U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
Nevada APPLIED FOR
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(State or other jurisdiction (I.R.S. Employer ID No.)
of incorporation or organization)
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Title of each class Name of each exchange on which to be so registered each class is to be registered Not applicable Not Applicable -------------- ---------------------- |
Securities to be registered under Section 12(g) of the Act.
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SOCHRYS.COM INC.
Form 10-SB
Table of Contents
PART I
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Page
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ITEM 1. Description of Business 4
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ITEM 2. Management's Discussion and Analysis
------- of Financial Conditions and Results of Operation 22
ITEM 3. Description of Property 28
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ITEM 4. Security Ownership of Certain Beneficial 29
------- Owners and Management
ITEM 5. Directors and Executive Officers, Promoters
------- and Control Persons 30
ITEM 6. Executive Compensation 31
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ITEM 7. Certain Relationships and Related Transactions 32
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ITEM 8. Description of Securities 32
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PART II
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ITEM 1. Market Price of and Dividends on the Registrant's
------- Common Equity and Related Shareholder Matters 33
ITEM 2. Legal Proceedings 34
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ITEM 3. Changes in and Disagreements with Accountants 34
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ITEM 4. Recent Sales of Unregistered Securities 34
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ITEM 5. Indemnification of Directors and Officers 35
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PART F/S
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Financial Statements
F-1
PART III
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ITEM 1. Index to Exhibits 36
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ITEM 2. Description of Exhibits 36
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Signature Page 37
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PART I
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
SOCHRYS.Com Inc. (the "Company") cautions readers that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements that may be deemed to have been made in this Registration Statement or that are otherwise made by or on behalf of the Company. For this purpose, any statements contained in the Registration Statement that are not statements of historical fact may be deemed to be forward-looking statements. This Registration Statement contains statements that constitute "forward-looking statements." These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as "believes," "anticipates," "expects," "estimates," "plans," "may," "will," or similar terms. These statements appear in a number of places in this Registration Statement and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) trends affecting the Company's financial condition or results of operations for its limited history; (ii) the Company's business and growth strategies; (iii) the Company's technology; (iv) the Internet; and, (v) the Company's financing plans. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Factors that could adversely affect actual results and performance include, among others, the Company's limited operating history, dependence on continued growth in the use of the Internet, security risks of transmitting information over the Internet, government regulation, technological change and competition.
The information contained in this Registration Statement, including, without limitation, the information set forth in "Part I. Item 1. Description of Business" including, but not limited to, that set out under the heading "Risk Factors" and the information set forth in "Part 1. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" identify important additional factors that could materially adversely affect actual results and performance. All of these factors should be carefully considered and evaluated. All forward-looking statements attributable to the Company are expressly qualified in their entirety by the foregoing cautionary statement. Any forward-looking statements in this Registration Statement should be evaluated in light of these important risk factors. In addition, the Company does not undertake to update forward-looking statements after the effectiveness of this Registration Statement, even if new information, future events or other circumstances have made them incorrect or misleading.
Item 1. DESCRIPTION OF BUSINESS
GENERAL
The Company, through its wholly-owned subsidiaries, Graph-O-Logic, S.A., a Swiss corporation (the "Subsidiary"), SOCHRYS Technologies S.A., a Swiss corporation and SOCHRYS Technologies Inc., a Canadian corporation, (collectively the "Subsidiaries"), is an Internet software company that develops and markets Web technologies (the "SOCHRYS(TM) Technology"). Management believes that SOCHRYS(TM) Technology based products have been developed to the stage of being saleable, but the Company has yet to make a commercial sale.
Products based on the SOCHRYS(TM) Technology will allow the implementation of integrated software solutions for providers of goods and services and will be able to be utilized on most current operating systems linked to the Internet or any other communication network. SOCHRYS(TM) Technology offers a user-friendly, software-only environment that supports most electronic services for distributed operations, including e-banking, e-commerce, and e-business. In addition, SOCHRYS(TM) Technology provides security over the Internet through a three-level Master/Agents/Clients architecture. This three-level approach places one or more Agents as an insulating level between the two parties to a transaction, the Master and the Client, so that no Client can directly communicate to the Master, and the Agents can only act upon the Master's instructions.
Unless the context indicates otherwise, reference to the "Company" herein includes the "Subsidiaries."
THE INTERNET MARKET
The rapid growth of business over the Internet is propelled by large and small businesses alike, as they consider the Web as a media to offer their products and services. Using this distribution channel, entrepreneurs start new businesses more easily and with smaller up-front inves(TM)ents. They can readily access a worldwide network of customers and develop their business activity through Internet-based operations.
Many products and services are available for purchase over the Internet, including computer hardware, software, entertainment products (books, motion pictures, videos, games, CDs and DVDs), information services (databases, online newspapers), product licenses, financial services and professional services. While the value of electronic trade is already in the billions of dollars, electronic trade is still a very small fraction of the total trade for goods and services.
Commerce on the Internet is still at the very beginning of the growth curve. Management believes that significant growth of commerce on the Internet will require that more vendors go
on-line; and that consumers feel secure about using the Internet to complete financial transactions.
