UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
PARADISE MUSIC & ENTERTAINMENT, INC.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
699071 10 6
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(CUSIP Number)
Walter M. Epstein, Esq.
Davis & Gilbert LLP
1740 Broadway
New York, New York 10019
(212) 468-4800
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 11, 1998
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP No. 699071 10 6 13D
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1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
THE CASSANDRA GROUP, INC.
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2 Check the Appropriate Box If a Member of a Group
a. |_|
b. |_|
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3 SEC Use Only
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4 Source of Funds
00
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5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
Massachusetts
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7 Sole Voting Power
Number of
Shares 0
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 0
Person --------------------------------------------------------
With 9 Sole Dispositive Power
2,000,000
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10 Shared Dispositive Power
0
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,000,000
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12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares |_|
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13 Percent of Class Represented By Amount in Row (11)
45%
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14 Type of Reporting Person
CO
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SEE INSTRUCTIONS BEFORE FILLING OUT!
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Item 1. Security and Issuer.
This Schedule 13D relates to the shares of common stock, $.01 par
value per share ("Common Stock"), of Paradise Music & Entertainment, Inc., a
Delaware corporation (the "Company"), whose principal executive offices are
located at 53 West 23rd Street, New York, New York 10010.
Item 2. Identity and Background.
This Schedule 13D is being filed on behalf of The Cassandra Group,
Inc., a Massachusetts corporation ("Cassandra"). Cassandra is engaged in the
investment management business and is an investment adviser registered under the
Investment Advisers Act of 1940, as amended. The address of the principal
business office of Cassandra is 561 Broadway, Suite 8C, New York, New York
10012.
Set forth on Schedule A hereto is the name, the citizenship, the
business address, the present principal occupation or employment and the name,
principal business and address of any corporation or other organization in which
such occupation or employment is conducted, of the sole executive officer,
director and controlling person of Cassandra.
During the last five years, neither Cassandra nor, to the best
knowledge of Cassandra, any other person identified on Schedule A hereto has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
During the last five years, neither Cassandra nor, to the best
knowledge of Cassandra, any other person identified on Schedule A hereto was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result
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of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On December 11, 1998, investors represented by Cassandra entered
into separate subscription agreements to purchase 500,000 shares of Common Stock
at a price of $1 per share or $500,000 in the aggregate. On December 14, 1998,
investors represented by Cassandra purchased an additional 1,500,000 shares of
Common Stock at a purchase price of $1 per share or $1,500,000 in the aggregate.
The Company received the first payment of $500,000 on December 11, 1998 and an
additional $100,000 on or about December 23, 1998. The purchase price was paid
by each such investor from moneys held in their investment accounts. The
purchase price for the remaining 1,400,000 shares is due promptly following the
effective date of a Registration Statement on Form S-3 (the "S-3") to be filed
by the Company with the Securities and Exchange Commission (the "Commission").
Pursuant to the subscription agreements, the Company agreed to file
the S-3 with the Commission with respect to the 2,000,000 shares promptly
following the initial funding of $500,000. The Company is required to have the
S-3 declared effective by the SEC no later than the 90th day after its filing or
the investors have the right to put back to the Company at a price of $1.00 per
share the 500,000 shares purchased and the issuance of the 1,500,000 shares will
be voided.
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In consideration for the execution of the subscription agreements by
the investors, the Company granted Cassandra the right to designate three
directors to sit on the Company's Board of Directors, subject to the approval of
the existing members not to be unreasonably withheld.
Item 4. Purpose of Transaction.
Cassandra acquired the shares on behalf of its clients for
investment purposes.
Cassandra intends to review its clients' holdings in the Company on
a continuing basis. Depending upon various factors, including, but not limited
to, the Company's business, prospects and financial condition and other
developments concerning the Company, available opportunities for Cassandra to
acquire or dispose of the Common Stock on behalf of its clients, other business
opportunities available to Cassandra's clients, and other relevant factors,
Cassandra may in the future take such actions with respect to its clients'
holdings in the Company as it deems appropriate in light of the circumstances
and conditions existing from time to time. Such actions may include, on behalf
of its clients, the purchase of additional Common Stock in the open market, the
purchase of additional Common Stock in privately negotiated transactions or
otherwise, the disposition, from time to time or at any time, of all or a
portion of the Common Stock now owned or hereafter acquired, either in a sale(s)
of Common Stock in the open market or the sale(s) of Common Stock in privately
negotiated transactions to one or more purchasers.
