SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
<TABLE>
<S> <C> <C> <C>
[ ] Preliminary Information Statement [ ] Confidential, for use of the Commission only
[ X ] Definitive Information Statement (as permitted by Rule 14c-5(d)(2))
</TABLE>
PACIFIC RIM ENTERTAINMENT, INC.
(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
/ x / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on which the filing
fee is calculated and state how it was determined)
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 1-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PACIFIC RIM ENTERTAINMENT, INC.
1661 East Camelback Road, Suite 245
Phoenix, Arizona 85016
------------------------------------
INFORMATION STATEMENT
------------------------------------
This Information Statement ("Statement") is furnished to holders of
record of Common Stock, par value $.01 per share ("Common Stock"), of Pacific
Rim Entertainment, Inc., a Delaware corporation (hereinafter the "Company"), as
of February 10, 1998, pursuant to Section 14(c) of the Securities Exchange Act
of 1934, as amended, and Rule 14c-2 promulgated thereunder. The purpose of this
Statement is to inform all stockholders of the approval by the Board of
Directors of the Company, and by written consent of the holders of Common Stock
entitled to cast at least a majority of the votes and by all the holders of the
Series B $3.00 Convertible Preferred Stock, of an amendment to the Company's
Certificate of Incorporation (the "Amendment") pursuant to which the corporate
name of the Company will change from "Pacific Rim Entertainment, Inc." to "Osage
Systems Group, Inc." The complete text of the Amendment is set forth herein.
The Company is not seeking consent, authorization or proxies of its
stockholders to file the Amendment, as the consent of stockholders entitled to
cast the requisite number of votes to approve the Amendment has been obtained
pursuant to Section 228 of the Delaware General Corporation law ("Section 228").
The Amendment shall not become effective pursuant to the written consents so
obtained until at least 20 days have elapsed from the date of the mailing of
this Statement (the "Effective Date"). This Statement also serves as notice to
stockholders of an action taken by less than unanimous written consent as
required by Section 228. Section 228 permits the Company to take the action
approving the filing of the Amendment without a meeting of the stockholders if
written consents are signed by holders of the outstanding shares having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Copies of this Statement are being mailed or given to
stockholders entitled thereto on or about February 17, 1998. For additional
information concerning the Company, reference is made to the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1996, Quarterly
Reports on Form 10-QSB for the periods ended March 31, 1997, June 30, 1997 and
September 30, 1997 and Current Report on Form 8-K dated December 22, 1997
(collectively, the "SEC Reports"). Copies of the SEC Reports will be provided to
any stockholder upon written request to the Secretary of the Company at 1661
East Camelback Road, Suite 245, Phoenix, Arizona 85016. The Company's SEC
Reports are not, however, to be considered part of this Statement or any
soliciting material of the Company.
As of the close of business on February 10, 1998, the record date for
determining stockholders entitled to consent to the Amendment and to receive
<PAGE>
this Statement, the Company had outstanding, 4,820,000 shares of Common Stock.
Each share of Common Stock is entitled to one vote per share.
Under Delaware law, stockholders are not entitled to dissenters rights
with respect to the Amendment.
THIS STATEMENT HAS BEEN PROVIDED FOR INFORMATIONAL PURPOSES ONLY. YOUR
VOTE IS NOT REQUIRED TO APPROVE AND ADOPT THE AMENDMENT. WE ARE NOT ASKING YOU
FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
The Company is also providing notice to its stockholders of a change in
the composition of the Board of Directors pursuant to Rule 14f-1 promulgated
under the Securities Exchange Act of 1934, as amended ("Rule 14f-1"). As of the
Effective Date, the Board of Directors will consist of Mr. Jack R. Leadbeater,
Mr. David S. Olson, Mr. Andrew P. Panzo, Mr. Steven B. Rosner and a
newly-appointed director, Mr. Michael G. Glynn. Mr. Glynn is appointed to the
Board of Directors pursuant to the exercise of certain rights granted to the
holders of the Series B $3.00 Convertible Preferred Stock to elect a majority of
the Board of Directors, and to vote as a class on all matters brought to a vote
of stockholders. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT - Voting Rights of Series B Shares." Mr. Glynn was appointed by
resolution of the Board of Directors adopted at a Special Meeting on December
31, 1997, subject to the notice to stockholders provided hereby pursuant to Rule
14f-1. See "BACKGROUND - Change in the Board of Directors."