Many vendors are deterred from selling over the Internet by the difficulties encountered in setting up an efficient e-commerce facility and the amount of human and financial resources required to set up such a facility. As a result, management believes that there is a need for an integrated e-commerce software package that facilitates the use of the Internet as a main-line distribution channel, linking large corporations, small businesses and individuals.
Management believes that consumer confidence in the security of financial transactions is also a major deterrent to more rapid growth of commerce over the Internet. Hacking, cracking, viruses, e-mail break-ins and theft of confidential information over the Internet are ongoing problems.
As discussed below, management believes that SOCHRYS(TM) Technology addresses both of these issues.
SOCHRYS(TM) Technology
SOCHRYS(TM) Technology is based upon a distributed, dynamic component architecture that operates on a three-level Master-Agents-Clients model. The Master level is the system supervisor; the Agent level contains the corporate software services; and the Client level provides controlled access to the system. It operates indifferently on any user's media (computer or digital devices like palmtops, cellular phones, set top boxes for televisions).
SOCHRYS Technology implements a "Virtual Operating System" ("VOS"). The Company's VOS ('SVOS') software is installed directly on the host computer processor, memory and disk storage unit and coexists with the host computer's operating system.
As a software-only solution, SOCHRYS(TM) Technology provides the following benefits:
- Compatibility
The SVOS works with most versions of the Microsoft, MacIntosh and Unix operating systems. Individual computers using SOCHRYS(TM) Technology through the Internet, Intranet or Extranet automatically become compatible with each other, regardless of their individual operating systems because once 'inside' the SVOS, the SOCHRYS(TM) Technology ensures compatibility and interoperability between all computers linked to the SVOS at that point in time.
- Mobility
The SVOS works with all main communication protocols (TCP/IP, IPX, SNA, Netbios, X25). It uses both modes of communication: synchronous (local, remote, parallel) or asynchronous (local, remote, parallel, massively parallel, engine). It also encapsulates the main set of standards, like DCOM/COM or CORBA and proprietary systems.
- Portability
The SVOS uses its own executable code file standards (where all instructions are subsets of one general instruction format) to generate assembled executable files that run on the SVOS. This ensures that the applications will operate on the different users' platforms. The Company plans to implement future evolutions in the host environment technologies in SOCHRYS(TM) Technology by upgrading the SVOS.
The SVOS does not require any dedicated hardware. It can make use of any type of peripherals connected to SOCHRYS(TM) Technology.
- Security
SOCHRYS(TM) Technology is based on a three-level architecture of Master - Agents - Clients that prevents any data or software from being hacked, cracked or disassembled. A number of specific procedures ensure full security:
- The Client software can only initiate a transaction once access to the SVOS has been recognized and authorized by a "Provider Agent" for whom this is its only function and which is entirely separate from all other Agents.
- A query can only be made by a Query Agent to the Master through various encryption, access recognition and password verification protocols and is only processed using a user-specified executable code.
- The Master forwards authorized requests directly and exclusively to the specialized Agent that will deliver the software, component or data to the user's Client and does so, through a separate channel, using different software codes and encryption protocols. Thus, no Client can directly communicate to the Master, and Agents can only act upon the Master's instructions.
The SOCHRYS UNIVERSAL COMPUTER(TM)
To access SOCHRYS(TM) Technology, SOCHRYS CLIENT(TM) software must first be downloaded to a computer. This software controls the access to the SVOS and its services. Once SOCHRYS CLIENT(TM) software is installed, the SOCHRYS(TM) Technology provides
compatibility and interoperability between all computers also linked to the SVOS at that point in time. Together, they form the "SOCHRYS Universal Computer(TM)." This brings all users in to the same computing environment where they may share the resources of any computer or device connected to the Universal Computer.
THE TARGET MARKET
The Company intends to target the following three types of customers for SOCHRYS(TM) Technology:
Large Organizations
The Company plans to license its technology to large organizations that develop, market, sell or distribute software products where interaction with a distributed client base is of the essence. Potential clients will include, among others, telecommunication firms, banks, large Internet Service Providers, international distribution services, government agencies, international retailers and hotel chains. These potential clients' applications may run on Microsoft, Unix or MacIntosh technologies.
Smaller Organizations
The Company plans to market a range of SOCHRYS(TM) Technology based Internet software products for easy customization by smaller organizations that wish to interact with their client base over the Internet. These products will be aimed at the numerous entrepreneurs and corporations that are developing new services to profit from the Internet and that desire to be compatible with all major operating systems. Services developed by such customers may cover the whole range of electronic commerce, be it for the business-to-business segment or the business-to-consumer segment.
Organizations With Special Needs
The Company also plans to target organizations that have extensive computing needs and wish to resort to a technology that may be as efficient but less expensive than super computers or an array of workstations.
MARKETING STRATEGY
The Company plans to initiate a marketing campaign to bring its technology and products to the marketplace. This campaign will be based on a direct sales approach, where experienced marketing representatives make high-level contacts within corporations to present the competitive advantage that the use of SOCHRYS(TM) Technology can bring to the corporation.