5
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Except as described herein, Cassandra has not formulated any plans
or proposals which relate to or would result in any of the following:
(a) the acquisition by any person of additional securities of the
Company, or the disposition of securities of the Company;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of the Company
or any of its subsidiaries;
(d) any change in the present board of directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board; provided, however, as
required by the agreement with Cassandra dated December 3, 1998, the Board will
be increased from six to nine with the vacancies to be filled with designees of
Cassandra, subject to the approval of the existing Board not to be unreasonably
withheld of delayed. In addition, as a condition to the investment the following
changes in management were made: Brian Doyle was appointed as Chief Executive
Officer, Richard Flynn was appointed as Chief Operating Officer and Philip Nappo
was appointed as Chief Financial Officer;
(e) any material change in the present capitalization or dividend
policy of the Company;
(f) any other material change in the Company's business or corporate
structure;
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(g) changes in the Company's charter, by-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person;
(h) causing a class of securities of the Company to be delisted from
a national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities of the Company becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended (the "Securities Exchange Act"); or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) (b) On the date hereof, Cassandra owns directly 0 shares of
Common Stock. Cassandra has discretionary power to dispose of the securities
held in its client's accounts, including the shares of Common Stock.
Accordingly, by virtue of such discretionary power to dispose of the Common
Stock, pursuant to Rule 13d-3 promulgated under the Securities Exchange Act,
Cassandra may be deemed to be the indirect beneficial owner of the shares of
Common Stock acquired by the investors represented by Cassandra. Accordingly, on
the date hereof, Cassandra may be deemed to indirectly beneficially own an
aggregate of 2,000,000 shares of Common Stock, which constitutes approximately
45% of the issued and outstanding Common Stock.
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Cassandra has the sole power to vote or to direct the vote of 0
shares of Common Stock and, and sole power to dispose or to direct the
disposition of 2,000,000 shares of Common Stock.
Cassandra has shared power to vote or to direct the vote of 0 shares
of Common Stock and shared power to dispose or direct the disposition of 0
shares of Common Stock.
To the best of Cassandra's knowledge, none of the persons named in
Schedule A hereto are beneficial owners of shares of Common Stock.
(c) Except for the transactions described in Item 3 above, to the
best knowledge of Cassandra, there were no transactions in shares of the Common
Stock effected by the persons named in response to paragraph (a) of this Item 5
during the past sixty days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
Under the terms of the investment management agreements between
Cassandra and its clients, Cassandra has the discretionary power to dispose of
the securities in the accounts of the client. The client retains the right to
vote such securities. Except as described herein, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) among the
persons named in Item 2 and between such persons and any person with respect to
any securities of the Company, including, but not
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limited to, transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
(a) Letter Agreement dated December 3, 1998 between the Company
and The Cassandra Group, Inc.
(b) Form of Subscription Agreement.
(c) Form of Investment Management Agreement between Cassandra and
the Investor
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After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned hereby certifies that the information set
forth in this statement is true, complete and correct.
Dated: December 18, 1998
THE CASSANDRA GROUP, INC.
By: /s/ Dana Giacchetto
-----------------------------
Name: Dana Giacchetto
Title: President
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<PAGE>
SCHEDULE A
TO SCHEDULE 13D FILED
BY
THE CASSANDRA GROUP, INC.
The following table sets forth certain information, as of the date
hereof, concerning each executive officer and director of Cassandra.
1. Name: Dana Giacchetto
Citizenship: United States
Business Address: 561 Broadway, Suite 8C
New York, New York 10012
Principal Occupation: President, Secretary and Treasurer of The
Cassandra Group, Inc.
[Letterhead of The Cassandra Group, Inc.]