The date of this Information Statement is February 17, 1998
2
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BACKGROUND
Change in Control of the Company
On December 22, 1997, Pacific Rim Entertainment, Inc. (the "Company")
acquired Osage Computer Group, Inc. ("Osage") pursuant to the terms of a Merger
Agreement dated November 5, 1997 (the "Merger Agreement"), in a transaction that
resulted in a change in control of the Company. Upon the closing of the merger
(the "Merger"), through a wholly-owned subsidiary, the Company acquired 100% of
the outstanding capital stock of Osage in exchange for Merger consideration paid
to the former stockholders of Osage (the "Osage Stockholders") consisting of:
(i) $500,000 in cash; (ii) 900,000 newly-issued shares of Common Stock (subject
to upward adjustment in the event the trading price of the Company's Common
Stock is below $2.00 per share during an eighteen (18) month period following
the Merger); (iii) 200,000 newly-issued shares of Common Stock; (iv) $1.5
million of Series B $3.00 Convertible Preferred Stock (the "Series B Shares"),
which are convertible into 500,000 shares of Common Stock (subject to adjustment
in the event that certain performance criteria are not achieved subsequent to
the Merger); and (v) options with a term of six years that permit the purchase
of 800,000 shares of Common Stock, subject to an exercise price equal to the
lower of: (a) $3.00 per share; or (b) the average of the closing bid and ask
prices of shares of the Company's Common Stock on the principal exchange,
automated quotation system or over-the-counter market for the fifteen (15)
trading days prior to the date upon which any segment of the options vests (the
"Options"). The Options vest pursuant to certain performance criteria set forth
in the Merger Agreement.
Contemporaneous with the Merger, the Company completed a private
placement offering to accredited investors (the "Offering") of $3,660,000,
consisting of 122 shares of Series A $3.00 Convertible Preferred Stock (the
"Series A Shares"). The net proceeds of the Offering were used by the Company
to: (i) retire approximately $450,000 principal amount of bridge indebtedness;
(ii) pay the $500,000 cash component of the Merger consideration to the Osage
Stockholders; and (iii) finance the Company's strategic acquisition strategy.
For a description of the material terms of the Merger and the Common Stock,
Series B Shares and Options issued in connection therewith, reference is made to
the Company's Current Report on Form 8-K dated December 22, 1997.
Change in the Board of Directors
Upon the completion of the Merger, the existing officers of the Company
tendered their resignation from office, and were replaced by the existing
management of Osage. In addition, two of the directors of the Company tendered
their resignation from office and were replaced by designees of the holders of
the Series B Shares.
Provided that the Company continues to achieve certain performance
criteria identified hereafter, for a period of three years following the Merger,
the holders of the Series B Shares, including Messrs. Leadbeater and Olson, are
entitled to elect a majority of the Board of Directors, and to vote as a class
on all matters brought to a vote of stockholders. See "SECURITY OWNERSHIP OF
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<PAGE>
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - Voting Rights of Series B Shares."
Accordingly, commencing with the completion of the Merger, the holders of the
Series B Shares became entitled to appoint three designees to the Company's
Board of Directors. The remaining two directors consist of a designee of the
Company's Board of Directors prior to the Merger (the "Pacific Rim Designee")
and an individual mutually selected by the Pacific Rim Designee and the designee
of the holders of the Series B Shares. Upon the closing of the Merger, the
Company's Board of Directors was reconstituted to consist of Messrs. Jack R.
Leadbeater, David Olson, Andrew P. Panzo (designee of the Pacific Rim Designee
and the holders of the Series B Shares) and Steven B. Rosner (the Pacific Rim
Designee). As of December 31, 1997, Mr. Michael Glynn was appointed to the Board
of Directors as a designee of the holders of the Series B Shares, subject to the
notice to stockholders provided hereby pursuant to Rule 14f-1.
DIRECTORS AND OFFICERS OF THE COMPANY
The following table sets forth certain information with respect to each
of the executive officers and directors of the Company. Mr. Michael G. Glynn
will commence his service as a director as of the Effective Date.
Name Age Position
---- --- --------
Jack R. Leadbeater 43 Chairman of the Board and Chief
Executive Officer
David S. Olson 40 Director, Chief Operating Officer
and President
Michael G. Glynn 41 Executive Vice President
Andrew P. Panzo 33 Director
Steven B. Rosner 46 Director
The following is a brief summary of the business experience of the
foregoing directors and executive officers.
Jack R. Leadbeater
Mr. Leadbeater became Chairman and Chief Executive Officer of the
Company upon the closing of the Merger with Osage on December 22, 1997. Mr.