Leads to such presentations will be generated through personal contacts and through attendance at and participation in specialized e-commerce and security trade shows, where the Company's presence will reflect its high-level approach.
A Web site will be designed to attract technical personnel where the Company will stress its multi-level architecture and its inherent security as well as the ease with which applications can be developed and integrated into existing systems.
The marketing representatives will target early adopters of technology in order to generate testimonials from clients and implementation sites in the earliest timeframe possible. These early clients will have an impact on the SOCHRYS Technology development schedule, as interfaces with current systems will need to be developed for the first few clients before being generalized to other sites.
The representatives will be supported by a series of technical literature on specific topics such as security, integration into current systems, openness of our architecture, future developments and implementation procedures.
The main expense factors for this marketing campaign are expected to be for personnel, participation in trade shows, travel and living expenses, Web site development and maintenance and literature preparation and distribution, roughly in this descending order of importance.
The Company expects the sales cycle to be from four to eight months in duration. The territory where most potential clients will reside is expected to be in the northeastern, southeastern and central US. Marketing representatives could be based in the Atlanta and Boston area to minimize travel. Some three to five representatives could be hired during the next year.
Marketing in Europe could start in the months after the first few successful implementations in North America.
For more information, please see: "Part I. Item 2. Management Discussion and Analysis; Plan of Operations".
SOCHRYS(TM) PRODUCTS
The Company plans to offer specific products for each type of customer (as described in "Part 1. Item 1. Description of Business; The Target Market"):
- For large organizations, the Company plans to propose customized versions of the SOCHRYS Universal Computer(TM). This suite of products will contain the elements of SOCHRYS(TM) Technology required to build an Internet Domain where a Provider can implement its services. Business and commercial applications can be built on
SOCHRYS(TM) Technology and delivered in a secure manner by using the SOCHRYS Universal Computer(TM) software.
- For mid-size organizations, the product frameworks will include various extensions of the SOCHRYS Universal Computer(TM) that can interact with each other.
- For organizations requiring computer power, the Company plans to offer Massively Parallel Virtual Computation which will operate over the Internet and will be based upon the SVOS. It will enable any host computer or media to have the power and resources of a more powerful computer by accessing and sharing the power of any hardware or software resource from any and all computers networked via the Company, regardless of geographical location.
Competition
For Security Features
The competition for SOCHRYS(TM) Technology security features comes from a host of suppliers of security measures products and from internal systems developed by potential clients to prevent unauthorized access.
Security measures suppliers include:
- Private Key Encryption algorithms such as DES
- Public Key encryption algorithms such as RSA, Entrust
- Browser Level Protection such as Secure Socket Layer offered by
Netscape and Microsoft
- System Level Protection such as the Secure Electronic
Transaction developed by Visa and MasterCard offered by the
credit card industry and the banking system
- Network Level Protection such as the Private Networks Virtual
Private Networks.
SOCHRYS(TM) Technology will provide security features for the transmission of data over the Internet, extranet or intranet as well as on private and public networks. Typically, the potential clients of SOCHRYS(TM) Technology do not use the Internet to exchange data. They use various systems developed by them for their private purpose to circulate data on private networks. Alternatively, they circulate data on public data-only networks like the AT&T World Net.
SOCHRYS(TM) Technology will offer a different approach to security, by installing its virtual computer on any Client Site which will makes the information managed by the SVOS
inaccessible by any other party. Once inside the SVOS, a number of the above-mentioned security measures may also be used to interface with the customers internal systems, although they do not contribute to the inherent security of SOCRYS Technology.
The Company knows of no other supplier who has implemented this approach on PC environments but no assurances can be given that competitive products do not exist or will not be developed or that the Company's products will be saleable in the marketplace.
For the Virtual Operating System
Competitors for "Virtual Operating Systems" all have a common type of implementation, using a "layer" approach that relies on the host normal operating system. While these "Virtual Operating Systems" have success in making applications more host-independent, they all share the difficulty and security threats of the underlying operating systems. The SVOS will be implemented directly on the host processor and memory and coexists with the host operating system but the SVOS operations will be entirely separate from that of the host system.
We know of no other supplier who has implemented this approach but no assurance can be given that competitive products do not exist or will not be developed or that the Company's products will be saleable in the marketplace.
RESEARCH AND DEVELOPMENT
The Company spent $202,000 and $270,000 during the nine months ended September 30, 1999 and the year ended December 31, 1998 respectively, on research and development activities. See: "Part I. Item 2. Management Discussion and Analysis; Plan of Operations".
INTELLECTUAL PROPERTY PROTECTION
The Company is taking the following steps to protect its intellectual property. The Company relies on trade secrets and confidentiality agreements. Trademarks are being registered in North America and in Europe to cover specific products described herein, as well as the SOCHRYS name itself. The Company claims copyright in specific software products and various elements of the core SOCHRYS(TM) Technology.
