<PAGE>
As filed with the Securities and
Exchange Commission on December 19, 1997 Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
---------------------
SNAKE EYES GOLF CLUBS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 59-3303066
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
Harold E. Hutchins
Snake Eyes Golf Clubs, Inc.
13000 Sawgrass Village Circle, Suite 30 13000 Sawgrass Village Circle, Suite 30
Ponte Vedra Beach, FL 32082 Ponte Vedra Beach, FL 32082
(904) 273-8772 (904) 273-8772
(Address, including zip code and telephone (Name, address, including
number, including area code of Registrant's zip code, telephone number,
principal executive offices) including area code, of
Agent for Service)
SNAKE EYES GOLF CLUBS, INC. 1995 STOCK OPTION PLAN AND
SNAKE EYES GOLF CLUBS, INC.1997 STOCK OPTION
AND LONG-TERM INCENTIVE PLAN
(Full Title of the Plans)
----------------------
Copy to:
JONATHAN A. BERNSTEIN, ESQ.
BLAKE HORNICK, ESQ.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
(212) 421-4100
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================
Proposed Proposed
Title of Each Class of Maximum Maximum
Securities to be Amount to Offering Aggregate Amount of
Registered be Registered Price Per Share* Offering Price Registration Fee
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 2,000,000/1/ $1.70 $3,400,000 $1,003.00
($.001 par value)
=============================================================================================
</TABLE>
* Estimated, in accordance with Rule 457(c), solely for the purpose of
calculating the registration fee. The Proposed Maximum Offering Price per Share
represents the average of the bid and asked prices as reported on the NASDAQ
SmallCap Market on December 16, 1997.
================================================================================
Exhibit Index is on page 13
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.
Information required by Part I of Form S-8 to be contained
in a prospectus meeting the requirements of Section 10(a) of the
Securities Act of 1933, as amended (the "Securities Act") is not
required to be filed with the Securities and Exchange Commission (the
"Commission") and is omitted from this Registration Statement in
accordance with Rule 428 under the Securities Act and the Note to Part
I of Form S-8.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
Not required to be filed with the Commission.
- ----------
Pursuant to General Instruction C to Form S-8, included on the immediately
following pages is a "reoffer prospectus" for use by certain selling
shareholders in connection with the reoffer and resale of restricted
securities pursuant to the Company's 1995 Stock Option Plan and 1997 Stock
Option and Long-Term Incentive Plan.
<PAGE>
PROSPECTUS
- ----------
2,000,000 Shares
SNAKE EYES GOLF CLUBS, INC.
Common Stock
-----------
All of the 2,000,000 shares of common stock, $.001 par value per share (the
"Common Stock"), of Snake Eyes Golf Clubs, Inc. and its subsidiaries (the
"Company") registered hereby are registered for the account of the shareholders
described herein (the "Selling Shareholders"). See "Selling Shareholders." The
Company will not receive any proceeds from the sale of such Common Stock by the
Selling Shareholders. The 2,000,000 shares of Common Stock registered hereby
are referred to herein as the "Selling Shareholder Shares." All of the Selling
Shareholder Shares are grants of restricted stock or are issuable upon the
exercise of options granted under either the Company's 1995 Stock Option Plan or
the Company's 1997 Stock Option and Long-Term Incentive Plan.
Shares of Common Stock may be sold from time to time by the Selling
Shareholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on the NASDAQ SmallCap Market ("NASDAQ"), or
otherwise at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The Selling
Shareholder Shares may be sold in one or more of the following transactions: (a)
a block trade in which the broker or dealer so engaged will attempt to sell the
Selling Shareholder Shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by the broker or dealer for its account pursuant
to this Prospectus; (c) an exchange distribution in accordance with the rules of
the exchange; and (d) ordinary brokerage transactions and transactions in which
the broker solicits purchasers. In effecting sales, brokers or dealers engaged
by the Selling Shareholders may arrange for the other brokers or dealers to
participate. Brokers or dealers may receive commissions or discounts from
Selling Shareholders in amounts to be negotiated immediately prior to the sale.
These brokers or dealers and any other participating brokers or dealers, as well
as certain pledgees, donees, transferees and other successors in interest, may
be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), in connection with the sales. In
addition, any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather
than pursuant to this Prospectus.
The aggregate proceeds to the Selling Shareholders from the sale of the
Selling Shareholder Shares will be the purchase price of the Selling Shareholder
Shares sold less the aggregate agents' commissions and underwriters' discounts,
if any. By agreement, the Company will pay substantially all of the expenses
incident to the registration of the Selling Shareholder Shares, except for
selling commissions associated with the sale of the Selling Shareholder Shares,
all of which will be paid by the Selling Shareholders.
The Common Stock is listed on NASDAQ under the symbol "SNKE." The closing
price of the Common Stock as reported on NASDAQ on December 16, 1997 was $1.75
per share.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES OR COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- --------------------------------------------------------------------------------
The date of this Prospectus is December 19, 1997.
<PAGE>
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company or the Selling Shareholders. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby in any jurisdiction in which such offer or
solicitation is not authorized, or to any person to whom it is unlawful to make
such offer or solicitation. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
any information contained herein is correct as of any time subsequent to the
date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at its Regional Offices located at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the Commission's Web site is: http://www.sec.gov. The Common
Stock is listed on NASDAQ and trading and other information concerning the
Company can be obtained by contacting NASDAQ at (202) 782-8015 or NASDAQ's web
site at http://www.nasdaq.com
The Company has filed with the Commission a registration statement (the
"Registration Statement") (of which this Prospectus is a part) under the
Securities Act with respect to the securities offered hereby. This Prospectus
does not contain all the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. Statements contained in this Prospectus as to
the contents of any contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding the Company and the securities offered hereby, reference is hereby
made to the Registration Statement and such exhibits and schedules which may be
obtained from the Commission at its principal office in Washington D.C. upon
payment of the fees prescribed by the Commission.
All documents that are incorporated by reference in this Prospectus but
which are not delivered herewith are available without charge (other than
exhibits to such documents which are not specifically incorporated by reference
herein) upon request from Snake Eyes Golf Clubs, Inc., 13000 Sawgrass Village
Circle, Suite 30, Ponte Vedra Beach, FL. 32082 Attention: Secretary (telephone
number: (904) 273-8772).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference:
(1) the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996;
(2) Form 8-K of the Company, dated February 6, 1997;
(3) Form 8-K of the Company, dated October 1, 1997;
(4) Form 8-K of the Company, dated October 7, 1997;
(5) the Company's Quarterly Report on Form 10-QSB for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997; and
(6) the description of the Company's Common Stock (the "Common Stock")
contained in the Company's Registration Statement on Form 10SB, dated
June 28, 1995, as amended.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be
<PAGE>
part hereof from the date of filing such documents (provided, however, that the
information referred to in Item 402(a)(7) of Regulation S-B of the Commission
shall not be deemed specifically incorporated by reference herein).
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in the applicable Prospectus Supplement) or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY
The Company, a Delaware corporation, is the surviving corporation from a
merger with Golf-Technology Holding, Inc., an Idaho corporation, and also
formerly known as THO2 and Rare Metals Exploration, Inc.
The Company designs, manufactures, and markets "Snake Eyes" golf clubs.
"Snake Eyes" is the Company's registered brand and logo. Snake Eyes(R) golf
clubs are tour-quality golf clubs marketed to the premium-priced segment of the
golf equipment market. The Company's initial products, the Snake Eyes(R) Sand
Wedge, Pitching Wedge, and Lob Wedge, have been praised in a number of
international golf publications and are used by a number of PGA Tour players.
The Company began distribution of the Snake Eyes(R) Driver in 1996. The Company
recently completed the development and began distribution of a full set of ten
irons. The Company also licenses the use of the Snake Eyes name to sell an
upscale line of golf apparel, bags, sunglasses and umbrellas.
USE OF PROCEEDS
The shares of Common Stock offered hereby are being registered for the
account of the Selling Shareholders and, accordingly, the Company will not
receive any proceeds from the sale of the Selling Shareholder Shares by the
Selling Shareholders.
DETERMINATION OF OFFERING PRICE
The purchase price of the shares will be the market price (plus customary
or negotiated brokerage commissions) prevailing at the time of sale in the case
of transactions on NASDAQ and negotiated prices related to market prices in
private negotiated transactions not consummated through NASDAQ.
SELLING SHAREHOLDERS
The following table identifies each of the selling shareholders and
indicates (i) the nature of any position, office or other material relationship
that each such selling shareholder has had within the past three years with the
Company (or any of its predecessors or affiliates), (ii) the number of shares of
Common Stock owned by each selling shareholder prior to the offering, (iii) the
number of shares to be offered for the account of such selling shareholder, and
(iv) the number of shares and percentage of outstanding shares to be owned by
such selling shareholder after completion of the offering.