Leadbeater remains President and Director of Osage, positions he has held since
1993. From 1987 to 1993, Mr. Leadbeater served as President of a privately held
computer systems integration company. Prior to 1987, Mr. Leadbeater was employed
by MAI Canada Ltd., where his responsibilities included the sales and management
of a regional office for this international manufacturer of mini-computers. Mr.
Leadbeater is a graduate of the University of Manitoba, Canada with a
Business/Commerce degree and a major in Marketing.
4
<PAGE>
David S. Olson
Mr. Olson became Director, President and Chief Operating Officer of the
Company upon the closing of the Merger with Osage on December 22, 1997. Mr.
Olson remains a Director and Executive Vice-President/General Manager of Osage,
positions he has held since 1993. From 1989 to 1993, Mr. Olson served as an
Executive Vice-President of a privately held computer systems integration
company. Prior to 1989, he was employed by Sun Microsystems Canada Ltd., where
his responsibilities included sales as well as Sun Microsystems' overall market
development in the petroleum exploration market. Prior to joining Sun
Microsystems, Mr. Olson was an Account Manager at Digital Equipment, Canada
where he sold information processing technology to major national accounts in
the petroleum exploration market. Mr. Olson is a graduate of the University of
Calgary, Canada with a Bachelor of Science degree and a major in Computer
Science.
Michael G. Glynn
Mr. Glynn will commence his service as a director of the Company as of
the Effective Date. Mr. Glynn became an Executive Vice-President of the Company
upon the closing of the Merger of Osage on December 22, 1997. During 1997, Mr.
Glynn served as Director of Sales for the Southwest region of United States for
Compuware, a publicly-traded software manufacturer. From 1996 to 1997, Mr. Glynn
served as Senior Vice President and Chief Operating Officer of Prologic
Management Systems, a publicly-traded software development company. From 1993 to
1996, he was Director of Sales and International Business Development at Access
Technologies (formerly Access Graphics, a division of Lockheed Martin), an
aggregator of computer software and hardware. From 1991 to 1993, Mr. Glynn
served on the football staff at the University of Colorado. Mr. Glynn is a
graduate from the University of Notre Dame with a Bachelor of Arts degree in the
Program of Liberal Studies and Languages and a Master of Divinity degree. He is
also continuing his graduate work at Northwestern University's JL Kellogg
Graduate School of Management.
Andrew P. Panzo
Mr. Panzo became a Director of the Company during December 1997. Mr.
Panzo is President of American Maple Leaf Financial Corporation in Philadelphia,
Pennsylvania, an investment banking firm which specializes in emerging growth
companies. He is also a director of The Eastwind Group, Inc., a public company.
Mr. Panzo is a graduate of the University of Connecticut and has a Masters
degree in International Business and Finance from Temple University.
Steven B. Rosner
Mr. Rosner had been the President and a Director of the Company since
January 1997. He resigned his position as an officer of the Company effective
upon the closing of the Merger with Osage on December 22, 1997, however, he
remains a Director of the Company. Mr. Rosner is an officer and director of
several privately held corporations and is the sole shareholder of SLD Capital
Corporation, which specializes in providing consulting and investment banking
services. Previously, from 1984 to 1996, Mr. Rosner served as President of
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<PAGE>
Centaur Financial Corporation, an investment banking firm. Mr. Rosner is a
graduate of Tulane University.
Directors' Compensation
The Company currently has no policy with respect to the granting of
fees to directors in connection with their service to the Company. However, the
Company may reimburse directors for their cost of travel and lodging to attend
meetings of the Board of Directors or committees thereof. In connection with
their service as directors of the Company, each of Messrs. Steven B. Rosner,
Bernard Buchwalter, Ike Suri and Richard Someck received 1,000 shares of Common
Stock of the Company during the fiscal year ended December 31, 1997. Prior to or
in connection with the closing of the Merger, Messrs. Buchwalter, Suri and
Someck resigned as directors of the Company.
