SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended June 30, 1999
[ ] Transition report under section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 0-19620
REDDI BRAKE SUPPLY CORPORATION
(Name of small business issuer in its charter)
Nevada 84-1152135
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
5882 South 900 East, Suite 202, Salt Lake City, Utah 84121
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 801-269-9500
Securities registered pursuant to Section 12(b) of the Exchange
Act: None
Securities registered under Section 12(g) of the Exchange Act:
$.0001 par value Common Stock
(Title of class)
Check whether the Issuer (1) filed all reports required to be
filed by section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is contained in this form, and no
disclosure will be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-KSB or any
amendment to this Form 10-KSB. [ X ]
The issuer's revenue for its most recent fiscal year was: $ -0-
The aggregate market value of the issuer's voting stock held as
of March 10, 2000, by non-affiliates of the issuers was
$2,035,857.
As of March 20, 2000, issuer had 59,224,952 shares of its no par
value common stock outstanding.
Transitional Small Business Format: Yes [ ] No [ X ]
Documents incorporated by reference: None
<PAGE>
PART I
Item 1. Description of Business.
The Company was incorporated in Nevada on July 13, 1990 as
Franklin Capital, Inc. On October 17, 1991, the Company changed
its name to Wesco Auto Parts Corporation and again effected a
name change on April 21, 1994 to Reddi Brake Supply Corporation.
The Company's only significant asset was its wholly owned
(operating) subsidiary RBSC, Inc., (formerly Reddi Brake Supply
Company, Inc.). The subsidiary filed for Chapter 11 bankruptcy
protection on March 17, 1997. All of the subsidiary's operating
assets were sold to satisfy claims of creditors. The
subsidiary's Plan of Reorganization became effective March 22,
1998. The subsidiary's assets, primarily cash from the sale of
operating assets and notes, were transferred to a Creditors'
Trust and the subsidiary shell was reorganized for the benefit of
creditors. This resulted in the Company losing the operating
subsidiary, its only tangible asset.
Since the divestiture of the Company's subsidiary, the
Company has not engaged in any operations. At the present time,
the Company intends to seek, investigate, and if warranted,
acquire an interest in a business opportunity. The Company does
not propose to restrict its search for a business opportunity to
any particular industry or geographical area and may, therefore,
engage in essentially any business in any industry. The Company
has unrestricted discretion in seeking and participating in a
business opportunity, subject to the availability of such
opportunities, economic conditions and other factors.
The selection of a business opportunity in which to
participate is complex and extremely risky and will be made by
management in the exercise of its business judgment. There is no
assurance that the Company will be able to identify and acquire
any business opportunity which will ultimately prove to be
beneficial to the Company and its shareholders.
The activities of the Company are subject to several
significant risks which arise primarily as a result of the fact
that the Company has no specific business and may acquire or
participate in a business opportunity based on the decision of
management which will, in all probability, act without the
consent, vote, or approval of the Company=s shareholders.
Sources of Opportunities
It is anticipated that business opportunities may be
available to the Company from various sources, including its
officers and directors, professional advisers, securities broker-
dealers, venture capitalists, members of the financial community,
and others who may present unsolicited proposals.
The Company will seek a potential business opportunity from
all known sources, but will rely principally on personal contacts
of its officers and directors as well as indirect associations
between them and other business and professional people.
Although the Company does not anticipate engaging professional
firms specializing in business acquisitions or reorganizations,
if management deems it in the best interests of the Company, such
firms may be retained. In some instances, the Company may
publish notices or advertisements seeking a potential business
opportunity in financial or trade publications.
Criteria
The Company will not restrict its search to any particular
business, industry or geographical location. The Company may
acquire a business opportunity or enter into a business in any
industry and in any stage of development. The Company may enter
into a business or opportunity involving a Astart up@ or new
company. The Company may acquire a business opportunity in
various stages of its operation.
In seeking a business venture, the decision of management of
the Company will not be controlled by an attempt to take
advantage of an anticipated or perceived appeal of a specific
industry, management group, or product
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<PAGE>
or industry, but will be
based upon the business objective of seeking long-term capital
appreciation in the real value of the Company.
In analyzing prospective business opportunities, management
will consider such matters as the available technical, financial
and managerial resources; working capital and other financial
requirements; the history of operations, if any; prospects for
the future; the nature of present and expected competition; the
quality and experience of management services which may be
available and the depth of the management; the potential for
further research, development or exploration; the potential for
growth and expansion; the potential for profit; the perceived
public recognition or acceptance of products, services, trade or
service marks, name identification; and other relevant factors.
Generally, the Company will analyze all available factors in
the circumstances and make a determination based upon a composite
of available facts, without reliance upon any single factor as
controlling.
Methods of Participation of Acquisition
Specific business opportunities will be reviewed and, on the
basis of that review, the legal structure or method of
participation deemed by management to be suitable will be
selected. Such structures and methods may include, but are not
limited to, leases, purchase and sale agreements, licenses, joint
ventures, other contractual arrangements, and may involve a
reorganization, merger or consolidation transaction. The Company
may act directly or indirectly through an interest in a
partnership, corporation, or other form of organization.
Procedures
As part of the Company=s investigation of business
opportunities, officers and directors may meet personally with
management and key personnel of the firm sponsoring the business
opportunity, visit and inspect material facilities, obtain
independent analysis or verification of certain information
provided, check references of management and key personnel, and
conduct other reasonable measures.
The Company will generally request that it be provided with
written materials regarding the business opportunity containing
such items as a description of product, service and company
history; management resumes; financial information; available
projections with related assumptions upon which they are based;
an explanation of proprietary products and services; evidence of
existing patents, trademarks or service marks or rights thereto;
present and proposed forms of compensation to management; a
description of transactions between the prospective entity and
its affiliates; relevant analysis of risks and competitive
conditions; a financial plan of operation and estimated capital
requirements; and other information deemed relevant.
Competition
The Company expects to encounter substantial competition in
its efforts to acquire a business opportunity. The primary
competition is from other companies organized and funded for
similar purposes, small venture capital partnerships and
corporations, small business investment companies and wealthy
individuals.
Employees
The Company does not currently have any employees but relies
upon the efforts of its officers and directors to conduct the
business of the Company.
Item 2. Description of Property.
The Company does not own any property. The Company
currently utilizes office space, free of charge, from officers
and directors of the Company.
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Item 3. Legal Proceedings.
McCormick, et al., v. Reddi Brake Supply Corp., et al,
L.A.S.C. Case No. BC 180840. On November 6, 1997, the above
action was filed in the Los Angeles County Superior Court as a
class action on behalf of all persons or entities who bought
common stock of Reddi Brake Supply Corporation prior to March 23,
1996 and/or who bought or sold such stock thereafter until August
13, 1996. The complaint assets causes of action for breach of
fiduciary duty by officers and directors and conspiracy to
manipulate the price of the common stock of the Company and
concealment thereof. Reddi Brake has denied and continues to
deny all of the claims and contentions alleged in the complaint.
The parties to the litigation have entered into a Stipulation of
Settlement dated May 21, 1999, dismissing the litigation with
prejudice. The Stipulation of Settlement provides that the
Plaintiffs will release the Company from a $20 million judgement
if the Company and individual defendants assign any and all
rights for insurance coverage to the Plaintiffs. As of the date
of this report, the settlement offer remains pending.
Maremont Corporation v. McGorrian, et al. The Company
settled the referenced litigation in October, 1999 for 150,000
shares of common stock of the Company.
Standard Motor Products v. McGorrian, et al. The Company
settled the referenced litigation in October, 1999 for 850,000
shares of common stock of the Company.
Sheerin v. McCorrian, Birin and Reddi Brake Supply
Corporation, L.A.S.C. Case No. BC 186930. On March 3, 1998, the
above action was filed in the Los Angeles County Superior Court
alleging breach of contract, breach of fiduciary duty, fraud,
negligent misrepresentation, violation of federal securities laws
and violation of California securities laws. The Company has
denied and continues to deny all of the claims and contentions
alleged in the complaint. The parties have been negotiating a
settlement agreement which remains unresolved as of the date of
this report.
Item 4. Submission of Matters to a Vote of Securities Holders.
No matters were submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders.
PART II
Item 5. Market for Common Equity and Related Stockholder
Matters.
The Company's common stock is listed on the Over the Counter
Bulletin Board ("OTCBB"), under the symbol "REDIE". As of
February 10, 2000, the Company had 626 shareholders holding
59,224,952 shares of common stock. Of the issued and outstanding
common stock, 53,129,779 are free trading, the balance are
restricted stock as that term is used in Rule 144.
The following quotations, as provided by the National
Quotation Bureau, represent prices between dealers and do not
include retail markup, markdown or commission. In addition,
these quotations do not represent actual transactions.
CLOSING BID CLOSING ASK
HIGH LOW HIGH LOW
1998
First Quarter .035 .002 .042 .0025
Second Quarter .015 .005 .017 .007
Third Quarter .0065 .003 .0075 .004
Fourth Quarter .003 .002 .0045 .0025
1999
First Quarter .0085 .002 .01 .0029
Second Quarter .018 .004 .021 .006
Third Quarter .01 .005 .013 .006
4
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Fourth Quarter .005 .003 .007 .005
2000
Jan. 3 through .0625 .003 .067 .005
March 10
The Company has never declared a dividend on its Common
Stock. The Company has not paid, nor declared, any dividends
since its inception and does not intend to declare any such
dividends in the foreseeable future. The Company's ability to pay
dividends is subject to limitations imposed by Nevada law. Under
Nevada law, dividends may be paid to the extent that the
corporation's assets exceed its liabilities and it is able to pay
its debts as they become due in the usual course of business.
Item 6. Management's Discussion and Analysis or Plan of
Operation.
The Company has $9,183 in cash and $12,756 in accounts
receivable for total current assets of $21,939. Other assets
include $2,034 in securities available for sale and $262,261 in
convertible debt offering costs. The Company has current
liabilities in the amount of $10,441,744 which include $45,154 in
accounts payable, $6,900,000 in the form of a subordinated
convertible debt and $3,496,590 in accrued interest payable on
the convertible debt.
The Company did not generate any revenue during fiscal year
1999. The Company has no material commitments for capital
expenditures for the next twelve months.
The Company is currently in negotiations with the debenture
holders to settle the debt. The Company believes that its
current cash needs can be met with the cash on hand for at least
the next twelve months. However, should the Company obtain a
business opportunity, it may be necessary to raise additional
capital. This may be accomplished by loans from the principals
of the Company, debt financing, equity financing or a combination
of financing options.
Item 7. Financial Statements.
The financial statements of the Company appear at the end of
this report beginning with the Index to Financial Statements on
page F-1.
Item 8. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act.
The following tables sets forth as of March 10, 2000, the
name, age, and position of each executive officer and director
and the term of office of each director of the Company.
Name Age Position Director or Officer Since
John Chymboryk 46 President and Director February 2000
Kip Eardley 40 Secretary/Treasurer and February 2000
Director
All Directors hold their positions for one year or until
their successors are duly elected and qualified. All officers
holds their positions at the will of the Board of Directors.
5
<PAGE>
Set forth below is certain biographical information
regarding each of the Company's executive officers and directors:
John Chymboryk, President and Director. Mr. Chymboryk
received his bachelor's degree with an emphasis in accounting and
economics in 1982. Following graduation he worked for a large
international accounting firm until 1984. He then taught courses
in finance, marketing and management in the business departments
of a Community College from 1984 to 1992. Concurrent with his
teaching experience, Mr. Chymboryk operated an accounting
business that specialized in preparing financial statements, tax
returns and business plans for small businesses. Mr. Chymboryk
co-founded a company that specialized in marketing, customer
retention and management training. Mr. Chymboryk served as Vice
President and was responsible for the financial operations and in
developing and delivering management training. Mr. Chymboryk was
instrumental in designing and presenting the sales management
workshop that was contracted with Lexus, the Toyota Motor
Corporation luxury car line. In 1997, Mr. Chymboryk was
involved in designing, developing and implementing a new
application that assists companies in following up and retaining
their existing customer base.
Kip Eardley, Secretary/Treasurer and Director. Since 1989,
Mr. Eardley has been self employed as the president and owner of
Capital Consulting of Utah, Inc. which is a consulting firm to
various public and private companies. Mr. Eardley is also
president and director of Holmes Microsystems, Inc., a publicly
traded corporation.
To the knowledge of management, during the past five years,
no present or former director, executive officer or person
nominated to become a director or an executive officer of the
Company:
(1) filed a petition under the federal bankruptcy laws or
any state insolvency law, nor had a receiver, fiscal agent
or similar officer appointed by a court for the business or
property of such person, or any partnership in which he was
a general partner at or within two years before the time of
such filing, or any corporation or business association of
which he was an executive officer at or within two years
before the time of such filing;
(2) was convicted in a criminal proceeding or named subject
of a pending criminal proceeding (excluding traffic
violations or other minor offenses);
(3) was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining
him from or otherwise limiting, the following activities;
(i) acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool operator,
floor broker, leverage transaction merchant, associated
person of any of the foregoing, or as an investment advisor,
underwriter, broker or dealer in securities, or as an
affiliate person, director or employee of any investment
company, or engaging in or continuing any conduct or
practice in connection with such activity; (ii) engaging in
any type of business practice; or (iii) engaging in any
activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of
federal or state securities laws or federal commodities
laws;
(4) was the subject of any order, judgment, or decree, not
subsequently reversed, suspended, or vacated, of any federal
or state authority barring, suspending, or otherwise
limiting for more than 60 days the right of such person to
engage in any activity described above under this Item, or
to be associated with persons engaged in any such activity;
(5) was found by a court of competent jurisdiction in a
civil action or by the Securities and Exchange Commission to
have violated any federal or state securities law, and the
judgment in such civil action or finding by the Securities
and Exchange Commission has not been subsequently reversed,
suspended, or vacated
(6) was found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission
to have violated any federal commodities law, and the
judgment in such civil action or finding by the Commodity
Futures Trading Commission has not been subsequently
reversed, suspended or vacated.
6
<PAGE>
Item 10. Executive Compensation.
No compensation has been paid to any officer or director of
the Company in the past three years. There are no compensatory
plans or arrangements, including payments to be received from the
Company, with respect to any officers or directors of the Company
which would in any way result in payments to any such person
because of his resignation, retirement, or other termination of
such person's employment with the Company, or any change in
control of the Company, or a change in the person's
responsibilities following a change in control of the Company.
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth as of February 10, 2000, the
name and the number of shares of the Company's Common Stock, par
value. $.0001 per share, held of record, or was known by the
Company to own beneficially, more than 5% of the 59,224,952
issued and outstanding shares of the Company's Common Stock, and
the name and shareholdings of each director and of all officers
and directors as a group.
Title of Name and Address of Amount and Nature of Percentage of
Class Beneficial Owner Beneficial Ownership Class
Common John Chymboryk (1) -0- -0-
5882 S. 900 E., Suite 202
Salt Lake City, UT 84121
Common Kip Eardley (1) -0- -0-
5882 S. 900 E., Suite 202
Salt Lake City, UT 84121
Common Officers, Directors and -0- -0-
Nominees as a Group:
2 persons
(1) Officer and/or director of the Company.
Item 12. Certain Relationships and Related Transactions.
The Company utilizes office space provided by the officers
and directors of the Company at no charge to the Company.
Item 13. Exhibits and Reports on Form 8-K.
Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
last calendar quarter of 1999.
Exhibits
Copies of the following documents are included as exhibits
to this report pursuant to Item 601 of Regulation S-B.
Exhibit No. SEC Ref. No. Title of Document Location
1 (3)(i) Articles of Incorporation Attached
2 (3)(i) Articles of Amendment to the
Articles of Incorporation Attached
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3 (3)(i) Articles of Amendment to the
Articles of Incorporation Attached
4 (3)(i) Articles of Amendment to the
Articles of Incorporation Attached
5 (3)(i) Articles of Amendment to the
Articles of Incorporation Attached
6 (3)(i) Articles of Amendment to the
Articles of Incorporation Attached
7 (3)(ii) By Laws Attached
8 (10) Asset Purchase Agreement Attached
9 (10) Lease Agreement Attached
10 (99) Order Confirming Plan of
Reorganization Attached
11 (27) Financial Data Schedule Attached
8
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
REDDI BRAKE SUPPLY CORPORATION
Date: March 22, 2000 By:/s/ John Chymboryk
President
Date: March 22, 2000 By: /s/ Kip Eardley
Chief Financial Officer
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Date: March 22, 2000 By: /s/ John Chymboryk
Director
Date: March 22, 2000 By: /s/ Kip Eardley
Director
9
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REDDI BRAKE SUPPLY CORPORATION
(A Development Stage Company)
Financial Statements
June 30, 1999
CONTENTS
Independent Auditors' Report F-2
Balance Sheet F-3
Statements of Operations F-4
Statement of Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to the Financial Statements . F-7
F-1
<PAGE>
Board of Directors
Reddi Brake Supply Corporation
Salt Lake City, Utah
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheet of Reddi Brake
Supply Corporation (development stage company) at June 30, 1999
and the related statements of operations, stockholders' equity,
and cash flows for the years ended June 30, 1999 and 1998 and
the period July 1, 1997 (date of inception of development stage)
to June 30, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating
the overall balance sheet presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Reddi Brake Supply Corporation at June 30, 1999 and the
results of operations, and cash flows for the years ended June
30, 1999 and 1998 and the period July 1, 1997 (date of inception
of development stage) to June 30, 1999, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company
has suffered recent substantial losses and does not have the
necessary working capital for any future planned activity ,
which raises substantial doubt about its ability to continue as
a going concern. Management's plans in regard to these matters
are described in Note 8. These financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.