<PAGE>
<TABLE>
<CAPTION>
Amount and
Positions held Common Stock Common Stock to be Percentage Stock to
with Company owned before offered in be owned after
Selling Shareholder in last 3 years the Offering the Offering/(1)/ the Offering/(2)/
------------------- --------------- ------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Ernest R. Vadersen Chairman ofthe Board 985,000 696,600 985,000
and Treasurer
Harold E. Hutchins Chief Executive Officer, 0 472,500 0
President, Chief Financial
Officer, Chief Operating
Officer, Secretary and
Director
Melvin Simon Director 135,000 5,000 135,000
Jonathan Bernstein Director 16,667 5,000 16,667
Kevin Moore Director 8,334 5,000 8,334
Larry Movsovitz Director 240,000 5,000 240,000
Doug Tewell Director 0 17,500 0
John Upton Vice President Production 0 12,000 0
M. Dan Brown Vice President, Tour 0 23,000 0
Terry Vidal Vice President, Sales 0 56,500 0
L. Joseph Scallan Consultant 0 135,000 0
Ronald Dick Corporate Sales 0 3,000 0
Jim Lawrence Manager, Customer Service 0 1,500 0
Don Parker Consultant 0 1,000 0
Bill Boutwell Consultant 0 1,000 0
Phyllis Phillips Administrative Assistant 0 200 0
John Mahaffey Player Representative 0 10,000 0
Lennie Clements Player Representative 0 5,000 0
Bob Dickson Player Representative 0 15,000 0
Leonard Thompson Player Representative 0 5,000 0
--------- --------- ---------
Total 1,385,001 1,474,800 1,385,001
</TABLE>
/(1)/ Includes 750,000 shares of Common Stock underlying options issued
pursuant to the Company's 1995 Stock Option Plan and 653,800 shares of
Common Stock underlying options and 71,000 shares of restricted stock
issued pursuant to the Company's 1997 Stock Option and Long-Term
Incentive Plan.
<PAGE>
(2) Assumes all shares registered hereunder will be sold. All selling
shareholders, with the exception of Mr. Vadersen, will own less than one
percent of the number of outstanding shares of Common Stock on December 18,
1997. Mr. Vadersen will own 17.83% of the outstanding shares of Common
Stock on December 16, 1997.
PLAN OF DISTRIBUTION
The Selling Shareholder Shares may be sold from time to time by the Selling
Shareholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on NASDAQ, or otherwise at prices and at terms
then prevailing or at prices related to the then current market price, or in
negotiated transactions. The Selling Shareholder Shares may be sold in one or
more of the following transactions: (a) a block trade in which the broker or
dealer so engaged will attempt to sell the Selling Shareholder Shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction; (b) purchases by a broker or dealer as principal and resale by
the broker or deal for its account pursuant to this Prospectus; (c) an exchange
distribution in accordance with the rules of the exchange; and (d) ordinary
brokerage transactions and transactions in which the broker solicits purchasers.
In effecting sales, brokers or dealers engaged by the Selling Shareholders may
arrange for other brokers or dealers to participate. Any broker or dealer to be
utilized by a Selling Shareholder will be selected by such Selling Shareholder.
Brokers or dealers will receive commissions or discounts from Selling
Shareholders in amounts to be negotiated immediately prior to the sale. These
brokers or dealers and any other participating brokers or dealers, as well as
certain pledgees, donees, transferees and other successors in interest, may be
deemed to be "underwriters" within the meaning of section 2(11) of the
Securities Act in connection with the sales. In addition, any securities
covered by this Prospectus that qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than pursuant to this
Prospectus.
Upon the Company being notified by a Selling Shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of Selling
Shareholder Shares through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplemental prospectus will be filed, if required, pursuant to Rule 424(c)
under the Securities Act, disclosing: (i) the name of each such Selling
Shareholder and of the participating broker-dealer(s), (ii) the number of
Selling Shareholder Shares involved, (iii) the price at which such Selling
Shareholder Shares were sold, (iv) the commissions paid or discounts or
concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus and (vi) other facts
material to the transactions.
The Selling Shareholders reserve the sole right to accept and, together
with any agent of the Selling Shareholders, to reject in whole or in part any
proposed purchase of the Selling Shareholder Shares. The Selling Shareholders
will pay any sales commissions or other seller's compensation to such
transactions. The Company will not bear any of the expenses of such
transactions.
To the extent required, the amount of the Selling Shareholder Shares to be
sold, purchase prices, published offering prices, the names of any agents,
dealers or underwriters, and any applicable commissions or discounts with
respect to a particular offer will be set forth by the Company in a prospectus
supplement accompanying this Prospectus or, if appropriate, a post-effective
amendment to the Registration Statement. The Selling Shareholders and agents
who execute orders on their behalf may be deemed to be underwriters as that term
is defined in Section 2(11) of the Securities Act and a portion of any proceeds
of sales and discounts, commissions or other seller's compensation may be deemed
to be underwriting compensation for purposes of the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of shares of the Common Stock may not be
simultaneously engaged in market-making activities with respect to such shares
of Common Stock for a period of two to nine business days prior to the
commencement of such distribution. In addition to and without limitation, Rules
10b-2, 10b-6 and 10b-7, which provisions may limit the timing of purchases and
sales of any of the shares of Common Stock by the Selling Shareholders or any
such other person. All of the foregoing may affect the marketability of the
Common Stock and the brokers and dealers' ability to engage in market-making
activities with respect to the Common Stock.
DESCRIPTION OF SECURITIES TO BE REGISTERED
The Company has 25,000,000 shares of its $.001 par value Common Stock
authorized. As of December 16, 1997, 5,523,808 shares of Common Stock were
outstanding. The holders of Common Stock are entitled to one vote for each
share held of record on all matters to be voted on by stockholders. The holders
of Common Stock are entitled to receive such dividends, if any, as may be
declared from time to time by the Board of Directors in its discretion from
funds legally available therefor. Upon liquidation, dissolution or winding-up
of the Company, the holders of Common Stock are entitled to receive pro rata all
assets remaining legally available for distribution to stockholders after
liquidating distributions to the holders of Series A, Series B and Series C
Preferred Stock and any future capital stock are designated as being senior to
the Common Stock. The holders of Common Stock have no right to cumulate their
votes in the election of directors. The Common Stock has no preemptive or other
subscription rights, and there are no conversion rights or redemption or sinking
fund provisions with respect to such shares. All the outstanding shares of
Common Stock are fully paid and non-assessable.
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with this offering, including the
validity of the issuance of the shares of Common Stock offered hereby, will be
passed upon for the Company by Pryor, Cashman, Sherman & Flynn, New York, New
York. The Company has previously issued 25,000 shares of its common stock to
the firm in connection with such counsel's representation of the Company.
Jonathan A. Bernstein, a director of the Company, is a member of Pryor, Cashman,
Sherman & Flynn. Mr. Bernstein owns 16,667 shares of Common Stock, warrants to
purchase 4,500 shares of Common Stock and options to purchase 5,000 shares of
Common Stock. The Common Stock underlying such options is registered for resale
hereunder.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on From 10-KSB of the Company for the year ended December 31,
1996 have been so incorporated in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
<PAGE>
================================================================================
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company or the Selling Shareholders. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby in any jurisdiction in which such offer or
solicitation is not authorized, or to any person to whom it is unlawful to make
such offer or solicitation. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
any information contained herein is correct as of any time subsequent to the
date hereof.
---------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information.................................................... 2
Incorporation of Certain Documents
by Reference........................................................... 2
The Company.............................................................. 3
Use of Proceeds.......................................................... 3
Determination of Offering Price.......................................... 3
Selling Shareholders..................................................... 3
Plan of Distribution..................................................... 5
Description of Securities to be
Registered............................................................. 5
Legal Matters............................................................ 7
Experts.................................................................. 7
</TABLE>
================================================================================
================================================================================
2,000,000 Shares
SNAKE EYES GOLF CLUBS, INC.
Common Stock
--------------------
PROSPECTUS
--------------------
December 19, 1997
================================================================================
<PAGE>
PART II
Item 3. Incorporation of Documents by Reference.
The following documents and information heretofore filed (File No. 0-
26344) with the Commission by Snake Eyes Golf Clubs, Inc., formerly known as
Golf-Technology Holding, Inc. (the "Company") are incorporated by reference in
this registration statement:
(1) the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1996;
(2) Form 8-K of the Company, dated February 6, 1997;
(3) Form 8-K of the Company, dated October 1, 1997;
(4) Form 8-K of the Company, dated October 7, 1997;
(5) the Company's Quarterly Report on Form 10-QSB for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997; and
(6) the Company's Definitive Proxy Statement filed with the Commission
on November 13, 1997;
(7) the description of the Company's Common Stock (the "Common Stock")
contained in the Company's Registration Statement on Form 10SB,
dated June 28, 1995, as amended.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be part hereof from the date of filing such
documents (provided, however, that the information referred to in Item 402(a)(7)
of Regulation S-B of the Commission shall not be deemed specifically
incorporated by reference herein).
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
The Company has previously issued 25,000 shares of its common stock to its
counsel, Pryor, Cashman, Sherman & Flynn, in connection with such counsel's work
representing the Company. Jonathan A. Bernstein, a director of the Company, is a
member of Pryor, Cashman, Sherman & Flynn. Mr. Bernstein owns 16,667 shares of
Common Stock, warrants to purchase 4,500 shares of Common Stock and options to
purchase 5,000 shares of Common Stock. The Common Stock underlying such options
is registered for resale hereunder.
Item 6. Indemnification of Directors and Officers
Under provisions of the Certificate of Incorporation and the By-Laws of
the Company, each person who is or was a director or officer of the Company may
be indemnified by the Company to the full extent permitted or authorized by the
General Corporation Law of Delaware.
Under such law, to the extent that such person is successful on the
merits of defense of a suit or proceeding brought against him by reason of the
fact that he is a director or officer of the Company, he shall be indemnified
against expenses (including attorneys' fees) reasonably incurred in connection
with such action.