December 3, 1998
Board of Directors
Paradise Music & Entertainment, Inc.
53 West 23rd Street - 11th Floor
New York, NY 10010
Gentlemen:
Re: Purchase of $2 million of Registered and Unrestricted Common Stock.
This letter contains a general recitation of the material business terms to be
incorporated into any definitive common stock subscription agreement(s) (the
"Definitive Agreement(s)") which we agree to negotiate, in good faith, pursuant
to which we have agreed to purchase, for the benefit of our clients, $2 million
in registered and unrestricted securities of Paradise Music & Entertainment,
Inc. ("Paradise"). This letter sets forth our mutual intent and understanding,
but is not meant to be binding upon either party (except for Sections 3(a) and
(b) which shall be binding) unless and until we both execute and deliver a
Definitive Agreement covering the subject matter discussed below. If either
party decides that it no longer wishes to pursue the transaction contemplated
hereunder for any reason, such terminating party shall give the other party
prompt written notice to such effect. We presently contemplate that the
Definitive Agreement will cover the following material terms:
Section 1: Sale of $2 Million Common Stock.
(a) The Definitive Agreement will provide that the Company, a Delaware
corporation, will sell us $2 million in common stock ("Equity") at a price of
$1.00 per share on such terms set forth in the term sheet annexed hereto which
is incorporated herein by reference with the same force and effect as if recited
here in its entirety. The Equity shall be denominated in such increments and in
the names of the investors as we otherwise direct. The Equity will be sold to
certain investors we represent pursuant to an exemption under Section 4(2) of
the Securities Act of 1933, as amended (the "Act"). As soon as we provide you
with the names of the subscribers, the amounts of their subscriptions, their
addressees and social security numbers, and their subscriptions for $2 million
(with an initial funding of $500,000) you will promptly file a registration
statement on Form S-3 relating to the Equity being sold hereunder.
(b) We agree to use our best efforts to cause the first $500,000 of
subscriptions (the "Initial Subscriptions") to be funded on or before December
4, 1998, but you acknowledge and understand that we cannot guaranty with any
certainty, the date of such first funding. In the event that we have not funded
the Initial Subscriptions on or before December 15, 1998, you reserve the right
to terminate this Agreement. We agree to fund the remaining $1.5 million in
Equity subscriptions (the "Remaining Equity Subscriptions") promptly upon the
effective date of the registration statement relating to the Equity.
(c) In the event that the S-3 registration statement relating to the $2
million in Equity is not effective by the 90th day after its filing with the
Securities Exchange Commission, we reserve the right to (i) put back to the
Company at a price of $1.00 per share the Equity represented by the Initial
Subscriptions, and (ii) cancel all Remaining Equity Subscriptions.
<PAGE>
Section 2: Employment Agreements and Board Representation. As a condition to
funding the Equity, a letter agreement in the form annexed hereto must be
executed by each of Messrs. Loeffler, Doyle, and Flynn and the current Board of
Directors must deliver resolutions in the form annexed hereto.
Section 3: Miscellaneous.
(a) The parties represent, warrant and covenant to each other that no
party is entitled to any broker's or finder's fee in connection with the
transaction contemplated hereby. Paradise (and each of its executive officers
and directors, regardless of whether they are executing counterparts of this
letter), agree that they will not, jointly or severally, undertake or engage in
any discussions or negotiations with any third party or otherwise solicit
interest with respect to the sale or financing of Paradise, its assets, its
businesses, or any transaction involving the sale of all or substantially all of
the stock or assets of Paradise, or any other arrangement or understanding which
would adversely effect the ability of Paradise to consummate the transaction as
contemplated hereunder or diminish the worth of its business or assets in any
way for a period of five (5) months from the date of the execution of this
letter agreement.
(b) The parties agree that they shall not issue any press releases or make
any public statements relating to the execution of this letter, or the
transactions contemplated hereby without first receiving the consent of the
other party hereto, such consent not to be unreasonably withheld. The content of
any such press release or statement shall be subject to the reasonable prior
review and comment by the other party and their counsel.