Salt Lake City, Utah
March 17, 2000
F-2
<PAGE>
REDDI BRAKE SUPPLY CORPORATION
(Development Stage Company)
BALANCE SHEET
June 30, 1999
ASSETS
CURRENT ASSETS
Cash $ 9,183
Accounts receivable 12,756
Total Current Assets 21,939
OTHER ASSETS
Securities - available for sale - Note 3 2,034
Convertible debt offering costs - net of amortization - Note 4 262,261
$ 286,234
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 45,154
Subordinated convertible debt - Note 4 6,900,000
Accrued interest payable - convertible debt - Note 4 3,496,590
Total Current Liabilities 10,441,744
STOCKHOLDERS' EQUITY
Preferred stock
2,500,000 shares authorized at $0.0001 par value;
60,000 shares issued and outstanding - Note 5 682,856
Common stock
75,000,000 shares authorized at $0.0001 par value;
58,224,952 shares issued and outstanding 5,823
Capital in excess of par value 36,492,880
Accumulated deficit - Note 1 (47,337,069)
Total Stockholders' Deficiency (10,149,510)
286,234
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
REDDI BRAKE SUPPLY CORPORATION
(Development Stage Company)
STATEMENTS OF OPERATIONS
For the Years Ended June 30, 1999 and 1998 and the period
July 1, 1997 (date of inception of development stage) to June 30, 1999
July 1, 1997
June 30, June 30, to
1999 1998 June 30, 1999
REVENUES $ - $ - $ -
EXPENSES
Administrative 16,615 50,011 66,626
Interest 1,150,357 1,392,355 2,542,712
NET LOSS -before other losses (1,166,672) (1,442,366) (2,609,338)
LOSS ON LIQUIDATION OF ASSETS
AND LIABILITIES - (25,223,711) (25,223,711)
NET LOSS $ (1,166,972) $ (26,666,077) $ (27,833,049)
NET LOSS PER COMMON
SHARE
Basic $ (.02) $ (.50)
AVERAGE OUTSTANDING
SHARES
Basic 54,225,000 50,186,949
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
REDDI BRAKE SUPPLY CORPORATION
(Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period July 1, 1997 (date of inception of development stage) to June 30, 1999
[CAPTION]
<TABLE>
Capital in
Preferred Stock Common Stock Excess of Accumulated
Shares Amount Shares Amount Par Value Deficit
<S> <C> <C> <C> <C> <C> <C>
Balance July 1, 1997 130,000 $ 1,300,000 50,186,949 $ 5,019 $ 35,793,684 $ (19,421,164)
Issuance of common stock for
redemption of preferred (70,000) (700,000) 8,038,003 804 699,196 -
Net operating loss for the year
ended June 30, 1998 - - - - - (26,666,077)
Net operating loss for the year
ended June 30, 1999 - - - - - (1,166,972)
Preferred stock dividends
- 82,856 - - - (82,856)
Balance June 30, 1999 60,000 $ 682,856 58,224,952 $ 5,823 $36,492,880 $ (47,337,069)
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-5
<PAGE>
REDDI BRAKE SUPPLY CORPORATION
(Development Stage Company)
STATEMENT OF CASH FLOWS
For the Years Ended June 30, 1999 and 1998 and the Period
July 1, 1997 (date of inception of development stage) to June 30, 1999
[CAPTION]
<TABLE>
June 30, June 30, July 1, 1997
1999 1998 to June 30, 1999
<S>
CASH FLOWS FROM
OPERATING ACTIVITIES
<C> <C> <C>
Net loss $ (1,166,972) $(26,666,077) $ (27,833,049)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Changes in accounts payable 7,000 38,154 45,154
Loss of assets - 25,223,711 25,223,711
Accrued interest - convertible debt 1,150,358 1,392,354 2,542,712
Net Cash Used in Operations (9,614) (11,858) (21,472)
CASH FLOWS FROM INVESTING
ACTIVITIES - - -
CASH FLOWS FROM FINANCING
ACTIVITIES - -
Net Increase (Decrease) in Cash (9,614) (11,858) (21,472)
Cash at Beginning of Period 18,797 30,655 30,655
Cash at End of Period $ 9,183 $ 18,797 $ 9,183
The accompanying notes are an integral part of these financial
statements
F-6
<PAGE>
REDDI BRAKE SUPPLY CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Company was incorporated under the laws of the State of
Nevada on July 12, 1990 with name "Franklin Capital, Inc" with
authorized common stock of 35,000,000 shares with a par value of
$0.0001 and preferred stock of 2,500,000 shares with a par value
of $0.0001. On October 24, 1996 the authorized common stock was
increased to 75,000,000 shares with the same par value. The
Company had several name changes and on April 21, 1994 changed
its name to "Reddi Brake Supply Corporation".
The principal business activity of the corporation through its
subsidiary, Reddi Brake Supply company, Inc., has been the sale
of auto parts, mainly to professional installers, through several
warehouses located throughout the United States.
On March 17, 1997 an involuntary petition in bankruptcy was filed
against the subsidiary, which resulted in the loss of the
business and the warehouses and as a result of the bankruptcy
the Company sustained substantial losses. After 1997 the Company
had no operations and is considered to be a development stage
company since that date.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual
method of accounting.
Dividend Policy
The Company has not adopted a policy regarding payment of
dividends.
Income Taxes
On June 30, 1999 the Company had a net operating loss carry
forward of $47,334,069. The tax benefit from the loss carry
forward has been fully offset by a valuation reserve because the
use of the future tax benefit is doubtful since the Company has
no operations and there has been a substantial change in its
stockholders. The net operating loss will expire starting in
1998 through 2020.
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on
the weighted average number of shares actually outstanding.
Diluted net income (loss) per share amounts are computed using
the weighted average number of common shares and common
equivalent shares outstanding as if shares had been issued on the
exercise of the preferred share rights unless the exercise
becomes antidilutive and then only the basic per share amounts
are shown in the report.
F-7
<PAGE>
REDDI BRAKE SUPPLY CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Instruments
The carrying amounts of financial instruments, including cash,
accounts receivable, securities, and accounts payable, are
considered by management to be their estimated fair values.
Comprehensive Income
The Company adopted Statement of Financial Accounting Standards
No. 130. The adoption of this standard had no impact on the total
stockholder's equity on June 30, 1999.
Accounting for Stock-Based Compensation
The Company has adopted Statement of Financial Accounting
Standards No. 123 but has elected to continue to measure
compensation cost under APB 25. The adoption of FASB No. 123
has no impact
on the Company's financial statements.
Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent
accounting pronouncements will
have a material impact on its financial statements.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported
amounts of the assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were
assumed in preparing these financial statements.
3. SECURITIES - AVAILABLE FOR SALE
Securities consists of 2,034 shares of Micro Transmission
Systems. The fair market value is considered to be $2,034.
F-8
<PAGE>
REDDI BRAKE SUPPLY CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
4. SUBORDINATED CONVERTIBLE DEBT
On February 9, 1995, the Company completed a private placement of 9%
Adjustable Convertible Subordinated Debentures due 2005 in the amount
of $6.9 million. Interest on the unpaid principal is payable quarterly
on April 30, July 31, October 31 and January 31 of each year. The
Company may call the Debentures after January 17, 1998. The Debentures
are subordinated to all of the obligations due to the Company's bank and
suppliers and are convertible into shares of the Company's Common Stock
at a conversion price or $3.50 per share. The conversion price is also
subject to the antidilution adjustment.
Any holders of shares issuable upon conversion have demand and piggyback
rights to have the shares registered, at the Company's expense, under the
Securities Act of 1993.
The Company received approximately $6.5 million in net proceeds from the
Placement. The offering and sale of the securities in the placement
were not registered under the Act, in reliance upon the exemption from
registration provided by Regulation D. The issuance costs of $400,000 are
being amortized over ten years.
5. PREFERRED STOCK
On March 25, 1996, and April 23, 1996, the Company authorized the issuance
of 400,000 shares of Class A preferred stock at $10 issue price and 550,000
shares of Class B preferred stock at $10 issue price. Subsequent to the
authorization of the preferred stock, the Company completed private placements
of the 950,000 shares of preferred stock.
The holders of Class A and Class B Preferred Stock are entitled to a cumulative
annual dividend at the rate of four percent of the initial issue price of
$10.00 per share, to accrue quarterly. The dividends can be paid in cash
or in common stock of the Company at the option of the Compnay, at the
conversion rates outlined below. The holders of Class A and Class B Preferred
Stock will be entitled to convert these shares into fully paid and
non-assessable shares of the Company's common stock. This conversion is
derived by dividing the original issue price by eighty percent of the average
per share high closing bid price of the Company's common stock for the five
consecutive trading days ending two days before the conversion date, provided,
however that the maximum conversion rate will be $2.25 and the minimum
conversion rate will be $1.50.
The Company received approximately $8.3 million in net proceeds from the
placements. The offerings and sale of the Securities in the Placement were
not registered under the Securities Act of 1933, in reliance upon the exemption
from registration provided by Regulation S.
During 1996 and 1997 all of the preferred A and part of the Preferred B shares
were converted into the Company's common stock leaving a balance of 60,000
Preferred B shares outstanding.
F-9
<PAGE>
REDDI BRAKE SUPPLY CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
6. STOCK WARRANTS
On June 30, 1999, the Company had 20,000 warrants outstanding
issued to Software License - IDCS, Inc., which entitles the
holder to purchase one share of Common stock for each warrant at
an exercise price of $5.00 per share of common stock. The date of
grant for the warrants was October 19, 1991 and the expiration
date is October 18, 2001.
The market price of the stock on October 18, 1991, the date of
grant, was $2.44 and therefore no value was assigned to the
warrants.
7. RELATED PARTY TRANSACTIONS
The officers and directors do not own any of the Company's
outstanding stock.
8. GOING CONCERN
The Company intends to acquire interests in various business
opportunities which, in the opinion of management, will provide a
profit to the Company, however there is insufficient working
capital for any future planned activity.
Continuation of the Company as a going concern is dependent upon
obtaining additional working capital and the management of the
Company has developed a strategy, which it believes will
accomplish this objective through additional equity funding and
long term debt which will enable the Company to conduct
operations for the coming year.
There can be no assurance that they will be successful in this
effort.
9. LEGAL ACTIONS
McCormick, et al., v. Reddi Brake Supply Corporation., et al.
On November 6, 1997, a class action lawsuit was filed in the Los
Angeles County Superior Court on behalf of all persons or
entities who bought common stock of the defendant prior to March
23, 1996, and/or who bought or sold any shares thereafter until
August 13, 1996, excluding defendants, their families, employees,
agents or assigns. The complaint asserts causes of action for
breach of fiduciary duty by officers and director and conspiracy
to manipulate the price of the common stock of the defendant.
The Reddi Brake Defendants has denied the claims plaintiffs in
the litigation. The parties to the litigation have entered into
a Stipulation of Settlement dated May 21, 1999, dismissing the
litigation with prejudice. The Stipulation of Settlement
provides that the Plaintiffs will release the Company from a $20
million judgement if the Company and individual defendants assign
any and all rights for insurance coverage to the Plaintiffs. As
of the date of this report, the settlement offer remains pending.
F-10
<PAGE>
REDDI BRAKE SUPPLY CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
9. LEGAL ACTIONS - continued
Maremont Corporation v McGorrian, et al., and Standard Motor
Products v McGorrian et al.
On September 6, 1996, Maremont Corporation filed a lawsuit in the
United States District Court for the Central District of
California against the Company, alleging that the Company owes
the plaintiff approximately $1.2 million for goods sold and
delivered to the Company. The lawsuit does not name Reddi
Brake Supply Corporation, but the Company's indemnification
agreements with the directors obligates the Company to support
the defense.
The Company settled the litigation in October 1999 by the
issuance of 1,000,000 common shares.
Sheerin, et al., v Reddi Brake Supply Corporation, Birin and
McGorrian et al.
On March 3, 1998, Allen J. Sheerin filed a lawsuit in the Los
Angeles County Superior Court against the Company and
specifically against two former officers and directors of the
Company. Mr. Sheerin alleges that these officers and directors
misrepresented the financial status of the Company during the
time that he was negotiating to buy shares in the Company and
which resulted in a loss to him of $2,100,000.
The parties have been negotiating a settlement agreement which
remains unresolved at the report date.
F-11
<PAGE>
</TABLE>
Exhibit 1
Form 10-KSB
Reddi Brake Supply Company, Inc.
F I L E D
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
July 13,1990
ARTICLES OF INCORPORATION
OF
FRANKLIN CAPITAL, INC.
KNOW ALL MEN BY THESE PRESENTS: That the undersigned
incorporator being a natural person of the age of twenty-one years
or more and desiring to form a body corporate under the laws of
the State of Nevada does hereby sign, verify and deliver in
duplicate to the Secretary of State of the State of Nevada, these
Articles of Incorporation:
ARTICLE I
NAME
The name of the Corporation shall be: Franklin Capital, Inc.
ARTICLE II
PERIOD OF DURATION
The Corporation shall exist in perpetuity, from and after the
date of filing these Articles of Incorporation with the Secretary
of State of the State of Nevada unless dissolved according to law.
ARTICLE III
PURPOSES AND POWERS
1. Purposes. Except as restricted by these Articles of
Incorporation, the Corporation is organized for the purpose of
transacting all lawful business for which corporations may be
incorporated pursuant to the Nevada Business Corporation Act.
2. General Powers. Except as restricted by these
Articles of Incorporation, the Corporation shall have and may
exercise all powers and rights which a corporation may exercise
legally pursuant to the Nevada Business Corporation Act.
3. Issuance of Shares. The board of directors of the
Corporation may divide and issue any class of stock of the
Corporation in series pursuant to a resolution properly filed with
the Secretary of State of the State of Nevada.
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<PAGE>
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares which this Corporation shall
have authority to issue is: Twenty Five Million (25,000,000)
shares of $.0001 par value each, which shares shall be designated
"Common Stock"; and Two Million Five Hundred Thousand (2,500,000)
shares of $.0001 par value each, which shares shall be designated
"Preferred Stock" and which may be issued in one or more series at
the discretion of the Board of Directors. In establishing a series
the Board of Directors shall give to it a distinctive designation
so as to distinguish it from the shares of all other series and
classes, shall fix the number of shares in such series, and the
preferences, rights and restrictions thereof. All shares of any
one series shall be alike in every particular except as otherwise
provided by these Articles of Incorporation or the Nevada Business
Corporation Act.
1. Dividends. Dividends in cash, property or shares
shall be paid upon the Preferred Stock for any year on a
cumulative or noncumulative basis as determined by a resolution of
the Board of Directors prior to the issuance of such Preferred
Stock, to the extent earned surplus for each such year is
available, in an amount as determined by a resolution of the Board
of Directors. Such Preferred Stock dividends shall be paid pro
rata to holders of Preferred Stock in any amount not less than nor
more than the rate as determined by a resolution of the Board of
Directors prior to the issuance of such Preferred Stock. No other
dividend shall be paid on the Preferred Stock.
Dividends in cash, property or shares of the Corporation may
be paid upon the Common Stock, as and when declared by the Board
of Directors, out of funds of the Corporation to the extent and in
the manner permitted by law, except that no Common Stock dividend
shall be paid for any year unless the holders of Preferred Stock,
if any, shall receive the maximum allowable Preferred Stock
dividend for such year.
2. Distribution in Liquidation. Upon any liquidation,
dissolution or winding up of the Corporation, and after paying or
adequately providing for the payment of all its obligations, the
remainder of the assets of the Corporation shall be distributed,
either in cash or in kind, first pro rata to the holders of the
Preferred Stock until an amount to be determined by a resolution
of the Board of Directors prior to issuance of such Preferred
Stock, has been distributed per share, and, then, the remainder
pro rata to the holders of the Common Stock.
3. Redemption. The Preferred Stock may be redeemed in
whole or in part as determined by a resolution of the Board of
Directors prior to the issuance of such Preferred Stock, upon
prior notice to the holders of record of the Preferred Stock,
published, mailed and given in such manner and form and on such
other terms and conditions as may be prescribed by the Bylaws or
by resolution of the Board of Directors, by payment in cash or
Common Stock for each share of the Preferred Stock to be redeemed,
as determined by a resolution of the Board of Directors prior to
the issuance of such Preferred Stock. Common Stock used to redeem
Preferred Stock shall be valued as determined by a resolution of
the Board of Directors prior to the issuance of such Preferred
Stock. Any rights to or arising from fractional shares shall be
treated as rights to or arising from one share. No such purchase
or retirement shall be made if the capital of the Corporation
would be impaired thereby.
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<PAGE>
If less than all the outstanding shares are to be redeemed,
such redemption may be made by lot or pro rata as may be
prescribed by resolution of the Board of Directors; provided,
however, that the Board of Directors may alternatively invite from
shareholders offers to the Corporation of Preferred Stock at less
than an amount to be determined by a resolution of the Board of
Directors prior to issuance of such Preferred Stock, and when such
offers are invited, the Board of Directors shall then be required
to buy at the lowest price or prices offered, up to the amount to
be purchased.
From and after the date fixed in any such notice as the date
of redemption (unless default shall be made by the Corporation in
the payment of the redemption price) , all dividends on the
Preferred Stock thereby called for redemption shall cease to
accrue and all rights of the holders thereof as stockholders of
the Corporation, except the right to receive the redemption price,
shall cease and terminate.
Any purchase by the Corporation of the shares of its
Preferred Stock shall not be made at prices in excess of said
redemption price.
4. Voting Rights; Cumulative Voting. Each outstanding
share of Common Stock shall be entitled to one vote and each
fractional share of Common Stock shall be entitled to a
corresponding fractional vote on each matter submitted to a vote
of shareholders. A majority of the shares of Common Stock entitled
to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of shareholders. Except as otherwise provided
by these Articles of Incorporation or the Nevada Business
Corporation Act, if a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders.
When, with respect to any action to be taken by shareholders of
this Corporation, the laws of Nevada require the vote or
concurrence of the holders of two-thirds of the outstanding
shares, of the shares entitled to vote thereon, or of any class or
series, such action may be taken by the vote or concurrence of a
majority of such shares or class or series thereof. Cumulative
voting shall not be allowed in the election of directors of this
Corporation.
Shares of Preferred Stock shall only be entitled to such vote
as is determined by the Board of Directors prior to the issuance
of such stock, except as required by law, in which case each share
of Preferred Stock shall be entitled to one vote.
5. Denial of Preemptive Rights. No holder of any shares of
the Corporation, whether now or hereafter authorized, shall have
any preemptive or preferential right to acquire any shares or
securities of the Corporation, including shares or securities held
in the treasury of the Corporation.
6. Conversion Rights. Holders of shares of Preferred Stock
may be granted the right to convert such Preferred Stock to Common
Stock of the Corporation on such terms as may be determined by the
Board of Directors prior to issuance of such Preferred Stock.
ARTICLE V
TRANSACTIONS WITH INTERESTED DIRECTORS
No contract or other transaction between the Corporation and
one or more of its directors or any other corporation, firm,
association, or entity in which one or more of its directors are
directors
E-3
<PAGE>
or officers or are financially interested shall be either void or
voidable solely because of such relationship or interest or solely
because such directors are present at the meeting of the board of
directors or a committee thereof which authorizes, approves, or
ratifies such contract or transaction or solely because their
votes are counted for such purpose if:
(a) The fact of such relationship or interest is
disclosed or known to the board of directors or committee which
authorizes, approves, or ratifies the contract or transaction by a
vote or consent sufficient for the purpose without counting the
votes or consents of such interested directors; or
(b) The fact of such relationship or interest is
disclosed or known to the shareholders entitled to vote and they
authorize, approve, or ratify such contract or transaction by vote
or written consent; or
(c) The contract or transaction is fair and reasonable
to the corporation.
Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the board of directors or
a committee thereof which authorizes, approves, or ratifies such
contract or transaction.
ARTICLE VI
CORPORATE OPPORTUNITY
The officers, directors and other members of management of
this Corporation shall be subject to the doctrine of "corporate
opportunities" only insofar as it applies to business
opportunities in which this Corporation has expressed an interest
as determined from time to time by this Corporation's board of
directors as evidenced by resolutions appearing in the
Corporation's minutes. Once such areas of interest are delineated,
all such business opportunities within such areas of interest
which come to the attention of the officers, directors, and other
members of management of this Corporation shall be disclosed
promptly to this corporation and made available to it. The board
of directors may reject any business opportunity presented to it
and thereafter any officer, director or other member of management
may avail himself of such opportunity. Until such time as this
Corporation, through its board of directors, has designated an
area of interest, the officers, directors and other members of
management of this Corporation shall be free to engage in such
areas of interest on their own and this doctrine shall not limit
the rights of any officer, director or other member of management
of this Corporation to continue a business existing prior to the
time that such area of interest is designated by the Corporation.
This provision shall not be construed to release any employee of
this Corporation (other than an officer, director or member of
management) from any duties which he may have to this Corporation.
ARTICLE VII
INDEMNIFICATION
The Corporation may indemnify any director, officer,
employee, fiduciary, or agent of the Corporation to the full
extent permitted by the Nevada Business Corporation Act as in
effect at the time of the conduct by such person.
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<PAGE>
ARTICLE VIII
AMENDMENTS
The Corporation reserves the right to amend its Articles of
Incorporation from time to time in accordance with the Nevada
Business Corporation Act.
ARTICLE IX
ADOPTION AND AMENDMENT OF BYLAWS
The initial Bylaws of the Corporation shall be adopted by its
board of directors. Subject to repeal or change by action of the
shareholders, the power to alter, amend or repeal the Bylaws or
adopt new Bylaws shall be vested in the board of directors. The
Bylaws may contain any provisions for the regulation and
management of the affairs of the Corporation not inconsistent with
law or these Articles of Incorporation.
ARTICLE X
REGISTERED OFFICE AND REGISTERED AGENT
The address of the initial registered office of the
Corporation is One East First Street, Reno, Nevada 89501, Washoe
County, Nevada, and the name of the registered agent at such
address is The Corporation Trust Company of Nevada. Either the
registered office or the registered agent may be changed in the
manner permitted by law.
ARTICLE XI
INITIAL BOARD OF DIRECTORS
The number of directors of the Corporation shall be fixed by
the Bylaws of the Corporation, and the number of directors of the
Corporation may be changed from time to time by consent of the
Corporation's directors. The initial board of directors of the
Corporation shall consist of one (1) director. The name and
address of the person who shall serve as director until the first
annual meeting of shareholders and until his successor is elected
and shall qualify are: Earnest J. Mathis, Jr. , 6160 South
Syracuse
Way, Suite 310, Englewood, CO 80111.
ARTICLE XII
LIMITATION OF LIABILITY OF
DIRECTORS TO-CORPORATIONS AND SHAREHOLDERS
No director shall be liable to the Corporation or any
shareholder for monetary damages for breach of fiduciary duty as a
director, except for any matter in respect of which such director
(a) shall be liable under Section 78.037 of the Nevada Business
Corporation Act or any amendment thereto or successor provision
thereto; (b) shall have breached the director's duty of loyalty to
the Corporation or its shareholders; (c) shall have not acted in
good faith or, in failing to act, shall not have acted in good
faith; (d) shall have acted or failed to act in a manner involving
intentional
E-5
<PAGE>
misconduct or a knowing violation of law; or (e) shall have
derived an improper personal benefit. Neither the amendment nor
repeal of this Article, nor the adoption of any provision in the
Articles of Incorporation inconsistent with this Article, shall
eliminate or reduce the effect of this Article in respect of any
matter occurring prior to such amendment, repeal or adoption of an
inconsistent provision. This Article shall apply to the full
extent now permitted by Nevada law or as may be permitted in the
future by changes or enactments in Nevada law, including without
limitation section 78.037 and/or the Nevada Business Corporation
Act.
ARTICLE XIII
INCORPORATOR
The name and address of the incorporator are: Jon D. Sawyer,
c/o Wills & Sawyer, P.C., 511 16th Street, Suite 400, Denver, CO
80202.
IN WITNESS WHEREOF, the above-named incorporator has signed
these Articles of Incorporation this 12th day of July, 1990.
_________________________
Jon O. Sawyer
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
On the 12th day of July, 1990, personally appeared before me,
a notary public, Jon D. Sawyer, who acknowledged before me that he
executed the foregoing Articles of Incorporation.
My commission expires: 7/21/90
________________________
Notary Public
511 16th Street, Suits 400
Denver, CO 80202
E-6
<PAGE>
F I L E D
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
IN THE MATTER OF Franklin Capital, Inc. THE CORPORATION TRUST
COMPANY OF NEVADA hereby certifies that on the 12th day of July,
1990, it accepted the appointment as Resident Agent of the above
entitled corporation in accordance with Sec. 78.090, NRS 1957.
Furthermore, that the principal office in this State is located at
One East First Street, Town of Reno, County of Washoe, State of
Nevada.
IN WITNESS WHEREOF, it has hereunto set its hand this 12th
day of July, 1990.
THE CORPORATION TRUST COMPANY OF NEVADA, Resident Agent
By:________________________________________
Corinne M. Lude, Assistant
Secretary
SEC 78 Every corporation shall have a resident agent, who may be
either an individual or a corporation, resident of or located in
this state charge of its principal office. Every such resident
agent shall, within ten days after acceptance of an appointment as
such, file a certificate thereof in the office of the secretary of
state and a copy of such certificate in the office of the county
clerk of the county in which the principal office of the
corporation in the state be located. The resident agent may be a
bank, or banking corporation, or other corporation located and
doing business in this state, and any such bank and any such
corporation, acting as such resident agent, shall have authority.
E-7
<PAGE>
Exhibit 2
Form 10-KSB
Reddi Brake Supply Company, Inc.
F I L E D
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
OCT 07 1991
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
FRANKLIN CAPITAL, INC.
Pursuant to the applicable provisions of the Nevada Business
Corporations Act, Franklin Capital, Inc. (the "Corporation")
adopts the following Articles of Amendment to its Articles of
Incorporation by stating the following:
FIRST: The present name of the Corporation is Franklin
Capital, Inc.
SECOND: The following amendments to its Articles of
Incorporation were adopted by majority vote of shareholders of
the Corporation on October 4, 1991 in the manner prescribed by
Nevada law.
1. Article IV, is amended as follows:
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares which this Corporation shall
have authority to issue is: (a) Twenty Five Million (25,000,000)
shares, $.0001 par value, which shares shall be designated
"Common Stock"; (b) Three Million (3,000,000) shares, no par
value, which shares shall be designated "Special Stock;" and (c)
Two Million Five Hundred Thousand (2,500,000) shares, $.0001 par
value, which shares shall be designated "Preferred Stock" and
which Preferred Stock may be issued in one or more series at the
discretion of the Board of Directors. In establishing a series
the Board of Directors shall give to it a distinctive designation
so as to distinguish it from the shares of all other series and
classes, shall fix the number of shares in such series, and the
preferences, rights and restrictions thereof. All shares of any
one series shall be alike in every particular except as otherwise
provided by these Articles of Incorporation or the Nevada
Business Corporation Act.
1. Dividends. Dividends in cash, property or shares
shall be paid upon the Preferred Stock for any year on a
cumulative or noncumulative basis as determined by a
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<PAGE>
resolution of the Board of Directors prior to the issuance of
such Preferred Stock, to the extent earned surplus for each such
year is available, in an amount as determined by a resolution of
the Board of Directors. Such Preferred Stock dividends shall be
paid pro rata to holders of Preferred Stock in any amount not
less than nor more than the rate as determined by a resolution of
the Board of Directors prior to the issuance of such Preferred
Stock. No other dividend shall be paid on the Preferred Stock.
Dividends in cash, property or shares of the Corporation may
be paid upon the Common Stock, as and when declared by the Board
of Directors, out of funds of the corporation to the extent and
in the manner permitted by law, except that no Common Stock
dividend shall be paid for any year unless the holders of
Preferred Stock, if any, shall receive the maximum allowable
Preferred Stock dividend for such year.
No dividends shall be paid on Special Stock.
2. Distribution in Liquidation Upon any liquidation,
dissolution or winding up of the Corporation, and after paying or
adequately providing for the payment of all its obligations, the
remainder of the assets of the Corporation shall be distributed,
either in cash or in kind, first pro rata to the holders of the
Preferred Stock until an amount to be determined by a resolution
of the Board of Directors prior to issuance of such Preferred
Stock, has been distributed per share, and, then, the remainder
pro rata to the holders of the Common Stock. No distributions in
liquidation shall be made with respect to Special Stock.
3. Redemption The Preferred Stock may be redeemed in
whole or in part as determined by a resolution of the Board of
Directors prior to the issuance of such Preferred Stock, upon
prior notice to the holders of record of the Preferred Stock,
published, mailed and given in such manner and form and on such
other terms and conditions as may be prescribed by the Bylaws or
by resolution of the Board of Directors, by payment in cash or
Common Stock for each share of the Preferred Stock to be
redeemed, as determined by a resolution of the Board of Directors
prior to the issuance of such Preferred Stock. Common Stock used
to redeem Preferred Stock shall be valued as determined by a
resolution of the Board of Directors prior to the issuance of
such Preferred Stock. Any rights to or arising from fractional
shares shall be treated as rights to or arising from one share.
No such purchase or retirement shall be made if the capital of
the Corporation would be impaired thereby.
If less than all the outstanding shares are to be redeemed,
such redemption may be made by lot or pro rata as may be
prescribed by resolution of the Board of Directors; provided,
however, that the Board of Directors may alternatively invite
from shareholders offers to the Corporation of Preferred Stock at
less than an amount to be determined by a resolution of the Board
of Directors prior the issuance of such Preferred Stock, and when
such offers are invited, the Board of Directors shall then be
required to buy at the lowest price or prices offered, up to the
amount to be purchased.
From and after the date fixed in any such notice as the date
of redemption (unless default
shall be made by the corporation in the payment of the redemption
price), all dividends on the Preferred Stock thereby called for
redemption shall cease to accrue and all rights of the holders
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<PAGE>
thereof as stockholders of the Corporation, except the right to
receive the redemption price, shall cease and terminate.
Any purchase by the corporation of the shares of its
Preferred Stock shall not be made at prices in excess of said
redemption price.
4. Voting Rights; Cumulative Voting Each outstanding
shares of Common Stock and Special Stock shall be entitled to one
vote and each fractional share of Common Stock and Special Stock
shall be entitled to a corresponding fractional vote on each
matter submitted to a vote of shareholders. A majority of the
shares of Common Stock and Special Stock entitled to vote,
represented in person or by proxy, shall constitute a quorum at a
meeting of shareholders. Except as otherwise provided by these
Articles of Incorporation or the Nevada Business Corporation Act,
if a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders. When, with
respect to any action to be taken by shareholders of this
Corporation, the laws of Nevada require the vote or concurrence
of the holders of two-thirds of the outstanding shares, of the
shares entitled to vote thereon, or of any class or series, such
action may be taken by the vote or concurrence of a majority of
such shares or class or series thereof. Cumulative voting shall
not be allowed in the election of directors of this Corporation.
Shares of Preferred Stock shall only be entitled to such
vote as is determined by the Board of Directors prior to the
issuance of such stock, except as required by law, in which case
each share of Preferred Stock shall be entitled to one vote.
5. Denial of Preemptive Rights No holder of any shares
of the Corporation, whether now or hereafter authorized, shall
have any preemptive or preferential right to acquire any shares
or securities of the Corporation, including shares or securities
held in the treasury of the Corporation.
6. Conversion Rights. Holders of shares of Preferred
Stock may be granted the right to convert such Preferred Stock to
Common Stock of the Corporation on such terms as may be
determined by the Board of Directors prior to issuance of such
Preferred Stock.
7. Automatic Conversion of Special Shares. Each share of
Special Stock shall be automatically converted to one share of
Common Stock as, if and to the extent the Corporation and its
subsidiaries exceed certain "earnings before interest and taxes"
targets by June 30, 1995. If and to the extent the Corporation
and its subsidiaries do not exceed such targets by June 30, 1995,
the Special Shares which have not become convertible into shares
of Common Stock shall thereupon be automatically cancelled. A
schedule of the "earnings before interest and taxes" targets as
referred to herein shall be attached to each stock certificate
representing Special Shares and is on file at the Corporation's
offices at 1705 West Garvey Avenue, North, West Covina,
California 91790.
8. The Corporation has effectuated a 1.5 to 1 forward stock
split of its shares of common stock outstanding as of October 4,
1991 increasing said shares from 500,000 shares to 750,000
shares. Said reverse split to be effective with the commencement
of business on October 7, 1991.
E-10
<PAGE>
THIRD: The number of shares of the Corporation
outstanding and entitled to vote at the time of the adoption of
said amendment was 500,000.
FOURTH: The number of shares voted for such amendments was
490,362 and the number voted against such amendment was -0-
DATED this 4th day of October, 1991.
FRANKLIN CAPITAL, INC.
By:_____________________________
Earnest Mathis, Jr.,
President and Secretary
VERIFICATION
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
The undersigned being first duly sworn, deposes and states:
that the undersigned is the Secretary of Franklin capital, Inc.,
that the undersigned has read the Articles of Amendment and knows
the contents thereof and that the same contains a truthful
statement of the Amendment duly adopted by the sole director and
stockholders of the Corporation.
______________________________________
Earnest Mathis, Jr., Secretary
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
Before me the undersigned Notary Public in and for the said
County and State, personally appeared Earnest Mathis, Jr. as the
President and Secretary of Franklin Capital, Inc., a Nevada
corporation, and signed the foregoing Articles of Amendment as
his own free and voluntary act and deed pursuant to a corporate
resolution for the uses and purposes set forth.
E-11
<PAGE>
IN WITNESS WHEREOF, I have set my hand and seal this 4th day
of October, 1991.
__________________________
NOTARY PUBLIC residing at Salt Lake City
My Commission Expires: Nov. 1, 1993
S T A T E O F N E V A D A S E C R E T A R Y O F S T A T E
I, FRANKIE SUE DEL PAPA, Secretary of State of the State of
Nevada, do hereby certify that FRANKLIN CAPITAL, INC. did on the
THIRTEENTH day of JULY, 1990, file in this office the original
Articles of Incorporation; that said Articles are now on file and
of record in the office of the Secretary of State of the State of
Nevada, and further, that said Articles contain all the
provisions required by the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the Great Seal of State, at my office in Carson City, Nevada,
this THIRTEENTH day of JULY, A.D. 1990.
________________________________
Secretary of State
________________________________
Deputy
E-12
<PAGE>
Exhibit 3
Form 10-KSB
Reddi Brake Supply Company, Inc.
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
FRANKLIN CAPITAL, INC.
Pursuant to the applicable provisions of the Nevada Business
Corporations Act, Franklin Capital, Inc. (the "Corporation")
adopts the following Articles of Amendment to its Articles of
Incorporation by stating the following:
FIRST: The present name of the Corporation is Franklin
Capital, Inc.
SECOND: The following amendments to its Articles of
Incorporation were adopted by majority vote of shareholders of
the Corporation on October 4, 1991 in the manner prescribed by
Nevada law.
1. Article I, is amended as follows:
ARTICLE I
NAME
The name of the corporation shall be: Wesco Auto Parts
Corporation.
THIRD: The number of shares of the Corporation
outstanding and entitled to vote at the time of the adoption of
said amendment was 500,000.
FOURTH: The number of shares voted for such amendments was
490,362 (98%) and the number voted against such amendments was -0-
.
DATED this 16th day of October, 1991.
FRANKLIN CAPITAL, INC.
By: /s/ President and
Secretary
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<PAGE>
Exhibit 4
Form 10-KSB
Reddi Brakes Supply Company, Inc.
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
WESCO AUTO PARTS CORPORATION
Pursuant to the applicable provisions of the Nevada Business
Corporations Act, WESCO AUTO PARTS CORPORATION (the
"Corporation") adopts the following Articles of Amendment to its
Articles of Incorporation by stating the following:
FIRST: The present name of the corporation is Wesco Auto
Parts Corporation.
SECOND: The following amendment to its Articles of
Incorporation was adopted by majority vote of shareholders of the
corporation on November 22, 1993 in the manner prescribed by
Nevada law:
1. The first sentence of Article IV is amended to read as
follows:
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares which this
corporation shall have authority to issue is: Thirty
Five Million (35,000,000) shares of $.0001 par value
each, which shares shall be designated "Common Stock";
and Two Million Five Hundred Thousand (2,500,000)
shares of $.0001 par value each, which shares shall be
designated "Preferred Stock" and which may be issued in
one or more series at the discretion of the Board of
Directors.
THIRD: The number of shares of the Corporation
outstanding and entitled
to vote at the time of the adoption of said amendment was
16,261,148.
FOURTH: The number of shares which voted for such
amendment was
8,270,836, which constitutes over 50% of the total voting
power of the Corporation's
stockholders.
DATED: November 24, 1993
WESCO AUTO PARTS CORPORATION
By: /s/ Allen J. Sheerin,
President
By: /s/ Michael J. Cassidy,
Secretary
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<PAGE>
Exhibit 5
Form 10-KSB
Reddi Brake Supply Company, Inc.
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
WESCO AUTO PARTS CORPORATION
Pursuant to the applicable provisions of the Nevada Business
Corporations Act, Wesco Auto Parts Corporation (the
"Corporation") adopts the following Articles of Amendment to its
Articles of Incorporation by stating the following:
FIRST: The present name of the Corporation is Wesco Auto
Parts Corporation.
SECOND: The following amendments to its Articles of
Incorporation were adopted by majority vote of shareholders of
the Corporation on April 21, 1994 in the manner prescribed by
Nevada law.
Article I is amended as follows:
ARTICLE I
NAME
The name of the Corporation shall be: Reddi Brake Supply
Corporation.
THIRD: The number of shares of the corporation
outstanding and entitled to vote at the time of the adoption of
said amendment was 17,690,140.