If unsuccessful in defense of a third-party civil suit or if a criminal
suit is settled, such a person may be indemnified under such law against both
(1) expenses (including attorneys' fees) and (2) judgments, fines and amounts
paid in settlement if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company, and
with respect to any criminal action, had no reasonable cause to believe his
conduct was unlawful.
<PAGE>
If unsuccessful in defense of a suit brought by or in the right of the
Company, or if such suit is settled, such a person may be indemnified under such
law only against expenses (including attorneys' fees) incurred in the defense or
settlement of such suit if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company except
that if such a person is adjudged to be liable in such suit for negligence or
misconduct in the performance of his duty to the Company, he cannot be made
whole even for expenses unless the court determines that he is fairly and
reasonably entitled to indemnity for such expenses.
The Company and its officers and directors are covered by officers and
directors liability insurance. The policy coverage is $3,000,000.00, which
includes reimbursement for costs and fees. There is a maximum deductible under
the policy of $100,000.00 for each claim
Neither the Certificate of Incorporation nor the By-Laws of the Company
contain any provisions which prevent or prohibit the indemnification of the
Company's directors or officers. However, in accordance with Delaware law and
the broad powers granted its directors and officers, the Company could provide
indemnification to its directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing, the Company has been informed that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
Item 7. Exemption from Registration Claimed.
Not Applicable
Item 8. Exhibits.
4 -- Certificate of Incorporation of the Company
5 -- Opinion of Pryor, Cashman, Sherman & Flynn
23.1 -- Consent of KPMG Peat Marwick LLP
23.2 -- Consent of Pryor, Cashman, Sherman & Flynn (included in
Exhibit 5)
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering; and
(4) in the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore, unenforceable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, SNAKE EYES GOLF
CLUBS, INC. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized on this 19th day of December 1997.
Snake Eyes Golf Clubs, Inc.
By: /s/ Harold E. Hutchins
---------------------------------
Harold E. Hutchins
President, Chief Executive Officer,
Chief Financial Officer, Chief Operating
Officer, Secretary and Director (principal
executive officer, principal financial and
accounting officer)
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons on behalf of the Registrant
and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Ernest R. Vadersen Chairman of the Board, and Treasurer December 19, 1997
- ----------------------------
Ernest R. Vadersen
/s/ Harold E. Hutchins President, Chief Executive Officer, December 19, 1997
- ---------------------------- Chief Financial Officer, Chief
Harold E. Hutchins Operating Officer, Secretary and
Director (principal executive officer,
principal financial and accounting
officer)
/s/ Jonathan A. Bernstein Director December 19, 1997
- ----------------------------
Jonathan A. Bernstein
- ---------------------------- Director December 19, 1997
Kevin S. Moore
/s/ Larry Movsovitz Director December 19, 1997
- ----------------------------
Larry Movsovitz
- ---------------------------- Director December 19, 1997
Melvin Simon
- ---------------------------- Director December 19, 1997
Doug Tewell
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page No.
- -------- ----------- -------
<S> <C> <C>
4 Certificate of Incorporation of the Company.................................................14
5 Opinion of Pryor, Cashman, Sherman & Flynn..................................................38
23.1 Consent of KPMG Peat Marwick LLP............................................................39
23.2 Consent of Pryor, Cashman, Sherman & Flynn..................................................
(included in Exhibit 5)
</TABLE>
page 13
<PAGE>
EXHIBIT 4
CERTIFICATE OF INCORPORATION
OF
SNAKE EYES GOLF CLUBS, INC.
FIRST: The name of the corporation is Snake Eyes Golf Clubs, Inc.
-----
(hereinafter referred to as the "Corporation"),
SECOND: The address of the registered office of the Corporation in the
------
State of Delaware is, The Corporation Trust Center, 1209 Orange Street,
Wilmington, DE 19801, New Castle County. The name of the registered agent of
the Corporation at that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
-----
activity for which a corporation may be organized under the Delaware General
Corporation Law.
FOURTH: A. The total number of shares of all classes of stock which the
------
Corporation shall have authority to issue is thirty million (30,000,000),
consisting of twenty-five million (25,000,000) shares of Common Stock, par value
one-tenth of one cent ($0.001) per share (the "Common Stock") and five million
(5,000,000) shares of Preferred Stock, par value one-tenth of one cent ($0.001)
per share (the "Preferred Stock").
B. The board of directors is authorized, subject to any
limitations prescribed by law, to provide for the issuance of shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware (such certificate being hereinafter
referred to as a "Preferred Stock Designation"), to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers, preferences, and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof. The number of
authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the Common Stock without a vote of the holders of a
majority of the Common Stock, without a vote of the holders of the Preferred
Stock, or of any series thereof, unless a vote of any such holders is required
pursuant to the terms of any Preferred Stock Designation.
C. Series A Preferred Stock. Four Hundred Thousand (400,000) of
------------------------
the Five Million (5,000,000) authorized shares Preferred Stock of the
B-1
<PAGE>
Corporation shall be designated Series A preferred stock (the "Series A
Preferred Stock") and shall possess the rights set forth below:
(a) Voting Rights. (i) Except as otherwise provided herein or as
-------------
required by law, the holders of shares of Series A Preferred Stock shall not be
entitled to vote on any matters that come before the shareholders.
(ii) In the event the Corporation shall fail to pay current
dividends on the Series A Preferred on four Dividend Payment Dates (as defined
herein), whether consecutive or non-consecutive, the holders shall be entitled
to vote, on a one-vote-per-share of Series A Preferred Stock basis, with the
holders of the Common Stock on all matters submitted to the Company's
shareholders. The holders shall continue to be entitled to the foregoing right
to vote, notwithstanding the subsequent payment of any of or all such dividends.
(iii) On all matters on which the Series A Preferred Stock is
entitled to vote by law, the holders shall be entitled to one vote per share of
Series A Preferred Stock, voting separately as a single class.
(b) Dividend Rights. (i) Each issued and outstanding share of Series A
---------------
Preferred Stock shall entitle the holder of record thereof to receive, when, as
and if declared by the Board of Directors, out of funds legally available
therefor, dividends in cash at the annual rate of nine percent (9%), as adjusted
for stock splits, stock dividends, recapitalization, reclassifications and
similar events, payable quarterly on March 31, June 30, September 30 and
December 31, of each year, commencing June 30, 1995 (each a "Dividend Payment
Date"). Dividends and distributions (other than those payable solely in Common
Stock) may be paid, or declared and set aside for payment, upon shares of Common
Stock in any calendar year only if dividends shall have been paid, or declared
and set apart for payment, on account of all shares of Series A Preferred Stock
then issued and outstanding, at the aforesaid rate for such calendar year.
(ii) The right to dividends upon the issued and outstanding shares
of Series A Preferred Stock shall be cumulative from the date of issuance of
such share of Preferred Stock to which the dividend relates so that such rights
shall be deemed to accrue, whether earned, or whether there be funds legally
available therefor, or whether said dividends shall have been declared; and if
such dividends shall not have been declared and paid, the deficiency shall first
be fully paid on the Series A Preferred Stock, before any dividend or other
distribution (other than those payable solely in Common Stock) may be paid, or
declared and set apart for payment, to the holders of shares of Common Stock,
and shall in any event be paid upon conversion of the Series A Preferred Stock,
in cash, or at the election of the holders of shares of Series A Preferred
Stock, partly in cash and partly in shares of Common Stock, or all in shares of
Common Stock, at the fair market value of the Common Stock at the time of
payment, as determined in as set forth in paragraph (e) hereof. Any accumulation
of dividends on the shares of Series
B-2
<PAGE>
A Preferred Stock shall not bear interest. The dividends payable upon the issued
and outstanding shares of Series A Preferred Stock shall be payable upon a pro
rata basis.
(iii) The restrictions on dividends and distributions with respect
to shares of Common Stock and of Series A Preferred Stock set forth in paragraph
(b) hereof are in addition to, and not in derogation of, the other restrictions
on such dividends and distributions set forth herein.
(iv) The Holders shall be entitled to the voting rights set forth
in paragraph (a)(ii) in the event dividends are not paid on four Dividend
Payment Dates.
(c) Liquidation Rights. In the event of a voluntary or involuntary
------------------
liquidation, dissolution, or winding up of the Corporation, the holders of
record of shares of Series A Preferred Stock shall be entitled to receive, out
of the assets of the Corporation legally available therefor, five Dollars
($5.00) per share of Series A Preferred Stock, plus a further amount per share
equal to dividends, if any (i) then declared and unpaid on account of shares of
Series A Preferred Stock and (ii) whether or not declared, then accrued in
accordance with the provisions of subparagraph (b)(ii) hereof before any payment
shall be made or any assets distributed to the holders of shares of Common
Stock. If, upon any liquidation, dissolution, or winding up, whether voluntary
or involuntary, the assets thus distributed among the holders of the Series A
Preferred Stock shall be insufficient to permit payment to such holders of the
full preferential amounts aforesaid, then the entire assets of the Corporation
to be distributed shall be distributed ratably among the holders of the Series A
Preferred Stock shall be insufficient to permit payment to such holders of the
full preferential amounts aforesaid, then the entire asserts of the Corporation
to be distributed shall be distributed ratably among the holders of Series A
Preferred Stock.