Although no assurances can be given, the Company believes that the SOCHRYS(TM) Technology and its implementation are patentable. The Company is taking steps to prepare a patent application covering its approach and preferred implementation. The initial patent applications will cover the U.S. and be expanded to other countries as and when the Company penetrates new markets. The Company is in the process of defining migration paths for the various products and developing schedules for that migration. This will define the requirement
for additional patent, trademarks and copyright protection, which will be applied for as required in order to prevent unauthorized use of the SOCHRYS(TM) Technology.
No assurances can be given that the Company will be able to obtain or maintain the foregoing intellectual property protection nor that the SOCHRYS(TM) Technology does not infringe upon the intellectual property rights of others. In the event that the Company is unable to obtain the foregoing protection or SOCHRYS(TM) Technology infringes intellectual property rights of others, the Company's business and results of operations could be materially and adversely affected. For more information see: "Risk Factors; Proprietary Rights" below.
EMPLOYEES
As of November 30 1999 the Company had thirteen full-time employees including three executive officers, six software developers and programmers, two in marketing and sales and two administrative staff. Twelve of the employees are located in the Geneva, Switzerland office and one is located in Ottawa, Canada. In addition, the Company regularly engages technical consultants and independent contractors to provide specific advice or to perform certain administrative or technical functions.
HISTORY OF THE COMPANY
The Company was incorporated in the State of Nevada on April 12, 1989 as CCC Funding Corp. to seek out one or more potential business ventures. It has changed its name on four subsequent occasions to: American Gold Group Inc. (February 3, 1992); American Group, Inc. (August 26, 1992); Global Science Corp. (December 23, 1993); and SOCHRYS.com Inc. (August 9, 1999).
The Company's Articles of Incorporation were revoked by the State of Nevada effective January 1, 1996 for failure to file a list of Officers and Directors and pay the requisite filing fees. The State of Nevada reinstated the Company's Articles of Incorporation on February 10, 1999.
On February 24, 1999, the Company acquired certain mining property located in Fresno, California (the "Jack Thorn Property") from Western Continental, Inc. for $27,500 worth of Company Common Stock (91,667 post reverse split shares).
On April 6, 1999, the Company effected a reverse split of its issued and outstanding shares of Common Stock on a one-for-300 basis. All references to shares of the Company's Common Stock herein retroactively give effect to this reverse split unless the text specifically indicates otherwise.
The Company undertook the sale of 3,000,000 shares of its Common Stock for an aggregate of $30,000 pursuant to an offer conducted under Rule 504 of Regulation D of the
Securities Act of 1933, as amended (the "Act"). The sale was completed on April 6, 1999. See "Part II. Item 4. Recent Sales of Unregistered Securities."
On June 23, 1999, the Board of Directors and Company Shareholders owning a majority of the issued and outstanding shares of the Company's Common Stock, determined not to maintain the Jack Thorn Property and to write off the costs of acquiring the property.
On August 3, 1999, the Board of Directors and Company Shareholders owning a majority of the issued and outstanding shares of the Company's Common Stock, approved the acquisition of 100% of the issued and outstanding shares of stock of Graph-O-Logic, S.A., a Swiss corporation (the "Subsidiary"), for 8,459,000 shares of the Company's Common Stock and warrants to purchase an aggregate of 2,000,000 shares over a four year period. 1,000,000 of the warrants are exercisable at $2.00 per share and the other 1,000,000 warrants are exercisable at $5.00 per share. In addition, Jean Pierre Hofman and Andre Hensler, two Executive Officers of the Subsidiary, were elected Directors of the Company.
The Company's acquisition of the Subsidiary was consummated on August 30, 1999 at which time the Company's former executive officers and directors other than Messrs. Hofman and Hensler resigned and were replaced by a slate chosen by the Subsidiary.
In August 1999 the Company incorporated SOCHRYS Technologies S.A. in Switzerland as a wholly owned subsidiary to conduct research and development and marketing in Europe. In December 1999 the Company incorporated SOCHRYS Technologies Inc. in Canada as a wholly owned subsidiary to conduct research and development and marketing in North America.
RISK FACTORS
The Company's operations and its securities are subject to a number of risks, including those described below. If any of the following risks actually occur, the business, financial condition and/or operating results of the Company and the trading price or value of its securities could be materially adversely affected.
Limited Operating History
The Company's limited operating history makes it difficult to evaluate its current business and prospects or to accurately predict its future revenue or results of operations. The Company's revenue and income potential are unproven, and its business plan is constantly evolving. Management believes that SOCHRYS(TM) Technology based products have been developed to the stage of being saleable, but the Company has yet to make a commercial sale. Because the Internet is constantly changing and software technology is constantly improving, the Company may need to modify its business plan to adapt to these changes. Companies in early stages of development, particularly companies in new and rapidly evolving computer technology and
Internet industry segments, are generally more vulnerable to risks, uncertainties, expenses and difficulties than more established companies.
