereon, by written consent
pursuant to Section 9.10 of the Texas Business Corporation Act. The number of
shares of common stock outstanding and entitled to vote on the amendment was
13,386,116 shares and the number of shares consenting to the amendment was
9,275,000 which was sufficient for approval by that group. All written notice
required by Article 9.10 has been given.
1. The name of the Corporation is C SQUARE VENTURES, INC.
2. The purpose of this Amendment is to change the name of this
corporation as follows:
The name of this corporation is CONSYGEN, INC.
C SQUARE VENTURES. INC.
By:/s/ Carl H. Canter
-----------------------------
President - Director
September 4, 1996
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
C SQUARE VENTURES, INC.
Pursuant to the provisions of the Texas Business Corporation Act, the
undersigned corporation adopts the following amendment to the Corporation's
Articles of Incorporation, which amendment was adopted by the shareholders of
the Corporation on August 22, 1996 by the holders of the outstanding common
stock, the only voting group entitled to vote thereon, by written consent
pursuant to Section 9.10 of the Texas Business Corporation Act. The number of
shares of common stock outstanding and entitled to vote on the amendment was
4,444,667 shares and the number of shares consenting to the amendment was
3,733,666 which was sufficient for approval by that group. All written notice
required by Article 9.10 has been given.
1. The name of the Corporation is C SQUARE VENTURES, INC.
2. The purpose of this Amendment is to accomplish a one-for-forty
reverse stock split of the outstanding common stock of this corporation as
follows:
Each 40 shares of the Corporation's outstanding Common Stock, $.003 par
value, shall be and they are hereby automatically changed (without any further
act) into one share of Common Stock, $.003 par value per share, provided that
any fractional shares shall be increased to the next whole share. Immediately
after the effective date of this amendment, the stockholders of record as of the
close of business on the effective date, shall be given notice to surrender
their certificates for shares of Common Stock to the transfer agent for
cancellation and reissuance in accordance with the terms of the foregoing.
The Board of Directors of the Corporation or any executive committee
thereof is empowered to adopt further rules and regulations concerning the
foregoing reverse stock split and to appropriately adjust any options, warrants
or other securities which are convertible into shares of the Corporation's
Common Stock, if any.
C SQUARE VENTURES. INC.
By:/s/ Carl H. Canter
------------------------
Carl H. Canter
President
August 26, 1996
ARTICLES OF AMENDMENT BY THE
SHAREHOLDERS TO THE
ARTICLES OF INCORPORATION
OF
C SQUARE VENTURES, INC.
Pursuant to the Provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Article of
Amendment to its Articles of Incorporation.
ARTICLE I
The name of the corporation is C Square Ventures, Inc.,
ARTICLE II
The following amendment to the Articles of Incorporation was adopted by
the shareholders of the corporation on October 31, 1989. Article IV of the
Articles of Incorporation is hereby amended to read in full as follows:
"The aggregate number of shares which the corporation shall have
authority to issue is sixteen million six hundred sixty-six thousand six hundred
sixty-six (16,666,666) at the par value of three tenths of a cent ($.003)."
ARTICLE III
The number of shares of the corporation outstanding at the time of the
adoption was 133,344,613; and the number of shares entitled to vote on the
amendment was 133,344,613.
ARTICLE IV
The number of shares which voted for the amendment, and the number of
shares which voted against the amendment was as follows:
FOR: 112,956,178
AGAINST: 24,000
ABSTAIN: 20,364,435
ARTICLE V
The amendment provides for an exchange of issued shares and the manner
in which the exchange is effected is as follows: All shares outstanding shall be
surrendered to the transfer agent in exchange for new shares at the rate of one
new share for each thirty shares surrendered. Fractional shares will not be
issued but cash in an amount equal to the fair market value of such fractional
shares will be issued in lieu thereof.
Dated this 6th day of November, 1989.
C SQUARE VENTURES, INC.
By:/s/ Carl H. Canter
---------------------------
Carl H. Canter, President
ARTICLES OF INCORPORATION
OF
C SQUARE VENTURES, INC.
The undersigned natural person of the age of eighteen (18) years or
more acting as incorporator of a corporation under the Texas Business
Corporation Act hereby adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation is C Square Ventures, Inc.
ARTICLE II
The period of its duration is perpetual.
ARTICLE III
The purpose for which the corporation is organized is the transaction
of any and all lawful business for which corporations may be incorporated under
the Texas Business Corporation Act.
ARTICLE IV
The aggregate number of shares which the corporation shall have
authority to issue is five hundred million (500,000,000) at the par value of ten
thousandths of a cent ($.0001).
ARTICLE V
The corporation will not commence business until it has received for
the issuance of shares consideration of the value of one thousand dollars
($1,000) consisting of money, labor done, or property actually received.
ARTICLE VI
The street address of its initial registered office is 1600 Smith
Street, Suite 4900, Houston, Texas 77002, and the name of its initial registered
agent at such address is Hank Vanderkam.
ARTICLE VII
The number of Directors constituting the initial Board of Directors is
three (3), and the names and addresses of the persons who are to serve as
Directors until the first annual meeting of the shareholders or until their
successors are elected and qualified are:
CARL H. CANTER
417 Goolsby Boulevard
Deerfield Beach, Florida 33442
ROBERTA WEHR
417 Goolsby Boulevard
Deerfield Beach, Florida 33442
HANK VANDERKAM
1600 Smith Street, Suite 4900
Houston, Texas 77002
ARTICLE VIII
The name and address of the incorporator is:
HANK VANDERKAM
Vanderkam & Sanders
1600 Smith Street, Suite 4900
Houston, Texas 77002
ARTICLE IX
A Director of the corporation is not liable to the corporation or its
shareholders or members for monetary damages for an act or omission in the
Director's capacity as Director, unless the act or omission involves a breach of
a Director's duty of loyalty to the corporation or its shareholders or members;
or the act or omission is not in good faith or involves intentional misconduct
or a knowing violation of the law; or the Director engages in a transaction from
which he receives an improper benefit, whether or not the benefit resulted from
an action taken within the scope of the Director's office; or the act or
omission is one in which the liability of the Director is expressly provided for
by statute; or the Director engages in an act related to an unlawful stock
repurchase or payment of dividend.
ARTICLE X
The shareholders of the corporation shall not have a preemptive right
to acquire additional, unissued or treasury shares of the corporation, or
securities of the corporation convertible into or carrying a right to subscribe
to or acquire shares.
ARTICLE XI
The shareholders of the corporation by this Article are hereby
prohibited from cumulatively voting their shares at any election for Directors.
SIGNED this 27th day of September, 1988.
/s/ Hank Vanderkam
----------------------------------------
HANK VANDERKAM, Incorporator
STATE OF TEXAS S
S
COUNTY OF HARRIS S
BEFORE ME, a notary public on this day personally appeared HANK
VANDERKAM, known to me to be the person whose name is subscribed to the
foregoing document and being by me first duly sworn, declared that the
statements therein contained are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS 27th day of September,
1988.
/s/ Janet K. Webb
-------------------------------------
Notary Public in and for the
State of TEXAS
/s/ Janet K. Webb
-------------------------------------
Printed Name of Notary Public
My Commission Expires: 3/28/92
EXHIBIT 4.2
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR STATE SECURITIES LAWS. NO SALE, TRANSFER OR OTHER
DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER APPLICABLE
STATE SECURITIES LAWS, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER SUCH
LAWS IS AVAILABLE.
Warrant No.___ STOCK PURCHASE WARRANT No. of Shares_______
To Subscribe for and Purchase Common Stock of
CONSYGEN, INC.
THIS CERTIFIES that, for value received, _____________________
(together with any subsequent transferees of all or any portion of this Warrant,
the "Holder"), is entitled, upon the terms and subject to the conditions
hereinafter set forth, to subscribe for and purchase from CONSYGEN, INC., a
Texas corporation (hereinafter called the "Company"), at the price hereinafter
set forth in Section 2, up to __________________________ (________) fully paid
and non-assessable shares (the "Shares") of the Company's Common Stock, $.003
par value per share (the "Common Stock").
1. Definitions. As used herein the following term shall have the
following meaning:
"Act" means the Securities Act of 1933, as amended, or a successor
statute thereto and the rules and regulations of the Securities and Exchange
Commission issued under that Act, as they each may, from time to time, be in
effect.
2. Purchase Rights. Subject to this Section 2, the purchase rights
represented by this Warrant shall be exercisable by the Holder in whole or in
part commencing one (1) year from the date hereof.
Subject to the terms hereof, the purchase rights represented by this
Warrant shall expire two (2) years from the date hereof.
Subject to this Section 2, this Warrant may be exercised for Shares at
a price of five dollars ($5.00) per share, subject to adjustment as provided in
Section 6 (the "Warrant Purchase Price").
This Warrant may be redeemed by the Company upon 60 days written notice
to the Holder hereof at a price equal to the product of the number of Shares
issuable hereunder and the par value of the Shares ($.003). The Company may
exercise its redemption right by delivering or mailing to the Holder written
notice of redemption to the address according to the Company's records. Within
60 days after the date of the Company's notice of redemption hereunder, the
Holder shall tender to the Company at its principal offices the certificate or
certificates representing this Warrant, all in form suitable for transfer of
this Warrant to the Company, together with such documents as the Company may
reasonably require to effectuate such transfer. Upon its receipt of such
certificate(s), the Company shall deliver or mail to the Holder a check in the
amount of the redemption price determined in accordance herewith. After the time
at which the certificate(s) is required to be delivered to the Company for
transfer to the Company hereunder, the Holder shall have no rights hereunder,
including without limitation the right to exercise the purchase rights evidenced
by this Warrant. In the event that the Company elects to exercise its redemption
right hereunder, it may do so by canceling the certificate(s) evidencing this
Warrant and depositing the redemption price determined hereunder in a bank
account for the benefit of the Holder, whereupon this Warrant shall be, for all
purposes, canceled and neither the Holder nor any transferee shall have any
rights hereunder. In addition to any other legal or equitable remedies which it
may have, the Company may enforce its rights by actions for specific performance
(to the extent permitted by law).