FOURTH: The number of shares voted for such amendment was
12,143,276 (68.6%) and the number voted against such amendment
was 11,470.
DATED this 21st day of April, 1994.
WESCO AUTO PARTS CORPORATION
By: /s/ Bruce Douglass, President
By: /s/ Michael J. Cassidy,
Secretary
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<PAGE>
Exhibit 6
Form 10-KSB
Reddi Brake Supply Company, Inc.
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
REDDI BRAKE SUPPLY CORPORATION
Pursuant to the applicable provisions of the Nevada Business
Corporations Act, REDDI BRAKE SUPPLY CORPORATION (the
"Corporation") adopts the following Articles of Amendment to its
Articles of Incorporation by stating the following:
FIRST: The present name of the Corporation is Reddi
Brake Supply Corporation.
SECOND: The following amendment to its Articles of
Incorporation was adopted by majority vote of shareholders of the
Corporation on October 24, 1996 in the manner prescribed by
Nevada law:
1. The first sentence of Article IV is amended to read as
follows:
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares which this corporation shall
have authority to issue is: Seventy Five Million (75,000,000)
shares of $.0001 par value each, which shares shall be designated
"Common Stock"; and Two Million Five Hundred Thousand (2,500,000)
shares of $.0001 par value each, which shares shall be designated
"Preferred Stock" and which may be issued in one or more series
at the discretion of the Board of Directors.
THIRD: The number of shares of the Corporation
outstanding and entitled to vote at the time of the adoption of
said amendment was 25,164,839.
FOURTH: The number of shares which voted for such
amendment was 16,010,571, which constitutes over 50% of the total
voting power of the Corporation's stockholders.
DATED: October 24, 1996
REDDI BRAKE SUPPLY CORPORATION
By: /s/ Richard McGorrian,
President
By: /s/ Sanford Waddell, Secretary
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<PAGE>
VERIFICATION
STATE OF CALIFORNIA )
COUNTY OF LOS ANGLES )
The undersigned being first duly sworn, deposes and says:
that the undersigned is the Secretary of Reddi Brake Supply
Corporation, that the undersigned has read the Articles of
Amendment and knows the contents thereof, and that the same
contains a truthful statement of the Amendment duly adopted by
the directors and the stockholders of the Corporation.
/s/ Sanford Waddell
ACKNOWLEDGEMENT
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES )
Before me, the undersigned notary public in and for the said
County and State, personally appeared Richard McGorrian and
Sanford Waddell, President and Secretary, respectively, of Reddi
Brake Supply Corporation, a Nevada corporation, and signed the
foregoing Articles of Amendment as their own free and voluntary
act and deed pursuant to a corporation resolution for the uses
and purposes set forth.
IN WITNESS WHEREOF, I have set my hand and seal this 31st of
October, 1996.
/s/ Nancy Dillon
E-17
<PAGE>
Exhibit 7
Form 10-KSB
Reddi Brake Supply Company, Inc.
BYLAWS
OF
FRANKLIN CAPITAL, INC.
E-18
<PAGE>
I
TABLE OF CONTENTS
Page
ARTICLE I - OFFICES . . . . . . . . . . . . . . . . . . . . . . .. 1
1.1 Business Office . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Registered office . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - SHARES AND TRANSFER THEREOF.. .. . . . . . . . . . . 1
2.1 Regulation . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.2 Certificates for Shares . . . . . . . . . . . . . . . . . . .. 1
2.3 Cancellation of Certificates . . . . . . . . . . . . . . . . .. 2
2.4 Lost, Stolen or Destroyed Certificates . . . . . . . . . . . .. 2
2.5 Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . .. 3
2.7 Close of Transfer Book and Record Date . . . . . . . . . . . . .3
ARTICLE III - SHAREHOLDERS AND MEETINGS THEREOF. . . . . . . . . 4
3.1 Shareholders of Record . . . . . . . . . . . . . . . . . . . . 4
3.2 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Annual Meetings. . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Special Meetings . . . . . . . . . . . . . . . . . . . . . . .. 4
3.5 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.6 Meeting of all Shareholder . . . . . . . . . . . . . . . . . . 5
3.7 Voting Record. . . . . . . . . . . . . . . . . . . . . . . . .. 5
3.8 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5
3.9 Manner of Acting . . . . . . . . . . . . . . . . . . . . . .. 6
3.10 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.11 Voting of Shares. . . . . . . . . . . . . . . . . . . . . . . 6
3.12 Voting of Shares by Certain Holders . . . . . . . . . . . . . 6
3.13 Information Action by Shareholder . . . . . . . . . . . . . . .7
3.14 Voting by Ballot. . . . . . . . . . . . . . . . . . . . . . . 7
3.15 Cumulative Voting . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE IV - DIRECTORS, POWERS AND MEETINGS . . . . . . . . . . . 7
4.1 Board of Directors . . . . . . . . . . . . . . . . . . . . . 7
4.2 Regular Meetings. . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Special Meetings. . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8
4.5 Participation by Electronic Means . . . . . . . . . . . . . .. 8
4.6 Quorum and Manner of Acting . . . . . . . . . . . . . . . . . 8
4.7 Organization. . . . . . . . . . . . . . . . . . . . . . . . .. 9
4.8 Presumption of Assent . . . . . . . . . . . . . . . . . . . .. 9
4.9 Informal Action by Directors. . . . . . . . . . . . . . . . . 9
4.10 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . .. 9
4.11 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . 9
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<PAGE>
4.12 Removal of Directors. . . . . . . . . . . . . . . . . . . . ..10
4.13 Resignations. . . . . . . . . . . . . . . . . . . . . . . . ..10
4.14 General Powers. . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V - OFFICERS. . . . . . . . . . . . . . . . . . . . . . . 10
5.1 Term and Compensation . . . . . . . . . . . . . . . . . . . ..10
5.2 Powers. . . . . . . . . . . . . . . . . . . . . . . . . . .. .10
5.3 Compensation. . . . . . . . . . . . . . . . . . . . . . . ... 12
5.4 Delegation of Duties. . . . . . . . . . . . . . . . . . . . .12
5.5 Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . ..12
5.6 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI - FINANCE. . . . . . . . . . . . . . . . . . . . . . . 12
6.1 Reserve Fund. . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 Banking . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VII - DIVIDENDS . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII - CONTRACTS, LOANS AND CHECKS. . . . . . . . . . . . 13
8.1 Execution of Contracts. . . . . . . . . . . . . . . . . . . ..13
8.2 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . ..13
8.3 Checks. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.4 Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLES IX - FISCAL YEAR . . . . . . . . . . . . . . . . . . . . 14
ARTICLE X - CORPORATE SEAL. . . . . . . . . . . . . . . . . . . ..14
ARTICLE XI - AMENDMENTS . . . . . . . . . . . . . . . . . . . . ..14
ARTICLE XII - EXECUTIVE COMMITTEE . . . . . . . . . . . . . . . ..14
12.1 Appointment . . . . . . . . . . . . . . . . . . . . .. . . . .14
12.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12.3 Tenure and Qualifications . . . . . . . . . . . . . . . . . . 14
12.4 Meetings . . . . . . . . . . . . . . . . . . . . . . . . .. .15
12.5 Quorum . . . . . . . . . . . . . . . . . . . . . . . . .. 15
12.6 Informal Action by Executive Committee. . . . . . . . . . . . 15
12.7 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.8 Resignations and Removal. . . . . . . . . . . . . . . . . . . 15
12.9 Procedure . . . . . . . . . . . . . . . . . . . . . . . . .. .15
ARTICLE XIII - EMERGENCY BYLAWS . . . . . . . . . . . . . . . . ..16
CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . ..17
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<PAGE>
ARTICLE I
OFFICES
1.1 Business Office. The principal office and place of
business of the corporation shall be at 6160 South Syracuse Way,
Suite 310, Englewood, Colorado 80111. Other offices and places of
business may be established from time to time by resolution of the
Board of Directors or as the business of the corporation may
require.
1.2 Registered Office. The registered office of the
corporation, required by the Nevada Business Corporation Act to be
maintained in the State of Nevada, may be, but need not be,
identical with any principal office in the State of Nevada, and
the address of the registered office may be changed from time to
time by the Board of Directors.
ARTICLE II
SHARES AND TRANSFER THEREOF
2.1 Regulation. The Board of Directors may make such rules
and regulations as it may deem appropriate concerning the
issuance, transfer and registration of certificates for shares of
the corporation, including the appointment of transfer agents and
registrars.
2.2 Certificates for Shares. Certificates representing
shares of the corporation shall be respectively numbered serially
for each class of shares, or series thereof, as they are issued,
shall be impressed with the corporate seal or a facsimile thereof,
and shall be signed by the Chairman or Vice Chairman of the Board
of Directors or by the President or a Vice-President and by the
Treasurer or an Assistant Treasurer or by the Secretary or an
Assistant Secretary; provided that any or all of the signatures
may be facsimile if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation
itself or its employee. Each certificate shall state the name of
the corporation, the fact that the corporation is organized or
incorporated under the laws of the State of Nevada, the name of
the person to whom issued, the date of issue, the class (or series
of any class), the number of shares represented thereby and the
par value of the shares represented thereby or a statement that
such shares are without par value. A statement of the
designations, preferences, qualifications, limitations,
restrictions and special or relative rights of the shares of each
class shall be set forth in full or summarized on the face or back
of the certificates which the corporation shall issue, or in lieu
thereof, the certificate may set forth that such a statement or
summary will be furnished to any shareholder upon request without
charge. Each certificate shall be otherwise in such form as may be
prescribed by the Board of Directors and as shall conform to the
rules of any stock exchange on which the shares may be listed. The
corporation shall not issue certificates representing fractional
shares and shall not be obligated to make any transfers creating a
fractional interest in a share of stock. The corporation may issue
scrip in lieu of any fractional shares, such scrip to have terms
and conditions specified by the Board of Directors.
2.3 Cancellation of Certificates. All certificates
surrendered to the corporation for transfer shall be cancelled and
no new certificates shall be issued in lieu thereof until the
former certificate for a like number of shares shall have been
surrendered and cancelled, except as herein
provided with respect to lost, stolen or destroyed certificates.
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<PAGE>
2.4 Lost, Stolen or Destroyed Certificates. Any shareholder
claiming that his certificate for shares is lost, stolen or
destroyed may make an affidavit or affirmation of the fact and
lodge the same with the Secretary of the corporation, accompanied
by a signed application for a new certificate. Thereupon, and upon
the giving of a satisfactory bond of indemnity to the corporation
not exceeding an amount double the value of the shares as
represented by such certificate (the necessity for such bond and
the amount required to be determined by the President and
Treasurer of the corporation), a new certificate may be issued of
the same tenor and representing the same number, class and series
of shares as were represented by the certificate alleged to be
lost, stolen or destroyed.
2.5 Transfer of Shares. Subject to the terms of any
shareholder agreement relating to the transfer of shares or other
transfer restrictions contained in the Articles of Incorporation
or authorized therein, shares of the corporation shall be
transferable on the books of the corporation by the holder thereof
in person or by his duly authorized attorney, upon the surrender
and cancellation of a certificate or certificates for a like
number of shares. Upon presentation and surrender of a certificate
for shares properly endorsed and payment of all taxes therefor,
the transferee shall be entitled to a new certificate or
certificates in lieu thereof. As against the corporation, a
transfer of shares can be made only on the books of the
corporation and in the manner hereinabove provided, and the
corporation shall be entitled to treat the holder of record of any
share as the owner thereof and shall not be bound to recognize any
equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have express or other
notice thereof, save as expressly provided by the statutes of the
State of Nevada.
2.6 Transfer Agent. Unless otherwise specified by the
Board of Directors by resolution, the Secretary of the corporation
shall act as transfer agent of the certificates representing the
shares of stock of the corporation. He shall maintain a stock
transfer book, the stubs in which shall set forth among other
things, the names and addresses of the holders of all issued
shares of the corporation, the number of shares held by each, the
certificate numbers representing such shares, the date of issue of
the certificates representing such shares, and whether or not such
shares originate from original issue or from transfer. Subject to
Section 3.7, the names and addresses of the shareholders as they
appear on the stubs of the stock transfer book shall be conclusive
evidence as to who are the shareholders of record and as such
entitled to receive notice of the meetings of shareholders; to
vote at such meetings; to examine the list of the shareholders
entitled to vote at meetings; to receive dividends; and to own,
enjoy and exercise any other property or rights deriving from such
shares against the corporation. Each shareholder shall be
responsible for notifying the Secretary in writing of any change
in his name or address and failure so to do will relieve the
corporation, its directors, officers and agents, from liability
for failure to direct notices or other documents, or pay over or
transfer dividends or other property or rights, to a name or
address other than the name and address appearing on the stub of
the stock transfer book.
2.7 Close of Transfer Book and Record Date. For the purpose
of determining shareholders entitled to notice of or to vote at
any meeting of shareholders, or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a
determination of
shareholders for any other proper purpose, the Board of Directors
may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case, sixty days. If the
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<PAGE>
stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of, or to vote at a
meeting of shareholders, such books shall be closed for at least
ten days immediately preceding such meeting. In lieu of closing
the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than sixty days
and, in case of a meeting of shareholders, not less than ten days
prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If the stock
transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at
a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof.
ARTICLE III
SHAREHOLDERS AND MEETINGS THEREOF
3.1 Shareholders of Record. Only shareholders of record on
the books of the corporation shall be entitled to be treated by
the corporation as holders in fact of the shares standing in their
respective names, and the corporation shall not be bound to
recognize any equitable or other claim to, or interest in, any
shares on the part of any other person, firm or corporation,
whether or not it shall have express or other notice thereof,
except as expressly provided by the laws of Nevada.
3.2 Meetings. Meetings of shareholders shall be held at the
principal of f ice of the corporation, or at such other place as
specified from time to time by the Board of Directors. If the
Board of Directors shall specify another location such change in
location shall be recorded on the notice calling such meeting.
3.3 Annual Meeting. The annual meeting of shareholders of
the corporation for the election of directors, and for the
transaction of such other business as may properly come before the
meeting, shall be held at such time as may be determined by the
Board of Directors by resolution in conformance with Nevada law.
If the election of Directors shall not be held on the day
designated herein for any annual meeting of the shareholders, the
Board of Directors shall cause the election to be held at a
special meeting of the shareholders as soon thereafter as may be
convenient.
3.4 Special Meetings. Special meetings of shareholders,
for any purpose or purposes, unless otherwise prescribed by
statute, may be called by the President, the Board of Directors,
the holders of not less than one-tenth of all the shares entitled
to vote at the meeting, or legal counsel of the corporation as
last designated by resolution of the Board of Directors.
3.5 Notice. Written notice stating the place, day and hour
of the meeting and, in case of a
special meeting, the purpose or purposes for which the meeting is
called, shall be delivered unless otherwise prescribed by statute
not less than ten days nor more than fifty days before the date of
the meeting, either personally or by mail, by or at the direction
of the President, the Secretary, or the
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<PAGE>
officer or person calling the meeting to each shareholder of
record entitled to vote at such meeting; except that, if the
authorized shares are to be increased, at least thirty days'
notice shall be given, and if the sale of all or substantially all
of, the corporation's assets is to be voted upon, at least twenty
days, notice shall be given. Any shareholder may waive notice of
any meeting. Notice to shareholders of record, if mailed, shall be
deemed given as to any shareholder of record, when deposited in
the United States mail, addressed to the shareholder at his
address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid, but if three successive
letters mailed to the last-known address of any shareholder of
record are returned as undeliverable, no further notices to such
shareholder shall be necessary, until another address for such
shareholder is made known to the corporation.
3.6 Meeting of All Shareholders. If all of the shareholders
shall meet at any time and place, either within or without the
State of Nevada, and consent to the holding of a meeting at such
time and place, such meeting shall be valid without call or
notice, and at such meeting any corporate action may be taken.
3.7 Voting Record. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at
least ten days before such meeting of shareholders, a complete
record of the shareholders entitled to vote at each meeting of
shareholders or any adjournment thereof, arranged in alphabetical
order, with the address and the number of shares held by each. The
record, for a period of ten days prior to such meeting, shall be
kept on file either at a place within the city where the meeting
is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting
is to be held, whether within or without the State of Nevada, and
shall be subject to inspection by any shareholder for any purpose
germane to the meeting at any time during usual business hours.
Such record shall be produced and kept open at the time and place
of the meeting and shall be subject to the inspection of any
shareholder for any purpose germane to the meeting during the
whole time of the meeting for the purposes thereof. The original
stock transfer books shall be the prima facie evidence as to who
are the shareholders entitled to examine the record or transfer
books or to vote at any meeting of shareholders.
3.8 Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at any meeting of shareholders, except
as otherwise provided by the Nevada Business Corporation Act and
the Articles of Incorporation. In the absence of a quorum at any
such meeting, a majority of the shares so represented may adjourn
the meeting from time to time for a period not to exceed sixty
days without further notice. At such adjourned meeting at which a
quorum shall be presentor represented, any business may be
transacted which might have been transacted at the meeting as
originally noticed. The shareholders present at a duly organized
meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave
less than a quorum.
3.9 Manner of Acting. If a quorum is present, the
affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on the subject matter shall be the
act of the shareholders, unless the vote of a greater proportion
or number or voting by classes is otherwise required by statute or
by the Articles of Incorporation or these Bylaws.
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3.10 Proxies. At all meetings of shareholders a shareholder
may vote in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney-in-fact. Such proxy
shall be filed with the Secretary of the corporation before or at
the time of the meeting. No proxy shall be valid after three years
from the date of its execution, unless otherwise provided in the
proxy.
3.11 Voting of Shares. Unless otherwise provided by these
Bylaws or the Articles of Incorporation, each outstanding share
entitled to vote shall be entitled to one vote upon each matter
submitted to a vote at a meeting of shareholders, and each
fractional share shall be entitled to a corresponding fractional
vote on each such matter.
3.12 Voting of Shares by Certain Holders. Shares standing
in the name of another corporation may be voted by such officer,
agent or proxy as the bylaws of such corporation may prescribe,
or, in the absence of such provision, as the Board of Directors of
such other corporation may determine. Shares standing in the name
of a deceased person, a minor ward or an incompetent person, may
be voted by his administrator, executor, court appointed guardian
or conservator, either in person or by proxy without a transfer of
such shares into the name of such administrator, executor, court
appointed guardian or conservator. Shares standing in the name of
a trustee may be voted by him, either in person or by proxy, but
no trustee shall be entitled to vote shares held by him without a
transfer of such shares into his name. Shares standing in the name
of a receiver may be voted by such receiver, and shares held by or
under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such
receiver was appointed.