History of Operating Losses and Anticipated Losses and Negative Cash Flow for the Foreseeable Future
The Company incurred operating losses and negative cash flow during the nine months ended September 30, 1999. During the year ended December 31, 1998 the Company generated operating income and positive cash flow. However, the Company expects operating losses and negative cash flow to continue for the foreseeable future and to increase significantly from current levels as the Company significantly increases its expenditures for sales and marketing, technology, infrastructure research and development and to enhance its business. With increased on-going operating expenses, the Company will need to generate significant revenue to achieve profitability. Consequently, it is possible that the Company may never achieve profitability, and even if it does achieve profitability, the Company may not sustain or increase profitability on a quarterly or annual basis in the future. If the Company does not achieve or sustain profitability in the future, the Company may be unable to continue its operations.
Immediate Need for Additional Capital
The Company has an immediate need for additional working capital in order to maintain its current operations and to proceed with its business plan. See "Part I. Item 2. Management Discussion and Analysis; Plan of Operations." The Company does not currently have any commitment from any third party to provide financing and may be unable to obtain financing on reasonable terms or at all. Furthermore, if the Company raises additional working capital through equity, its shareholders will experience dilution. If the Company is unable to raise additional financing when needed, it may be unable to grow or maintain its then current level of business operations.
Dependence On Key Personnel
The future success of the Company depends to a significant extent on the continued services of senior management, including Jean Pierre Hofman, Andre Hensler, and Paul Claverie. The loss of any of these senior managers would likely have an adverse effect on the Company's business. At present, the Company does not have any employment agreements with these personnel nor does it have key man life insurance on them. In addition, competition for personnel throughout the industry is intense and the Company may be unable to retain its current key employees or attract, integrate or retain other highly qualified employees in the future. If the Company does not succeed in attracting new personnel or retaining and motivating its current personnel, its business could be materially adversely affected.
The Market is Highly Competitive and the Company May Not Be Able to Compete Successfully Against Its Current and Future Competitors
The market for the Company's products and technology is highly competitive and subject to rapid change. The Company faces competitive pressures from numerous actual and potential competitors. Competition is likely to increase significantly as new companies enter the market and current competitors expand their services. Many of the Company's current and potential competitors have substantial competitive advantages, including:
- longer operating histories;
- significantly greater financial, technical and marketing
resources;
- greater brand name recognition; and
- larger existing customer bases.
These competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements and devote greater resources to develop, promote and sell their products or services. Services offered by existing and potential competitors may be perceived by users or advertisers as being superior to the Company's. No assurance can be given that the Company will be able to compete.
Brand Recognition
To attract customers the Company may have to develop a brand identity and increase public awareness of its technology, and products. To increase brand awareness, the Company may advertise to the extent that it has adequate financial and other resources to do so. These activities may, however, not result in significant revenue and, even if they do, any revenue may not offset the expenses incurred in building brand recognition. Moreover, despite these efforts the Company may be unable to increase public awareness of its brands, which would have an adverse effect on the results of operations of the Company.
RAPID TECHNOLOGICAL CHANGE
The market for Internet solutions and software products and services is characterized by rapid change, evolving industry standards and frequent introductions of new technological developments. These new standards and developments could make the Company's existing or future products or technology obsolete. Keeping pace with introduction of new standards and technological developments could result in significant additional costs or prove difficult or impossible. The failure to keep pace with these changes and to continue to enhance and improve the responsiveness, functionality and features of the Company's technology and products could harm the Company's ability to attract and retain customers. No assurance can be given that the Company will be able to improve and expand its technology and products to keep them state-of-the-art or that current competitors or new market entrants will not succeed in developing and
introducing new or enhanced technology and/or products superior to, or more effective than, those of the Company.
Proprietary Rights
The Company's success and ability to compete depend, to a large degree, on its current technology and, in the future, technology that the Company might develop or license from third parties. Others may develop technologies that are similar or superior to that of the Company, which could impair the Company's ability to compete. For the technology developed by the Company, the Company relies on the technological and creative skills of its employees. To establish and maintain a technology leadership position, new product developments, frequent product enhancements, name recognition, and reliable product maintenance are essential. If the Company were unable to continually update the SOCHRYS(TM) Technology, develop new technology and deliver new products and enhancements, its financial condition and business prospects would be impaired. In the future, the Company may also rely on technology licensed from third parties, including software integrated with internally developed software and used in its products to perform key functions. If implemented as a component of the Company's business, these third-party technology licenses may not continue to be available to the Company on commercially reasonable terms. The loss of any technology licenses could delay, impede or prevent the Company from selling and delivering products unless and until equivalent technology could be identified, licensed, and integrated. Any such delays or halt could have a materially adverse effect on the Company's finances and business.