3. Exercise of Warrant. Subject to Section 2 above, the purchase rights
represented by this Warrant may be exercised, in whole or in part and from time
to time, by the surrender of this Warrant and the duly executed Notice of
Exercise (the form of which is attached as Exhibit A) at the principal office of
the Company and by the payment to the Company, by check, of an amount equal to
the then applicable Warrant Purchase Price per share multiplied by the number of
Shares then being purchased. Upon exercise, the Holder shall be entitled to
receive, within a reasonable time, a certificate or certificates, issued in the
Holder's name or in such name or names as the Holder may direct, for the number
of Shares so purchased. The Shares so purchased shall be deemed to be issued as
of the close of business on the date on which this Warrant shall have been
exercised.
4. Shares to be Issued; Reservation of Shares. The Company covenants
that the Shares that may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon issuance in accordance herewith, be fully
paid and non-assessable, and free from all liens and charges with respect to the
issue thereof. During the period within which the purchase rights represented by
the Warrant may be exercised, the Company will at all times have authorized and
reserved, for the purpose of issuance upon exercise of the purchase rights
represented by this Warrant, a sufficient number of shares of its Common Stock
to provide for the exercise of the right represented by this Warrant.
5. No Fractional Shares. No fractional shares shall be issued upon the
exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to
such fraction multiplied by the fair market value of such shares of Common
Stock, as determined in good faith by the Company's Board of Directors.
6. Adjustments of Warrant Purchase Price and Number of Shares. If there
shall be any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure of the Company, appropriate adjustments
shall be made by the Board of Directors of the Company (or if the Company is not
the surviving corporation in any such transaction, the Board of Directors of the
surviving corporation) in the aggregate number and kind of shares
-2-
subject to this Warrant, and the number and kind of shares and the price per
share then applicable to shares covered by the unexercised portion of this
Warrant.
7. No Rights as Shareholders. This Warrant does not entitle the Holder
to any voting rights or other rights as a shareholder of the Company prior to
exercise of this Warrant and the payment for the Shares so purchased.
Notwithstanding the foregoing, the Company agrees to transmit to the Holder such
information, documents and reports as are generally distributed to holders of
the capital stock of the Company concurrently with the distribution thereof to
the shareholders. Upon valid exercise of this Warrant and payment for the Shares
so purchased in accordance with the terms of the Warrant, the Holder or the
Holder's designee, as the case may be, shall be deemed a shareholder of the
Company.
8. Sale or Transfer of the Warrant and the Shares; Legend. The Warrant
and the Shares shall not be sold or transferred unless either (i) they first
shall have been registered under applicable State Securities laws, or (ii) such
sale or transfer is exempt from the registration requirements of such laws. Each
certificate representing any Warrant shall bear the legend set out on page 1
hereof. Each certificate representing any Shares shall bear a legend
substantially in the following form, as appropriate:
9. THE SHARES EVIDENCED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO UNDER APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO
AN EXEMPTION UNDER APPLICABLE STATE SECURITIES LAWS.
10. Such Warrant and Shares may be subject to additional restrictions
on transfer imposed under applicable state and federal securities law.
11. Modifications and Waivers. This Warrant may not be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which enforcement of the same is sought.
12. Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
the Holder at its address shown on the books of the Company or in the case of
the Company, at the address indicated therefor on the signature page of this
Warrant, or, if different, at the principal office of the Company.
13. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants with the Holder that upon its receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate and, in the case of any such loss, theft
or destruction, of an indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of this Warrant or stock certificate, if
mutilated, the Company will
-3-
make and deliver a new Warrant or stock certificate, of like tenor, in lieu of
the lost, stolen, destroyed or mutilated Warrant or stock certificate.
14. Representations and Warranties of Holder. By accepting this
Warrant, the Holder represents and warrants that he, she or it is acquiring this
Warrant and the Shares for his, her or its own account, for investment and not
with a view to, or for sale in connection with, any distribution thereof or any
part thereof. Holder represents and warrants that he, she or it is (a)
experienced in the evaluation of businesses similar to the Company, (b) has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Company, (c) has the
ability to bear the economic risks of an investment in the Company, (d) has been
furnished with or has had access to such information as is specified in
subparagraph (b)(2) of Rule 502 promulgated under the Act and (e) has been
afforded the opportunity to ask questions of and to receive answers from the
officers of the Company and to obtain any additional information necessary to
make an informed investment decision with respect to an investment in the
Company.
15. Binding Effect on Successors. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Shares issuable upon exercise of this Warrant
shall survive the exercise and termination of this Warrant and all of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
16. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Texas.
IN WITNESS WHEREOF, CONSYGEN, INC. has caused this Warrant to be
executed under seal by its officer thereunto duly authorized.
ORIGINAL ISSUANCE DATE: {} ___, 1996
CONSYGEN, INC.
CORPORATE
SEAL
----------------------------
By: Robert L. Stewart, President
Address: 10201 So. 51st Street
Suite 140
Phoenix, AZ 85044
-4-
EXHIBIT A
NOTICE OF EXERCISE
------------------
To: CONSYGEN, INC.
1. The undersigned hereby elects to purchase _______ shares of Common
Stock of CONSYGEN, INC. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below.
3. The undersigned represents that the aforesaid shares of Common Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof and
that the undersigned has no present intention of distributing or reselling such
shares. The undersigned further represents that such shares shall not be sold or
transferred unless either (1) they first shall have been registered under
applicable state securities laws or (ii) or an exemption from applicable state
registration requirements is available.
4. In the event of partial exercise, please re-issue an appropriate
Warrant exercisable into the remaining shares.
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
(Signature)
-------------------------------
(Date)
EXHIBIT 4.3
SUBSCRIPTION AGREEMENT
ConSyGen, Inc.
10201 South 51st Street
Suite 140
Phoenix, AZ 85044
Gentlemen:
1. The undersigned hereby tenders this subscription and subscriber
for the purchase of a 6% Convertible Note, in the principal amount of $600K
convertible into shares of common stock of ConSyGen, Inc. (The "Company").
Together with this Subscription Agreement, the undersigned is delivering to the
Company, its funds by wire transfer as instructed by the Company. (See previous
page 2).
2. Representations and Warranties. In order to induce the Company
to accept this subscription, the undersigned hereby represents and warrants to,
and covenants with, the Company as follows:
(i) The undersigned performed reasonable due diligence and has not
been furnished with any other materials or literature relating to the offer and
sale of the shares being offered except those included in these confidential
offering materials.
(ii) The undersigned has had a reasonable opportunity to ask
questions of and receive answers from the Company concerning the Company and the
offering, and all such questions, if any, have been answered to the full
satisfaction of the undersigned;
(iii) The undersigned has such knowledge and expertise in
financial and business matters that the undersigned is capable of evaluating the
merits and risks involved in an investment in the securities offered hereby.
(iv) The Confidential Purchaser Questionnaire being delivered by
the undersigned to the Company simultaneously herewith is true, complete and
correct in all material respects; and the undersigned understands that the
Company has determined that the exemption from the registration provisions of
the Securities Act of 1933, as amended (the "Act"), which is based upon
non-public offerings are applicable to the offer and sale of the securities
offered hereby, based, upon the representations, warranties and agreements made
by the undersigned herein and in the Confidential Purchaser Questionnaire
referred to above;
(v) Except as set forth in the confidential offering `materials no
representations or warranties have been made to the undersigned by the Company
or any agent, employee or affiliate of the Company and in entering into this
transaction the
-2-
undersigned is not relying upon any information, other than that which is made
and the results of independent investigation by the undersigned;
(vi) The undersigned understands that (A) the Securities have not
been registered under the Act or the securities laws of any state, based upon an
exemption from such registration requirements for non-public offerings pursuant
to Regulation D under the Act; (B) the Securities are and will be "restricted
securities", as said term is defined in Regulation D of the Securities Act of
1933 and Regulations promulgated under the Act; (C) the Securities may not be
sold or otherwise transferred unless they have been first registered under the
Act and all applicable state securities laws, or unless exemptions from such
registration provisions are available with respect to said resale or transfer;
(D) the certificates for the underlying Shares when issued will bear a legend to
the effect that the transfer of the securities represented thereby is subject to
restrictions on resale under federal and state securities laws; and (E) stop
transfer instructions will be placed with the transfer agent for the Shares;
(vii) The undersigned is acquiring the Securities solely for the
account of the undersigned, for investment purposes only, and not with a view
towards the resale or distribution thereof;
(viii) The undersigned will not sell or otherwise transfer any of
the Securities of common stock or any interest therein, unless and until (I)
said shares shall have first been registered under the Act and all applicable
state securities laws; or (ii) the undersigned shall have first delivered to the
Company a written opinion of counsel (which counsel and opinion (in form and
substance) shall be reasonably satisfactory to the Company), to the effect that
the proposed sale or transfer is exempt from the registration provisions or the
Act and all applicable state securities laws;
(ix) The undersigned has full power and authority to execute and
deliver this Subscription Agreement and to perform the obligations of the
undersigned hereunder; and this Subscription Agreement is a legally binding
obligation of the undersigned in accordance with its terms;
(x) the undersigned is an "accredited investor", as such term is
defined in Regulation D promulgated under the Act.
3. The undersigned understands that this subscription is not
binding upon the Company until the Company accepts it, which acceptance is at
the sole discretion of the Company and is to be evidenced by the Company's
execution of this Subscription Agreement where indicated. This Subscription
Agreement shall be null and void if the Company does not accept it as aforesaid.
4. The undersigned understands that the Company may, in its sole
discretion, reject this subscription and, in the event that the offering is over
subscribed, offer partial reduce this subscription in any amount and to any
extent, whether or not pro rata reductions are made of any other investor's
subscription.
-3-
5. The undersigned agrees to indemnify the Company and hold it
harmless from and against any and all losses, damages, liabilities, costs and
expenses which it may sustain or incur in connection with the breach by the
undersigned or if an representation, warranty or covenant made by the
undersigned herein.
6. Neither this Subscription Agreement nor any of the rights of
the undersigned hereunder may be transferred or assigned by the undersigned.
7. This Subscription Agreement (I) may only be modified by a
written instrument executed by the undersigned and the Company; and (ii) sets
forth the entire agreement of the undersigned and the Company with respect to
the subject matter hereof; (iii) shall be governed by the laws of the State of
Texas applicable to contracts made and to be wholly performed therein; and (iv)
shall inure to the benefit of, and be binding upon the Company and the
undersigned and their respective heirs, legal representatives, successors and
permitted assigns.
8. Unless the context otherwise requires, all personal pronouns
used in this Subscription Agreement, whether in the masculine, feminine or
neuter gender, shall include all other genders.
9. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
within five days if mailed by certified or registered mail, return receipt
requested, postage prepaid, as follows; if to the undersigned, to the address
set forth in the Confidential Purchaser Questionnaire referred to above; and if
to the Company, to ConSyGen, Inc. 10201 South 51st Street, Phoenix, AZ 85044 or
to such other address as the Company or the undersigned shall have designated to
the other by like notice.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this 17th day of March, 1997.
Organization Signature:
Little Wing, L.P.
--------------------------
Print Name of Subscriber
By: /s/Parker Quillen
-----------------------
Print Name and Title
Person Signing
Principal amount of Note
subscribed for:
$600,000.00
-4-
INDEMNIFICATION
(a) The undersigned hereby indemnifies the Company, its affiliates and its
agents and holds them harmless from and against any and all loss, damage,
liability or expense, including costs and reasonable attorney's fees,
incurred by the Company (or its affiliates or agents) by reason of or in
connection with any misrepresentation made by the undersigned, any breach
of any of the undersigned's warranties, or failure of the undersigned to
fulfill any covenants or agreements under this Subscription Agreement.
This Subscription Agreement and the representations and warranties
contained herein shall survive the undersigned's purchase of the Shares
and shall be binding upon the successors and assigns of the undersigned.
(b) The Company hereby indemnifies the undersigned, its affiliates and its
agents and holds them harmless from and against any and all loss, damage,
liability or expense, including costs and reasonable attorney's fees,
incurred by the undersigned (or its affiliates or agents) by reason of or
in connection with any misrepresentation made by the Company, any breach
of any of the Company's warranties, or failure of the Company to fulfill
any covenants or agreements under this Subscription Agreement. This
Subscription Agreement and the representations and warranties contained
herein shall survive the undersigned's purchase of the Shares and shall be
binding upon the successors and assigns of the Company.
-5-
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15 (d) OF THE ACT BY REGISTRANT'S WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
-6-
ACCEPTANCE OF SUBSCRIPTION
ConSyGen, Inc.
The foregoing subscription is hereby accepted by ConSyGen, Inc.,
this 20th day of March, 1997, for $600,000.00.
ConSyGen, Inc.
By: /s/Ronald I. Bishop
------------------------------
Ronald I. Bishop, President
SUMMARY OF TERMS
CONSYGEN, INC.
10201 South 51st Street
Suite 140
Phoenix, AZ 85044
(A Texas Corporation)
*******************
<TABLE>
<CAPTION>
<S> <C>
AMOUNT: Up to $1,000,000
UNDERWRITING: Best efforts, exclusive to IRA Capital Corporation
INSTRUMENT A 6% Convertible Note, convertible into shares of common stock of
ConSyGen, Inc. (The "Company")
REGISTRATION: The Convertible Notes will be issued pursuant to the exemption provisions
of Sections 4(2) and 4(6) of the Securities Act of 1933 (Regulation D).
The Company agrees to file a Registration Statement with the Securities
and Exchange Commission on Form S-3, its successor form, or any other form
under the Securities Act under which the common shares underlying the
Convertible Note is eligible to be registered, as soon as reasonably
practicable after the Closing Date, unless the shares underlying the Notes
are freely tradable under the Securities Act without registration
thereunder.
CONVERSION DISCOUNT: Lesser of:
(i) A fixed price determined to be 115% of the closing bid price of the
common shares on the Closing date; or
(ii) 30% discount off the average of the
previous 5 day closing bid price prior to
conversion.
CONVERSION DATE: The Note may be converted to shares of common stock at the earlier of the
expiration of 90 days following the Closing Date or the effective date of
the Registration Statement registering the Shares underlying the
Convertible Note as the case may be. The underlying common shares will be
subject to a Stop Transfer Instruction until the underlying shares are
registered under the Securities Act or the Company has received an opinion
of counsel, in form and substance satisfactory to the Company, that such
registration is not required.
If the Registration Statement registering the shares underlying the
Convertible Notes (the "Registration Statement") is not declared effective
by the Securities and Exchange Commission ("SEC") within 90 days of the
Closing, a penalty of an amount equal to two (2%) percent interest shall
be paid by the company in cash on the first day of the first month and at
the end of each 30 day period thereafter, during which the Registration
statement has not been declared effective by the SEC, a penalty of 3%
(three percent) shall be paid by the company in cash on the first day of
each subsequent month thereafter.
(A) The Company may force conversion of the Note with notice at any time
following the expiration of 6 months of the effective registration date.
(B) If the price of the shares of common stock is less than the bid price
on the day of closing of this offering, then the Company may elect to
redeem all or part of the Notes at a 130% (one hundred and thirty percent)
premium. The following conditions are applicable: (1) The Company must
provide the subscriber with full cash payment within three business days
of their notice to redeem the Note. Failure to satisfy the terms of
payment of the redemption in full, the Company shall forfeit all
redemption rights. (2) Upon the Company's receipt of conversion notice
from the subscriber, the Company may not effect a redemption of any kind.
(3) Upon notification of conversion from the subscriber to the Company,
the Company is required to deliver the shares of common stock to the
subscriber within 5 (five) business days of notification.
TERM: 3 Years
INTEREST: 6% per annum, payable semi-annually
CLOSING: On or before March 11, 1997
DOCUMENTATION: All documentation to be in form acceptable to counsel to ConSyGen, Inc.
and IRA Capital Corporation
ESCROW AGENT: IRA Capital Corporation
DATE: March 10, 1997
************
</TABLE>
This document is for information purposes only. IRA Capital Corporation believes
that the above-noted terms are indicative of the current investment climate
although the opinions expressed herein are subject to change without notice.
EXHIBIT 4.4
SUBSCRIPTION AGREEMENT
ConSyGen, Inc.
10201 South 51st Street
Suite 140
Phoenix, AZ 85044
Gentlemen:
1. The undersigned hereby tenders this subscription and subscriber for
the purchase of a 6% Convertible Note, in the principal amount of $400K
convertible into shares of common stock of ConSyGen, Inc. (The "Company").
Together with this Subscription Agreement, the undersigned is delivering to the
Company, its funds by wire transfer as instructed by the Company. (See previous
page 2).
2. Representations and Warranties. In order to induce the Company to
accept this subscription, the undersigned hereby represents and warrants to, and
covenants with, the Company as follows:
(i) The undersigned performed reasonable due diligence and has not been
furnished with any other materials or literature relating to the offer and sale
of the shares being offered except those included in these confidential offering
materials.
(ii) The undersigned has had a reasonable opportunity to ask questions
of and receive answers from the Company concerning the Company and the offering,
and all such questions, if any, have been answered to the full satisfaction of
the undersigned;
(iii) The undersigned has such knowledge and expertise in financial and
business matters that the undersigned is capable of evaluating the merits and
risks involved in an investment in the securities offered hereby.
(iv) The Confidential Purchaser Questionnaire being delivered by the
undersigned to the Company simultaneously herewith is true, complete and correct
in all material respects; and the undersigned understands that the Company has
determined that the exemption from the registration provisions of the Securities
Act of 1933, as amended (the "Act"), which is based upon non-public offerings
are applicable to the offer and sale of the securities offered hereby, based,
upon the representations, warranties and agreements made by the undersigned
herein and in the Confidential Purchaser Questionnaire referred to above;
(v) Except as set forth in the confidential offering `materials no
representations or warranties have been made to the undersigned by the Company
or any agent, employee or affiliate of the Company and in entering into this
transaction the undersigned is not relying upon any information, other than that
which is made and the results of independent investigation by the undersigned;
-2-
(vi) The undersigned understands that (A) the Securities have not been
registered under the Act or the securities laws of any state, based upon an
exemption from such registration requirements for non-public offerings pursuant
to Regulation D under the Act; (B) the Securities are and will be "restricted
securities", as said term is defined in Regulation D of the Securities Act of
1933 and Regulations promulgated under the Act; (C) the Securities may not be
sold or otherwise transferred unless they have been first registered under the
Act and all applicable state securities laws, or unless exemptions from such
registration provisions are available with respect to said resale or transfer;
(D) the certificates for the underlying Shares when issued will bear a legend to
the effect that the transfer of the securities represented thereby is subject to
restrictions on resale under federal and state securities laws; and (E) stop
transfer instructions will be placed with the transfer agent for the Shares;
(vii) The undersigned is acquiring the Securities solely for the
account of the undersigned, for investment purposes only, and not with a view
towards the resale or distribution thereof;
(viii) The undersigned will not sell or otherwise transfer any of the
Securities of common stock or any interest therein, unless and until (I) said
shares shall have first been registered under the Act and all applicable state
securities laws; or (ii) the undersigned shall have first delivered to the
Company a written opinion of counsel (which counsel and opinion (in form and
substance) shall be reasonably satisfactory to the Company), to the effect that
the proposed sale or transfer is exempt from the registration provisions or the
Act and all applicable state securities laws;
(ix) The undersigned has full power and authority to execute and
deliver this Subscription Agreement and to perform the obligations of the
undersigned hereunder; and this Subscription Agreement is a legally binding
obligation of the undersigned in accordance with its terms;
(x) the undersigned is an "accredited investor", as such term is
defined in Regulation D promulgated under the Act.
3. The undersigned understands that this subscription is not binding
upon the Company until the Company accepts it, which acceptance is at the sole
discretion of the Company and is to be evidenced by the Company's execution of
this Subscription Agreement where indicated. This Subscription Agreement shall
be null and void if the Company does not accept it as aforesaid.
4. The undersigned understands that the Company may, in its sole
discretion, reject this subscription and, in the event that the offering is over
subscribed, offer partial reduce this subscription in any amount and to any
extent, whether or not pro rata reductions are made of any other investor's
subscription.
5. The undersigned agrees to indemnify the Company and hold it harmless
from and against any and all losses, damages, liabilities, costs and expenses
which it may sustain or
-3-
incur in connection with the breach by the undersigned or if an representation,
warranty or covenant made by the undersigned herein.
6. Neither this Subscription Agreement nor any of the rights of the
undersigned hereunder may be transferred or assigned by the undersigned.
7. This Subscription Agreement (I) may only be modified by a written
instrument executed by the undersigned and the Company; and (ii) sets forth the
entire agreement of the undersigned and the Company with respect to the subject
matter hereof; (iii) shall be governed by the laws of the State of Texas
applicable to contracts made and to be wholly performed therein; and (iv) shall
inure to the benefit of, and be binding upon the Company and the undersigned and
their respective heirs, legal representatives, successors and permitted assigns.