A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the
name of the pledgee, and thereafter the pledgee shall be entitled
to vote the shares so transferred. Neither shares of its own stock
belonging to this corporation, nor shares of its own stock held by
it in a fiduciary capacity, nor shares of its own stock held by
another corporation if the majority of shares entitled to vote for
the election of directors of such corporation is held by this
corporation may be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of
outstanding shares at any given time. Redeemable shares which have
been called for redemption shall not be entitled to vote on any
matter and shall not be deemed outstanding shares on and after the
date on which written notice of redemption has been mailed to
shareholders and a sum sufficient to redeem such shares has been
irrevocably deposited or set aside to pay the redemption price to
the holders of the shares upon surrender of certificates therefor.
3.13 Information Action by Shareholders. Any action
required or permitted to be taken at
a meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders holding at least a majority of
the Corporation's common stock.
3.14 Voting by Ballot. Voting on any question or in any
election may be by voice vote unless the presiding officer shall
order or any shareholder shall demand that voting be by ballot.
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3.15 Cumulative Voting. No shareholder shall be permitted to
cumulate his votes by giving one candidate as many votes as the
number of such directors multiplied by the number of his shares
shall equal, or by distributing such votes on the same principal
among any number of candidates.
ARTICLE IV
DIRECTORS, POWERS AND MEETINGS
4.1 Board of Directors. The business and affairs of the
corporation shall be managed by a board of not less than one (1)
nor more than seven (7) directors. Directors need not be
shareholders of the corporation or residents of the State of
Nevada and who shall be elected at the annual meeting of
shareholders or some adjournment thereof. Directors shall hold
office until the next succeeding annual meeting of shareholders
and until their successors shall have been elected and shall
qualify. The Board of Directors may increase or decrease, to not
less than one (1), nor more than seven (7), the number of
directors by resolution.
4.2 Regular Meetings. A regular, annual meeting of the
Board of Director's shall be held at the same place as, and
immediately after, the annual meeting of shareholders, and no
notice shall be required in connection therewith. The annual
meeting of the Board of Directors shall be for the purpose of
electing officers and the transaction of such other business as
may come before the meeting. The Board of Directors may provide,
by resolution, the time and place, either within or without the
State of Nevada, for the holding of additional regular meetings
without other notice than such resolution.
4.3 Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the President or
any two directors. The person or persons authorized to call
special meetings of the Board of Directors may fix any place,
either within or without the State of Nevada, as the place for
holding any special meeting of the Board of Directors called by
them.
4.4 Notice. Written notice of any special meeting of
directors shall be given as follows:
(a) By mail to each director at his business address at
least three days prior to the meeting; or
(b) By personal delivery or telegram at least twenty-
four hours prior to the meeting to the business address of each
director, or in the event such notice is given on a Saturday,
Sunday or holiday, to the residence address of each director. if
mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, so addressed,
with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Any director may waive notice
of any meeting. The attendance of a director at any meeting shall
constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to
the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice or waiver of
notice of such meeting.
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4.5 Participation by Electronic Means. Except as may be
otherwise provided by the Articles of Incorporation or Bylaws,
members of the Board of Directors or any committee designated by
such Board may participate in a meeting of the Board or committee
by means of conference telephone or similar communications
equipment by which all persons participating in the meeting can
hear each other at the same time. Such participation shall
constitute presence in person at the meeting.
4.6 Quorum and Manner of Acting. A quorum at all meetings
of the Board of Directors shall consist of a majority of the
number of directors then holding office, but a smaller number may
adjourn from time to time without further notice, until a quorum
is secured. The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board
of Directors, unless the act of a greater number is required by
the laws of the State of Nevada or by the Articles of
Incorporation or these Bylaws.
4.7 Organization. The Board of Directors shall elect a
chairman to preside at each meeting of the Board of Directors. The
Board of Directors shall elect a Secretary to record the
discussions and resolutions of each meeting.
4.8 Presumption of Assent. A director of the corporation
who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent shall be entered
in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the Secretary of
the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the Secretary of the corporation
immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such
action.
4.9 Informal Action By Directors. Any action required or
permitted to be taken by the Board of Directors, or a committee
thereof, at a meeting may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by
all the directors or all the committee members entitled to vote
with respect to the subject matter thereof.
4.10 Vacancies. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of
the remaining directors though less than a quorum of the Board of
Directors. A director elected to fill a vacancy shall be elected
for the unexpired term of his predecessor in office, and shall
hold such office until his successor is duly elected and shall
qualify. Any directorship to be filled by reason of an increase in
the number of directors shall be filled by
the affirmative vote of a majority of the directors then in office
or by an election at an annual meeting, or at a special meeting of
shareholders called for that purpose. A director chosen to fill a
position resulting from an increase in the number of directors
shall hold office only until the next election of directors by the
shareholders.
4.11 Compensation. By resolution of the Board of Directors
and irrespective of any personal interest of any of the members,
each director may be paid his expenses, if any, of attendance at
each meeting of the Board of Directors, and may be paid a stated
salary as director or a fixed sum for attendance at each meeting
of the Board of Directors or both. No such payment
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shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
4.12 Removal of Directors. Any director or directors of
the corporation may be removed at any time, with or without cause,
in the manner provided in the Nevada Business Corporation Act.
4.13 Resignations. A director of the corporation may resign
at any time by giving written notice to the Board of Directors,
President or Secretary of the corporation. The resignation shall
take effect upon the date of receipt of such notice, or at any
later period of time specified therein. The acceptance of such
resignation shall not be necessary to make it effective, unless
the resignation requires it to be effective as such.
4.14 General Powers. The business and affairs of the
corporation shall be managed by the Board of Directors which may
exercise all such powers of the corporation and do all such lawful
acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be
exercised or done by the shareholders. The directors shall pass
upon any and all bills or claims of officers for salaries or other
compensation and, if deemed advisable, shall contract with
officers, employees, directors, attorneys, accountants, and other
persons to render services to the corporation.
ARTICLE V
OFFICERS
5.1 Term and Compensation. The elective officers of the
corporation shall consist of at least a President, a Secretary and
a Treasurer, each of whom shall be eighteen years or older and who
shall be elected by the Board of Directors at its annual meeting.
Unless removed in accordance with procedures established by law
and these Bylaws, the said officers shall serve until the next
succeeding annual meeting of the Board of Directors and until
their respective successors are elected and shall qualify. Any
number of offices may be held by the same person at the same time.
The Board may elect or appoint such other officers and agents as
it may deem advisable, who shall hold office during the pleasure
of the Board.
5.2 Powers. The officers of the corporation shall exercise
and perform the respective powers, duties and functions as are
stated below, and as may be assigned to them by the Board of
Directors.
(a) The President shall be the chief executive officer
of the corporation and shall, subject to the control of the Board
of Directors, have general supervision, direction and control of
the business and officers of the corporation. He shall preside,
when present, at all meetings of the shareholders and of the Board
of Directors unless a different chairman of such meetings is
elected by the Board of Directors.
(b) In the absence or disability of the President, the
Vice-President or Vice-Presidents, if any, in order of their rank
as fixed by the Board of Directors, and if not ranked, the Vice
Presidents in the order designated by the Board of Directors,
shall perform all the duties of the
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President, and when so acting shall have all the powers of, and
be subject to all the restrictions on the President. Each Vice-
President shall have such other powers and perform such other
duties as may from time to time be assigned to him by the
President or the Board of Directors.
(c) The Secretary shall keep accurate minutes of all
meetings of the shareholders and the Board of Directors unless a
different Secretary of such meetings is elected by the Board of
Directors. He shall keep, or cause to be kept a record of the
shareholders of the corporation and shall be responsible for the
giving of notice of meetings of the shareholders or the Board of
Directors. The Secretary shall be custodian of the records and of
the seal of the corporation and shall attest the affixing of the
seal of the corporation when so authorized. The Secretary or
Assistant Secretary shall sign all stock certificates, as
described in Section 2.2 hereof. The Secretary shall perform all
duties commonly incident to his office and such other duties as
may from time to time be assigned to him by the President or the
Board of Directors.
(d) An Assistant Secretary may, at the request of the
Secretary, or in the absence or disability of the Secretary,
perform all of the duties of the Secretary. He shall perform such
other duties as may be assigned to him by the President or by the
secretary.
(e) The Treasurer, subject to the order of the Board of
Directors, shall have the care and custody of the money, funds,
valuable papers and documents of the corporation. He shall keep
accurate books of accounts of the corporation's transactions,
which shall be the property of the corporation, and shall render
financial reports and statements of condition of the corporation
when so requested by the Board of Directors or President. The
Treasurer shall perform all duties commonly incident to his office
and such other duties as may from time to time be assigned to him
by the President or the Board of Directors. In the absence or
disability of the President and Vice-President or Vice-Presidents,
the Treasurer shall perform the duties of the President.
(f) An Assistant Treasurer may, at the request of the
Treasurer, or in the absence or disability of the Treasurer,
perform all of the duties of the Treasurer. He shall perform such
other duties as may be assigned to him by the President or by the
Treasurer.
5.3 Compensation. All officers of the corporation may
receive salaries or other compensation if so ordered and fixed by
the Board of Directors. The Board of Directors shall have
authority to fix salaries in advance for stated periods or render
the same retroactive as the Board may deem advisable.
5.4 Delegation of Duties. In the event of absence or
inability of any officer to act, the Board of Directors may
delegate the powers or duties of such officer to any other
officer, director or person whom it may select.
5.5 Bonds. If the Board of Directors by resolution shall
so require, any officer or agent of the corporation shall give
bond to the corporation in such amount and with such surety as the
Board of Directors may deem sufficient, conditioned upon the
faithful performance of their respective duties and offices.
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5.6 Removal. Any officer or agent may be removed by the
Board of Directors or by the executive committee, if any, whenever
in its judgment the best interest of the corporation will be
served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not, of itself, create
contract rights.
ARTICLE VI
FINANCE
6.1 Reserve Funds. The Board of Directors, in its
uncontrolled discretion, may set aside from time to time, out of
the net profits or earned surplus of the corporation, such sum or
sums as it deems expedient as a reserve fund to meet
contingencies, for equalizing dividends, for maintaining any
property of the corporation, and for any other purpose.
6.2 Banking. The moneys of the corporation shall be
deposited in the name of the corporation in such bank or banks or
trust company or trust companies, as the Board of Directors shall
designate, and may be drawn out only on checks signed in the name
of the corporation by such person or persons as the Board of
Directors, by appropriate resolution, may direct. Notes and
commercial paper, when authorized by the Board, shall be signed in
the name of the corporation by such officer or officers or agent
or agents as shall thereunto be authorized from time to time.
ARTICLE VII
DIVIDENDS
Subject to the provisions of the Articles of Incorporation
and the laws of the State of Nevada, the Board of Directors may
declare dividends whenever, and in such amounts, as in the Board's
opinion the condition of the affairs of the corporation shall
render such advisable.
ARTICLE VIII
CONTRACTS, LOANS AND CHECKS
ARTICLE XI
AMENDMENTS
These Bylaws may be altered, amended or repealed and new
Bylaws may be adopted by a majority of the Directors present at
any meeting of the Board of Directors of the corporation at
which a quorum is present.
ARTICLE XII
EXECUTIVE COMMITTEE
12.1 Appointment. The Board of Directors by resolution
adopted by a majority of the full Board, may designate two or more
of its members to constitute an executive committee. The
designation of such committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or
any member thereof, of any responsibility imposed by law.
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12.2 Authority. The executive committee, when the Board
of Directors is not in session shall have and may exercise all of
the authority of the Board of Directors except to the extent, if
any, that such authority shall be limited by the resolution
appointing the executive committee and except also that the
executive committee shall not have the authority of the Board of
Directors in reference to amending the Articles of Incorporation,
adopting a plan of merger or consolidation, recommending to the
shareholders the sale, lease or other disposition of all or
substantially all of the property and assets of the corporation
otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the
corporation or a revocation thereof, or amending the Bylaws of the
corporation.
12.3 Tenure and Qualifications. Each member of the
executive committee shall hold office until the next regular
annual meeting of the Board of Directors following his
designation.
12.4 Meetings. Regular meetings of the executive committee
may be held without notice at such time and places as the
executive committee may fix from time to time by resolution.
Special meetings of the executive committee may be called by any
member thereof upon not less than one day's notice stating the
place, date and hour of the meeting, which notice may be written
or oral, and if mailed, shall be deemed to be delivered when
deposited in the United States mail addressed to the member of the
executive committee at his business address. Any member of the
executive committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in
person. The notice of a meeting of the executive committee need
not state the business proposed to be transacted at the meeting.
12.5 Quorum. A majority of the members of the executive
committee shall constitute a quorum for the transaction of
business at any meeting thereof, and action of the executive
committee must be authorized by the affirmative vote of a majority
of the members present at a meeting at which a quorum is present.
12.6 Informal Action by Executive Committee. Any action
required or permitted to be taken by the executive committee at a
meeting may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the
members of the committee entitled to vote with respect to the
subject matter thereof.
12.7 Vacancies. Any vacancy in the executive committee
may be filled by a resolution adopted by a majority of the full
Board of Directors.
12.8 Resignations and Removal. Any member of the
executive committee may be removed at any time with or without
cause by resolution adopted by a majority of the full Board of
Directors. Any member of the executive committee may resign from
the executive committee at any time by giving written notice to
the President or Secretary of the corporation, and unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
12.9 Procedure. The executive committee shall elect a
presiding officer from its members and may fix its own rules of
procedure which shall not be inconsistent with these Bylaws.
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it shall keep regular minutes of its proceedings and report the
same to the Board of Directors for its information at the meeting
thereof held next after the proceedings shall have been taken.
ARTICLE XIII
EMERGENCY BYLAWS
The Emergency Bylaws provided for in this Article shall be
operative during any emergency in the conduct of the business of
the corporation resulting from an attack on the United States or
any nuclear or atomic disaster, notwithstanding any different
provision in the preceding articles of the Bylaws or in the
Articles of Incorporation of the corporation or in the Nevada
Business Corporation Act. To the extent not inconsistent with the
provisions of this Article, the Bylaws provided in the preceding
articles shall remain in effect during such emergency and upon its
termination the Emergency Bylaws shall cease to be operative.
During any such emergency:
(a) A meeting of the Board of Directors may be called
by any officer or director of the corporation. Notice of the time
and place of the meeting shall be given by the person calling the
meeting to such of the directors as it may be feasible to reach by
any available means of communication. Such notice shall be given
at such time in advance of the meeting as circumstances permit in
the judgment of the person calling the meeting.
(b) At any such meeting of the Board of Directors, a
quorum shall consist of the number of directors in attendance at
such meeting.
(c) The Board of Directors, either before or during any
such emergency, may, effective in the emergency, change the
principal office or designate several alternative principal
offices or regional offices, or authorize the officers so to do.
(d) The Board of Directors, either before or during any
such emergency, may provide, and from time to time modify, lines
of succession in the event that during such an emergency any or
all officers or agents of the corporation shall for any reason be
rendered incapable of discharging their duties.
(e) No officer, director or employee acting in
accordance with these Emergency
Bylaws shall be liable except for willful misconduct.
(f) These Emergency Bylaws shall be subject to repeal or
change by further action of the Board of Directors or by action of
the shareholders, but no such repeal or change shall modify the
provisions of the next preceding paragraph with regard to action
taken prior to the time of such repeal or change. Any amendment of
these Emergency Bylaws may make any further or different provision
that may be practical and necessary for the circumstances of the
emergency.
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CERTIFICATE
I hereby certify that the foregoing Bylaws, consisting of 17
pages, including this page, constitute the Bylaws of Franklin
Capital, Inc. adopted by the Board of Directors of the corporation
as of the 14th day of August, 1990.
________________________________
Secretary
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Exhibit 8
Form 10-KSB
Reddi Brake Supply Corporation, Inc.
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and
entered into as of April 29, 1997, by and among REDDIBRAKE SUPPLY
COMPANY, INC., a California corporation located at 1376 Walter
Street, Ventura, CA. 93003 ("Seller") and EXPRESS PARTS WAREHOUSE,
INC., a North Carolina corporation located 3825 Barrett Drive,
Suite 104, Raleigh, North Carolina 27609 ("Buyer").
WITNESSETH
WHEREAS, Seller has been engaged in the business of supplying
brake systems, chassis components and other automobile
undercarriage parts primarily to automobile repair facilities
through various outlets throughout the United States (the
"Business");
WHEREAS, Seller is a debtor and debtor in possession in a
case under Chapter 11 of Title 11 of the United States Code,
pending in the United States Bankruptcy Court for the Central
District of California, at Santa Barbara, CA. (the "Bankruptcy
Court") and assigned Case No. ND 97-11349-RR;
WHEREAS, Seller now desires to sell to the Buyer and Buyer
wishes to purchase substantially all of the Assets of the Seller
utilized in the Business (the "Assets," as defined in Section 1.1.
hereof), on the terms and conditions hereinafter set forth (the
"Sale");
WHEREAS, the consummation of the Sale shall be subject to the
entry of an Order of the Bankruptcy Court, as set forth in
Sections 7.3. and 8.3. below, authorizing the Sale of the Assets
by the Seller to the Buyer free and clear of all liens and
encumbrances pursuant to Section 363 of the Bankruptcy Code and
the assumption and assignment to the Buyer of the "Real Estate
Leases", as such term is hereinafter defined, pursuant to Section
365 of the Bankruptcy Code (the "Sale and Lease Assumption
Order"); and
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1. Transfer of Assets. Upon the terms and subject to the
conditions contained herein, on the "Closing Date" (as defined in
Article III below), Buyer shall purchase and acquire from Seller
and Seller shall sell, convey, assign and transfer to Buyer all of
the assets utilized by the Seller in
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the operation of the Business described below, except the
"Excluded Assets" as such term is defined in Section 1.2. below,
which are owned or held by the Seller on the Closing Date. The
Assets subject to the Sale are as follows:
1.1.a. all of the accounts receivable (gross) of the Seller
arising from the ordinary course of the Business existing on the
Seller's books and records as of the Closing Date (the "Accounts
Receivable");
1.1.b. all of the inventory owned by the Seller as of the
Closing Date (the "Inventory");
1.1.c. all of the real property leases held by the Seller
listed in Schedule 1.1.c.1. attached hereto and made a part hereof
(the "Assumed Leases"), except for those real property leases
listed in Schedule 1.1.c.2. attached hereto and made a part hereof
(the "Excluded Leases");
1.1.d. all computer equipment and systems, telephone
equipment and systems, machinery and equipment, motor vehicles and
furniture and furnishings owned by the Seller;
1.1.e. certain items of machinery and equipment or computers
which the Seller holds subject to leases, as listed on Schedule
1.l.e. which will be attached hereto and made a part hereof prior
to May 20, 1997 (the "Leased Equipment") ;
1.1.f. all names, copyrights, logos, trademarks, computer
software, goodwill and other intellectual property rights owned by
the Seller; including but not limited to the trade style
"ReddiBrake";
1.1.g. those intellectual property rights, licenses and other
rights and assets held by the Seller which are subject to licenses
or other agreements as listed in Schedule 1.1.g. which will be
attached hereto and made a part hereof prior to May 20, 1997 (the
"Licensed Rights");
1. 1.h. all personal properties, supplies, tools, post office
box, telephone numbers, supplier, sales and vendor records of
Seller;
1.1.i. all rights of the Seller to that certain promissory
note of Allen J. Sheerin to Seller; (the "Sheerin Note");
1.1.j. all deposits and prepayments with (i) landlords with
respect to the Assumed Leases and (ii) utilities with respect to
the Assumed Leases (the '"Included Deposits); and
1.1.k. all rebates, credits, cooperative advertising or
promotional monies due to Seller from any vendors with respect to
the Assets (the "Vendor Credits") which are not contested by the
vendors or subject to any setoff, recoupment or other claims or
counterclaims of any vendors against Seller arising out of the
bankruptcy proceedings or otherwise, provided that, in the event
Seller has scheduled any claim by the vendor or the vendor has
filed a proof of claim for any monies due such vendor from Seller,
all rights to any Vendor Credits with respect to such vendor shall
remain with Seller.