To protect its technology, the Company plans to rely on patent, trademark, trade secret, and copyright law and generally enters into confidentiality and/or license agreements with its employees, consultants, and suppliers. Despite these precautions, it may be possible for unauthorized third parties to copy or otherwise obtain and use the Company's products, technology or proprietary information. In addition, effective patent, trademark, trade secret, and copyright protection may be unavailable or limited in certain foreign countries. The Company is in the process of registering trademarks and preparing patent applications. Litigation may be necessary in the future to enforce the Company's intellectual property rights, to defend the validity of its patents, to protect its trade secrets, or to determine the validity and scope of the proprietary rights of others. Such misappropriation or litigation could result in substantial costs and diversion of resources and the potential loss of intellectual property rights, which could impair the Company's financial and business condition. Although not currently engaged in any form of litigation proceedings, in the future, the Company may receive notice of claims of infringement of other parties' proprietary rights. Such claims may involve internally developed technology or technology and enhancements that the Company may license from third parties. Moreover, although the Company sometimes may be indemnified by third parties against claims that licensed third-party technology infringes the proprietary rights of others, indemnity may be limited, unavailable, or, where the third party lacks sufficient assets or insurance, ineffectual. Any such claims could require the Company to spend time and money defending against them, and, if they were decided adversely to the Company, could cause the Company to pay damages,
to be subject to injunctions, or to halt distribution of its products while the Company re-engineers them or seeks licenses to necessary technology (which might not be available on reasonable terms). Moreover, the Company could also be subject to claims for indemnification resulting from infringement claims made against Company customers, which could increase defense costs and potential damages. The Company does not currently have liability insurance to protect against the risk that its technology or licensed third-party technology infringes the proprietary rights of others. Any of these factors could have a materially adverse effect on the Company's financial condition and business.
Year 2000 Risks
The "Year 2000 Issue" refers generally to the problems that some software may have in determining the correct century for the year 2000. For example, software with date-sensitive functions that are not Year 2000 compliant may not be able to distinguish whether "00" means 1900 or 2000, which may result in failures or the creation of erroneous results. The Company has defined "Year 2000 Compliant" to mean that the product will accurately receive, process, and provide date data from, into, and between the twentieth and twenty-first centuries, including the years 1999 and 2000, and make leap year calculations, provided that all other products (whether hardware, software, or firmware) used in or in combination with the product properly exchange data with it. The Company has developed a Year 2000 readiness plan. The plan includes assessment, implementation, validation testing, and contingency planning. The Company has largely completed all phases of its plan, except for contingency planning, with respect to the SOCHRYS(TM) Technology and current versions of its products. Management believes that its products are Year 2000 Compliant, provided that the underlying operating system of the host machines and any other software used with or in the host machines are also Year 2000 Compliant. The Company has not tested its products on all platforms or all versions of operating systems that the Company currently supports and will advise its future customers to verify that their platforms and operating systems support the transition to the year 2000. The Company continues to test its software for compliance and may yet find errors or defects associated with Year 2000 date functions. The Company has not specifically tested software obtained from third parties (licensed software, shareware, and freeware) that may be incorporated into its products but the Company is seeking assurances from its vendors that licensed software is Year 2000 Compliant. Despite the Company's testing, future testing by the Company's potential customers, and whatever assurances the Company may receive from developers of products incorporated into or used with its products, the Company's products may contain undetected errors or defects associated with Year 2000 date functions. Known or unknown errors or defects in the Company's products could result in delay or loss of revenue, diversion of development resources, damage to the Company's reputation, or increased service and warranty costs, any of which could impair the Company's finances or business prospects.
Some commentators have predicted significant litigation regarding Year 2000 compliance issues. Because of the unprecedented nature of such litigation, it is uncertain whether or to what extent the Company may be affected by it.
The Company does not currently have any information concerning the Year 2000 compliance status of its potential customers. As is the case with other similarly situated companies, if the Company's potential customers fail to achieve Year 2000 compliance or if they divert technology expenditures to address Year 2000 compliance problems, the Company's own finances or business prospects could be impaired. The Company may experience material problems and costs with Year 2000 compliance that could impair the Company's finances and business prospects. The Company has not yet fully developed a comprehensive contingency plan to address situations that may result if it will not be able to achieve Year 2000 readiness of its critical operations. The cost of developing and implementing such a plan may itself be material.
Failure of Online Security Measures
A key element of the SOCHRYS(TM) Technology and the Company's products is its state-of-the-art Internet security feature. If anyone is able to circumvent the Company's security measures, they could misappropriate proprietary information or cause interruptions or problems with hardware and software of customers using the Company's products. Any such security breaches could damage the reputation of the Company. In addition, the Company could be liable to its customers for the damages caused by such breaches or it could incur substantial costs as a result of defending claims for those damages. The Company may need to expend significant capital and other resources to protect against such security breaches or to address problems caused by such breaches. Security measures taken by the Company may not prevent disruptions or security breaches. Management believes that the three-level architecture of the Company's security system totally prevents security breaches. In the event that management is incorrect or future events or developments result in a compromise or breach of the technology the Company uses to protect a customer's personal information, the Company's financial condition and business could be materially adversely affected.