(d) Conversion Rights. (i) Subject to the terms and conditions hereof,
-----------------
each holder of record of shares of Series A Preferred Stock may, at any time,
upon surrender to the Corporation of the certificates therefor at the principal
office of the Corporation or at such other place as the Corporation shall
designate, convert all or any part of such holder's shares of Series A Preferred
Stock into such number of fully paid and non-assessable shares of Common Stock
of the Corporation (as such Common Stock shall then be constituted) equal to the
product of (A) the number of shares of Series A Preferred Stock which such
holder shall then surrender to the Corporation, multiplied by (B) the number
determined by dividing Five Dollars ($5.00) by the Conversion Price (as
hereinafter defined) per share for the Series A Preferred Stock in effect at the
time of conversion.
(ii) For purposes of this Certificate of Designation:
"Additional Shares of Common Stock" shall mean all shares of Common Stock
---------------------------------
issued by the Corporation after the Issuance Date (as defined herein) whether or
not subsequently reacquired or retired by the Corporation, other than (i) shares
of Common Stock issued upon conversion of the Series A Preferred Stock, (ii) any
shares of the
B-3
<PAGE>
Company's Common Stock issued pursuant to shares which are currently reserved
for issuance under the Golf-Technology Holding, Inc. Stock Option Plan (as such
plan may be reconstituted to purchase Common Stock of the Company) and (iii) up
to 500,000 shares of Common Stock (which number may be proportionately increased
or decreased solely in the event of a subdivision or combination of the
Company's Common Stock or the payment of a dividend on all shares of the
Company's Common Stock payable in Common Stock of the Company) issued pursuant
to options, other rights and convertible securities having exercise or
conversion prices below the Conversion Price in effect which options, rights or
securities are issued as incentive compensation to employees of the Company or
its affiliates or to independent contractors who act as agents for the Company
or its affiliates in connection with the Company's product sales.
"Conversion Price" shall mean the price at which shares of the Common Stock
----------------
shall be deliverable upon conversion of the Series A Preferred Stock. The
Conversion Price shall initially be Five Dollars ($5.00). The Conversion Price
shall be subject to adjustment as provided below:
"Convertible Securities" shall mean any evidences of indebtedness, shares
----------------------
or securities convertible into, exercisable for or exchangeable for Additional
Shares of Common Stock.
"Issuance Date" shall mean the date the first share of Series A Preferred
-------------
Stock is issued.
"Options" shall mean rights, options or warrants to subscribe for, purchase
-------
or otherwise acquire Common Stock or Convertible Securities.
(iii) Adjustments to Conversion Price for Diluting Issues
---------------------------------------------------
(A) In the event the Corporation at any time or from time to time shall
declare or pay any dividend on the Common Stock payable in Common Stock, or
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock (by reclassification, stock split or otherwise
than by payment of a dividend in Common Stock), then and in any such event, the
Conversion Price in effect shall be proportionately decreased:
(i) in the case of any such dividend, immediately after the close
of business on the record date for the determination of holders of any class of
securities entitled to receive such dividend, or
(ii) in the case of any such subdivision, at the close of business
on the date immediately prior to the date upon which such subdivision becomes
effective.
(B) In the event the outstanding shares of Common Stock shall be combined
or consolidated, by the reclassification or otherwise, into a lesser number of
shares of Common Stock, the Conversion Price in effect immediately prior to such
B-4
<PAGE>
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
(C) In case of any consolidation or merger of the Corporation with or into
another corporation or the conveyance of all or substantially all of the assets
of the Corporation to another corporation, each share of Series A Preferred
Stock shall thereafter be convertible into the number of shares of stock or
other securities or property to which a holder of the number of shares of Common
Stock of the Corporation deliverable upon conversion of such Series A Preferred
Stock would have been entitled upon such consolidation, merger or conveyance;
and, in any such case, appropriate adjustment (as determined by the Board of
Directors) shall be made in the application of the provisions herein set forth
with respect to the rights and interest thereafter of the holders of the Series
A Preferred Stock, to the end that the provisions set forth herein (including
provisions with respect to changes in and other adjustments of the Conversion
Price) shall thereafter be applicable, as nearly as reasonably may be possible,
in relation to any, shares of stock or other property thereafter deliverable
upon the conversation of the Series A Preferred Stock.
(D) If the Common Stock issuable upon the conversion of the Series A
Preferred Stock shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for above), the Conversion Price then in effect shall, concurrently
with the effectiveness of such reorganization or reclassification, be
proportionately adjusted such that the Series A Preferred Stock shall be
convertible into, in lieu of the number of shares of Common Stock which the
holder would otherwise have been entitled to receive, a number of shares of such
other class or classes of stock into which the Common Stock issuable upon
conversion of the Series A Preferred Stock immediately prior to such
effectiveness would have been changed.
(E) If and whenever, after the Issuance Date, the Corporation shall issue
or sell, or is, in accordance with subparagraphs E(1) through E(6), deemed to
have issued or sold, any Additional Shares of Common Stock for a consideration
per share less than the Conversion Price in effect for the Series A Preferred
Stock, immediately prior to the time of such issue or sale, then, forthwith upon
such issue or sale, such Conversion Price shall be reduced as of the opening of
business on the date of such issue or sale, to a price determined by multiplying
the Conversion Price for the Series A Preferred Stock by a fraction (a) the
numerator of which shall be (A) the number of shares of Common Stock outstanding
immediately prior to such issue or sale plus (B) the number of shares of Common
Stock which the aggregate consideration received (or by express provision hereof
deemed to have been received) by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at such Conversation
Price for the Series A Preferred Stock and (b) the denominator of which shall be
the number of shares of Common Stock outstanding at the close of business on the
date of such issue after giving effect to such issue of Additional Shares of
Common Stock.
B-5
<PAGE>
For purposes of this subparagraph E, the following subparagraphs (1) to
(6) shall also be applicable:
(E)(1) Issuance of Options. In case at any time after the
-------------------
Issuance Date the Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any Options for the purchase of Common
Stock or any stock or Convertible Securities whether or not such Options or the
right to convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Additional Shares of Common Stock
are issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Corporation as consideration for
the granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon the exercise of all such Options,
plus, in the case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversation or
exchange thereof, by (ii) the total maximum number of Additional Shares of
Common Stock issuable upon the exercise of all such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Conversion Price in effect for
the Series A Preferred Stock immediately prior to the time of the granting of
such Options, then the total maximum number of Additional Shares of Common Stock
issuable upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the exercise
of such Options shall be deemed to have been issued for such price per share as
of the date of granting of such Options or the issuance of such Convertible
Securities and thereafter shall be deemed to be outstanding. Except as otherwise
provided in subparagraph E(3), no adjustment of either Conversion Price shall be
made upon the actual issue of such Additional Shares of Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual issue of
such Additional shares of Common Stock upon conversion or exchange of such
Convertible Securities.
(E)(2) Issuance of Convertible Securities. In case the
----------------------------------
Corporation at any time after the Issuance Date shall in any manner issue
(whether directly or by assumption in a merger or otherwise) or sell any
Convertible Securities, whether or not the rights to exchange or convert any
such Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon such conversion or exchange (determined
by dividing (i) the total amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (ii) the total maximum
number of Additional Shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the Conversion
Price in effect for the Series A Preferred Stock, immediately prior to the time
of such issue or sale, then the total maximum number of Additional Shares of
Common Stock issuable upon the conversion or exchange of all such Convertible
Securities shall be deemed to
B-6
<PAGE>
have been issued for such price per share as of the date of the issue or sale of
such Convertible Securities and thereafter shall be deemed to be outstanding,
provided that (a) except as otherwise provided in subparagraph (E)(3), no
adjustment of the Conversion Price shall be made upon the actual issue of such
Additional Shares of Common Stock upon conversion or exchange of such
Convertible Securities and (b) if any such issue or sale of such Convertible
Securities is made upon exercise of any Options to purchase any such Convertible
Securities for which adjustments of the Conversion Price have been or are to be
made pursuant to other provisions of this subparagraph (E)(1), no further
adjustment of such Conversion Price shall be made by reason of such issue or
sale.
(E)(3) Change in Option Price or Conversion Rate. Upon the
-----------------------------------------
happening of any of the following events, namely, if the purchase price provided
for in any Option referred to in subparagraph (E)(1), the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subparagraph (E)(1) or (E)(2), or the rate
at which Convertible Securities referred to in subparagraph (E)(1) or (E)(2) are
convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Conversion Price in effect for the
Series A Preferred Stock, at the time of such event shall forthwith be
readjusted to the Conversion Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the case
may be, at the time initially granted, issued or sold, but only if as a result
of such adjustment the Conversion Price then in effect hereunder is thereby
reduced; and on the expiration of any Option the issuance of which has reduced
the Conversion Price or the termination of any such right to convert or exchange
Convertible Securities the issuance of which has reduced the Conversion Price,
the Conversion Price them in effect hereunder shall forthwith be increased to
the Conversion Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued.
(E)(4) Consideration for Stock. In case any shares of Common
-----------------------
Stock, Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Corporation therefor, without deduction therefrom of any expenses incurred on
any underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith. In case
any Options shall be issued in connection with the issue and sale of other
securities of the Corporation, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the parties
thereto, such Options
B-7
<PAGE>
shall be deemed to have been issued for such consideration as determined in good
faith by the Board of Directors of the Corporation.
(E)(5) Record Date. In case the Corporation shall take a record
-----------
of the holders of its Common Stock for the purpose of entitling them to
subscribe for or purchase Common Stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
(E)(6) Treasury Shares. The disposition of any shares of Common
---------------
Stock owned or held by or for the account of the Corporation shall be considered
an issue or sale of Additional Shares of Common Stock for the purpose of this
subparagraph E.