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1.2. Excluded Assets. Notwithstanding anything contained in
Section 1.1. hereof to the contrary, Seller is not selling, and
Buyer is not purchasing, pursuant to this Agreement, any asset of
Seller not identified as an Asset, including without limitation
the following, all of which shall be retained by Seller:
1.2.a. the Excluded Leases and all other real or personal
property leases of Seller not listed in Schedules 1.1.c.1 or
1.1.e., respectively;
1.2.b. all cash, cash equivalents or similar type investments
of Seller, such as certificates of deposit, Treasury bills and
other marketable securities on hand and/or in banks, bank
accounts, security or other deposits of the Seller on the Closing
Date, except for the Included Deposits;
1.2.c. Seller's corporate seal, minute books, charter
documents, corporate stock record books and such other books and
records as pertain to the organization, existence or share
capitalization of Seller and duplicate copies of such accounting
and other records as Seller deems advisable to file its tax
returns and reports and for other corporate purposes;
1.2.d. all refunds, rebates or other monies due to or held by
or on behalf of the Seller arising out of any income, sales,
property, value added, franchise, excise or any tax whatsoever
from any governmental taxing authority;
1.2.e. all pension, profit sharing or cash or deferred
(Section 401(k)) plans and trusts and the assets thereof and any
other employee benefit plan or arrangement and the assets thereof,
if any maintained by Seller;
1.2.f. all contracts of insurance and all insurance proceeds
or claims previously made by Seller or which may be asserted in
the future relating to assets, property, liabilities, rights or
claims arising on behalf of the Seller prior to the Closing Date
irrespective of when such claims are actually asserted;
1.2.g. any claims, causes of action and claims for relief
whether or not asserted prior to the Closing Date which are
asserted by Seller in any litigation involving Seller including
without limitation claims arising under Title 11, United States
Code, but not any claims (i) arising out of breaches of express or
implied warranties relating to any of the Assets or (ii) relating
to the Accounts Receivable;
1.2.h. any books and records relating to any of the
foregoing, except to the extent that Buyer wishes to make, at its
expense, a duplicate copy of such materials in order to facilitate
its operation of the Business;
1.2.i. all rights of the Seller to those certain promissory
notes of Hi-Lo Automotive, Inc. to Seller; and
1.2.j. all Vendor Credits and rights with respect thereto
which are not included in the Assets pursuant to Section 1.1.k.
above.
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ARTICLE II
CONSIDERATION
2.1. Payment of Purchase Price for Assets. The initial
purchase price for the Assets shall be the sum of (i) $6,176,582,
plus (ii) the Real Estate Lease Assumption Payment, as such term
is hereinafter defined in Section 2.4. below, plus (iii) the
Buyer's Expense Reimbursement", as such term is defined in Section
2.5. below (items (i),(ii) and (iii) hereinafter collectively the
"Initial Purchase Price"). Said Initial Purchase Price shall be
reduced by such adjustments, if any as may be required first by
the "Receivable Adjustment", as defined in Section 2.2. below
(said resulting amount hereinafter defined as the "Adjusted
Purchase Price") and/or the "Inventory Adjustment" as defined in
Section 2.3. below. The Adjusted Purchase Price, as further
adjusted by the Inventory Adjustment shall be the "Final Purchase
Price". The Final Purchase Price shall be payable as follows:
2.1.a. Initial Deposit. Buyer shall deliver to counsel for
the Seller, Jeffer, Mangels, Butler & Marmaro LLP ("JMBM") into an
interest bearing segregated account (the "Escrow Account") an
initial deposit of $50,000 upon execution of this Agreement (the
"Initial Deposit"). This Initial Deposit shall be held in escrow
by JMBM pending consummation of the Sale or termination of this
Agreement. Except as set forth in the following two sentences: (i)
interest earned on all funds in the Escrow Account and the "'BCS
Escrow Account", as hereinafter defined (the "'Escrow Interest")
shall be for the Seller's benefit and shall not serve to reduce or
be applied towards the Final Purchase Price, and (ii) the Initial
Deposit shall be non-refundable. In the event to Sale is not
consummated, the Initial Deposit and the Escrow Interest shall be
returned to the Buyer only in the event the Sale is not
consummated solely for the following reasons:
2.1.a.l. failure to obtain entry of the Sale and Lease
Assumption Order from the Bankruptcy Court on or before May 22,
1997 in form and substance acceptable to Buyer; or
2.1.a.2. breach by the Seller of its obligations hereunder.
In the event the Sale is consummated, the Escrow Interest
shall be delivered to the Buyer at the Closing as set forth in
Section 2.1.e. below.
2.1.b. Second Deposit. Buyer shall deliver to the Escrow
Account via wire transfer, cashier's check or certified check the
sum of $50,000 no later than the close of business on May 20, 1997
(the "Second Deposit") . This Second Deposit, shall be held in the
Escrow Account pending consummation of the Sale or termination of
this Agreement and shall be non-refundable to Buyer unless the
Sale is not consummated solely for the reasons set forth in
Sections 2.1.a.l. and 2.1.a.2. above, in which case it will be
returned to Buyer.
2.1.c. Final Deposit. Buyer shall deliver to its counsel,
Bode, Call & Stroupe, LLP. ("BCS") into an interest bearing
segregated account (the "BCS Escrow Account") via wire transfer,
cashier's check or certified check the sum of $400,000
concurrently with and as a condition of the entry of the Sale and
Lease Assumption Order (the "Final Deposit") . This Final Deposit
shall be
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held in the BCS Escrow Account pending consummation of the Sale or
termination of this Agreement and shall be non-refundable to Buyer
unless the Sale is not consummated solely for the reasons set
forth in Sections 2.1.a.l. and 2.1.a.2. above, in which case it
will be returned to Buyer.
2.1.d. Cash at Closing. Except as set forth in 2.3.b. below
with respect to the "'Inventory and Equipment Adjustments Escrow",
at the Closing, the following funds shall be deposited to a
segregated client trust account on behalf of Seller at JMBM (the
"Closing Account") via wire transfer, delivery of a certified or
bank check or other form of cash requested by Seller:
the Initial and Second Deposit;
(i) the Final Deposit;
$5,676,582 less the "Receivable Adjustment", as
hereinafter defined in Section 2.2. below (the "Closing Cash");
the "Buyer's Real Estate Lease Payment", as such term is
defined in Section 2.4. below; and
(ii) the "Buyer's Expense Reimbursement" as defined in
Section 2.5. below.
2.1.e. Application of Escrow Funds. At the Closing, JMBM with
respect to the Escrow Account and BCS with respect to the BCS
Escrow Account shall each be deemed to have the joint consent of
Buyer and Seller to, and are hereby authorized and directed to
disburse the Initial, Second and Final Deposits to the Closing
Account and disburse all Escrow Interest to the Buyer.
2.2. Accounts Receivable Adjustment. Seller shall prepare and
deliver to Buyer no later than the close of business on May 20,
1997 a schedule showing all payments made on account of the
"Opening Accounts Receivable" as set forth in Schedule 2.2.
attached hereto and made a part hereof through May 19, 1997 (the
"Receivable Payments") . For the purposes hereof the Opening
Accounts Receivable shall be deemed to be those scheduled accounts
receivable (gross) on the books and records of the Seller as of
March 17, 1997 which the parties agree aggregated to $2,314,651.
The parties agree that the Initial Purchase Price shall be reduced
dollar for dollar by the sum of the Receivable Payments (the
"Receivable Adjustment"). At the Closing or thereafter as the case
may be, Seller agrees to deliver to Buyer a any proceeds received
by it on account of the opening Accounts Receivable and not
reflected on Receivable Payment Schedule; provided, however, that
Seller need not deliver any such payments received after the
Closing more frequently than on a bi-weekly basis.
2.3. Inventory Adjustment. Subject to the limitations set
forth below, the parties agree that for the purposes of this
Agreement the Adjusted Purchase Price shall be reduced dollar for
dollar to the extent that the "Closing Inventory", as hereinafter
defined in Section 2.3.a. below, is more than $500,000 less than
the "Opening Inventory" which for the purposes hereof shall be
deemed to be $17,208,674, the gross amount of the inventories on
the books and records of the Seller as of March 17, 1997 (the
"Inventory Adjustment").
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Under no circumstances shall the of the Inventory Adjustment
to the Adjusted Purchase Price exceed the amount of funds held in
the "Inventory Adjustment Escrow" as hereinafter defined in
Section 2.3.b. below.
2.3.a. Inventory Audit. Buyer agrees to "audit" the inventory
owned by Seller at the Closing as follows:
2.3.a.1. the Opening Inventory shall be "'audited" at Buyer's
sole cost and expense through an actual physical count thereof by
representatives of the Buyer. Seller's representatives may be
present at such "audit" at Seller's expense. The value of the
inventory held by the Seller on the Closing Date shall be the
average costs of the items as historically accounted for on the
Seller's books and records without regards for damage,
marketability, or obsolescence (the "Closing Inventory").
2.3.a.2. the parties agree that the audit of the Opening
Inventory held at the properties subject to Excluded Leases shall
be completed no later than the Closing Date. The audits of all
other Opening Inventory held at locations subject to Assumed
Leases shall be concluded no later than the first to occur of
either (i) 45 days after the Closing Date or (ii) as to each
particular property subject to an Assumed Lease the first to occur
of: W three business days prior to the delivery of any new
inventory purchased by the Buyer to such location; (y) the sale or
removal of Opening Inventory from such location; or (z) the
commencement of business by Buyer from such location. Buyer shall
deliver to Seller a schedule no later than 45 days after the
Closing Date of the Closing Inventory and the proposed Inventory
Adjustment, if any, necessitated thereby (the "Closing Inventory
Schedule"). Seller shall have 10 business days to object to the
Closing Inventory or it shall be deemed accepted by the Seller. In
the event Buyer fails to deliver such Closing Inventory Schedule
to Seller within 45 days of the Closing Date, the parties agree
that no Inventory Adjustment may thereafter be required and the
Seller shall be entitled immediately to withdraw all funds held in
the Inventory Adjustment Escrow. If Seller objects to the Closing
inventory Schedule in a timely manner, as provided above, and the
parties cannot agree on a Inventory Adjustment, if any, within 10
business days after the delivery of such objection, then and in
such event either party may file appropriate pleadings with the
Bankruptcy Court seeking an adjudication of this dispute, by
contested matter and not by adversary proceeding.
2.3.b. Inventory Adjustment Escrow. On the Closing Date, JMBM
shall establish a segregated interest bearing escrow account from
the Closing Cash equal to 10% of sum of (i) the Closing Cash plus
(ii) the Initial, Second and Final Deposits (the "Inventory
Adjustment Escrow") . The proceeds from the Inventory Adjustment
Escrow without interest will first be delivered to the Buyer to
cover the amounts, if any, of the Inventory Adjustment with the
balance of such proceeds delivered to the Closing Account, and all
interest earned thereon allocated with the disbursement of such
proceeds.
Buyer's Real Estate Lease Payment. Buyer agrees to pay Seller
the lesser of: (i) $200,000 or (ii) 50% of the sum of: W the
amounts actually due by Seller pursuant to the Sale and Lease
Assumption Order to cure all pre-petition and post-petition rents,
taxes and expenses on the Assumed Leases plus (y) the amounts owed
by the Seller for the aforementioned items with respect
to the Excluded Leases (the "Buyer's Real Estate Lease Payment").
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Buyer's Reimbursement of Certain Expenses. From and after the
date of this Agreement through the first to occur of either the
Closing Date or the termination of the Agreement other than solely
as a result as a result of the items set forth in 2.1.a.l. or
2.1.a.2. above, Buyer agrees to pay for the following expenses:
2.5.1.a. premium payments in an amount not to exceed $8,000
per week, on those insurance policies covering the Assets set
forth in Schedule 2.5.1.a. attached hereto and made a part hereof;
2.5.1.b. all costs and expenses relating to certain overhead
items, not to exceed $15,000 per week, as expressly set forth in
Schedule 2.5.1.b. attached hereto and made a part hereof;
2.5.1.c. an amount not to exceed $8,800 per week equaling all
costs and expenses, including salary as set forth opposite the
names of those individuals listed in Schedule 2.5.1.c. attached
hereto and made a part hereof (the "'Retained Individuals"),
workers' compensation insurance and health insurance for any
Retained Individual who requests it; and
The expenses set forth in Sections 2.5.1.a., 2.1.5.1.b. and
2.5.1.c. above hereinafter collectively referred to as the
"Buyer's Expense Reimbursement". Said Buyer's Expense
Reimbursement shall be payable to Seller at the Closing or if the
Agreement is terminated for any reason other than as set forth on
Sections 2.1.a.l. and 2.1.a.2. above, immediately upon such
termination.
2.5.2. Buyer shall pay as incurred all costs and expenses of
relocating all Assets from properties subject to the Excluded
Leases.
2.5.3. Buyer agrees to assume all post-Closing Date rent and
other ongoing costs and expenses relating to those Excluded Leases
which will not be terminated on or before the Closing Date for a
period terminating upon the last to occur of the following: (i)
Buyer's abandonment of the premises; (ii) termination of any
applicable notice period with respect to the termination of such
Excluded Leases; and (iii) termination of such Excluded Leases
pursuant to an order of the Bankruptcy Court or agreements between
the landlords and Buyer (the "Excluded Lease Payments"). Buyer
shall be responsible for giving the landlords with respect to such
leases appropriate notice of the termination thereof.
2.6. Assumption of Designated Liabilities. Buyer agrees to
assume all post-closing liabilities and obligations with respect
to the Real Property Leases, the License Rights, the Leased
Equipment and the Excluded Lease Payments ("Assumed Liabilities").
Any obligation not expressly assumed by Buyer in the Agreement or
the Sale and Lease Assumption Order shall remain the obligation of
the Seller, subject to the effect of the Bankruptcy Code.
2.7. Closing Costs; Transfer Taxes. Buyer shall be
responsible for and shall defend and indemnify Seller against any
and all documentary transfer taxes and any sales, use, excise,
property or other taxes imposed by reason of the transfer of the
Assets provided hereunder and any
deficiency, interest or penalty asserted with respect thereto.
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ARTICLE III
CLOSING
The Closing of the transactions contemplated herein (the
"Closing") shall be held at the offices of JMBM, 2121 Avenue of
the Stars, Tenth Floor, Los Angeles, California 90067, two
business days after the entry of the Sale and Lease Assumption
Order on or about 10:00 a.m. local time or such other place as
Seller and Buyer shall mutually agree (the "Closing Date"),
provided that all conditions to each party's obligations
hereunder, as set forth herein, have been satisfied by such date
or waived in writing by the party intended to be benefited
thereby, and further provided that this Agreement shall terminate
if the Closing Date has not occurred by the date set forth in
Section 11.1. hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represent and warrant to Buyer as follows:
4.1. Organization of Seller. Seller is duly organized,
validly existing and in good standing under the laws of the state
of its incorporation as set forth in the first paragraph of this
Agreement.
4.2. Consents and Approvals. Except for those consents set
forth on Schedule 4.2. which will be attached hereto and made a
part hereof prior to May 20, 1997 (the "Consents"), no consent,
approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority (other
than the Bankruptcy Court), is required to be made or obtained by
Seller in connection with the execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby.
4.3. Compliance With Laws. Seller has complied with, and
Seller has not received any notice that Seller is in violation of,
applicable laws, rules, regulations that could have a material
adverse effect on Buyer's use of the Assets in the Business.
4.4. No Obligations to Repair. To the best of Seller's
knowledge, Seller has complied with any order by any governmental
agency or any written demand of any casualty insurance Seller
requiring Seller to repair, maintain or improve the condition of
any of the Real Property Leases.
4.5. Title to Assets; No Liens. Seller has good and
marketable title to and interest in the Assets, and, except with
respect to the Assumed Liabilities, upon the approval of the Sale
by the Bankruptcy Court and the satisfaction of all other
conditions to Seller's obligations hereunder, the Assets will be
acquired by Buyer free and clear of any lien or encumbrance.
4.6. Environmental Matters, Seller has no knowledge or
information of the presence of any
illegally stored or maintained toxic or hazardous materials or
environmental contamination at the properties subject to the
Assumed Leases which would materially adversely affect Buyer's use
of such properties or the Assets contained therein.
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The aforementioned representations shall terminate at the
Closing and shall be of no further force or effect thereafter.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1. Organization of Buyer. Buyer is duly organized, validly
existing and in good standing under the laws of the state of its
incorporation as set forth in the first paragraph of this
Agreement and has full corporate power and authority to conduct
its business as it is presently being conducted.
5.2. Authorization. Buyer has all necessary corporate power
and authority and has taken all corporate action necessary to
enter into this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations hereunder. This
Agreement has been duly executed and delivered by Buyer and is a
legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.