The Company May Need to Change the Manner in Which it Conducts its Business if Government Regulation Increases or Changes
There are currently few laws or regulations that specifically regulate communications or commerce on the Internet. Laws and regulations may be adopted in the future, however, that address issues such as user privacy, pricing, taxation, content, copyrights, distribution, security, and the quality of products and services. For example, the Telecommunications Act of 1996 sought to prohibit transmitting certain types of information and content over the Web. Several telecommunications companies have petitioned the Federal Communications Commission to regulate Internet service providers and online services providers in a manner similar to long distance telephone carriers and to impose access fees on these companies. Any imposition of access fees could increase the cost of transmitting data over the Internet. In addition, the growth and development of the market for online commerce may lead to more stringent consumer protection laws, both in the United States and abroad, that may impose additional burdens on the
Company. The United States Congress recently enacted Internet laws regarding children's privacy, copyrights, taxation and the transmission of sexually explicit material. The law of the Internet, however, remains largely unsettled, even in areas where there has been some legislative action. Moreover, it may take years to determine the extent to which existing laws relating to issues such as property ownership, libel and personal privacy are applicable to the Web. Any new, or modifications to, existing laws or regulations relating to the Web could adversely affect the Company's business. If one or more states or any foreign country successfully asserts that the Company should collect sales or other taxes on the provision of its technology or products, the Company's net sales and results of operations could be harmed. One or more states may seek to impose sales tax collection obligations on companies which engage in or facilitate the provision of services on the Internet. A number of proposals have been made at the state and local level that would impose additional taxes on the sale of products and services through the Internet. Such proposals, if adopted, could substantially impair the growth of electronic commerce and could adversely affect the Company's opportunity to derive financial benefit from the provision of its products and technology. Legislation limiting the ability of the states to impose taxes on Internet-based transactions has been enacted by Congress. However, this legislation, known as the Internet Tax Freedom Act of 1998, imposes only a three-year moratorium ending on October 21, 2001 on state and local taxes on electronic commerce where such taxes are discriminatory and on Internet access unless such taxes were generally imposed and actually enforced before October 1, 1998. Failure to renew this legislation would allow various states to impose taxes on Internet-based commerce.
Operating Results May Prove Unpredictable, and May Fluctuate Significantly
The Company's operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which are outside of the Company's control. Because the Company's operating results may be volatile and difficult to predict, future operating results may fall below the expectations of securities analysts and investors. In this event, the trading price of the Common Stock may fall significantly. Factors that may cause operating results to fluctuate significantly include the following:
- new technology or products introduced by the Company or by its competitors;
- the timing and uncertainty of advertising sales cycles and seasonal declines in advertising sales; and
- general economic conditions, as well as economic conditions specific to users of the Company's products and technology.
Common Stock Price May Be Volatile
The market prices of securities of Internet and technology companies are extremely volatile and sometimes reach unsustainable levels that bear no relationship to the past or present operating performance of such companies. Factors that may contribute to the volatility of the trading price of the Common Stock include, among others:
- the Company's quarterly results of operations;
- the variance between the Company's actual quarterly results of operations and predictions by stock analysts;
- financial predictions and recommendations by stock analysts concerning Internet companies and companies competing in the Company's market in general, and concerning the Company in particular;
- public announcements of technical innovations relating to the Company's business, new products or technology by the Company or its competitors, or acquisitions or strategic alliances by the Company or its competitors;
- public reports concerning the Company's products or technology or those of its competitors; and
- the operating and stock price performance of other companies that investors or stock analysts may deem comparable to the Company.
In addition to the foregoing factors, the trading prices for equity securities in the stock market in general, and of Internet-related companies in particular, have been subject to wide fluctuations that may be unrelated to the operating performance of the particular company affected by such fluctuations. Consequently, broad market fluctuations may have an adverse effect on the trading price of the Common Stock, regardless of the Company's results of operations.
Limited Market for the Common Stock
The Common Stock is tradeable in the over-the-counter market and is quoted on the "Pink Sheets". The Common Stock was quoted on the OTC Electronic Bulletin Board until December 1, 1999. There is only a limited market for the Common Stock and there can be no assurance that this market will be maintained or broadened. The market price for shares of Common Stock is likely to be very volatile, and numerous factors beyond the Company's control may have a significant effect. On January 4, 1999, the Securities and Exchange Commission approved NASD rule amendments requiring companies to report their current financial information to the Securities and Exchange Commission as a condition to continuing to have their securities quoted on the OTC Electronic Bulletin Board. To do this, a company quoted on the OTC Electronic Bulletin Board needs to register its securities under the Securities Exchange Act of 1934 (the "Exchange Act") within the NASD's phase-in schedule. Pursuant to the NASD's phase-in schedule, the Company needed to be a reporting company by no later than December 1999. The Company has filed this Registration Statement to register its Common Stock under the Exchange Act. Management anticipates that once the Company is a "Reporting Company" under the Exchange Act and provided a broker-dealer is willing to list the Company's Common Stock on the OTC Electronic Bulletin Board (as to which there can be no assurance), the Company's Common Stock will be quoted on the OTC Electronic Bulletin Board again.