(iv) Whenever the Conversion Price or the amount of Common Stock
or other securities deliverable upon the conversion of Series A Preferred Stock
shall be adjusted pursuant to the provisions hereof, the Corporation shall
forthwith file, at its principal executive office and with any transfer agent or
agents for its Series A Preferred Stock and Common Stock, a statement, signed by
the Chairman of the Board, President, or one of the Vice Presidents of the
Corporation, and by its Chief Financial Officer or one of its Assistant
Treasurers, stating the newly adjusted Conversion Price and adjusted amount of
its Common Stock or other securities deliverable per share of Series A Preferred
Stock calculated to the nearest one one-hundredth and setting forth in
reasonable detail the method of calculation and the facts requiring such
adjustment and upon which such calculation is based. A copy of such statement
shall be sent to each holder of Series A Preferred Stock. Each adjustment shall
remain in effect until a subsequent adjustment hereunder is required.
(v) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock the full number of
shares of Common Stock deliverable upon the conversion of all the then
outstanding shares of Series A Preferred Stock and shall take all such action
and obtain all such permits or orders as may be necessary to enable the
Corporation lawfully to issue such Common Stock upon the conversion of Series A
Preferred Stock.
(vi) No fraction of shares of Common Stock shall be issued upon
conversion, but in lieu thereof the Corporation shall pay cash equal to such
fraction multiplied by the fair market value of a share of Common Stock as
determined pursuant to paragraph (e) hereof.
(vii) The Corporation will not, but amendment to this
Certificate of Designation or by amendment of its Certificate of Incorporation
(the "Charter") or through any reorganization, transfer of assets, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the
B-8
<PAGE>
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this paragraph (d) and in the taking of all such action as
may be necessary or appropriate in order to protect the conversion rights of the
holders of the Series A Preferred Stock against impairment.
(e) Redemption. (i) The Corporation may, at its option, redeem the
----------
Series A Preferred Stock, in whole and not in part, out of funds legally
available therefor, by action of the Board of Directors, at any time on or after
six months from the date of issuance of the last share of Preferred Stock
pursuant to the Corporation's Confidential Private Placement Memorandum dated
January 19, 1995 at a redemption price of $5.00 per share, plus all accrued and
unpaid dividends on a share of Series A Preferred Stock, upon notice and in the
manner set forth in, and subject to the conditions of, this paragraph (e);
provided, the current market price of the Common Stock (the closing sale price
- --------
as reported by the Nasdaq National Market or, if not traded thereon, the closing
bid price as reported by Nasdaq or, if not quoted thereon, the closing bid price
in the National Quotation Bureau sheet listing for the Common Stock) equals or
exceeds $7.50 per share (as may be adjusted proportionately upward or downward
solely in the event of a subdivision or combination of the Company's Common
Stock or the payment of a dividend on all of the Company's Common Stock payable
in Common Stock of the Company) for 20 consecutive trading days ending no more
than 10 days prior to the date of notice of redemption.
(ii) Redemption Notice. If the Corporation elects to redeem the
-----------------
Preferred Stock, the Corporation shall mail, postage prepaid, not less than 30
days nor more than 60 days prior to the business day designated in such notice
for the closing of such redemption (the "Redemption Date"), written notice
thereof (the "Redemption Notice"), to each holder of record of the Series A
Preferred Stock, at his post office address last shown on the records of the
Corporation. Each such Redemption Notice shall state:
(A) The number of shares of Series A Preferred Stock held by the
holder that the Corporation shall redeem;
(B) The Redemption Date and Redemption Price;
(C) The date upon which the holder's conversion rights (as set
forth in paragraph (d) above) as to such shares terminate which termination
shall be five days before the Redemption Date; and
(D) That the holder is to surrender to the Corporation, in its
manner and at the place designated, his certificate or certificates representing
the shares of Series A Preferred Stock to be redeemed.
(iii) Surrender of Certificates; Payment. On or before the
----------------------------------
Redemption Date, each holder of shares of Series A Preferred Stock, unless such
holder has exercised his right to convert the shares as provided in paragraph
(d) hereof, shall
B-9
<PAGE>
surrender the certificate or certificates representing such shares to the
Corporation, in the manner and at the place designated in the Redemption Notice,
and thereupon the Redemption Price for such share shall be payable to the order
of the person whose name appears on such certificate or certificates as the
owner thereof, and each surrendered certificate shall be canceled and retired.
(iv) Rights Subsequent to Redemption. If the Redemption Notice
-------------------------------
shall have been duly given, and if on the Redemption Date the Redemption Price
therefor is either paid or made available for payment through the deposit
arrangement specified in subparagraph (vii) below, then notwithstanding that the
certificates evidencing any of the shares of Series A Preferred Stock so called
for redemption shall not have been surrendered, the dividends with respect to
such shares shall cease to accrue after the Redemption Date and all rights with
respect to such shares shall forthwith terminate after the Redemption Date,
except only the right of the holders to receive the Redemption Price without
interest upon surrender of their certificate or certificates therefor.
(v) Deposit of Funds. On or prior to the Redemption Date, the
----------------
Corporation shall deposit with any bank or trust company, having a capital and
surplus of at least $100,000,000 as a trust fund, a sum equal to the aggregate
Redemption Price of all shares of Series A Preferred Stock called for redemption
on such Redemption Date and not yet converted, with irrevocable instructions and
authority to the bank or trust company to pay, on and after each such Redemption
Date, the Redemption Price to the respective holders upon the surrender of their
share certificates. From and after the date of such deposit (but not prior to
the Redemption Date), the Series A Preferred Stock shall be redeemed. The
deposit shall constitute full payment of the shares of their holders, and from
and after the Redemption Date the Series A Preferred Stock shall be deemed to be
no longer outstanding, and the holders thereof shall cease to be shareholders
with respect to such shares and shall have no rights with respect thereto except
the rights to receive, from the bank or trust company, payment of the Redemption
Price of the shares, without interest, upon surrender of their certificates
therefor. Any funds so deposited and unclaimed at the first anniversary of the
Redemption Date shall be released or repaid to the Corporation, after which the
holders of shares called for redemption shall be entitled to receive payment of
the Redemption Price only from the Corporation.
(f) Protective Provisions. So long as any shares of Series A Preferred
---------------------
Stock are outstanding, the Corporation shall not, without the affirmative vote
of the holders of record of sixty-six and two-thirds percent (66 2/3%) of the
outstanding shares of Series A Preferred Stock voting as a class:
(i) Amend, repeal or modify any provision of, or add any
provision to, the Corporation's Charter or By-laws or this Certificate of
Designation if such action would alter or change the rights, preferences,
privileges or powers of, or the restrictions provided for the benefit of, the
Series A Preferred Stock so as to affect the Series A Preferred Stock adversely;
or
B-10
<PAGE>
(ii) Reclassify the shares of Common Stock or any other
shares of stock hereafter created junior to the Series A Preferred Stock as to
dividends or assets into shares of Series A Preferred Stock or into shares
having any preference or priority as to dividends or assets superior to or on a
parity with that of the Series A Preferred Stock.
D. Series B Preferred Stock. Ten Thousand (10,000) of the
------------------------
Five Million (5,000,000) authorized shares of Preferred Stock of the Corporation
shall be designated Series B Preferred Stock (the "Series B Preferred Stock")
and shall possess the rights and privileges set forth below:
(a) Dividends (i) The holder of each issued and outstanding share
---------
of Series B Preferred Stock shall be entitled to receive, when and as
declared by the Board of Directors of the Corporation, out of the assets at
the time legally available for such purpose, dividends at a rate of $32.50,
payable annually in arrears. No dividends shall be declared and paid on
the Series B Preferred Stock (other than a dividend payable solely in
shares of Series B Preferred Stock) unless all accrued but unpaid dividends
on the Corporation's existing class of Series A Preferred Stock have been
declared and paid in cash. Such dividends shall not be cumulative and no
right to such dividends shall accrue to holders of Series B Preferred Stock
unless declared by the Corporation's Board of Directors; provided, however,
that if all shares of Series B Preferred Stock have not been converted into
common stock by April 30, 1997 such dividends shall begin to accumulate on
all shares of Series B Preferred Stock which remain outstanding at such
time and shall be payable, subject to clause (ii) below, on April 30, 1997
and each April 30 thereafter. At the Corporation's election, such
dividends may be declared in cash, or in additional shares of Series B
Preferred Stock in an amount equal to the number of shares of Series B
Preferred Stock which on such date would be convertible into that number of
shares of common stock, par value $.001 per share (the "Common Stock")
which shall be determined as follows: the amount of the dividend divided by
the closing bid price of the Common Stock on April 30th (or the first
following business day if such date should fall on a weekend or holiday).
No dividends shall be declared or paid with respect to the Corporation's
Common Stock (other than a dividend payable solely in Common Stock of the
Corporation), or upon any other class of Preferred Stock of the Corporation
with a dividend preference subordinate to the dividend preference of the
Series B Preferred Stock, unless all accrued but unpaid dividends on the
Series B Preferred Stock has been declared and paid and a dividend of equal
or greater amount per share (on an as-if-converted to Common Stock basis)
is first declared and paid with respect to the Series B Preferred Stock.
(ii) No dividends shall be paid on the Series B Preferred
Stock at such time as:
(A) such payment would violate Idaho law; or
B-11
<PAGE>
(B) such payment would impair the net capital or other
financial requirements applicable to the Corporation established by the National
Association of Securities Dealers, Inc., the Securities and Exchange Commission,
or any other state of federal securities authority or agency, any state or
federal commodities authority or agency, or any commodities or securities
exchange.