(c) Except as set forth in the attached term sheet, the parties agree to
bear all of their respective expenses in connection herewith and in consummating
the transactions contemplated hereby.
(d) This letter (including the term sheet annexed hereto) sets forth the
entire agreement among the parties with respect to the subject matter hereof,
and supersedes all prior consistent and inconsistent agreements, written or
oral, with respect thereto.
(e) This letter may be amended, modified, superseded, canceled, renewed or
extended, and the terms and conditions hereof may be waived, only by a written
instrument signed by each of the parties hereto, or in the case of a waiver,
signed by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder, nor any single or partial exercise of any right, power or
privilege hereunder, preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies that any party may otherwise have at law or in equity.
(f) This letter shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to principles of conflicts
of law.
(g) This letter is not assignable except by operation of law or as
specifically set forth herein.
(h) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the identity of the person or persons
may required.
(i) This letter may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
If the above is satisfactory to you and adequately reflects our understanding,
please acknowledge by executing in the space below provided.
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THE CASSANDRA GROUP, INC..
By: /s/ Dana Giacchetto
-------------------------------
Dana Giacchetto, President
AGREED TO AND ACCEPTED BY:
PARADISE MUSIC & ENTERTAINMENT, INC.
By: /s/ John Loeffler
-------------------------------
Name: John Loeffler
Title: President
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Private Placement of
$2 Million in Common Stock (the "Equity")
to
Certain Clients of The Cassandra Group, Inc. ("Investors")
by
Paradise Music & Entertainment, Inc. ("Paradise")
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Term Sheet
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Equity: $2,000,000 in unrestricted Common Stock at the price at a
price of $1.00 per share (the "Equity") issued pursuant to
Section 4(2) of the Securities Act of 1933.
Board Reps: Investors to gain three (3) Board Representatives with full
voting rights.
Closing and Initial Subscription of $500,000 on December 1, 1998 (or as
Funding: soon thereafter as practicable) with filing thereafter at the
earliest practicable opportunity of an S-3 registration
statement registering the shares underlying the full $2
million in Equity such that, upon registration, the full $2
million in Equity will be freely tradable and unrestricted;
The Remaining Equity Subscription balance of $1,500,000 will
be funded on the effective date of the S-3 registration
statement. In the event that the S-3 registration statement
relating to the $2 million in Equity is not effective by the
90th day after its filing with the Securities Exchange
Commission, you reserve the right to (i) put back to the
Company at a price of $1.00 per share the Equity represented
by the Initial Subscriptions, and (ii) cancel all Remaining
Equity Subscriptions.
-1-
<PAGE>
Use Of Proceeds: (a) up to $750,000 in trade and other short-term payables
booked as of November 20, 1998;
(b) $200,000 production advance to Blessid Union of Souls (in
fulfillment of existing contract terms);
(c) Up to $100,000 production/licensing advance for a Daryl
Hall solo album;
(d) funding of PUSH Records at an SG&A budget of $75,000 for
December, 1998, $100,000 for January, 1999, and $125,000 for
February of 1999;
(e) funding of various marketing expenses related to PUSH
Record's existing and planned releases in the amount of
$200,000 for the period beginning November 15, 1998 and
ending January 31, 1999; and
(f) balance for Paradise Music and subsidiaries working
capital.
Legal and Company to pay up to $10,000 of Investors' transaction costs;
Accounting Fees: The Company to bear the costs of outside counsel in preparing
the transaction documents and S-3 registration statement.
Buyer's o Paradise agrees to "no shopping" of deal for five months
Conditions: from date of execution of the letter agreement to which
this Term Sheet is annexed.
o Subject at all times to final terms, due diligence and
legal documentation satisfactory to in its sole and
absolute discretion.
Officers: The Investors are making the investment on the basis of the
following management team being in place prior to funding of
the Equity:
John Loeffler: Chairman and President ($25,000 per annum
stipend from Paradise) plus $225,000 base
from Rave with an earn up as per Employment
Modification Letter Agreement.
Brian Doyle: CEO ($50,000 per annum base from Paradise
with profit sharing to be negotiated plus
$100,000 base from each of All Access and
PUSH Records with an earn up as per
Employment Modification Letter Agreement).