8. Unless the context otherwise requires, all personal pronouns used in
this Subscription Agreement, whether in the masculine, feminine or neuter
gender, shall include all other genders.
9. All notices or other communications hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally or within
five days if mailed by certified or registered mail, return receipt requested,
postage prepaid, as follows; if to the undersigned, to the address set forth in
the Confidential Purchaser Questionnaire referred to above; and if to the
Company, to ConSyGen, Inc. 10201 South 51st Street, Phoenix, AZ 85044 or to such
other address as the Company or the undersigned shall have designated to the
other by like notice.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this 17th day of March, 1997.
Organization Signature:
Tonga Partners, L.P.
---------------------------
Print Name of Subscriber
By: /s/Carlo Cannell
------------------------
Print Name and Title
Person Signing
Principal amount of Note
subscribed for:
$400,000.00
-4-
INDEMNIFICATION
(a) The undersigned hereby indemnifies the Company, its affiliates and its
agents and holds them harmless from and against any and all loss, damage,
liability or expense, including costs and reasonable attorney's fees,
incurred by the Company (or its affiliates or agents) by reason of or in
connection with any misrepresentation made by the undersigned, any breach
of any of the undersigned's warranties, or failure of the undersigned to
fulfill any covenants or agreements under this Subscription Agreement. This
Subscription Agreement and the representations and warranties contained
herein shall survive the undersigned's purchase of the Shares and shall be
binding upon the successors and assigns of the undersigned.
(b) The Company hereby indemnifies the undersigned, its affiliates and its
agents and holds them harmless from and against any and all loss, damage,
liability or expense, including costs and reasonable attorney's fees,
incurred by the undersigned (or its affiliates or agents) by reason of or
in connection with any misrepresentation made by the Company, any breach of
any of the Company's warranties, or failure of the Company to fulfill any
covenants or agreements under this Subscription Agreement. This
Subscription Agreement and the representations and warranties contained
herein shall survive the undersigned's purchase of the Shares and shall be
binding upon the successors and assigns of the Company.
-5-
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15 (d) OF THE ACT BY REGISTRANT'S WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
-6-
ACCEPTANCE OF SUBSCRIPTION
ConSyGen, Inc.
The foregoing subscription is hereby accepted by ConSyGen, Inc.,
this 20th day of March, 1997, for $400,000.00.
ConSyGen, Inc.
By: /s/Ronald I. Bishop
---------------------------------
Ronald I. Bishop, President
SUMMARY OF TERMS
CONSYGEN, INC.
10201 South 51st Street
Suite 140
Phoenix, AZ 85044
(A Texas Corporation)
*******************
<TABLE>
<CAPTION>
<S> <C>
AMOUNT: Up to $1,000,000
UNDERWRITING: Best efforts, exclusive to IRA Capital Corporation
INSTRUMENT A 6% Convertible Note, convertible into shares of common stock of
ConSyGen, Inc. (The "Company")
REGISTRATION: The Convertible Notes will be issued pursuant to the exemption provisions
of Sections 4(2) and 4(6) of the Securities Act of 1933 (Regulation D).
The Company agrees to file a Registration Statement with the Securities
and Exchange Commission on Form S-3, its successor form, or any other form
under the Securities Act under which the common shares underlying the
Convertible Note is eligible to be registered, as soon as reasonably
practicable after the Closing Date, unless the shares underlying the Notes
are freely tradable under the Securities Act without registration
thereunder.
CONVERSION DISCOUNT: Lesser of:
(i) A fixed price determined to be 115% of the closing bid price of the
common shares on the Closing date; or
(ii) 30% discount off the average of the
previous 5 day closing bid price prior to
conversion.
CONVERSION DATE: The Note may be converted to shares of common stock at the earlier of the
expiration of 90 days following the Closing Date or the effective date of
the Registration Statement registering the Shares underlying the
Convertible Note as the case may be. The underlying common shares will be
subject to a Stop Transfer Instruction until the underlying shares are
registered under the Securities Act or the Company has received an opinion
of counsel, in form and substance satisfactory to the Company, that such
registration is not required.
If the Registration Statement registering the shares underlying the
Convertible Notes (the "Registration Statement") is not declared effective
by the Securities and Exchange Commission ("SEC") within 90 days of the
Closing, a penalty of an amount equal to two (2%) percent interest shall
be paid by the company in cash on the first day of the first month and at
the end of each 30 day period thereafter, during which the Registration
statement has not been declared effective by the SEC, a penalty of 3%
(three percent) shall be paid by the company in cash on the first day of
each subsequent month thereafter.
(A) The Company may force conversion of the Note with notice at any time
following the expiration of 6 months of the effective registration date.
(B) If the price of the shares of common stock is less than the bid price
on the day of closing of this offering, then the Company may elect to
redeem all or part of the Notes at a 130% (one hundred and thirty percent)
premium. The following conditions are applicable: (1) The Company must
provide the subscriber with full cash payment within three business days
of their notice to redeem the Note. Failure to satisfy the terms of
payment of the redemption in full, the Company shall forfeit all
redemption rights. (2) Upon the Company's receipt of conversion notice
from the subscriber, the Company may not effect a redemption of any kind.
(3) Upon notification of conversion from the subscriber to the Company,
the Company is required to deliver the shares of common stock to the
subscriber within 5 (five) business days of notification.
TERM: 3 Years
INTEREST: 6% per annum, payable semi-annually
CLOSING: On or before March 11, 1997
DOCUMENTATION: All documentation to be in form acceptable to counsel to ConSyGen, Inc.
and IRA Capital Corporation
ESCROW AGENT: IRA Capital Corporation
DATE: March 10, 1997
************
This document is for information purposes only. IRA Capital Corporation believes
that the above-noted terms are indicative of the current investment climate
although the opinions expressed herein are subject to change without notice.
</TABLE>
EXHIBIT 10.1
CONSYGEN, INC.
10201 SOUTH 51ST STREET, SUITE 140
PHOENIX, ARIZONA 85044
Carriage House Capital May 19, 1997
2530 South Rural Road
Tempe, AZ 85282
Attn: Howard Baer, President
Dear Howard:
We have received your proposal that we issue you 300,000 shares of
stock. We appreciate the services you have rendered to ConSyGen over the last
year.
We shall issue to you 300,000 shares, as you have requested, upon the
following terms and conditions:
1. These shares shall be in full satisfaction of all amounts due now or in
the future under any existing arrangement between Carriage House
Capital, Inc. and/or its affiliates ("CHC"), and ConSyGen, Inc., a
Texas corporation, and/or its wholly-owned subsidiary, ConSyGen, Inc.,
an Arizona corporation, and their respective affiliates (together, the
"Company"), including, without limitation, $1,153,000 of indebtedness
of ConSyGen, Inc., an Arizona corporation, to CHC, acquired by CHC from
certain persons who loaned money to ConSyGen, Inc., an Arizona
corporation.
2. All agreements between CHC and the Company shall terminate, except that
CHC shall until June 14, 1998 (i) have a right of first refusal with
respect to any debt or equity financing of the Company and (ii) without
further compensation provide such consulting services to the Company as
the Company may reasonably request. The terms of the CHC first refusal
right shall be as set forth below. The Company shall provide written
notification to CHC of the terms and conditions of the proposed
financing (the "Notice"). If CHC does not agree in writing within five
(5) business days of receipt of the Notice from the Company, to provide
the Company with financing in the amount set forth in the Notice and on
terms and conditions at least as favorable to the Company as those set
forth in the Notice, then the Company shall be free to proceed with the
financing which is the subject of the Notice. In addition, if any
individual previously introduced to the Company by CHC makes an
investment in the Company after the date hereof, CHC shall be entitled
to reasonable compensation in an amount to be agreed by CHC and the
Company.
3. CHC shall execute and deliver to Wolinetz, Gottlieb and Lafazan, P.C.,
the Company's independent accountants, such documents as they require
in connection with their audit of the financial statements of the
Company.
4. CHC shall execute such further documents as are reasonably required by
the Company to give effect to this letter agreement.
If these terms are acceptable to you, please sign where indicated below
and return to me.
AGREED AND ACCEPTED BEST REGARDS,
Carriage House Capital
ConSyGen, Inc.
/s/Howard Baer
- ---------------------------
Howard Baer, President
/s/Robert L. Stewart
---------------------------
Robert L. Stewart, Chairman
CARRIAGE HOUSE CAPITAL
1223 E. BROADWAY, SUITE #1
TEMPE, AZ 85282
(602) 731-9100
FAX 731-9565
June 14, 1996
Mr. Robert Stewart
International Data Systems
10201 S. 51st Street
Phoenix, AZ 85044
Dear Bob:
As per our conversations, Carriage House Capital (CHC) and
International Data Systems (IDS) have agreed to fund IDS as follows:
1. CHC will seek loans up to $500,000 for IDS subject to IDS filing a 504K
public offering, which will be arranged by CHC. The lenders will
receive one warrant to purchase additional shares of IDS after one
year, at $5 per share for each two dollars loaned to the company.
2. CHC will orchestrate a 504K public offering, to be filed in New York,
for $1,000,000, which is the maximum allowed under the 504
registration. This will be for 2,000,000 shares at $.50 per share.
These shares will have warrants attached to purchase one warrant for
each two shares purchased. The warrants will not be exercisable for one
year and will be at $5 per share.
3. All warrants issued for the above will be exercisable at $5.00, will
not be exercisable for one year unless registered by the company at a
later date, will be callable after the first year, and will be good for
two years.
4. CHC will arrange for meetings in New York with brokers and investors to
assist in the selling of the 2,000,000 shares. CHC will also arrange
for at least three NASD member firms to maintain a market in the shares
of IDS.
The final capitalization would be as follows:
Presently issued (rounded off) 6,750,000 shs 57.5%
Employee Options 1,725,000 14.7%
IPO 2,000,000 17.05%
OPTIONS @ $5.00 (Maximum) 1,250,000 10.66%
TOTAL-Fully diluted 11,725,000 100.00%
TOTAL FUNDS WHEN EXERCISED:
IPO $1,000,000
WARRANTS 6,250,000
TOTAL FOR 28% $7,250,000
FEES and COSTS (approx) 200,000
June 14, 1996
Page 2
IDS Agreement
COMPENSATION
1. CHC will receive the balance of the original 300,000 shares at $.01
per share.
2. Ten (10%) per cent of the funds raised will be held for brokers fees.
This would be $100,000.
3. CHC would receive $50,000 in compensation and expenses of $7,500 upon
completion of the IPO.