(b) Liquidation Preference (i) In the event of any liquidation,
----------------------
dissolution or winding-up of the Corporation, either voluntary or
involuntary (a "Liquidation"), the holders of shares of the Series B
Preferred Stock then issued and outstanding shall be entitled to be paid
out of the assets of the Corporation available for distribution to its
shareholders, whether from capital, surplus or earnings, before any payment
shall be made to the holders of shares of the Common Stock or upon any
other series of Preferred Stock of the Corporation with a liquidation
preference subordinate to the liquidation preference of the Series B
Preferred Stock, an amount equal to one thousand dollars ($1,000) per
share. The liquidation preference of the Series B Preferred Stock shall be
junior in right of payment to the liquidation preference of the
Corporation's existing class of Series A Preferred Stock. If, upon any
Liquidation of the Corporation, the assets of the Corporation available for
distribution to its shareholders shall be insufficient to pay the holders
of shares of the Series B Preferred Stock, and the holders of any other
series of Preferred Stock with a liquidation preference equal to the
liquidation preference of the Series B Preferred Stock the full amounts to
which they shall respectively be entitled, the holders of shares of the
Series B Preferred Stock, holders of shares of the Series B Preferred
Stock, and the holders of any other series of Preferred Stock with
liquidation preference equal to the liquidation preference of the Series B
Preferred Stock and Series B Preferred Stock shall receive all of the
assets of the Corporation available for distribution and each such holder
of shares of the Series B Preferred Stock, holders of share of the Series B
Preferred Stock, and the holders of any other series of Preferred Stock
with a liquidation preference equal to the liquidation preference of the
Series B Preferred Stock shall share ratably in any distribution in
accordance with the amounts due such shareholders. After payment shall
have been made to the holders of shares of the Series B Preferred Stock of
the full amount to which they shall be entitled, as aforesaid, the holders
of shares of the Series B Preferred Stock shall be entitled to no further
distributions thereon and the holders of shares of the Common Stock and of
shares of any other series of stock of the Corporation shall be entitled to
share, according to their respective rights and preferences, in all
remaining assets of the Corporation available for distribution to its
shareholders.
(ii) A merger or consolidation of the Corporation with or into
any other corporation, or a sale, lease, exchange, or transfer of all or any
part of the assets of the Corporation which shall not in fact result in the
liquidation (in whole or in part) of the Corporation and the distribution of its
assets to its shareholders shall not be deemed to be a voluntary or involuntary
liquidation (in whole or in part), dissolution, or winding-up of the
Corporation.
B-12
<PAGE>
(c) Conversion of Series B Preferred Stock The holders of Series B
--------------------------------------
Preferred Stock shall have the following conversion rights:
(i) Right to Convert. Each share of Series B Preferred Stock
----------------
shall be convertible, on the Conversion Dates and at the Conversion
Prices set forth below, into fully paid and nonassessable shares of
Common Stock.
(ii) Mechanics of Conversion. Each holder of Series B
-----------------------
Preferred Stock who desires to convert the same into shares of Common
Stock shall provide notice ("Conversion Notice") via telecopy to the
Corporation. The original Conversion Notice and the certificate or
certificates representing the Series B Preferred Stock for which
conversion is elected, shall be delivered to the Corporation by
international courier, duly endorsed. The date upon which a
Conversion Notice is properly received by the Corporation shall be a
"Notice Date."
The Corporation shall use all reasonable efforts to issue and deliver
within three (3) business days after the Notice Date, to such holder of Series B
Preferred Stock at the address of the holder on the stock books of the
Corporation, a certificate or certificates for the number of shares of Common
Stock to which the holder shall be entitled as aforesaid; provided that the
original shares of Series B Preferred Stock to be converted are received by the
transfer agent or the Corporation within three business days after the Notice
Date and the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date. If the original
shares of Series B Preferred Stock to be converted are not received by the
transfer agent or the Corporation within three business days after the Notice
Date, the Conversion Notice shall become null and void.
(iii) Conversion Dates. The Series B Preferred Stock shall
----------------
become convertible into shares of Common Stock at any time commencing forty-five
(45) days after the last day on which there is an original issuance of the
Series B Preferred Stock (the "Conversion Date").
(iv) Conversion Price. Each share of Series B Preferred Stock
----------------
shall be convertible into the number of shares of Common Stock according to the
following formula:
N x 1,000
- ---------
Conversion Price
where:
B-13
<PAGE>
N = the number of shares of the Series B Preferred Stock for
which conversion is being elected:
and
Conversion
Price = the lesser of (x) the closing bid price or the
Corporation's Common Stock on the date of the original
issuance of the Series B Preferred Stock, or (y) the
average closing bid price of the Corporation's Common
Stock for the five (5) trading days immediately preceding
the Notice Date; provided, however, in no event shall the
Conversion Price be less than $4.00 nor greater than
$6.05; provided, further, however, that the aforesaid
$4.00 minimum Conversion Price shall be applicable on and
after the first to occur of (i) January 1, 1997, (ii)
August 15, 1996, if the Corporation's Common Stock has
not been listed on the NASDAQ SmallCap Market on or prior
to such date, or (iii) October 1, 1996, if the Company's
unaudited financial statements for the quarter ended June
30, 1996 (as set forth in its Form 10-QSB filed with the
Securities and Exchange Commission) reflected less than
$350,000 of net income before income taxes.
(v) Automatic Conversion. Each share of Series B Preferred
--------------------
Stock outstanding on December 31, 1997 automatically shall be converted into
Common Stock on such date at the Conversion Price then in effect, and December
31, 1997 shall be deemed to be the Notice Date with respect to such conversion.
(vi) Fractional Shares. No fractional share shall be issued
-----------------
upon the conversion of any shares, share or fractional share of Series B
Preferred Stock. All shares of Common Stock (including fractions thereof)
issuable upon conversion of shares (or fractions thereof) of Series B Preferred
Stock by a holder thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of any fractional share. If,
after the aforementioned aggregation, the conversion would result in the
issuance of a fraction of a share of Common Stock, the Corporation shall, in
lieu of issuing any fractional share, pay the holder otherwise entitled to such
fraction a sum in cash equal to the closing bid price of the Corporation's
Common Stock on the Notice Date multiplied by such fraction.
(vii) Reservation of Stock Issuable Upon Conversion. The
---------------------------------------------
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common stock, solely for the purpose of effecting the
conversion of the shares of the Series B Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of the Series B Preferred Stock; and
if at any time the number of authorized but unissued
B-14
<PAGE>
shares of Common stock shall not be sufficient to effect the conversion of all
then outstanding shares of the Series B Preferred Stock, the Corporation will
take such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(viii) Adjustment to Conversion Price.
------------------------------
(A) If, prior to the conversion of all shares of Series B
Preferred Stock, the number of outstanding shares or Common Stock is increased
by a stock split, stock dividend, or other similar event, the Conversion Price
shall be proportionately reduced, or if the number of outstanding shares of
Common Stock is decreased by a combination or reclassification of shares, or
other similar event, the Conversion Price shall be proportionately increased.
(B) If prior to the conversion of all shares of Series B
Preferred Stock, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which
shares of Common Stock or the Corporation shall be changed into the same or a
different number of shares of the same or another class or classes of stock or
securities of the Corporation or another entity, then the holders of Series B
Preferred Stock shall thereafter have the right to purchase and receive upon
conversion of shares of Series B Preferred Stock, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such share of stock and/or
securities as may be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore purchasable and
receivable upon the conversion of shares of Series B Preferred Stock held by
such holders had such merger, consolidation, exchange of shares,
recapitalization or reorganization not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interest of
the holders of the Series B Preferred Stock to the end that the provisions
hereof (including, without limitation, provisions for adjustment of the
Conversion Price and of the number of shares issuable upon conversion of the
Series B Preferred Stock) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the exercise hereof. The Corporation shall not effect any
transaction described in this subsection unless the resulting successor or
acquiring entity (if not the Corporation) assumes by written instrument the
obligation to deliver to the holders of the Series B Preferred Stock such shares
of stock and/or securities as, in accordance with the foregoing provisions, the
holders of the Series B Preferred Stock may be entitled to purchase.
(C) If any adjustment under this subsection would create
a fractional share of Common Stock or a right to acquire a fractional share if
Common Stock, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon conversion shall be the next higher number
of shares.
B-15
<PAGE>
(d) Voting. Except as otherwise provided by the Idaho Business
------
Corporation Act, the holders of the Series B Preferred Stock shall have no
voting power whatsoever, and no holder of Series B Preferred Stock shall vote or
otherwise participate in any proceeding in which actions shall be taken by the
Corporation or the shareholders thereof or be entitled to notification as to any
meeting of the Board of Directors or the shareholders.
(e) Protective Provisions. So long as shares of Series B
---------------------
Preferred Stock are outstanding, the Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least a majority of the then outstanding shares of Series B
Preferred Stock:
(i) alter or change the rights, preferences or privileges of
the shares of Series B Preferred Stock so as to affect adversely the Series C
preferred Stock;
(ii) create any new class or series of stock being on a parity
with or having a preference over the Series C Preferred Stock with respect to
dividends, to payments upon Liquidation (as provided for in Section B of this
Designation) or to redemption; or
(iii) do any act or thing not authorized or contemplated by
this Designation which would result in taxation of the holders of shares of the
Series B Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
(f) Status of Converted Stock. In the event any shares of Series B
-------------------------
Preferred Stock shall be converted as contemplated by this Designation, the
shares so converted shall be canceled, shall return to the status of authorized
but unissued Preferred Stock of no designated class of series, and shall not be
issuable by the Corporation as Series B Preferred Stock.