Richard Flynn: Chief Operating Officer ($50,000 from
Paradise per annum plus $100,000 base from
each of All Access and PUSH with an earn up
as per Employment Modification Letter
Agreement).
Philip Nappo: Chief Financial Officer and VP of
Acquisitions ($100,000 per annum base (with
all benefits to which other executive
officers are entitled, as a consultant for
the first six months from Paradise with
profit sharing and future salary to be
negotiated).
-2-
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The Investors believe that the record label is an integral
component of Paradise and to incentivize the executives and
employees thereof, Paradise must issue an additional 180,000
shares of common stock to each of Messrs. Doyle and Flynn
(payable into a deferred compensation plan or as otherwise
directed by such executives), and the Board must adopt a
compensation plan pursuant to which key employees of
Paradise will receive an allocation of up to 5% of the
issued and outstanding shares of Paradise in the form of
restricted stock awards under a deferred compensation plan,
all to be awarded as the Board deems appropriate over
calendar year 1999.
-3-
Paradise Music & Entertainment, Inc.
SUBSCRIPTION AGREEMENT
Name of Subscriber: ______________________________
Dated: December ____, 1998
1. Subscription. The undersigned hereby subscribes for ______ shares of
Common Stock, $0.01 par value, of Paradise Music & Entertainment, Inc. (the
"Company") at a price of $1.00 per share for a total investment of $___________.
In satisfaction therefore, we have wired such amount to [an escrow account
maintained by The Cassandra Group, Inc.] which account will be disbursed upon
the effective registration of the shares of Common Stock being subscribed for
hereunder.
2. Risk Factors. The undersigned understands and acknowledges that the
purchase of the Common Stock is a highly speculative investment that involves a
high degree of risk of loss by it of its entire investment in the Company due to
a number of significant risk factors including, but not limited to, the fact
that the Company is in the developmental stage and has a limited operating
history.
3. Representations, Warranties and Covenants of the Company. The Company
represents, warrants and covenants to the undersigned as follows:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. The Company is not in violation of any of the
provisions of its Articles of Incorporation or By-Laws.
(b) The Company has full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. No other
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and constitutes the valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms.
(c) The Common Stock has been duly authorized and, when issued and
delivered against payment therefor as provided in this Agreement, will be
validly issued, fully paid and nonassessable. No holder of any of the Common
Stock will be subject to personal liability solely be reason of being such a
holder.
(d) The Company agrees to promptly file a registration statement on Form
S-3 with the Securities Exchange Commission ("Commission") to register the
shares of Common Stock represented by this subscription promptly after
subscriptions in the amount of $1,500,000 in the aggregate have been subscribed
for by investors, such as yourself. In the event that investors have not
subscribed for $1,500,000 in Common Stock in the aggregate by December 15, 1998,
the Company reserves the right to cancel your subscription and instruct the
escrow agent to return any monies that you have deposited therewith in
furtherance of your subscription. In the event that the shares of Common Stock
evidenced by this subscription have not been effectively registered (i.e., so as
to become freely trading and unrestricted)
<PAGE>
by the 90th day after the S-3 registration statement has been filed with the
Commission, the Company agrees that you can cancel this subscription agreement,
the escrow agent will promptly return the proceeds of your subscription, with
interest, if any, and that you will have no further obligation to the Company.
4. Representations and Warranties of the Undersigned. The undersigned
represents and warrants to the Company as follows:
(a) The undersigned is an accredited investor as such term is defined in
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act) and has been supplied with or has sufficient access to all
information, including financial statements and other financial information of
the Company including, its most recent 10-KSB for the fiscal year ended June 30,
1998 and 10-QSB for the quarter ended September 30, 1998, and has been afforded
with an opportunity to ask questions of and receive answers from any officer of
the Company concerning information which a reasonable investor would attach
significance in making investment decisions.