EXECUTIVE COMPENSATION
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------------------------
Awards Payouts
--------------------------------- ---------------
Annual Compensation Restricted
------------------- Stock Options/ All Other
Name and Principal Position Year Salary Award(s)($) SARs(#) Compensation($)
- --------------------------- ---- ------ ----------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Jack R. Leadbeater 1997 $200,000(1) -0- -0-(2) -0-
Chairman of the Board and Chief 1996 N/A N/A N/A N/A
Executive Officer 1995 N/A N/A N/A N/A
David S. Olson 1997 $200,000(3) -0- -0-(2) -0-
Director, Chief Operating Officer 1996 N/A N/A N/A N/A
and President 1995 N/A N/A N/A N/A
Michael G. Glynn 1997 $200,000(4) -0-(5) 100,000(6) -0-
Director and Executive Vice 1996 N/A N/A N/A N/A
President 1995 N/A N/A N/A N/A
Steven B. Rosner 1997 -0- $10(7) -0- $100,000(8)
Director, Former President and 1996 -0- -0- -0- -0-
Secretary 1995 -0- -0- -0- -0-
</TABLE>
- ----------------------------
(1) In conjunction with the Merger, Mr. Leadbeater became Chairman and
Chief Executive Officer of the Company as of December 22, 1997. He
remains President and Director of Osage. Upon closing of the Merger,
Mr. Leadbeater entered into an Employment Agreement with the Company.
See "Employment Arrangements."
(2) Does not include options to purchase 332,000 shares of Common Stock
issued as part of the purchase price in connection with the Merger.
(3) In conjunction with the Merger, Mr. Olson became Director, President
and Chief Operating Officer of the Company as of December 22, 1997. He
remains a Director and Executive Vice President of Osage. Upon closing
of the Merger, Mr. Olson entered into an Employment Agreement with the
Company. See "Employment Arrangements."
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(4) In conjunction with the Merger, Mr. Glynn became an Executive Vice
President of the Company as of December 22, 1997. He will commence his
service as a Director of the Company as of the Effective Date. Upon
closing of the Merger, Mr. Glynn entered into an Employment Agreement
with the Company. See "Employment Arrangements."
(5) Does not include 200,000 shares of Common Stock being held by the
Company which is subject to release at the rate of 100,000 shares on
each of the first and second anniversary of the closing of the Merger;
provided that Mr. Glynn is an employee of the Company at the time such
shares are released.
(6) Pursuant to the terms of his employment agreement, Mr. Glynn was
granted options to purchase 100,000 shares of Common Stock. Such
options have a term of six years commencing in December 1997 and an
exercise price equal to the lower of: (i) $3.00 per share; or (ii) the
average of the closing bid and ask prices of the Company's Common Stock
on the principal exchange, automated quotation system or
over-the-counter market for the 15 trading days prior to the date upon
which the option, or portion thereof, vests. Provided that Mr. Glynn
remains employed by the Company, the options will vest as follows: (i)
50% of the options once the Company's audited financial statements
reflect annual earnings for the preceding year commencing December 31,
1998 of no less than $.20 per share; and (ii) 50% of the options vest
once the Company's audited financial statements reflect annual earnings
for the preceding year commencing December 31, 1998 of no less than
$.30 per share, provided, however, that once the Company achieves
audited earnings per share of $.30 all options shall vest.
(7) Represents 1,000 shares of Common Stock granted to Mr. Rosner at $.01
per share during the year ended December 31, 1997 in connection with
his service as a Director of the Company.
(8) Mr. Rosner had been the President and a Director of the Company since
January 1997. He resigned his position as an officer of the Company
effective upon the closing of the Merger, however, he remains a
Director of the Company. While the directors and executive officers of
the Company received no annual compensation during the fiscal years
ended December 31, 1997, 1996 and 1995, Mr. Rosner received $100,000
during the fiscal year ended December 31, 1997 in consideration for the
provision of the Company's executive offices prior to the Merger,
reimbursement of certain expenses on behalf of the Company and for
consulting services by Mr. Rosner in connection with the financial and
administrative reorganization of the Company. See "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS."
Employment Arrangements
Upon the closing of the Merger, the Company entered into employment
agreements with each of Messrs. Leadbeater, Olson and Glynn which will provide
each with an annual salary of $200,000. Each of Messrs. Leadbeater and Olson are
employed for an initial term of three years, with successive year-to-year
renewals in the event that neither they, nor the Company, elect to terminate the
agreement after the initial term. Mr. Glynn is employed for an initial term of
one year, with successive year-to-year renewals in the event that neither he nor
the Company elects to terminate the agreement. The employment agreements of
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Messrs. Leadbeater, Olson and Glynn contain non-competition and non-solicitation
provisions which survive their actual employment for a term of one year. Mr.
Glynn has been granted 200,000 shares under his employment arrangement; 100,000
of which vest at the end of his first year of employment and the remainder of
which vest at the end of his second year of employment. Mr. Glynn has also been
granted options to purchase 100,000 shares of Common Stock of the Company.See
"Summary Compensation Table."