4. CHC would receive 300,000 warrants at $5.00. Part of these would be
retained by CHC and the remainder paid to brokers for their assistance.
These warrants would be transferable.
AGREEMENT BY IDS
IDS agrees that if for any reason the 504K cannot be completed, but a minimum of
$200,000 has been raised in loans, CHC would be allowed to proceed with a
reverse merger into a public company.
IDS agrees that loans previously given to IDS by CHC or HOWARD BAER can be
converted into loans on the 504K and further converted into the IPO.
Upon completion of the 504K, IDS agrees to retain CHC as a non-exclusive
financial consultant at the monthly rate of $3,500 per month for a period of 24
month. CHC will provide continued market support, broker and shareholder
relations, and additional equity funding when and if required by IDS. The
company also agrees to give CHC the right of first refusal on any future
financing the company may need during a period of two years from the date of
this agreement.
IDS agrees that CHC will have the exclusive right to finance IDS for 90 days
subject to a minimum of $100,000 being received by IDS by the close of business
Friday, June 21, 1996.
If you are in agreement with the terms of our working relationship, please sign
where appropriate and return one duplicate original of this letter. We will
begin working upon completion of a signed agreement.
Sincerely, Consented and agreed to:
INTERNATIONAL DATA SYSTEMS
/s/Kevin C. Baer /s/Robert L. Stewart
- ------------------------------ ----------------------------
Kevin C. Baer, Vice President Robert L. Stewart, President
CARRIAGE HOUSE CAPITAL, INC.
351 Newbury Street 1223 East Broadway, Suite #1
Boston, MA 02115 Tempe, AZ 85282
(617) 536-1920 (602) 731-9100
Fax (617) 536-6062 Fax (602) 731-9565
October 26, 1995
Mr. Robert Stewart
International Data Systems
10201 S. 51st Street
Suite 140
Phoenix, AZ 85044
Dear Bob:
Based on our conversations, Carriage House Capital, Inc., (CHC) is
prepared to assist IDS in securing the funds presently needed by IDS in a two
step process. The first would be to raise funds needed immediately for monthly
expenses on an "as needed" basis, while at the same time arranging for more
substantial, long term financing via a public offering or private Investors.
After making several inquiries around Wall Street as to the
availability of firms to participate in an IPO, I firmly believe that a reverse
merger into a blind pool, followed by a secondary offering in the spring of next
year would be much more beneficial to you in order to retain the greater amount
of equity in the company. I will explain the benefits of this the next time we
meet.
It is my understanding that the company needs approximately $100,000
per month to meet its negative cash flow. Our goal would be to raise this amount
monthly while giving up as little equity as possible.
Based on these assumptions, CHC is prepared to assist you in the following:
1. Raise equity financing at the rate of a minimum of $100,000 per month
for at least six months (IDS determines the length of time), while
seeking permanent, long term financing of approximately $5 to $7
million. The first raising of at least $100,000 is to be completed
within 60 days of the effective date of this agreement. The minimum
term may be reduced if proportionately larger raisings are achieved
within the term.
2. Locate and acquire an existing public company to merge with, if that is
the direction that we (CHC and IDS) decide to go in.
3. Locate an underwriter to do an IPO for $5 million or more, or, if
merged with an existing public company, to do a secondary offering of
$5 million or more.
In consideration of the consulting services to be provided in conjunction with
all of the above, CHC would be entitled to compensation as follows:
4. An option to purchase a maximum of 300,000 IDS shares at $0.01 per
share on the following basis:
a. upon the signing of this agreement - 100,000 shares;
b. upon the raising of each successive $100,000 until a total
raising of $400,000 is reached, a further 50,000 shares until
the balance of 200,000 shares is reached.
In the event that IDS completes its financing independently of CHC, CHC
will have the right to purchase the remainder of this share entitlement at $0.01
per share.
5. A cash payment of 10% of the gross proceeds of any equity financing
received by the company by any party introduced by CHC, other than an
underwriter, upon receipt of such financing.
6. A cash payment of 5% of the gross proceeds of any equity financing
received by the company by any party whose investment is made with
CHC's direct involvement.
7. A cash payment of 3% with a minimum of $150,000 upon completion of the
above-noted public offering arranged by CHC.
It is agreed that if the company completes a full equity financing as set forth
above by any source first introduced by CHC within two years, then IDS will be
obligated to pay CHC, at the closing of such financing, an amount equal to the
compensation outlined herein.
Upon completion of a full equity financing as set forth above, IDS agrees to
retain CHC as a non-exclusive financial consultant at the monthly rate of $3,500
per month for a period of 24 months. CHC will provide continued market support,
broker and shareholder relations, and additional equity funding when and if
required by IDS. The company also agrees to give CHC the right of first refusal
on any future financing the company may need during a period of two years from
the date of this agreement.
IDS is to retain the right to purchase, within one year of the date of this
agreement, the initial allotment of 100,000 IDS shares for a sum of $25,000 if
CHC has not been able to obtain at least $100,000 in equity financing for IDS.
If you are in agreement with the terms of our working relationship, please sign
where appropriate and return one duplicate original of this letter to us. We are
prepared to begin working as soon as the agreement is signed.
We look forward to working with you and if you have any questions please do not
hesitate to call us.
Sincerely,
CARRIAGE HOUSE CAPITAL, INC. Consented and agreed to:
INTERNATIONAL DATA SYSTEMS
/s/Howard R. Baer /s/Robert L. Stewart
- -------------------------- -----------------------------
Howard R. Baer, President Robert L. Stewart, President
EXHIBIT 10.2
CARRIAGE HOUSE CAPITAL
729 BOYLSTON STREET, 4TH FLOOR
BOSTON, MA 02116
(617) 536-1920 - FAX 536-6062
Consulting Agreement
Mr. Carl H. Canter, President
C Square Ventures, Inc.
551 N.W. 77th Street, Suite 109
Boca Raton, Florida 33487-1330
Dear Mr. Canter:
This will confirm the terms under which you, Carl H. Canter, President
of C Square Ventures, Inc. (the "Company") have engaged Carriage House Capital
(the "Consultant") to provide business and financial consulting services in
connection with your potential acquisition of ConSyGen, Inc. (the "Target").
Carriage House Capital shall provide advice and guidance upon request in
connection with the foregoing transaction including:
1. Assisting in the evaluation of the financial condition and reviewing
the financial information supplied relating to the business and
financial condition of the Target.
2. Assisting management and counsel in the negotiation of the acquisition
agreement.
3. Assisting in working with the Company's counsel and auditors in
conjunction with the preparation of any documentation in connection
with the transaction referred to above.
4. Assisting management in its due diligence investigation of the Target.
Upon completion of such acquisition Consultant shall be paid a fee of
1,000,000 free trading shares of the Company's common stock, such shares not
being subject to the proposed reverse stock split of the Company's common stock.
Such shares shall be registered under Form S-8 of the Securities Act of 1933.
The Company agrees that it will reimburse Consultant for actual travel
and other out-of pocket expenses reasonably incurred in connection with the
performances of services thereunder and which have been approved by the Company
in advance in writing.
If the foregoing accurately sets forth the full and complete terms of
our agreement, please so confirm by signing in the place indicated below and
returning to me at which time this shall constitute a legally binding agreement
between you and Carriage House Capital.
The above is confirmed: Yours very truly,
C Square Ventures, Inc. Carriage House Capital
By:/s/Carl H. Canter By:/s/Howard Baer
--------------------------- -------------------------
Carl H. Canter, President Howard Baer, President
Dated: July 10, 1996
EXHIBIT 10.3
MIKESCO, INC.
1223 EAST BROADWAY, SUITE 1
TEMPE, AZ 85282
(602) 731-9100
FAX 731-9565
Consulting Agreement
Mr. Carl H. Canter, President
C Square Ventures, Inc.
551 N.W. 77th Street, Suite 109
Boca Raton, Florida 33487-1330
Dear Mr. Canter:
This will confirm the terms under which you, Carl H. Canter, President
of C Square Ventures, Inc. (the "Company") have engaged Mikesco, Inc. (the
"Consultant") to provide business and financial consulting services in
connection with your potential acquisition of ConSyGen, Inc. (the "Target").
Mikesco, Inc. shall provide advice and guidance upon request in connection with
the foregoing transaction including:
1. Assisting in the evaluation of the financial condition and reviewing
the financial information supplied relating to the business and
financial condition of the Target.
2. Assisting management and counsel in the negotiation of the acquisition
agreement.
3. Assisting in working with the Company's counsel and auditors in
conjunction with the preparation of any documentation in connection
with the transaction referred to above.
4. Assisting management in its due diligence investigation of the Target.
Upon completion of such acquisition Consultant shall be paid a fee of
950,000 free trading shares of the Company's common stock, such shares not being
subject to the proposed reverse stock split of the Company's common stock. Such
shares shall be registered under Form S-8 of the Securities Act of 1933.
The Company agrees that it will reimburse Consultant for actual travel
and other out-of pocket expenses reasonably incurred in connection with the
performances of services thereunder and which have been approved by the Company
in advance in writing.
If the foregoing accurately sets forth the full and complete terms of
our agreement, please so confirm by signing in the place indicated below and
returning to me at which time this shall constitute a legally binding agreement
between you and Mikesco, Inc.
The above is confirmed: Yours very truly,
C Square Ventures, Inc. Mikesco, Inc.
By:/s/Carl H. Canter By:/s/Kevin C. Baer
--------------------------- ---------------------------
Carl H. Canter, President Kevin C. Baer, President
Dated: July 10, 1996
EXHIBIT 10.4
CONCORDA CORP.
P.O. BOX 40400
MESA, AZ 85274
(604) 731-9100
FAX 731-9565
Consulting Agreement
Mr. Carl H. Canter, President
C Square Ventures, Inc.
551 N.W. 77th Street, Suite 109
Boca Raton, Florida 33487-1330
Dear Mr. Canter:
This will confirm the terms under which you, Carl H. Canter, President
of C Square Ventures, Inc. (the "Company") have engaged Concorda Corp. (the
"Consultant") to provide business and financial consulting services in
connection with your potential acquisition of ConSyGen, Inc. (the "Target").
Concorda Corp. shall provide advice and guidance upon request in connection with
the foregoing transaction including:
1. Assisting in the evaluation of the financial condition and reviewing
the financial information supplied relating to the business and
financial condition of the Target.
2. Assisting management and counsel in the negotiation of the acquisition
agreement.