(b) The undersigned agrees that, prior to the effectiveness of an S-3
registration statement registering the shares of Common Stock being purchased
hereunder, a legend may be placed on any certificate or other document
evidencing the Common Stock stating that they have not been registered under the
Securities Act (and a stop transfer order may be placed with respect thereto)
and that the Common Stock are subject to other transfer restrictions as set
forth in the By Laws of the Company.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as the
date first stated above.
SUBSCRIBER:
[NAME OF ENTITY MAKING INVESTMENT, IF RELEVENT]
- ------------------------------
Name:
Title:
This Subscription is accepted by Paradise Music & Entertainment, Inc. as of this
___ day of December, 1998.
PARADISE MUSIC & ENTERTAINMENT, INC.
By
---------------------------------
Name:
Title:
2
THE CASSANDRA GROUP, INC.
Investment Management Agreement
AGREEMENT made as of this __ day of __________________, 199__ between
______________________________ ("Client") and The Cassandra Group, Inc., a
Massachusetts corporation ("Manager").
WHEREAS, Client desires to appoint and retain Manager, upon the terms and
subject to the conditions contained herein, as the investment manager to assume
the responsibilities of investment management of assets of Client (such assets
so managed to be known as "the Account").
NOW THEREFORE, Client and Manager do hereby agree each with the other as
follows:
1. Effective as of the opening of business on ____________ 19__, Client hereby
appoints Manager as the investment manager with respect to the assets in the
Account, such appointment to continue until terminated as provided in this
Agreement. Manager shall have FULL DISCRETIONARY AUTHORITY to manage, acquire,
dispose of, invest in, or reinvest in any or all securities or assets in or for
the Account in a way likely to achieve such written objectives for the Account
as may be furnished by Client to Manager periodically in writing or, in the
absence of such written objectives, in accordance with Manager's own best
judgement. Attached hereto as Exhibit A is certain information supplied by
Client and her or his investment objectives. Client shall immediately notify
Manager of any change in Client's investment objectives or any material change
in any of the information set forth in Exhibit A. Client shall indemnify and
hold harmless Manager from and against any and all claims, liabilities (or
allegations thereof), costs and expenses (including legal fees) to which it may
be subjected solely by reason of investing the Account in compliance with the
provisions of this subparagraph and/or in accordance with any written statement
of investment objectives furnished by
<PAGE>
Client to Manager, except in the case of claims, liabilities, costs and expenses
resulting from Manager's negligence, misconduct, violation of applicable law or
breach of its fiduciary obligations to Client.
2. Client shall provide Manager periodically with all of the information that
Manager shall reasonably require concerning the management of the Account.
Manager will provide Client with a statement of the assets in the Account as of
the last day of each calendar quarter on which the New York Stock Exchange is
open, commencing with the quarter ending 19__. Securities shall be valued in
such manner as shall be determined in good faith by Manager to reflect fair
market value.
3. Manager shall have full and complete discretion to place orders with brokers
or dealers selected by Client for the purchase, sale, exchange, or liquidation
of any property in the Account. Manager is hereby authorized to combine orders
on behalf of the Account with orders on behalf of other clients of Manager as is
deemed necessary by the Manager.
3.1 It is The Cassandra Group's policy not to buy or sell a security for
its own account from the time a decision has been made to buy or sell such
security or recommend the purchase or sale of such security for the portfolio of
an advisory client, until the proposed transaction has been completed or
abandoned, a period of 20 days has expired from the date the recommendation is
made, or while such a prospective transaction is under immediate consideration.
This policy also applies to The Cassandra Group's directors, officers, and
employees who wish to engage in securities transactions for their own accounts
or any account in which they have a direct or indirect beneficial interest. The
Cassandra Group's President or other appropriate officer may make an exception
to this policy if he reasonably believes that, the purchase or sale will not
affect the market in the security to the detriment of a client's account or
interests. Directors,
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officers, and employees of The Cassandra Group are prohibited from taking any
action that is inconsistent with their obligations to The Cassandra Group's
clients.
4. Manager will use its best efforts to obtain best price and execution on
securities traded for the Account. In recommending brokers or dealers to Client
for the purpose of facilitating trading, Manager will consider a number of
factors, including, without limitation, the financial strength and stability of
the broker or dealer, the efficiency with which the transactions are effected,
the ability to effect transactions where a large block is involved, and the
availability of the broker or dealer to execute possible difficult transactions
in the future.