E. Series C Preferred Stock. Five Thousand (5,000) of the
------------------------
Five Million (5,000,000) authorized shares of Preferred Stock of the Company
shall be designated Series C Preferred Stock (the "Series C Preferred Stock").
The Series C Preferred Stock shall be pari passu with the Company's Series B
Preferred Stock and shall possess the rights and privileges set forth below:
(a) Dividends (i) The holder of each issued and outstanding share
---------
of Series C Preferred Stock shall be entitled to receive, when and as
declared by the Board of Directors of the Company, out of the assets at the
time legally available for such purpose, dividends at a rate of $33.30,
payable annually in arrears. No dividends shall be declared and paid on
the Series C Preferred Stock (other than a dividend payable solely in
shares of Series C Preferred Stock) unless all accrued but unpaid dividends
on the Company's existing class of Series A Preferred Stock
B-16
<PAGE>
have been declared and paid in cash. Such dividends shall not be
cumulative and no right to such dividends shall accrue to holders of Series
C Preferred Stock unless declared by the Company's Board of Directors;
provided, however, that if all shares of Series C Preferred Stock have not
been converted into common stock by December 31, 1997 such dividends shall
begin to accumulate on all shares of Series C Preferred Stock which remain
outstanding at such time and shall be payable, subject to clause (ii)
below, on December 31, 1997 and each December 31 thereafter. At the
Company's election, such dividends may be declared in cash, or in
additional shares of Series C Preferred Stock in an amount equal to the
number of shares of Series C Preferred Stock which on such date would be
convertible into that number of shares of common stock, par value $.001 per
share (the "Common Stock") which shall be determined as follows: the amount
of the dividend divided by the closing bid price of the Common Stock on
December 31st (or the first following business day if such date should fall
on a weekend or holiday). No dividends shall be declared or paid with
respect to the Company's Common Stock (other than a dividend payable solely
in Common Stock of the Company), or upon any other class of Preferred Stock
of the Company with a dividend preference subordinate to the dividend
preference of the Series C Preferred Stock, unless all accrued but unpaid
dividends on the Series C Preferred Stock has been declared and paid and a
dividend of equal or greater amount per share (on an as-if-converted to
Common Stock basis) is first declared and paid with respect to the Series C
Preferred Stock and Series B Preferred Stock on a pari passu basis.
(ii) No dividends shall be paid on the Series C Preferred
Stock at such time as:
(A) such payment would violate Idaho law; or
(B) such payment would impair the net capital or other
financial requirements applicable to the Company established by the National
Association of Securities Dealers, Inc., the Securities and Exchange Commission,
or any other state of federal securities authority or agency, any state or
federal commodities authority or agency, or any commodities or securities
exchange.
(b) Liquidation Preference (i) In the event of any liquidation,
----------------------
dissolution or winding-up of the Company, either voluntary or involuntary
(a "Liquidation"), the holders of shares of the Series C Preferred Stock
then issued and outstanding shall be entitled to be paid out of the assets
of the Company available for distribution to its shareholders, whether from
capital, surplus or earnings, before any payment shall be made to the
holders of shares of the Common Stock or upon any other series of Preferred
Stock of the Company with a liquidation preference subordinate to the
liquidation preference of the Series C Preferred Stock, an amount equal to
one thousand dollars ($1,000) per share. The liquidation preference of the
Series C Preferred Stock shall be junior in right of
B-17
<PAGE>
payment to the liquidation preference of the Company's existing class of
Series A Preferred Stock and shall be on a pari passu basis with the right
of payment to the liquidation preference of the Company's existing class of
Series B Preferred Stock. If, upon any Liquidation of the Company, the
assets of the Company available for distribution to its shareholders shall
be insufficient to pay the holders of shares of the Series C Preferred
Stock, holders of shares of the Series B Preferred Stock, and the holders
of any other series of Preferred Stock with a liquidation preference equal
to the liquidation preference of the Series C Preferred Stock the full
amounts to which they shall respectively be entitled, the holders of shares
of the Series C Preferred Stock, holders of shares of the Series B
Preferred Stock, and the holders of any other series of Preferred Stock
with liquidation preference equal to the liquidation preference of the
Series C Preferred Stock and Series B Preferred Stock shall receive all of
the assets of the Company available for distribution and each such holder
of shares of the Series C Preferred Stock, holders of share of the Series B
Preferred Stock, and the holders of any other series of Preferred Stock
with a liquidation preference equal to the liquidation preference of the
Series C Preferred Stock shall share ratably in any distribution in
accordance with the amounts due such shareholders. After payment shall
have been made to the holders of shares of the Series C Preferred Stock of
the full amount to which they shall be entitled, as aforesaid, the holders
of shares of the Series C Preferred Stock shall be entitled to no further
distributions thereon and the holders of shares of the Common Stock and of
shares of any other series of stock of the Company shall be entitled to
share, according to their respective rights and preferences, in all
remaining assets of the Company available for distribution to its
shareholders.
(ii) A merger or consolidation of the Company with or into any
other corporation, or a sale, lease, exchange, or transfer of all or any part of
the assets of the Company which shall not in fact result in the liquidation (in
whole or in part) of the Company and the distribution of its assets to its
shareholders shall not be deemed to be a voluntary or involuntary liquidation
(in whole or in part), dissolution, or winding-up of the Company.
(c) Conversion of Series C Preferred Stock The holders of Series C
--------------------------------------
Preferred Stock shall have the following conversion rights:
(i) Right to Convert. Each share of Series C Preferred Stock
----------------
shall be convertible, on the Conversion Dates and at the Conversion Prices set
forth below, into fully paid and nonassessable shares of Common Stock.
(ii) Mechanics of Conversion. Each holder of Series C
-----------------------
Preferred Stock who desires to convert the same into shares of Common Stock
shall provide notice in the form of the Notice of Conversion or Exercise
attached to the subscription agreement pursuant to which the Series C Preferred
Stock was issued (a "Conversion Notice") via telecopy to the Company. The
original Conversion Notice and
B-18
<PAGE>
the certificate or certificates representing the Series C Preferred Stock for
which conversion is elected, shall be delivered to the Company by international
courier, duly endorsed. The date upon which a Conversion Notice is properly
received by the Company shall be a "Notice Date."
The Company shall use all reasonable efforts to issue and deliver within
three (3) business days after the Notice Date, to such holder of Series C
Preferred Stock at the address of the holder on the stock books of the Company,
a certificate or certificates for the number of shares of Common Stock to which
the holder shall be entitled as aforesaid; provided that the original shares of
Series C Preferred Stock to be converted are received by the transfer agent or
the Company within three business days after the Notice Date and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date. If the original shares of Series C
Preferred Stock to be converted are not received by the transfer agent or the
Company within three business days after the Notice Date, the Conversion Notice
shall become null and void.
(iii) Conversion Dates. The Series C Preferred Stock shall
----------------
become convertible into shares of Common Stock at any time commencing forty-five
(45) days after the last day on which there is an original issuance of the
Series C Preferred Stock (the "Conversion Date").
(iv) Conversion Price. Each share of Series C Preferred Stock
----------------
shall be convertible into the number of shares of Common Stock according to the
following formula:
N x 1,000
- ---------
Conversion Price
where:
N = the number of shares of the Series C Preferred Stock for
which conversion is being elected:
and
Conversion
Price = the lesser of (i) $2.25 per share or (ii) the average
closing bid price on the NASDAQ SmallCap Market on the
five trading days immediately preceding the holder's
delivery of a Conversion Notice to the Company.
(v) Automatic Conversion. Each share of Series C Preferred
--------------------
Stock outstanding on June 30, 2002 automatically shall be converted into Common
Stock on such date at the Conversion Price then in effect, and June 30, 2002
shall be deemed to be the Notice Date with respect to such conversion.
B-19
<PAGE>
(vi) Fractional Shares. No fractional share shall be issued
-----------------
upon the conversion of any shares, share or fractional share of Series C
Preferred Stock. All shares of Common Stock (including fractions thereof)
issuable upon conversion of shares (or fractions thereof) of Series C Preferred
Stock by a holder thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of any fractional share. If,
after the aforementioned aggregation, the conversion would result in the
issuance of a fraction of a share of Common Stock, the Company shall, in lieu of
issuing any fractional share, pay the holder otherwise entitled to such fraction
a sum in cash equal to the closing bid price of the Company's Common Stock on
the Notice Date multiplied by such fraction.
(vii) Reservation of Stock Issuable Upon Conversion. The
---------------------------------------------
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common stock, solely for the purpose of effecting the
conversion of the shares of the Series C Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of the Series C Preferred Stock; and
if at any time the number of authorized but unissued shares of Common stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series C Preferred Stock, the Company will take such corporate action as
may be necessary to increase its authorized but unissued shares of Common Stock
to such number of shares as shall be sufficient for such purpose.
(viii) Adjustment to Conversion Price.
------------------------------
(A) If, prior to the conversion of all shares of Series
C Preferred Stock, the number of outstanding shares or Common Stock is increased
by a stock split, stock dividend, or other similar event, the Conversion Price
shall be proportionately reduced, or if the number of outstanding shares of
Common Stock is decreased by a combination or reclassification of shares, or
other similar event, the Conversion Price shall be proportionately increased.