3. Assisting in working with the Company's counsel and auditors in
conjunction with the preparation of any documentation in connection
with the transaction referred to above.
4. Assisting management in its due diligence investigation of the Target.
Upon completion of such acquisition Consultant shall be paid a fee of
1,000,000 free trading shares of the Company's common stock, such shares not
being subject to the proposed reverse stock split of the Company's common stock.
Such shares shall be registered under Form S-8 of the Securities Act of 1933.
The Company agrees that it will reimburse Consultant for actual travel
and other out-of pocket expenses reasonably incurred in connection with the
performances of services thereunder and which have been approved by the Company
in advance in writing.
If the foregoing accurately sets forth the full and complete terms of
our agreement, please so confirm by signing in the place indicated below and
returning to me at which time this shall constitute a legally binding agreement
between you and Concorda, Corp.
The above is confirmed: Yours very truly,
C Square Ventures, Inc. Concorda, Corp.
By:/s/Carl H. Canter By:/s/Kae Y. Park
---------------------------- ------------------------
Carl H. Canter, President Kae Y. Park, President
Dated: July 10, 1996
EXHIBIT 10.5
Scarlett Investment Group, Inc.
Consulting Agreement
Mr. Carl H. Canter, President
C Square Ventures, Inc.
551 N.W. 77th Street, Suite 109
Boca Raton, Florida 33487-1330
Dear Mr. Canter:
This will confirm the terms under which you, Carl H. Canter, President
of C Square Ventures, Inc. (the "Company") have engaged Scarlett Investment
Group, Inc. (the "Consultant") to provide business and financial consulting
services in connection with your potential acquisition of ConSyGen, Inc. (the
"Target"). Scarlett Investment Group, Inc. shall provide advice and guidance
upon request in connection with the foregoing transaction including:
1. Assisting in the evaluation of the financial condition and reviewing
the financial information supplied relating to the business and
financial condition of the Target.
2. Assisting management and counsel in the negotiation of the acquisition
agreement.
3. Assisting in working with the Company's counsel and auditors in
conjunction with the preparation of any documentation in connection
with the transaction referred to above.
4. Assisting management in its due diligence investigation of the Target.
Upon completion of such acquisition Consultant shall be paid a fee of
500,000 free trading shares of the Company's common stock, such shares not being
subject to the proposed reverse stock split of the Company's common stock. Such
shares shall be registered under Form S-8 of the Securities Act of 1933.
The Company agrees that it will reimburse Consultant for actual travel
and other out-of pocket expenses reasonably incurred in connection with the
performances of services thereunder and which have been approved by the Company
in advance in writing.
If the foregoing accurately sets forth the full and complete terms of
our agreement, please so confirm by signing in the place indicated below and
returning to me at which time this shall constitute a legally binding agreement
between you and Scarlett Investment Group, Inc.
The above is confirmed: Yours very truly,
C Square Ventures, Inc. Scarlett Investment Group, Inc.
By:/s/Carl H. Canter By:/s/J.R. Baustista
---------------------------- ----------------------------
Carl H. Canter, President J.R. Baustista, President
Dated: July 10, 1996
EXHIBIT 10.6
The Canter Corporation
Consulting Agreement
Mr. Carl H. Canter, President
C Square Ventures, Inc.
551 N.W. 77th Street, Suite 109
Boca Raton, Florida 33487-1330
Dear Mr. Canter:
This will confirm the terms under which you, Carl H. Canter, President
of C Square Ventures, Inc. (the "Company") have engaged The Canter Corporation
(the "Consultant") to provide business and financial consulting services in
connection with your potential acquisition of ConSyGen, Inc. (the "Target"). The
Canter Corporation shall provide advice and guidance upon request in connection
with the foregoing transaction including:
1. Assisting in the evaluation of the financial condition and reviewing
the financial information supplied relating to the business and
financial condition of the Target.
2. Assisting management and counsel in the negotiation of the acquisition
agreement.
3. Assisting in working with the Company's counsel and auditors in
conjunction with the preparation of any documentation in connection
with the transaction referred to above.
4. Assisting management in its due diligence investigation of the Target.
Upon completion of such acquisition Consultant shall be paid a fee of
400,000 free trading shares of the Company's common stock, such shares not being
subject to the proposed reverse stock split of the Company's common stock. Such
shares shall be registered under Form S-8 of the Securities Act of 1933.
Notwithstanding such registration, Consultant agrees not to transfer such shares
for a period following the completion of the acquisition determined by the
Company but not to exceed a period of 60 days and the Company may legend or
delay delivery of your stock certificate to assure compliance with such transfer
restriction.
The Company agrees that it will reimburse Consultant for actual travel
and other out-of pocket expenses reasonably incurred in connection with the
performances of services thereunder and which have been approved by the Company
in advance in writing.
If the foregoing accurately sets forth the full and complete terms of
our agreement, please so confirm by signing in the place indicated below and
returning to me at which time this shall constitute a legally binding agreement
between you and The Canter Corporation
The above is confirmed: Yours very truly,
C Square Ventures, Inc. The Canter Corporation
By:/s/Carl H. Canter By:/s/Carl H. Canter
---------------------------- ---------------------------
Carl H. Canter, President Carl H. Canter, President
Dated: August 20, 1996
EXHIBIT 10.7
CONSYGEN, INC.
1996 NON-QUALIFIED STOCK OPTION PLAN
Section I. Purpose of the Plan.
The purposes of this ConSyGen, Inc. 1996 Non-Qualified Stock Option Plan
(the "1996 Plan") are (i) to provide long-term incentives and rewards to those
key employees (the "Employee Participants") of ConSyGen, Inc., a Texas
corporation (the "Corporation") and its subsidiaries (if any), and any other
persons (the "Non-employee Participants") who are in a position to contribute to
the long-term success and growth of the Corporation and its subsidiaries, (ii)
to assist the Corporation in retaining and attracting executives and key
employees with requisite experience and ability, and (iii) to associate more
closely the interests of such executives and key employees with those of the
Corporation's stockholders.
Section II. Definitions.
"Common Stock" is the $.003 par value common stock of the
Corporation.
"Committee" is defined in Section III, paragraph (a).
"Corporation" is defined in Section I.
"Employee Participants" is defined in Section I.
"Fair Market Value" of any property is the value of the property as
reasonably determined by the Committee.
"1996 Plan" is defined in Section I.
"Non-employee Participants" is defined in Section I.
"Non-qualified Option" is a Stock Option which does not qualify as an
Incentive Stock Option or for which the Committee provides, in the terms
of such option and at the time such option is granted, that the option
shall not be treated as an Incentive Stock Option.
"Parent Corporation" has the meaning provided in Section 424(e) of
the Code.
"Participants" are all persons who are either Employee Participants
or Non-employee Participants.
"Permanent and Total Disability" has the meaning provided in Section
22(e)(3) of the Code.
"Rule 16b-3" means Securities and Exchange Commission Rule 16b-3.
"Section 16" means Section 16 of the Securities Exchange Act of 1934,
as amended, or any similar or successor statute, and any rules,
regulations, or policies adopted or applied thereunder.
"Stock Options" are rights granted pursuant to this 1996 Plan to
purchase shares of Common Stock at a fixed price.
"Subsidiary Corporation" has the meaning provided in Section 424(f)
of the Code.
Section III. Administration.
(a) The Committee. This 1996 Plan shall be administered by the Board of
Directors or by a compensation committee consisting solely of two or more
"non-employee directors", as defined in Rule 16b-3, who shall be designated by
the Board of Directors of the Corporation (the administering body is hereafter
referred to as the "Committee"). The Committee shall serve at the pleasure of
the Board of Directors, which may from time to time, and in its sole discretion,
discharge any member, appoint additional new members in substitution for those
previously appointed and/or fill vacancies however caused. A majority of the
Committee shall constitute a quorum and the acts of a majority of the members
present at any meeting at which a quorum is present shall be deemed the action
of the Committee. No person shall be eligible to be a member of the Committee if
that person's membership would prevent the plan from complying with Section 16,
if applicable to the Corporation.
(b) Authority and Discretion of the Committee. Subject to the express
provisions of this 1996 Plan and provided that all actions taken shall be
consistent with the purposes of this 1996 Plan, and subject to ratification by
the Board of Directors only if required by applicable law, the Committee shall
have full and complete authority and the sole discretion to: (i) determine those
persons who shall constitute key employees eligible to be Employee Participants;
(ii) select the Participants to whom Stock Options shall be granted under this
1996 Plan; (iii) determine the size and the form of the Stock Options, if any,
to be granted to any Participant; (iv) determine the time or times such Stock
Options shall be granted including the grant of Stock Options in connection with
other awards made, or compensation paid, to the Participant; (v) estab-
-2-
lish the terms and conditions upon which such Stock Options may be exercised
and/or transferred, including the exercise of Stock Options in connection with
other awards made, or compensation paid, to the Participant; (vi) make or alter
any restrictions and conditions upon such Stock Options and the Stock received
on exercise thereof, including, but not limited to, providing for limitations on
the Participant's right to keep any Stock received on termination of employment;
(vii) determine whether the Participant or the Corporation has achieved any
goals or otherwise satisfied any conditions or requirements that may be imposed
on or related to the exercise of Stock Options; and (viii) adopt such rules and
regulations, establish, define and/or interpret these and any other terms and
conditions, and make all determinations (which may be on a case-by-case basis)
deemed necessary or desirable for the administration of this 1996 Plan.
(c) Applicable Law. This 1996 Plan and all Stock Options shall be
governed by the law of the state in which the Corporation is incorporated.
Section IV. Terms of Stock Options.
(a) Agreements. Stock Options shall be evidenced by a written agreement
between the Corporation and the Participant awarded the Stock Option. This
agreement shall be in such form, and contain such terms and conditions (not
inconsistent with this 1996 Plan) as the Committee may determine. The agreement
shall include the following or a similar statement: "This stock option is not
intended to be an Incentive Stock Option, as that term is described in Section
422 of the Internal Revenue Code of 1986, as amended."
(b) Term. Stock Options shall be for such periods as may be determined
by the Committee.
(c) Purchase Price. The purchase price of shares purchased pursuant to
any Stock Option shall be determined by the Committee, and shall be paid by the
Participant or other person permitted to exercise the Stock Option in full upon
exercise, (i) in cash, (ii) by delivery of shares of Common Stock (valued at
their Fair Market Value on the date of such exercise), (iii) any other property
(valued at its Fair Market Value on the date of such exercise), or (iv) any
combination of cash, stock and other property, with any payment made pursuant to
subparagraphs (ii), (iii) or (iv) only as permitted by the Committee, in its
sole discretion. In no event will the purchase price of Common Stock be less
than the par value of the Common Stock.