5. Manager does not intend to act as custodian with respect to funds and
securities of Client Manager shall maintain in effect during the term of this
Agreement a custodial agreement with a financial institution selected by Client
pursuant to which a financial institution shall act as custodian (the
"Custodian") with respect to funds and securities of Client. Client authorizes
the Custodian and the brokers and dealers selected pursuant to paragraph 4
hereof to transfer assets in the Account between themselves and to Client or any
person designated by Client, but not to Manager except to the limited extent set
forth in paragraph 7, in connection with the acquisition, disposal, investment
or reinvestment of the assets in the Account but for no other purpose.
6. Manager shall not be subject to liability for any act, omission or mistake of
judgement in the course of, or connected with the performance of its
responsibilities under this Agreement, other than negligence, bad faith, willful
or reckless misconduct, violation or applicable law or breach of fiduciary
obligations to Client on the part of Manager hereunder. NOTHING HEREIN, HOWEVER,
SHALL BE CONSTRUED TO WAIVE ANY LIABILITY THAT THE MANAGER HAS UNDER APPLICABLE
FEDERAL OR STATE SECURITIES LAWS. The responsibilities of Manager under this
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Agreement shall not prevent Manager from rendering similar services to other
persons, firms, trusts, corporations or entities.
7. Client will pay or cause to be paid to the Manager an annual fee equal to
1.5% of total asset value charged quarterly, unless otherwise agreed by Client
and Manager. Client authorizes Manager to be paid such fee directly from the
Account upon presentation of a statement for its services hereunder by Manager
to the Custodian. Client authorizes Manager to receive all trading confirmations
and statements on behalf of Client unless otherwise specified.
8. No assignment, as such term is defined by the Investment Advisers Act of
1940, as amended (the "Advisers Act") of this Agreement shall be made by Manager
without consent of the Client.
9. The foregoing appointment and this Agreement may be terminated at any time by
either party hereto upon written notice furnished to the other party at least
five days prior to such termination date. Notwithstanding the foregoing, the
Client may terminate this Agreement without penalty within five business days
after the date of this agreement by giving notice to Manager.
10. Any notice, advice or report to be given pursuant to this agreement shall be
mailed to: a) Manager: THE CASSANDRA GROUP, INC., 561 Broadway, Suite #8C, New
York, NY 10012 Tel. (212) 966-5760, Fax (212) 966-5693, b) Client: _____________
____________________________________
11. THE PROVISIONS OF THIS AGREEMENT ARE GOVERNED BY AND SUBJECT TO THE ADVISERS
ACT AND NO LANGUAGE CONTAINED HEREIN
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SHALL BE CONSTRUED IN ANY MANNER INCONSISTENT WITH OR IN VIOLATION OF ANY
PROVISIONS OF THE ADVISERS ACT.
12. This Agreement, together with Exhibit A, contains the entire agreement
between Client and Manager and all representations with respect to the subject
matter hereof. By signing below Client acknowledges the Fee Structure. All fees
are subject to change upon 30 days' prior written notice to Client.
13. This agreement shall be construed and the rights and obligations of the
parties hereunder enforced in accordance with the laws of the Commonwealth of
Massachusetts.
14. Client by acceptance of this agreement acknowledges the receipt from Manager
of Part 11 of the Form ADV of Manager or a brochure containing at least the
information contained in Form ADV, Part II.
15. By signing this Agreement, Client represents that he or she has not been
notified by the Internal Revenue Service that she or he is subject to back-up
withholding due to under-reporting of interest or dividend income under Section
3406 (a) (1) (c) of the Internal Revenue Code of 1986, as amended.
IN WITNESS WHEREOF THE PARTIES HAVE CAUSED THIS AGREEMENT TO BE EXECUTED IN
DUPLICATE AS OF _______________, 19__.
- ------------------------- -----------------------------
The Cassandra Group, Inc. Client
Authorized Signature
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