Compliance with Section 16(a) of the Securities Exchange Act
Based solely on its review of copies of forms filed pursuant to Section
16(a) of the Securities Exchange Act of 1934, and written representations from
certain reporting persons, the Company believes that during fiscal 1997 all
reporting persons timely complied with all filing requirements applicable to
them, except for the following reports: (i) a Form 3, and Forms 4 and 5 for Mr.
Rosner; and (ii) a Form 3 and Forms 4 and 5 for each of Messrs. Bernard
Buchwalter, Ike Suri and Richard Someck. Messrs. Buchwalter, Suri and Someck
resigned as directors of the Company prior to or in connection with the closing
of the Merger.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of February 11, 1998 with
respect to: (i) each person known by the Company to beneficially own 5% or more
of the Company's outstanding Common Stock; (ii) each of the Company's directors;
(iii) each of the Company's executive officers; and (iv) all directors and
executive officers of the Company as a group. Except as otherwise indicated,
each person set forth below has sole voting and investment power on the shares
reported.
Name Number of Shares Owned(1)(2) Percentage of Shares
- ---- ---------------------------- --------------------
Jack R. Leadbeater 664,000(3) 13.2%
1661 East Camelback Road, Suite 245
Phoenix, AZ 85016
David S. Olson 664,000(3) 13.2%
1661 East Camelback Road, Suite 245
Phoenix, AZ 85016
Michael G. Glynn -0-(4) 0%
1661 East Camelback Road, Suite 245
Phoenix, AZ 85016
Godwin Finance Ltd. 350,000 7.26%
Whitehill House
Newby Road Industrial Estate
Newby Road
Hazel Grove
Stockport SK7 5DA
England
Steven B. Rosner 884,542(5) 18.35%
1220 Mirabeau Lane
Gladwynne, PA 19035
Synergy Group 250,000 5.18%
4725 E. Sunrise Drive
Suite 228
Tucson, AZ 85718
Andrew P. Panzo -0- 0%
2 Penn Center Plaza
Suite 605
Philadelphia, PA 19102
All officers and directors of the 2,212,542 42.26%
Company as a group (5 persons)
- ----------------------------
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in
the regulations promulgated under the Securities Exchange Act of 1934,
and, accordingly, may include securities owned by or for, among others,
the spouse and/or minor children of an individual and any other
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<PAGE>
relative who has the same home as such individual, as well as other
securities as to which the individual has or shares voting or
investment power or which each person has the right to acquire within
60 days through the exercise of options, or otherwise. Beneficial
ownership may be disclaimed as to certain of the securities. This table
has been prepared based on 4,820,000 shares of Common Stock
outstanding.
(2) Assumes the conversion into shares of Common Stock of the outstanding
Series A Shares and the Series B Shares. Prior to conversion, the
holders of the Series B Shares, including Messrs. Leadbeater and Olson,
are entitled to elect a majority of the Board of Directors, and to vote
as a class on all matters brought to a vote of stockholders for a
period of three years following the closing of the Merger.
(3) Does not include options to purchase 332,000 shares of Common Stock
issued as part of the purchase price in connection with the Merger,
which have not vested.
(4) Mr. Glynn will commence his service as a director as of the Effective
Date. Does not include 200,000 shares of Common Stock being held by the
Company in escrow, which are subject to release at the rate of 100,000
shares on each of the first and second anniversary of the closing of
the Merger; provided, that Mr. Glynn is an employee of the Company at
the time such shares are released. Does not include options to purchase
100,000 shares of Common Stock which have not vested.
(5) Includes the direct ownership of 192,850 shares and the indirect
ownership of 691,692 shares through Mr. Rosner's role as the sole
general partner of two Delaware limited partnerships, Diversified
Investment Fund, L.P. (50,000 shares) and PRE Investors L.P. (641,692
shares). See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
Voting Rights of Series B Shares
The holders of Series B Shares are entitled to vote in the election of
directors by casting as many votes in total as equates to the total number of
shares that may be cast in the election of directors by the holders of Common
Stock, plus one; provided that the holders of the Series B Shares may only elect
a majority of the Board of Directors by voting for their own nominees. The
holders of the Series B Shares will also be entitled to vote as a class on all
matters brought to a vote of stockholders. The foregoing rights shall terminate
upon the earlier of: (i) the first date upon which the Company no longer
complies with certain performance criteria described below; or (ii) the third
anniversary of the closing of the Merger. Upon termination of such rights, the
holders of the Series B Shares shall have no voting rights and their consent
shall not be required for the taking of any action except as required by law.