(d) Restrictions. At the discretion of the Committee, the Common Stock
issued pursuant to the Stock Options granted hereunder may be subject to
restrictions on vesting or transferability. For the purposes of this limitation,
options shall be taken into account in the order granted.
-3-
(e) Withholding of Taxes. Pursuant to applicable federal, state, local
or foreign laws, the Corporation may be required to collect income or other
taxes upon the grant of a Stock Option to, or exercise of a Stock Option by, a
holder. The Corporation may require, as a condition to the exercise of a Stock
Option, or demand, at such other time as it may consider appropriate, that the
Participant pay the Corporation the amount of any taxes which the Corporation
may determine is required to be withheld or collected, and the Participant shall
comply with the requirement or demand of the Corporation. In its discretion, the
Corporation may withhold shares to be received upon exercise of a Stock Option
if it deems this an appropriate method for withholding or collecting taxes.
(f) Securities Law Compliance. Upon exercise (or partial exercise) of a
Stock Option, the Participant or other holder of the Stock Option shall make
such representations and furnish such information as may, in the opinion of
counsel for the Corporation, be appropriate to permit the Corporation to issue
or transfer Stock in compliance with the provisions of applicable federal or
state securities laws. The Corporation, in its discretion, may postpone the
issuance and delivery of Stock upon any exercise of this Option until completion
of such registration or other qualification of such shares under any federal or
state laws, or stock exchange listing, as the Corporation may consider
appropriate. Furthermore, the Corporation is not obligated to register or
qualify the shares of Common Stock to be issued upon exercise of a Stock Option
under federal or state securities laws (or to register or qualify them at any
time thereafter), and it may refuse to issue such shares if, in its sole
discretion, registration or exemption from registration is not practical or
available. The Corporation may require that prior to the issuance or transfer of
Stock upon exercise of a Stock Option, the Participant enter into a written
agreement to comply with any restrictions on subsequent disposition that the
Corporation deems necessary or advisable under any applicable federal and state
securities laws. Certificates of Stock issued hereunder shall bear a legend
reflecting such restrictions.
(g) Right to Stock Option. No employee of the Corporation or any other
person shall have any claim or right to be a participant in this 1996 Plan or to
be granted a Stock Option hereunder. Neither this 1996 Plan nor any action taken
hereunder shall be construed as giving any person any right to be retained in
the employ of the Corporation. Nothing contained hereunder shall be construed as
giving any person any equity or interest of any kind in any assets of the
Corporation or creating a trust of any kind or a fiduciary relationship of any
kind between the Corporation and any such person. As to any claim for any unpaid
amounts under this 1996 Plan, any person having a claim for payments shall be an
unsecured creditor.
(h) Indemnity. Neither the Board of Directors nor the Committee, nor
any members of either, nor any employees of the Corporation or any parent,
subsidiary, or other affiliate, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection
with their responsibilities with respect to this 1996 Plan, and the Corporation
hereby
-4-
agrees to indemnify the members of the Board of Directors, the members of the
Committee, and the employees of the Corporation and its parent or subsidiaries
in respect of any claim, loss, damage, or expense (including reasonable counsel
fees) arising from any such act, omission, interpretation, construction or
determination to the full extent permitted by law.
(i) Participation by Foreigners. Without amending this 1996 Plan, the
Committee may modify grants made to participants who are foreign nationals or
employed outside the United States so as to recognize differences in local law,
tax policy, or custom.
Section V. Amendment and Termination: Adjustments Upon Changes in Stock.
The Board of Directors of the Corporation may at any time, and from time
to time, amend, suspend or terminate this 1996 Plan or any portion thereof,
provided that no amendment shall be made without approval of the Corporation's
stockholders if such approval is necessary to comply with any applicable rules
or regulations of the Securities and Exchange Commission, including Rule 16b-3
(or any successor rule thereunder), or the rules and regulations of any exchange
or stock market on which the Corporation's securities are listed or quoted.
Except as provided herein, no amendment, suspension or termination of this 1996
Plan may affect the rights of a Participant to whom a Stock Option has been
granted without such Participant's consent. If there shall be any change in the
Common Stock or to any Stock Option granted under this 1996 Plan through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure of the Corporation, appropriate
adjustments may be made by the Committee (or if the Corporation is not the
surviving corporation in any such transaction, the Board of Directors of the
surviving corporation, or its designee) in the aggregate number and kind of
shares subject to this 1996 Plan, and the number and kind of shares and the
price per share subject to outstanding options. In connection with the
foregoing, the Committee may issue new Stock Options in exchange for outstanding
Stock Options.
Section VI. Shares of Stock Subject to the Plan.
The number of shares of Common Stock that may be the subject of awards
under this 1996 Plan shall not exceed an aggregate of 1,500,000 shares. Shares
to be delivered under this 1996 Plan may be either authorized but unissued
shares of Common Stock or treasury shares. Any shares subject to an option
hereunder which for any reason terminates, is cancelled or otherwise expires
unexercised, and any shares reacquired by the Corporation due to restrictions
imposed on the shares, shares returned because payment is made hereunder in
stock of equivalent value rather than in cash, and/or shares reacquired from a
recipient for any other reason shall, at such time, no longer count towards the
aggregate number of shares which have been the subject of Stock Options issued
hereunder, and such number of shares shall be subject to further awards under
this 1996 Plan, provided, first, that the total number of shares then eligible
for award under
-5-
this 1996 Plan may not exceed the total specified in the first sentence of this
Section VI, and second, that the number of shares subject to further awards
shall not be increased in any way that would cause this 1996 Plan or any Stock
Option to not comply with Section 16, if applicable to the Corporation.
Section VII. Effective Date and Term of this Plan.
The effective date of this 1996 Plan is September 5, 1996 (the
"Effective Date") and awards under this 1996 Plan may be made for a period of
ten years commencing on the Effective Date. The period during which a Stock
Option may be exercised may extend beyond that time as provided herein.
DATE OF APPROVAL BY STOCKHOLDERS: N/A
DATE OF APPROVAL BY BOARD OF DIRECTORS: September 5, 1996
-6-
EXHIBIT 10.8
CONSYGEN, INC.
1997 NON-QUALIFIED STOCK OPTION PLAN
SECTION I. PURPOSE OF THE PLAN.
The purposes of this ConSyGen, Inc. 1997 Non-Qualified Stock Option Plan
(the "1997 Plan") are (i) to provide long-term incentives and rewards to those
key employees (the "Employee Participants") of ConSyGen, Inc., a Texas
corporation (the "Corporation") and its subsidiaries (if any), and any other
persons (the "Non-employee Participants") who are in a position to contribute to
the long-term success and growth of the Corporation and its subsidiaries, (ii)
to assist the Corporation in retaining and attracting executives and key
employees with requisite experience and ability, and (iii) to associate more
closely the interests of such executives and key employees with those of the
Corporation's stockholders.
SECTION II. DEFINITIONS.
"Common Stock" is the $.003 par value common stock of the Corporation.
"Committee" is defined in Section III, paragraph (a).
"Corporation" is defined in Section I.
"Employee Participants" is defined in Section I.
"Fair Market Value" of any property is the value of the property as
reasonably determined by the Committee.
"1997 Plan" is defined in Section I.
"Non-employee Participants" is defined in Section I.
"Non-qualified Option" is a Stock Option which does not qualify as an
Incentive Stock Option or for which the Committee provides, in the terms
of such option and at the time such option is granted, that the option
shall not be treated as an Incentive Stock Option.
"Parent Corporation" has the meaning provided in Section 424(e) of
the Code.
-1-
"Participants" are all persons who are either Employee Participants
or Non-employee Participants.
"Permanent and Total Disability" has the meaning provided in Section
22(e)(3) of the Code.
"Rule 16b-3" means Securities and Exchange Commission Rule 16b-3.
"Section 16" means Section 16 of the Securities Exchange Act of 1934,
as amended, or any similar or successor statute, and any rules,
regulations, or policies adopted or applied thereunder.
"Stock Options" are rights granted pursuant to this 1997 Plan to
purchase shares of Common Stock at a fixed price.
"Subsidiary Corporation" has the meaning provided in Section 424(f)
of the Code.
SECTION III. ADMINISTRATION.
(a) The Committee. This 1997 Plan shall be administered by the Board of
Directors or by a compensation committee consisting solely of two or more
"non-employee directors", as defined in Rule 16b-3, who shall be designated by
the Board of Directors of the Corporation (the administering body is hereafter
referred to as the "Committee"). The Committee shall serve at the pleasure of
the Board of Directors, which may from time to time, and in its sole discretion,
discharge any member, appoint additional new members in substitution for those
previously appointed and/or fill vacancies however caused. A majority of the
Committee shall constitute a quorum and the acts of a majority of the members
present at any meeting at which a quorum is present shall be deemed the action
of the Committee. No person shall be eligible to be a member of the Committee if
that person's membership would prevent the plan from complying with Section 16,
if applicable to the Corporation.
(b) Authority and Discretion of the Committee. Subject to the express
provisions of this 1997 Plan and provided that all actions taken shall be
consistent with the purposes of this 1997 Plan, and subject to ratification by
the Board of Directors only if required by applicable law, the Committee shall
have full and complete authority and the sole discretion to: (i) determine those
persons who shall constitute key employees eligible to be Employee Participants;
(ii) select the Participants to whom Stock Options shall be granted under this
1997 Plan; (iii) determine the size and the form of the Stock Options, if any,
to be granted to any Participant; (iv) determine the time or times such Stock
Options shall be granted including the grant of Stock Options in connection with
other awards made, or compensation paid, to the Participant; (v) establish
-2-
the terms and conditions upon which such Stock Options may be exercised and/or
transferred, including the exercise of Stock Options in connection with other
awards made, or compensation paid, to the Participant; (vi) make or alter any
restrictions and conditions upon such Stock Options and the Stock received on
exercise thereof, including, but not limited to, providing for limitations on
the Participant's right to keep any Stock received on termination of employment;
(vii) determine whether the Participant or the Corporation has achieved any
goals or otherwise satisfied any conditions or requirements that may be imposed
on or related to the exercise of Stock Options; and (viii) adopt such rules and
regulations, establish, define and/or interpret these and any other terms and
conditions, and make all determinations (which may be on a case-by-case basis)
deemed necessary or desirable for the administration of this 1997 Plan.