(B) If prior to the conversion of all shares of Series C
Preferred Stock, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which
shares of Common Stock or the Company shall be changed into the same or a
different number of shares of the same or another class or classes of stock or
securities of the Company or another entity, then the holders of Series C
Preferred Stock shall thereafter have the right to purchase and receive upon
conversion of shares of Series C Preferred Stock, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such share of stock and/or
securities as may be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore purchasable and
receivable upon the conversion of shares of Series C Preferred Stock held by
such holders had such merger, consolidation, exchange of shares,
recapitalization or reorganization not taken
B-20
<PAGE>
place, and in any such case appropriate provisions shall be made with respect to
the rights and interest of the holders of the Series C Preferred Stock to the
end that the provisions hereof (including, without limitation, provisions for
adjustment of the Conversion Price and of the number of shares issuable upon
conversion of the Series C Preferred Stock) shall thereafter be applicable, as
nearly as may be practicable in relation to any shares of stock or securities
thereafter deliverable upon the exercise hereof. The Company shall not effect
any transaction described in this subsection unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument the
obligation to deliver to the holders of the Series C Preferred Stock such shares
of stock and/or securities as, in accordance with the foregoing provisions, the
holders of the Series C Preferred Stock may be entitled to purchase.
(C) If any adjustment under this subsection would create
a fractional share of Common Stock or a right to acquire a fractional share if
Common Stock, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon conversion shall be the next higher number
of shares.
(d) Voting. Except as otherwise provided by the Idaho Business
------
Corporation Act, the holders of the Series C Preferred Stock shall have no
voting power whatsoever, and no holder of Series C Preferred Stock shall vote or
otherwise participate in any proceeding in which actions shall be taken by the
Company or the shareholders thereof or be entitled to notification as to any
meeting of the Board of Directors or the shareholders.
(e) Protective Provisions. So long as shares of Series C Preferred
---------------------
Stock are outstanding, the Company shall not without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least a majority of the then outstanding shares of Series C Preferred Stock:
(i) alter or change the rights, preferences or privileges of
the shares of Series C Preferred Stock so as to affect adversely the Series C
preferred Stock;
(ii) create any new class or series of stock being on a
parity with or having a preference over the Series C preferred Stock with
respect to dividends, to payments upon Liquidation (as provided for in Section B
of this Certificate Designation) or to redemption; or
(iii) do any act or thing not authorized or contemplated by
this Designation which would result in taxation of the holders of shares of the
Series C Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
(f) Status of converted Stock. In the event any shares of Series C
-------------------------
Preferred stock shall be converted as contemplated by this Certificate of
Designation, the
B-21
<PAGE>
shares so converted shall be canceled, shall return to the status of authorized
but unissued Preferred Stock of no designated class of series, and shall not be
issuable by the Company as Series C Preferred Stock.
FIFTH: The following provisions are inserted for the management of the
-----
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A. The business and affairs of the Corporation shall
be managed by or under the direction of the board of directors. In addition to
the powers and authority expressly conferred upon them by statute or by this
Certificate of Incorporation or the by-laws of the Corporation, the directors
are hereby empowered to exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation.
B. The directors of the Corporation need not be elected by
written ballot unless the by-laws so provide.
C. Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders of the Corporation and may not be effected by
any consent in writing by such stockholders.
D. Special meetings of stockholders of the corporation may
be called only by the Chairman of the Board or the President or by the board of
directors acting pursuant to a resolution adopted by a majority of the Whole
Board. For purposes of this Certificate of Incorporation, the term "Whole Board"
shall mean the total number of authorized directors whether or not there exist
any vacancies in previously authorized directorships.
SIXTH: A. Subject to the rights of the holders of any series of
-----
Preferred Stock to elect additional directors under specified circumstances, the
number of directors shall be fixed from time to time exclusively by the board of
directors pursuant to a resolution adopted by a majority of the Whole Board.
The directors, other than those who may be elected by the holders of any series
of Preferred Stock under specified circumstances, shall be divided into three
classes, with the term of office of the first class to expire at the
Corporation's first annual meeting of stockholders, the term of office of the
second class to expire at the Corporation's second annual meeting of
stockholders and the term of office of the third class to expire at the
Corporation's third annual meeting of stockholders. At each annual meeting of
stockholders, directors shall be elected to succeed those directors whose terms
expire shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders after their election.
B-22
<PAGE>
B. Subject to the rights of the holders of any series
of Preferred Stock then outstanding, newly created directorships resulting from
any increase in the authorized number of directors or any vacancies in the board
of directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause shall, unless otherwise provided by law or by
resolution of the board of directors, be filled only by a majority vote of the
directors then in office, though less than a quorum, and directors so chosen
shall hold office for a term expiring at the annual meeting of stockholders at
which the term of office of the class to which they have been chosen expires. No
decrease in the authorized number of directors shall shorten the term of any
incumbent director.
C. Advance notice of stockholder nominations for the
election of directors and of business to be brought by stockholders before any
meeting of the stockholders of the Corporation shall be given in the manner
provided in the by-laws of the Corporation.
D. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any directors, or the entire board of
directors, may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of at least sixty-six and two-thirds
percent (66.67%) of the voting power of all of the then-outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class.
SEVENTH: The board of directors is expressly empowered to adopt,
-------
amend or repeal the by-laws of the Corporation. Any adoption, amendment or
repeal of the by-laws of the Corporation by the board of directors shall
require the approval of a majority of the Whole Board. The stockholders
shall also have power to adopt, amend or repeal the by-laws of the
Corporation; provided, however, that, in addition to any vote of the
holders of any class or series of stock of the Corporation required by law
or by this Certificate of Incorporation, the affirmative vote of the
holders of at least fifty percent (50%) of the voting power of all of the
then-outstanding shares of the capital stock of the Corporation entitled to
vote generally in the election of directors, voting together as a single
class, shall be requested to adopt, amend or repeal any provision of the
by-laws of the Corporation.
EIGHTH: A director of the Corporation shall not be personally liable
------
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law or (iv) for any transaction for which the director
derived an improper personal benefit. If the Delaware General Corporation
Law is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability
B-23
<PAGE>
of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so
amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
NINTH: The Corporation reserves the right to amend or repeal any
-----
provision contained in this Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and all rights conferred
upon stockholders are granted subject to this reservation; provided,
however, that, notwithstanding any other provision of this Certificate of
Incorporation or any provision of law that might otherwise permit a lesser
vote or no vote, but in addition to any vote of the holders of any class or
series of the stock of this Corporation required by law or by this
Certificate of Incorporation, the affirmative vote of the holders of at
least sixty-six and two-thirds percent (66.67%) of the voting power of all
the then-outstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of Directors, voting together as
a single class, shall be required to amend or repeal this Article NINTH,
Sections C or D of Article FIFTH, Article SIXTH, Article SEVENTH, or
Article EIGHTH.
IN WITNESS WHEREOF, the undersigned incorporator hereby executes this
document and affirms that the facts set forth herein are true under the
penalties of perjury the 16th day of December, 1997.
/s/ Alexander Canate
--------------------
Alexander Canate
Incorporator
B-24
<PAGE>
Exhibit 5
December 17, 1997
Snake Eyes Golf Clubs, Inc.
13000 Sawgrass Village Circle, Suite 30
Ponte Vedra Beach, FL 32082
Re: 1995 Stock Option Plan
1997 Stock Option Plan and Long-Term Incentive Plan
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Dear Sirs:
We have acted as counsel for Snake Eyes Golf Clubs, Inc., a Delaware
corporation (the "Company"), in connection with the filing of a registration
statement on Form S-8 under the Securities Act of 1933, as amended
("Registration Statement"), with respect to 2,000,000 shares of its common
stock, par value $.001 per share ("Shares"), 750,000 of which may be issued
under the Company's 1995 Stock Option Plan (the "1995 Plan") and 1,250,000 of
which may be issued under the Company's 1997 Stock Option and Long-Term
Incentive Plan (the "1997 Plan").
We have examined originals or copies, certified or otherwise
identified, of such documents, corporate records and other instruments as we
have deemed necessary or advisable for purposes of this opinion. As to matters
of fact, we have examined and relied upon the 1995 Plan and 1997 Plan and, where
we have deemed appropriate, representations or certificates of officers of the
Company or public officials. We have assumed the authenticity of all documents
submitted to us as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all documents
submitted to us as copies.
Based on the foregoing, we are of the opinion that the Shares which
are being registered pursuant to the Registration Statement have been duly
authorized and, when issued and paid for in accordance with the terms of the
1995 Plan and 1997 Plan, such Shares will be validly issued, fully paid and non-
assessable.
We are admitted to practice law only in the State of New York and we
express no opinion concerning any law other than the law of the State of New
York, the General Corporation Law of the State of Delaware and the federal law
of the United States.
In rendering the opinion set forth above, we have not passed upon and
do not purport to pass upon the application of "doing business" or securities or
"blue-sky" laws of any jurisdiction (except federal securities law).
This opinion is given solely for the benefit of the Company and
purchasers of shares under the 1995 Plan and 1997 Plan, and no other person or
entity is entitled to rely hereon without express written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Pryor, Cashman, Sherman & Flynn
Pryor, Cashman, Sherman & Flynn
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
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The Board of Directors
Snake Eyes Golf Clubs, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Jacksonville, Florida
December 19, 1997