5.3. No Conflict or Violation. Neither the execution
and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in (a) a violation of
or a conflict with any provision of the Articles of Incorporation
or Bylaws of Buyer, (b) a breach of, or a default under, any term
or provision of any contract, agreement, indebtedness, lease,
commitment,. license, franchise, permit, authorization or
concession to which Buyer is a party which breach or default would
have a material adverse effect on the business or financial
condition of Buyer or its ability to consummate the transactions
contemplated hereby or (c) a violation by Buyer of any statute,
rule, regulation, ordinance, code, order, judgment, writ,
injunction, decree or award, which violation would have a material
adverse effect on the business or financial condition of Buyer or
its ability to consummate the transactions contemplated hereby.
5.4. Consents and Approvals. No consent, approval or
authorization of, or declaration, filing or registration with, any
governmental or regulatory authority (other than the Bankruptcy
Court), is required to be made or obtained by Buyer in connection
with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
5.5. No Brokers. Buyer has not entered into and will not
enter into any contract, agreement, arrangement, or understanding
with any person or firm which will result in the obligation to pay
any finders' fee, brokerage commission, or similar payment in
connection with the transactions contemplated hereby.
5.6. Sophisticated Purchaser. Buyer is a sophisticated
purchaser and Buyer's offer and decision to purchase the Assets is
based upon its own independent expert review and evaluation of the
Assets and such materials as are deemed relevant by Buyer and its
agents. Except as otherwise disclosed herein in writing, Buyer has
not relied in entering into this Agreement upon any oral or
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written information from Seller, or any of their respective
employees, affiliates, agents, legal counsel or other
representatives. Buyer further acknowledges that no employee,
agent, legal counsel or other representative of Seller has been
authorized to make, and Buyer has not relied upon, any statement
or representation other than those specifically set forth in this
Agreement.
5.7. Condition of Assets. Notwithstanding anything contained
herein to the contrary, Buyer represents and warrants that, as
specified in Section 5.6 hereof, Buyer has, or shall have,
inspected and conducted such tests and studies of the Assets as it
elects, and that Buyer is familiar with the general condition of
the Assets. Seller shall not have any responsibility or liability
with respect to the condition or fitness for any particular
purpose of the Assets. Buyer represents and warrants that Buyer is
acting, and will act only, upon information obtained by Buyer
directly from Buyer's own inspection of the Assets.
Notwithstanding anything to the contrary contained in this
Agreement, the suitability or lack of suitability of the Assets
for the operation of the Business by Buyer or any other proposed
or intended use by Buyer shall not affect the rights or
obligations of the Buyer hereunder.
ARTICLE VI
COVENANTS OF SELLER AND BUYER
Seller and Buyer covenant with each other as follows:
6.1. Access to Assets. Seller shall allow Buyer at Buyer's
expense during regular business hours to make such inspection of
the business and properties of Seller and to inspect and make
copies of other contracts, books and records or information
requested by Buyer and necessary for or reasonably related to the
Assets, including historical financial information, concerning the
Business and operations of such facilities. All such information
shall be provided to Buyer in such form as such information may
presently exist or be readily available.
6.2. Consents and Best Efforts. As soon as practicable after
the date hereof, Buyer and Seller, as applicable, will commence
all other reasonable action required hereunder to obtain all the
Consents and to give all notices and make all filings with, any
third parties as may be necessary to authorize, approve or permit
the full and complete sale, conveyance, assignment or transfer of
the Assets by a date 'early enough to allow the sale hereunder to
be consummated by the Closing Date. Buyer shall cooperate in good
faith with Seller's efforts to obtain such Consents, including but
not limited to the prompt delivery of all agreements, information,
documents, financial data and Bankruptcy Court pleadings as may be
necessary for the Seller to obtain the Sale and Lease Assumption
Order.
6.3. Notification of Certain Matters. Seller shall give
prompt notice to Buyer, and Buyer shall give prompt notice to
Seller, of (i) the occurrence, or failure to occur, of any event
which
occurrence or failure would be likely to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate
in any material respect any time from the date hereof to the
Closing Date and (ii) any material failure of Seller or Buyer, as
the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder.
Seller shall give prompt notice to Buyer of any order, judgment,
writ, injunction or decree of any court,
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governmental agency or entity threatened against or affecting the
Assets. Each party shall use all reasonable efforts to remedy any
material failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied
by it hereunder.
6.4. Further Assurances. Both before and after the Closing
Date, each party will cooperate in good faith with the others and
will take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably
necessary or advisable to carry out any of the transactions
contemplated hereunder. From time to time after the Closing,
Seller will execute and deliver to Buyer such instruments of sale,
transfer, conveyance, assignment and delivery, consents,
assurances, powers of attorney and other instruments as may be
reasonably requested by counsel for Buyer in order to vest in
Buyer all right, title and interest of Seller in and to the Assets
and otherwise in order to carry out the purpose and intent of this
Agreement.
6.5. Transfer of Permits. Seller shall use its best
reasonable efforts to assist Buyer in obtaining the transfer of
any existing permit previously issued to Seller by any
governmental agency permitting Seller to operate the Assets.
6.6. Post-Closing Utilization of Certain Assets By Seller.
Buyer agrees that for a period through and including December 31,
1997 (the "Asset Utilization Period"), Seller or Seller's parent
corporation, ReddiBrake Supply, Inc. (the "Parent"), may have
unlimited access to and utilize without charge by Buyer all office
related Assets including all computers and related equipment and
software, telephones, fax machines, copiers, desks, file cabinets,
books and records and office supplies located at the Seller's
address listed in this Agreement; provided that, Seller's
utilization of these Assets does not unduly interfere with Buyer's
access to and utilization of the Assets on such premises. In the
event Buyer moves such Assets to its new Western regional
headquarters or offices prior to the first to occur of: (i) the
termination of the Asset Utilization Period or (ii) both (y) the
confirmation of the Seller's Plan of Reorganization and (z)
completion of the winding-up of the Parent's affairs; then Buyer
shall provide Seller and/or Parent with the same unlimited rights
of access, up to 500 square feet of usable space, three of each of
the following: desks, chairs, telephones and computers, one
facsimile machine and one copier, all without any charge to
Seller, except a pro-rata pass through of any rent or related
charges with respect to the space occupied by the Seller and/or
the Parent pursuant hereto.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the Sale and the
other transactions provided for hereby are subject, in the
discretion of Seller, to the satisfaction, on or prior to the
Closing Date, of each of the following conditions:
7.1. Representations, Warranties, and Covenants. All
representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at
and as of the Closing Date, except as and to the extent that the
facts and conditions upon which such representations and
warranties are based are expressly required or permitted to be
changed by the
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terms hereof, and Buyer shall have performed all obligations,
agreements and covenants required hereby to be performed by it
prior to or at the Closing Date.
7.2. Consents. All Consents to permit Seller to transfer the
Assets to Buyer as contemplated hereby shall have been obtained,
unless such consents, approvals, and waivers have been waived by
Seller.
7.3. Sale and Lease Assumption Order. The Bankruptcy Court
shall have entered the Sale and Lease Assumption Order in form
acceptable to Seller.
7.4. No Governmental Proceedings or Litigation. No action by
any governmental authority shall have been instituted or
threatened which questions the validity or legality of the Sale or
the other transactions contemplated hereby and which could
reasonably be expected materially and adversely to damage Seller
if the transactions contemplated hereunder are consummated.
7.5. Certificates. Buyer will furnish Seller with such
certificates of its officers and others to evidence compliance
with the conditions set forth in this Article VII as may be
reasonably requested by Seller.
7.6. Corporate Documents. Seller shall have received from
Buyer resolutions duly adopted by the board of directors of Buyer
approving this Agreement and the transactions contemplated hereby,
certified by Buyer's corporate secretary.
7.7. Closing Deliveries. Buyer shall have delivered to Seller
all of the documents required by Section 10.2 hereof, the Final
Deposit, the Closing Cash, the Buyer's Real Estate Lease Payment
and the Buyer's Expense Reimbursement.
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions
provided for hereby are subject, in the discretion of Buyer, to
the satisfaction, on or prior to the Closing Date, of each of the
following conditions:
8.1. Representations, Warranties, and Covenants. All
representations and warranties of Seller and Shareholder contained
in this Agreement shall be true and correct in all material
respects at and as of the Closing Date, except as and to the
extent that the facts and conditions upon which such
representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and Seller shall have
performed all agreements and covenants required hereby to be
performed by it prior to or at the Closing Date.
8.2. Consents. All Consents to permit Seller to effectuate
the Sale and to transfer the Assets to Buyer as contemplated
hereby shall have been obtained, unless such consents, approvals,
and waivers have been waived by Buyer.
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8.3. Sale and Lease Assumption. The Bankruptcy Court shall
have entered the Sale Lease Assumption Order in form and substance
acceptable to Buyer.
8.4. No Governmental Proceedings or Litigation. No action by
any governmental authority shall have been instituted or
threatened which questions the validity or legality of the Sale or
the other transactions contemplated hereby and which could
reasonably be expected materially and adversely to damage Buyer or
the Assets if the transactions contemplated hereunder are
consummated.
8.5. Certificates. Seller will furnish Buyer with such
certificates of Seller to evidence compliance with the conditions
set forth in this Article VIII as may be reasonably requested by
Buyer.
8.6. Closing Deliveries. Seller shall have delivered to Buyer
all of the documents required by Section 10.1. hereof.
8.7. Financing Contingency. Buyer shall have obtained a
commitment for financing in an amount not to exceed $8, 700, 000
(the "Financing") . Notwithstanding the foregoing, in the event
Buyer does not deliver to Seller a notice of its failure to the
Financing on or before May 16, 1997 this Financing Contingency
shall have been deemed to be satisfied and/or waived by the Buyer
without any further action on the part of the Seller.
8.8. Fixed Assets and Motor Vehicles Contingency. Attached
hereto and made a part hereof is Schedule 8.8. which Seller
believes sets forth all material items of furniture, fixtures,
machinery, equipment and motor vehicles owned by the Seller as of
the date hereof (the "Opening FF & E"). Buyer may at Buyer's sole
cost and expense "audit" the Opening FF & E through an actual
physical count thereof by representatives of Buyer (the ""FF & E
Audit"). Seller's representatives may be present at the FF & E
Audit at Seller's expense. The FF & E Audit shall be completed no
later than May 9, 1997. In the event Buyer determines that as a
result of the FF & E Audit there has been a material diminution of
the Opening FF & E, Buyer may, upon written notice (the '"FF & E
Audit Notice")to Seller setting forth the Opening FF & E located
through the audit (the "Adjusted FF & E" ), delivered on or before
the close of business on May 9, 1997, seek a mutually agreeable
adjustment to the Initial Purchase Price. In the event the parties
are unable to agree on such adjustment to the Initial Purchase
Price and/or the Adjusted FF & E on or before the close of
business on May 14, 1997, Buyer may upon notice to the Seller
immediately terminate this Agreement. If no FF & E Audit Notice is
received by Seller on or before the close of business on May 9,
1997 or, if applicable, no termination notice is received by
Seller on or before the close of business on May 14, 1997, Buyer
shall be deemed to have accepted the Opening FF & E as scheduled
and Buyer's rights pursuant to this Section shall terminate
without any further action on the part of the Seller.
ARTICLE IX
RISK OF LOSS
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Prior to the Closing Date, all risk of fire or casualty loss
or damage to the Assets and solely with respect to the Adjusted FF
& E, if any, loss by theft shall be borne by Seller, thereafter
all such risks shall be borne by Buyer. If a portion of the Assets
whatsoever is destroyed or damaged by fire or any other cause
prior to the Closing Date, Seller shall promptly give notice to
Buyer of such damage or destruction and the amount of insurance,
if any, covering said personal property. Prior to the Closing
Date, in consultation with Seller, Buyer shall elect whether to
(i) have Seller repair, replace and restore any such damaged or
lost Assets to the reasonable satisfaction of Buyer, or (ii)
accept the Assets in their destroyed or damaged condition, in
which event any insurance proceeds payable to Seller with respect
to the damaged property shall be assigned to Buyer, and the full
Purchase Price payable by Buyer for the Assets shall be paid. If,
through no fault on the part of Buyer, the Assets are destroyed or
damaged and Seller refuses to satisfy its obligations set forth in
clause W or (iii) above prior to the Closing Date, then Buyer
shall have the right to terminate this Agreement and to a full
return of the Initial Deposit, the Second Deposit and/or the Final
Deposit; provided that Buyer gives Seller no less than three days
prior written notice with an opportunity to cure prior to its
termination of this Agreement pursuant to this Section.
ARTICLE X
CLOSING DELIVERIES
10.1. Deliveries by Seller. At the Closing, Seller shall
deliver or cause to be delivered to Buyer the following:
10.1.a. Bills of Sale, deeds, assignments and other good and
sufficient instruments of conveyance, transfer and assignment, all
in form and substance reasonably satisfactory to counsel for
Buyer, as shall be effective to vest in Buyer title in and to the
Assets;
10.1.b. the certificates referenced in Section 8.5. hereof;
10.l.c. an Amendment to Seller's Certificate of Incorporation
changing Seller's name, suitable for filing with the Office of the
Secretary of State of the State of California plus all other
necessary documents in order to effectuate such name change;
10.1.d. the Sheerin Note; and
10.1.e. a copy of the Sale and Lease Assumption Order, filed
stamped "Entered" by the Clerk of the Bankruptcy Court.
10.2. Deliveries by Buyer. At the Closing, Buyer shall
deliver or cause to be delivered to Seller the following:
10.2.a. the Final Deposit, the Closing Cash, Buyer's Real
Estate Lease Payment and Buyer's Expense Reimbursement as required
under Sections 2.1.c., 2.1.d. and 2.4. and 2.5. hereof;
10.2.b. the certificates and resolutions referenced in
Sections 7.5. and 7.6. hereof; and
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10.2.c. such other documents as may be required to evidence
Buyer's assumption of the Assumed Leases pursuant to Section 6.2.
above.
ARTICLE XI
TERMINATION RIGHTS
11.1. Termination of the Agreement. If any condition
precedent to Seller's obligations hereunder is not satisfied and
such condition is not waived by such party at or prior to the
Closing Date, or if any condition precedent to Buyer's obligations
hereunder is not satisfied and such condition is not waived by it
at or prior to the Closing Date, Seller or Buyer, as the case may
be, may terminate this Agreement at its option by three business
days notice with opportunity to cure notice to the other party
hereto; provided, however, in no event shall such notice period
either (i) extend past the Bankruptcy Court hearing to approve
this Agreement and the transactions contemplated hereby; or (ii)
serve to extend the Closing Date. Except as provided in Section
2.1. above, in the event of the termination of this Agreement by
any party as above provided, or in the event the Closing Date has
not occurred by May 23, 1997, no party shall have any liability
hereunder of any nature whatsoever to the other parties, including
any liability for damages, unless any party is in default under
its obligations hereunder, in which event the party in default
shall be liable to the other parties for such default. In the
event that a condition precedent to his or its obligations is not
satisfied, nothing contained herein shall be deemed to require any
party to terminate this Agreement, rather than to waive such
condition precedent and proceed with the Closing. Notwithstanding
anything contained herein to the contrary, this Agreement shall
terminate automatically if the Closing Date has not occurred on or
prior to May 23, 1997.
11.2. Reimbursement of Buyer's Out-of-Pocket Expenses. In the
event the Agreement is terminated solely as a result of an overbid
approved by the Bankruptcy Court, Seller agrees to reimburse Buyer
up to but not in excess of an aggregate amount of $620,000 for
Buyer's actual out-of-pocket costs and expenses incurred and
payments made as follows:
11.2.1. in satisfaction of Buyer's obligations under
Section 2.5. above; and
11.2.2. in connection with the transactions contemplated by
this Agreement.
ARTICLE XII
NO WARRANTY
12.1. No Side Agreements or Representations. No person acting
on behalf of Seller is authorized to make, and by execution
hereof, Buyer acknowledges that no person has made any
representation, agreement, statement, warranty, guarantee or
promise regarding the Assets, the Sale or the transactions
contemplated herein or the zoning, construction, physical
condition or other status of the Assets except as may be expressly
set forth in this Agreement. No representation, warranty,
agreement, statement, guarantee or promise, if any, made by any
person acting on behalf of Seller which is not contained in this
Agreement will be valid or binding on Seller.
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12.2. "AS IS" Condition. NOTWITHSTANDING THE LIMITED SCOPE OF
SECTION 5.7., BUYER ACKNOWLEDGES AND AGREES THAT NEITHER SELLER
HAS MADE OR DOES HEREBY MAKE ANY REPRESENTATIONS, WARRANTIES,
PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR
CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN,
PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO
(I) THE VALUE OF THE ASSETS; (II) THE INCOME TO BE DERIVED FROM
THE ASSETS; (III) THE SUITABILITY OF THE ASSETS FOR ANY AND ALL
ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREWITH; (IV) THE
HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF THE ASSETS; (V) THE MANNER,
QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE ASSETS; (VI) THE
NATURE, QUALITY OR CONDITION OF THE ASSETS; (VII) THE MANNER OR
QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED
INTO THE ASSETS; (VIII) THE CONTENT, COMPLETENESS OR ACCURACY OF
ANY WRITTEN INFORMATION OR PRELIMINARY REPORT REGARDING TITLE TO
OR OF THE ASSETS: AND (IX) THE CONFORMITY OF THE IMPROVEMENTS TO
ANY PLANS OR SPECIFICATIONS FOR THE ASSETS, INCLUDING ANY PLANS
AND SPECIFICATIONS THAT MAY HAVE BEEN OR MAY BE PROVIDED TO BUYER.
BUYER FURTHER ACKNOWLEDGES AND AGREES THAT HAVING BEEN GIVEN
THE OPPORTUNITY TO INSPECT THE ASSETS AND REVIEW INFORMATION AND
DOCUMENTATION AFFECTING THE ASSETS, BUYER IS RELYING SOLELY ON ITS
OWN INVESTIGATION OF THE ASSETS AND REVIEW OF SUCH INFORMATION AND
DOCUMENTATION, AND NOT ON ANY INFORMATION PROVIDED OR TO BE
PROVIDED BY SELLER. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT ANY
INFORMATION MADE AVAILABLE TO BUYER OR PROVIDED OR TO BE PROVIDED
BY OR ON BEHALF OF SELLER WITH RESPECT TO THE ASSETS WAS OBTAINED
FROM A VARIETY OF SOURCES AND THAT SELLER HAS NOT MADE ANY
INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND
MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF
SUCH INFORMATION. BUYER AGREES TO FULLY AND IRREVOCABLY RELEASE
ALL SUCH SOURCES OF INFORMATION AND PREPARERS OF INFORMATION AND
DOCUMENTATION AFFECTING THE ASSETS WHICH WERE RETAINED BY SELLER
FROM ANY AND ALL CLAIMS THAT IT MAY NOW HAVE OR HEREAFTER ACQUIRE
AGAINST SUCH SOURCES AND PREPARERS OF INFORMATION FOR ANY COSTS,
LOSSES, LIABILITIES, DAMAGES, EXPENSES, DEMANDS, ACTIONS OR CAUSES
OF ACTION ARISING FROM SUCH INFORMATION OR DOCUMENTATION.
SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR
WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO
THE ASSETS, OR THE OPERATION THEREOF, FURNISHED BY ANY REAL ESTATE
BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON. BUYER FURTHER
ACKNOWLEDGES AND AGREES THAT TO THE MAXIMUM EXTENT PERMITTED BY
LAW, THE SALE OF THE ASSETS AS PROVIDED FOR HEREIN IS MADE ON AN
"AS IS" CONDITION AND BASIS WITH ALL FAULTS, AND THAT SELLER HAS
NO OBLIGATION
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TO MAKE REPAIRS, REPLACEMENTS OR IMPROVEMENTS EXCEPT AS MAY
OTHERWISE BE EXPRESSLY STATED HEREIN.
BUYER REPRESENTS, WARRANTS AND COVENANTS TO SELLER THAT,
EXCEPT FOR SELLER'S EXPRESS REPRESENTATIONS AND WARRANTIES
SPECIFIED IN THIS AGREEMENT, BUYER IS RELYING SOLELY UPON BUYER'S
OWN INVESTIGATION OF THE ASSETS.
NOTHING CONTAINED IN THIS SECTION 12.2. SHALL EFFECT THE
RIGHTS OF THE PARTIES HERETO PURSUANT TO SECTIONS 2.2., 2.3. AND
ARTICLE IX HEREOF.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1. Assignment. Neither this Agreement nor any of the
rights or obligations hereunder may be assigned by any party
without the prior written consent of the other parties; except,
that Buyer may, without such consent, prior to the Bankruptcy
Court hearing on the Sale and Lease Assumption Order assign all
such rights and such obligations to any "affiliate" as such term
is defined by the Federal Securities Laws; provided that such
entity shall: (y) have the financial capacity to perform Buyer's
obligations hereunder and under the Sale and Lease Assumption
Order and (z) assume all obligations and liabilities hereunder.
Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns, and no other person shall have any right,
benefit or obligation hereunder.
13.2. Notices. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by
any party to the others shall be in writing and delivered
personally by messenger or courier, by facsimile, or if mailed by
certified or overnight express mail, postage prepaid, return
receipt requested (such mailed notice to be effective on the first
date of attempted delivery), as follows:
If to Seller, addressed to:
REDDIBRAKE SUPPLY COMPANY, INC.
1376 Walter Street
Ventura, CA. 93003
Attention: Sandford T. Waddell
Interim Chief Executive Officer
Facsimile No. (805) 644-4347
With a copy to:
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars 10th Floor
Los Angeles, CA. 90067
Attention: Joseph A. Eisenberg P.C.
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Facsimile No. (310) 785-5357
If to Buyer, addressed to:
Express Parts Warehouse, Inc.
3825 Barrett Drive, Suite 104
Raleigh, North Carolina 27609
Attention: Edward Slavin
President
Facsimile: (919) 786-2766
With a copy to:
Bode, Call & Stroupe, LLP.
2626 Glenwood Avenue
Raleigh, North Carolina 27608
Attention: Odes Stroupe, Esq.
Facsimile: (919)881-9548
If to Escrow Agent, addressed to:
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
Attention: Joseph A. Eisenberg P.C.
Facsimile No. (310) 785-5357
or to such other place and with such other copies as any party may
designate as to himself or itself by written notice to the others.
13.3. Choice of Law; Jurisdiction. This Agreement shall be
construed, interpreted and the rights of the parties determined in
accordance with the laws of the State of California without giving
effect to the choice of law principles thereof. The parties
further agree that the sole and exclusive forum for the resolution
of any dispute arising out of or relating to their rights and
obligations hereunder shall be the Bankruptcy Court.
13.4. Entire Agreement; Amendments and Waivers. Except with
respect to the Sale Order
and the Lease Order the terms of which shall not be modified by
this Agreement, this Agreement, together with all Schedules and
Exhibits hereto, constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. No supplement,
modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of
any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
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13.5. Multiple Counterparts. This Agreement may be executed
in one or more counterparts, by original signatures, copies or
signatures delivered by facsimile each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
13.6. Expenses. Except as set forth in Sections 2.3. and 2.5.
hereof, each party hereto shall be solely responsible for all
costs and expense incurred by it in connection with the
negotiation and preparation of this Agreement and the documents
contemplated hereby and completion of the transactions
contemplated thereby.
13.7. Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument
referred to herein, shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, then to the maximum
extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
13.8. Titles. The titles, captions or headings of the
Articles and Sections herein are inserted for convenience of
reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
13.9. Attorneys' Fees. Should any party hereto institute any
action or proceeding at law or in equity to enforce any provision
of this Agreement, including an action for declaratory relief, or
for damages by reason of an alleged breach of any provision of
this Agreement, or otherwise in connection with this Agreement, or
any provision hereof, the prevailing party shall be entitled to
recover from the losing party or parties reasonable attorneys'
fees and costs for services rendered to the prevailing party in
such action or proceeding.
13.10. Incorporation by Reference. All Exhibits and Schedules
attached hereto or to be delivered in connection herewith are
incorporated herein by this reference.
13.11. No Third Party Beneficiaries. Nothing herein expressed
or implied is intended or shall be construed to confer upon or
give to any person or entity other than the parties hereto and
their successors or permitted assigns, any rights or remedies
under or by reason of this Agreement.
13.12. Rule of Construction. Each party and counsel for each
party have reviewed this Agreement. The parties hereto hereby
agree that the normal rule of construction, which requires a court
to resolve any ambiguities against the drafting party, shall not
apply in interpreting this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, either individually or on their
respective behalf by their respective officers thereunto duly
authorized, all as of the day and year first above written.
REDDIBRAKE SUPPLY COMPANY, INC.
By: /s/ Sandford T. Waddell
Title: Interim Chief
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Executive Officer
EXPRESS PARTS WAREHOUSE, INC
By: Edward Slavin
Title: President
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Exhibit 9
Form 10-KSB
Reddi Brake Supply Company, Inc.
LEASE AGREEMENT
Randall Enterprises LLC, of Lehi, Utah, hereinafter referred
to as "landlord", hereby leases to DATIGEN.COM, INC. of Orem,
Utah, hereinafter referred to as "tenants", the premises situated
in Building #8 of the Abby Park Office Condo Buildings, in Utah
County, State of Utah, and more particularly described as
follows: 887 West Center, Orem, Utah 84058. Said lease is of
approximately 1,920 square feet and includes nine parking spaces
in the adjoining lot.
1. Said lease shall run for a term of one year, beginning on the
first day of November 1999 and continue until the last day of
October, 2000.
2. Tenant covenants and agrees to pay the landlord as rental for
said premises, the sum of $1365.00 on or before the 1st day of
each month. In the event that said rent or any part thereof
shall remain unpaid ten days after the same shall become due,
landlord shall be entitled to assess a penalty of 3% of the
unpaid amount. Further, landlord shall have such additional
remedies as are available at law.
3. As additional security to landlord, tenant shall prepay 1/2 of
last month's rent. Said payment in the amount of $680.00 shall
be paid to landlord on execution of this agreement.
4. Tenant further agrees to deliver up said premises to landlord
at the expiration of the lease term in as good an order and
condition as when the same were entered upon by tenant,
reasonable use and wear thereof and damage by the elements
excepted. Tenant shall make no structural changes to the
building without the express written consent of the landlord.
5. Responsibility for maintenance shall be as follows: Tenant
shall be responsible for interior decoration and janitorial
duties. Landlord shall be responsible for the roof, exterior
walls, interior walls, structural repair, exterior painting, yard
surfacing, plumbing equipment, heating and air conditioning,
electrical equipment, light globes and tubes, glass breakage,
trash removal and snow removal.
6. Responsibility for utilities, taxes and insurance shall be as
follows: Tenant shall be responsible for the power, heat, water,
telephone and fire insurance on personal property. Landlord
shall be responsible for real property tax, personal property
tax, fire insurance on building, glass insurance and any
increases in real property tax.
7. Tenant may enter into office sharing arrangements with other
companies in order to efficiently use the available space.
Landlord consents to said sub-letting of the premises in advance
without the necessity of further notice.
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8. Each party shall be responsible for losses resulting from
negligence or misconduct of himself, his employees or invites.
9. In the event of failure to faithfully perform any of the
terms or conditions of this agreement, the prevailing party shall
be entitled to all costs and reasonable attorney's fees.
10. At the end of this contract, lease may be renewed upon
approval by landlord and tenant for an additional 1, 2, or 3 year
term at no more than an increase of 2% per year.
11. Tenant understands that parking is at a premium around the
leased premises, and agrees that the use of more than nine spaces
can be grounds for termination of this agreement. However, in
the event that landlord desires to terminate this agreement based
upon overuse of parking spaces, tenant shall be entitled to 15
days written notice, and an opportunity to cure the problem.
12. Tenant shall have the right to provide and post its own sign
or signs, within the limits of existing law and aesthetic values.
13. Option is available to purchase existing Xerox copier 5328,
paper shredder, and two-drawer lateral file upon mutual agreement
of said parties.
15. "Tenant" agrees to give 45 days notice of non-renewal of
lease to give "landlord" time to release.
DATED this 12th day of October, 1999.
/s/ Scott D. Randall, Randall Enterprises LLC
/s/ Steven Lloyd, DATIGEN.COM, INC.
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Exhibit 10
Form 10-KSB
Reddi Brake Supply Company, Inc.
JOSEPH A. EISENBERG P.C. (SBN 52346)
MICHAEL D. GOOD (SBN 176033)
JEFFER, MANGELS, BUTLER & MARMARO LLP
2121 Avenue of the Stars
Tenth Floor
Los Angeles, California 90067
Telephone: (310) 203-8080
Fax: (310) 203-0567
Attorneys for Debtor
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In reply to: ) Case No. ND 97-11349-RR
)
REDDI BRAKE SUPPLY COMPANY, ) Chapter 11
INC., a California Corporation)
fdba EXPRESS UNDERCAR and ) ORDER CONFIRMING PLAN OF
WESCO AUTO PARTS, ) REORGANIZATION1
)
Debtor. ) Date: January 28 and
February 26, 1998
) Time: 11:00 a.m.
) Place: Courtroom "201"
) 1415 State Street
) Santa Barbara, CA
AT SANTA BARBARA, CALIFORNIA, IN THIS DISTRICT, ON THE 20TH
DAY OF MARCH, 1998.
Commencing on January 28, 1998, and concluding on February
26, 1998, this Court held a hearing to consider Confirmation of
the Debtor's Revised Plan of Reorganization (Dated October 14,
1997), as Modified (the "Plan"), of Reddi Brake Supply Company,
Inc., the debtor in this Case ("Debtor").
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Present at the hearing were counsel for the Debtor, Joseph
A. Eisenberg P.C. and Michael D. Good of Jeffer, Mangels, Butler,
Kane, Russell, Coleman & Logan, P.C.; counsel for HFG, E. Paul
Keiffer of Burke, Wright & Keiffer, P.C.; and counsel for the
Securities and Exchange Commission ("SEC"), Sandra W. Lavignae.
All other appearances are noted in the record.
The Court, having considered (i) the records and pleadings in
this Case, (ii) the Plan, (iii) the proposed modifications to the
Plan of Reorganization Dated October 14, 1997, as Revised filed
by Debtor, pursuant to Bankruptcy Rule 3019, on January 23, 1998,
(the "Modifications"), (iv) the further modifications announced
in open Court on January 28, 1998, and as set forth on Exhibit
"A" attached hereto (the "Further Modifications"), (v) the
additional modifications made in open Court on February 26, 1998,
and incorporated in this Order (the "Additional Modifications"),
(vi) the objections to Confirmation filed by various parties in
interest, including the Sec and certain tax agencies, (vii) the
responses to the objections to Confirmation, (viii) the various
briefs submitted by the Sec and HFG in respect of the securities
and discharge implications and provisions of the Plan and
Confirmation, (ix) the declarations and other evidence adduced in
support of Confirmation, including the testimony of witnesses
presented by the Debtor and HFG, (x) the arguments and
representations of counsel, and good cause appearing therefor,
and the Court having concurrently herewith entered Findings of
Fact and Conclusions of Law, pursuant to Federal Rule of Civil
Procedure 52, made applicable in this Case by Bankruptcy Rule
7052, and having found that the Plan, a modified by the
Modifications, the Further Modifications and the Additional
Modifications, should be confirmed pursuant to Section 1129 of
the Bankruptcy Code.
NOW, THEREFORE, IT IS HEREBY ORDERED:
- ------------------------
1 Capitalized terms in this Confirmation Order not otherwise defined herein
shall have the meanings ascribed thereto in the Plan.
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I. The objections to Confirmation, and each of them, being
and they are hereby overruled.
II. In accordance with Bankruptcy Rule 3019, the
Modifications, the Further Modifications, and the Additional
Modifications, and each of them, are approved and deemed accepted
by all Creditors who previously accepted the Plan.
III. The Plan, as modified by the Modifications, the Further
Modifications, and the Additional Modifications, should be and
hereby is confirmed.
IV. The Plan Shares shall be issued to each Class 3
Creditor as soon as practicable after the earlier of (a) the
Effective Date, and (b) the date on which such Class 3 Creditor
is the holder of an Allowed Claim.
V. The certificate representing the Plan Shares to be
issued to HFG shall bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN OPINION
OF COUNSEL SATISFACTORY TO THE PUBLIC COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
HFG MAY TRANSFER A PORTION OF THE SECURITIES IN A PRIVATE
TRANSACTION IN A MANNER CONSISTENT WITH ALL APPLICABLE STATE AND
FEDERAL SECURITIES LAWS TO A SINGLE TRANSFEREE OR GROUP OF
TRANSFEREES UNDER COMMON CONTROL BUT MAY NOT TRANSFER ITS
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RESPONSIBILITY TO FIND A REVERSE MERGER OR ACQUISITION CANDIDATE
AND COMPLETE THE TASKS SET FORTH IN THE COMPANIES PLAN OF
REORGANIZATION.
VI. Notwithstanding any state or local statute or
regulation to the contrary, holders of Allowed Tax Claims shall
be entitled to receive interest thereon from and after the
Effective Date until the date of payment at the rate of six
percent (6%) per annum.
VII. Any solicitation of Class 3 Creditors qua holders of
Plan Shares to approve the merger of or acquisition by the
Reorganized Debtor shall comply with Article VII, subparagraph D,
of the Plan and all applicable Federal, State, and local laws
concerning solicitation of such approval, including, to the
extend applicable:
A. The Securities Act of 1933; and
B. State Securities or "Blue Sky" laws governing
registration, disclosure and broker-dealer requirements in the
jurisdictions of the shareholders of the Reorganized Debtor.
VIII. The Reorganized Debtor shall file with this Court
no less than 45 days prior to any vote on such merger a copy of
all solicitation materials provided to Class 3 Creditors together
with evidence of service of such materials to Class 3 Creditors
and counsel in this matter for the SEC.
IX. The Debtor shall receive a discharge pursuant to
Section 1141(d) of the Bankruptcy Code, if and only if the
Reorganized Debtor files with this Court an appropriate
certificate evidencing that it has: (a) a completed reverse
merger or acquisition, and (b) is engaged in business by the
Consummation of the Plan Date.
X. Class 3 Creditors who are entitled to receive Plan
Shares are hereby enjoined from selling or otherwise trading
their Claims and are enjoined from selling or otherwise trading
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receive Plan Shares when received until the completion of the
reverse merger or reverse acquisition as provided for in the
Plan. If, upon the expiration of eighteen (18) months after the
Effective Date, such transaction is not complete, then the Plan
Shares and any right to receive Plan Shares shall be deemed void
and canceled, and this injunction shall terminate.
XI. As of the Effective Date and until the Consummation of
the Plan Date, all entities that have held, currently hold or may
hold a Claim or an Interest are enjoined from taking any of the
following actions on account of any such Claims or Interests: (a)
commencing or continuing in any manner any action or other
proceeding against the Reorganized Debtor, the Creditor Trust or
the property thereof; (b) enforcing, attaching, collecting or
recovering in any manner any judgment, award, decree or other
order against the Reorganized Debtor, the Creditor Trust or the
property thereof; (c) creating, perfecting or enforcing any lien
or encumbrance against the Reorganized Debtor, the Creditor Trust
or the property thereof; (d) asserting against the Reorganized
Debtor, the Creditor Trust or the property thereof a set-off
right or claim of subordination or recoupment of any kind against
any debt, liability or obligation due the Debtor; and (e)
commencing or continuing in any action, in any manner, in any
place that does not comply with or is inconsistent with the
provisions of the Plan. In the event, on Consummation of Plan
Date the Reorganized Debtor has completed a reverse merger or
acquisition, the foregoing injunctions shall be permanent.
XII. Pursuant to Section 1146 of the Bankruptcy Code, the
issuance transfer of exchange of a security, or the making or
delivery of an instrument or transfer under the Plan shall not be
taxed under any law imposing a stamp tax or any other similar
tax.
XIII. Tim Halter, as president of the Reorganized
Debtor, is authorized to execute any necessary documents to meet
the statutory requirements for filing the necessary papers with
the
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<PAGE>
State of California and the State of Texas for reorganization
under the Bankruptcy Code and to change the Articles of
Incorporation as required by the Plan.
XIV. Stanford T. Waddell, as chief executive officer of the
Debtor, is hereby ordered to execute the Creditor Trust Agreement
in the form attached hereto as Exhibit "B" and any other
documents necessary to implement the Plan on behalf of the
Debtor, and John T. Grigsby, Jr. is hereby authorized to serve as
the initial Trustee under the Creditor Trust Agreement.
XV. A post-Confirmation status conference will be held
before this Court on September 21, 1998, at 10:00 a.m., and the
Creditor Trust shall file and serve the post-Confirmation status
report, in accordance with Local Bankruptcy Rule 142(3), no later
than September 14, 1998.
/s/ Robin L. Riblet
The Honorable Robin Riblet
United States Bankruptcy Judge
Presented by:
/s/ Joseph A. Eisenberg P.C.
Jeffer, Mangles, Butler & Marmaro LLP
2121 Avenue of the Stars
10th Floor
Los Angeles, California 90067
Attorneys for Debtor
E-61
<PAGE>
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