(c) Applicable Law. This 1997 Plan and all Stock Options shall be
governed by the law of the state in which the Corporation is incorporated.
SECTION IV. TERMS OF STOCK OPTIONS.
(a) Agreements. Stock Options shall be evidenced by a written agreement
between the Corporation and the Participant awarded the Stock Option. This
agreement shall be in such form, and contain such terms and conditions (not
inconsistent with this 1997 Plan) as the Committee may determine. The agreement
shall include the following or a similar statement: "This stock option is not
intended to be an Incentive Stock Option, as that term is described in Section
422 of the Internal Revenue Code of 1986, as amended."
(b) Term. Stock Options shall be for such periods as may be determined
by the Committee.
(c) Purchase Price. The purchase price of shares purchased pursuant to
any Stock Option shall be determined by the Committee, and shall be paid by the
Participant or other person permitted to exercise the Stock Option in full upon
exercise, (i) in cash, (ii) by delivery of shares of Common Stock (valued at
their Fair Market Value on the date of such exercise), (iii) any other property
(valued at its Fair Market Value on the date of such exercise), or (iv) any
combination of cash, stock and other property, with any payment made pursuant to
subparagraphs (ii), (iii) or (iv) only as permitted by the Committee, in its
sole discretion. In no event will the purchase price of Common Stock be less
than the par value of the Common Stock.
(d) Restrictions. At the discretion of the Committee, the Common Stock
issued pursuant to the Stock Options granted hereunder may be subject to
restrictions on vesting or transferability. For the purposes of this limitation,
options shall be taken into account in the order granted.
-3-
(e) Withholding of Taxes. Pursuant to applicable federal, state, local
or foreign laws, the Corporation may be required to collect income or other
taxes upon the grant of a Stock Option to, or exercise of a Stock Option by, a
holder. The Corporation may require, as a condition to the exercise of a Stock
Option, or demand, at such other time as it may consider appropriate, that the
Participant pay the Corporation the amount of any taxes which the Corporation
may determine is required to be withheld or collected, and the Participant shall
comply with the requirement or demand of the Corporation. In its discretion, the
Corporation may withhold shares to be received upon exercise of a Stock Option
if it deems this an appropriate method for withholding or collecting taxes.
(f) Securities Law Compliance. Upon exercise (or partial exercise) of a
Stock Option, the Participant or other holder of the Stock Option shall make
such representations and furnish such information as may, in the opinion of
counsel for the Corporation, be appropriate to permit the Corporation to issue
or transfer Stock in compliance with the provisions of applicable federal or
state securities laws. The Corporation, in its discretion, may postpone the
issuance and delivery of Stock upon any exercise of this Option until completion
of such registration or other qualification of such shares under any federal or
state laws, or stock exchange listing, as the Corporation may consider
appropriate. Furthermore, the Corporation is not obligated to register or
qualify the shares of Common Stock to be issued upon exercise of a Stock Option
under federal or state securities laws (or to register or qualify them at any
time thereafter), and it may refuse to issue such shares if, in its sole
discretion, registration or exemption from registration is not practical or
available. The Corporation may require that prior to the issuance or transfer of
Stock upon exercise of a Stock Option, the Participant enter into a written
agreement to comply with any restrictions on subsequent disposition that the
Corporation deems necessary or advisable under any applicable federal and state
securities laws. Certificates of Stock issued hereunder shall bear a legend
reflecting such restrictions.
(g) Right to Stock Option. No employee of the Corporation or any other
person shall have any claim or right to be a participant in this 1997 Plan or to
be granted a Stock Option hereunder. Neither this 1997 Plan nor any action taken
hereunder shall be construed as giving any person any right to be retained in
the employ of the Corporation. Nothing contained hereunder shall be construed as
giving any person any equity or interest of any kind in any assets of the
Corporation or creating a trust of any kind or a fiduciary relationship of any
kind between the Corporation and any such person. As to any claim for any unpaid
amounts under this 1997 Plan, any person having a claim for payments shall be an
unsecured creditor.
(h) Indemnity. Neither the Board of Directors nor the Committee, nor any
members of either, nor any employees of the Corporation or any parent,
subsidiary, or other affiliate, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection
with their responsibilities with respect to this 1997 Plan, and the Corporation
hereby
-4-
agrees to indemnify the members of the Board of Directors, the members of the
Committee, and the employees of the Corporation and its parent or subsidiaries
in respect of any claim, loss, damage, or expense (including reasonable counsel
fees) arising from any such act, omission, interpretation, construction or
determination to the full extent permitted by law.
(i) Participation by Foreigners. Without amending this 1997 Plan, the
Committee may modify grants made to participants who are foreign nationals or
employed outside the United States so as to recognize differences in local law,
tax policy, or custom.
SECTION V. AMENDMENT AND TERMINATION: ADJUSTMENTS UPON CHANGES IN STOCK.
The Board of Directors of the Corporation may at any time, and from time
to time, amend, suspend or terminate this 1997 Plan or any portion thereof,
provided that no amendment shall be made without approval of the Corporation's
stockholders if such approval is necessary to comply with any applicable rules
or regulations of the Securities and Exchange Commission, including Rule 16b-3
(or any successor rule thereunder), or the rules and regulations of any exchange
or stock market on which the Corporation's securities are listed or quoted.
Except as provided herein, no amendment, suspension or termination of this 1997
Plan may affect the rights of a Participant to whom a Stock Option has been
granted without such Participant's consent. If there shall be any change in the
Common Stock or to any Stock Option granted under this 1997 Plan through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure of the Corporation, appropriate
adjustments may be made by the Committee (or if the Corporation is not the
surviving corporation in any such transaction, the Board of Directors of the
surviving corporation, or its designee) in the aggregate number and kind of
shares subject to this 1997 Plan, and the number and kind of shares and the
price per share subject to outstanding options. In connection with the
foregoing, the Committee may issue new Stock Options in exchange for outstanding
Stock Options.
SECTION VI. SHARES OF STOCK SUBJECT TO THE PLAN.
The number of shares of Common Stock that may be the subject of awards
under this 1997 Plan shall not exceed an aggregate of 1,000,000 shares. Shares
to be delivered under this 1997 Plan may be either authorized but unissued
shares of Common Stock or treasury shares. Any shares subject to an option
hereunder which for any reason terminates, is cancelled or otherwise expires
unexercised, and any shares reacquired by the Corporation due to restrictions
imposed on the shares, shares returned because payment is made hereunder in
stock of equivalent value rather than in cash, and/or shares reacquired from a
recipient for any other reason shall, at such time, no longer count towards the
aggregate number of shares which have been the subject of Stock Options issued
hereunder, and such number of shares shall be subject to further awards under
this 1997 Plan, provided, first, that the total number of shares then eligible
for award under
-5-
this 1997 Plan may not exceed the total specified in the first sentence of this
Section VI, and second, that the number of shares subject to further awards
shall not be increased in any way that would cause this 1997 Plan or any Stock
Option to not comply with Section 16, if applicable to the Corporation.
SECTION VII. EFFECTIVE DATE AND TERM OF THIS PLAN.
The effective date of this 1997 Plan is March 1, 1997 (the "Effective
Date") and awards under this 1997 Plan may be made for a period of ten years
commencing on the Effective Date. The period during which a Stock Option may be
exercised may extend beyond that time as provided herein.
DATE OF APPROVAL BY STOCKHOLDERS: N/A
- --------------------------------
DATE OF APPROVAL BY BOARD OF DIRECTORS: March 1, 1997
- --------------------------------------
EXHIBIT 10.9
INNOVATIVE RESEARCH ASSOCIATES, INC.
CONTRACT FOR FINANCIAL RELATIONS ACTIVITIES
FOR CONSYGEN, INC.
INNOVATIVE RESEARCH ASSOCIATES, INC., (IRA) will serve as investor/financial
relations counsel for ConSyGen, Inc. (CSGN). Duties will involve:
1. Daily liaison work with retail shareholders, interested brokers,
institutional investors, research analysts and the media for continuous
extensive coverage of corporate events.
2. Personal contact with market makers to facilitate an orderly market.
3. Editing and or writing of all communications to the press and stockholders,
including stockholders' information letters, annual letter, quarterly
reports and intermittent progress reports.
4. Scheduling of meetings for the management of CSGN with high quality money
managers, research analysts and other influential people in the investment
community to create viable and continuing interest in CSGN.
For services above, commencing September 3, 1996 and terminating on September 3,
1998 unless earlier terminated by CSGN on ten (10) days notice, CONSYGEN, Inc.
will provide the following compensation:
1. $15,000 (Fifteen thousand dollars) in cash compensation for a 6 (six) month
period, payable monthly in advance in installments of $2,500 (Two thousand
five hundred dollars) each for each full quarter of services rendered
hereunder; beginning September 9, 1996 through February 9, 1997.
2. $18,000 (Eighteen thousand dollars) in cash compensation for a 6 (six)
month period, payable monthly in advance in installments of a $3,000 (Three
thousand dollars) each for each full month of services rendered hereunder;
beginning February 9, 1997 through September 9, 1997.
3. $78,000 (Seventy eight thousand) in cash compensation for a period of 1
(one) year payable quarterly in advance in installments $19,500 (Nineteen
thousand, five hundred dollars) beginning September 9, 1997 through
September 9, 1998.
4. 100,000 shares of common stock with piggyback registration rights, do and
payable on September 9, 1996.
5. All incidental expenditures, including travel and entertainment, will be
subject to the prior written approval of CSGN management. In addition, all
expenses associated with the production of the research report,
(stationery, printing and mailing costs) will be billed to CSGN at cost
upon CSGN's prior approval.
ACCEPTED BY:
INNOVATIVE RESEARCH ASSOCIATES, INC. CONSYGEN, INC.
Name: Luis J. Mejia Name: Robert Stewart
------------- --------------
Title: Managing Partner Title: President
---------------- ---------
Signature: /s/Luis J. Mejia Signature: /s/Robert Stewart
---------------- -----------------
Date: September 30, 1996 Date: September 3, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANTS QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED AUGUST 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 994
<DEPRECIATION> 994
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 194,580
<BONDS> 0
0
0
<COMMON> 13,334
<OTHER-SE> (207,914)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> Accumulated Deficit of $(1,027,148) net of additional paid in capital
of $819,234.
</FN>
</TABLE>