For the purposes of preserving the rights of the holders of the Series
B Shares relative to the election of directors and voting as a class on all
matters brought before stockholders, the Company shall remain in compliance with
the performance criteria so long as for the first three years following the
closing of the Merger, its annual audited financial statements reflect earnings
per share of $.05, $.10, and $.15, respectively. Failure to meet the performance
criteria in any of the first three years after the closing of the Merger results
in the termination of such rights.
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Voting Trust
Upon the closing of the Merger, certain historic stockholders of the
Company placed in a voting trust (the "Voting Trust") 1.5 million shares of
Common Stock with voting rights as to such shares vested in the holders of the
Series B Shares, including Messrs. Leadbeater and Olson. The Voting Trust shall
remain in effect until the earlier of: (i) the end of the 18th month following
the Merger; or (ii) such earlier date when all of its shares have either been
released to its beneficial owners or allocated in satisfaction of the purchase
price in the Merger. During every three month period during the term of the
Voting Trust in which no shares are issued in satisfaction of the purchase
price, 250,000 shares may be released to such historic stockholders of the
Company from the Voting Trust.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Employment Arrangements
Upon closing of the Merger, the Company entered into certain employment
agreements with Messrs. Leadbeater, Olson and Glynn. The terms of Mr. Glynn's
employment agreement include the grant of options to purchase 100,000 shares of
Common Stock which have not vested and the grant of 200,000 shares of Common
Stock which have not vested. See "EXECUTIVE COMPENSATION - Employment
Arrangements."
Consulting Services
Mr. Rosner received $100,000 during the fiscal year ended December 31,
1997 in consideration for the provision of the Company's executive offices prior
to the Merger, reimbursement of certain expenses on behalf of the Company and
for consulting services by Mr. Rosner in connection with the financial and
administrative reorganization of the Company.
Sale of Common Stock
During the fourth quarter of the fiscal year ended December 31, 1997,
the Company sold shares of Common Stock in a private placement transaction at a
purchase price of $.10 per share which generated net proceeds in excess of
$300,000. In such private placement transaction, Mr. Rosner purchased 190,000
shares at a purchase price of $19,000. In addition, two Delaware limited
partnerships, of which Mr. Rosner is the sole general partner, purchased in the
aggregate 691,692 shares of Common Stock at a purchase price of $69,169. See
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
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AMENDMENT TO THE CERTIFICATE OF INCORPORATION
In order to amend the Company's Certificate of Incorporation to reflect
the name change, the Board of Directors and the holders of a majority of the
outstanding shares of the Company's Common Stock entitled to vote thereon, as
well as the holders of a majority of the Series B Shares, must approve the
Amendment herein described. The Board of Directors adopted resolution by
unanimous written consent dated December 31, 1997 approving the Amendment. On
February 10, 1998, there were 4,820,000 shares of Common Stock outstanding. As
of such date, the holders of 2,536,692 shares of Common Stock, representing
approximately 52.6% of such shares, and all the holders of the Series B Shares
approved the Amendment.
The name of the Company is being changed to "Osage Systems Group, Inc."
to reflect the assumption of the historic business of Osage Computer Group, Inc.
by the Company upon the closing of the Merger.
As of the Effective Date of the Certificate of Amendment to the
Company's Certificate of Incorporation as filed with the Delaware Secretary of
State, which shall be at least twenty days after the mailing of this Statement,
the Company's Certificate of Incorporation will be amended to change the name of
the Company to "Osage Systems Group, Inc."
Specific Amendment to Certificate of Incorporation
The following paragraph reflects the amendment to the Amended and
Restated Certificate of Incorporation as unanimously approved by the Board of
Directors and as approved by the requisite vote of the holders of the Company's
Common Stock and the holders of the Series B Shares.
"NOW, THEREFORE, BE IT RESOLVED, that the Resolution is hereby
approved and that the Certificate of Incorporation of the
Corporation be amended by deleting Article First thereof in
its present form and substituting therefor a new Article First
in the following form:
FIRST: Name. The name of the corporation is Osage Systems
Group, Inc. (hereinafter referred to as the "Corporation")."
Effective Date
The Effective Date of the name change is on or about March 10, 1998.
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Financial Statements
No financial statements are provided herein because the Amendment to
the Certificate of Incorporation will have no effect on the relative rights of
the holders of the stock of the Company and are therefore not material to such
stockholders.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Jack R. Leadbeater
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Jack R. Leadbeater
Chairman of the Board and Chief Executive Officer
13