Substantial Sales of Common Stock Could Cause Stock Price to Fall
As of November 19, 1999, the Company had outstanding 11,612,924 shares of Common Stock of which approximately 8,564,001 shares were "restricted securities" (as that term is defined under Rule 144 promulgated under the Act). These restricted shares are eligible for sale under Rule 144 at various times. No prediction can be made as to the effect, if any, that sales of shares of Common Stock or the availability of such shares for sale will have on the market prices prevailing from time to time. Nevertheless, the possibility that substantial amounts of Common Stock may be sold in the public market may adversely affect prevailing market prices for the Common Stock and could impair the Company's ability to raise capital through the sale of its equity securities.
No Dividends
The payment of dividends on the shares of the Company is within the discretion of the Board of Directors and will depend upon the Company's future earnings, its capital requirements, its financial condition, and other relevant factors. The Company does not currently intend to declare any dividends on its Shares for the foreseeable future.
The Common Stock May Be Deemed "Penny Stock" and Therefore Subject to Special Requirements
As of November 30, 1999, the Company's Common Stock is not a "penny
stock" as that term is defined in Rule 3a51-1 of the Securities and Exchange
Commission because it is selling at a price above five dollars per share. In
the future, the Company's Common Stock may be deemed to be a "penny stock" if
the per share sale price drops below five dollars. Penny stocks are stocks (i)
with a price of less than five dollars per share; (ii) that are not traded on a
"recognized" national exchange; (iii) whose prices are not quoted on the NASDAQ
automated quotation system (NASDAQ-listed stocks must still meet requirement
(i) above); or (iv) in issuers with net tangible assets less than $2,000,000
(if the issuer has been in continuous operation for at least three years) or
$5,000,000 (if in continuous operation for less than three years), or with
average revenues of less than $6,000,000 for the last three years. Section
15(g) of the Exchange Act, and Rule 15g-2 of the Securities and Exchange
Commission, require broker-dealers dealing in penny stocks to provide potential
investors with a document disclosing the risks of penny stocks and to obtain a
manually signed and dated written receipt of the document before effecting any
transaction in a penny stock for the investor's account. Moreover, Rule 15g-9
of the Securities and Exchange Commission requires broker-dealers in penny
stocks to approve the account of any investor for transactions in such stocks
before selling any penny stock to that investor. This procedure requires the
broker-dealer (i) to obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
to determine reasonably, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably
capable of evaluating the risks of penny stock transactions; (iii) to provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) to receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for investors in the Common Stock to resell their shares to third parties or to otherwise dispose of them.
Executive Officers, Directors and Major Stockholders Exercise Significant Control
As of November 30, 1999, the executive officers, Directors and holders of 5% or more of the outstanding Common Stock together beneficially owned approximately 49.9% (a majority of the outstanding Common Stock assuming exercise of all warrants held by them). These stockholders are able to significantly influence all matters requiring approval by stockholders, including the election of Directors and the approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying, deterring or preventing a change in control and may make some transactions more difficult or impossible to complete without the support of these stockholders.
Exchange Rate Risk
The Company expects some portion of its revenues to be based on sales provided outside of the United States. In addition, the Company expects that a significant portion of its operating expenses will be incurred outside of the United States. As a result, the financial performance of the Company will be affected by fluctuations in the value of the U.S. dollar to foreign currency. At the present time, the Company has no plan or policy to utilize forward contracts or currency options to minimize this exposure, and even if these measures are implemented there can be no assurance that such arrangements will be available, be cost effective or be able to fully offset such future currency risks.
Other Risks Associated With International Operations
There are certain risks inherent in doing business on an international level, such as unexpected changes in regulatory requirements, export and import restrictions, export and import controls relating to encryption technology that may limit sales sometime in the future. Tariffs and other trade barriers, difficulties in staffing and managing foreign operations, longer payment cycles, problems in collecting accounts receivable, political instability, fluctuations in currency exchange rates, software piracy, seasonal reductions in business activity during the summer months in Europe and elsewhere, and potentially adverse tax consequences could adversely impact the success of the Company's international operations. One or more of such factors may impair the Company's future international operations and its overall financial condition and business prospects.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Until the Company's acquisition of the Subsidiary, it had no Material or substantive business operations. Since the acquisition of the Subsidiary, the Company's business has been the business of the Subsidiary. Accordingly, the discussion in this section focuses solely on the historical business operations of the Subsidiary and the Company's current business plan and operations.
PLAN OF OPERATIONS
The Company is still in its start up phase. As such, the historic results of operations are unlikely to provide a meaningful understanding of the activities expected to take place during the year ended December 31, 2000. The Company believes that SOCHRYS(TM) Technology based products have been developed to the stage of being saleable, but the Company has yet to make a commercial sale. The major initiatives of the Company are now marketing the product and developing and improving product agents to perform specialized functions common to many e-commerce sites. See: "Part 1. Item 1: Description of Business; Technology".
Marketing Plans: The Company has started the marketing process, with its primary focus being potential customers located in the northeast and southeast sectors of the United States. The potential customers are more fully described in "Part 1. Item 1: Description of Business; The Target Market". Marketing activities will be multi-faceted.
Marketing leads will be developed by direct identification of potential customers, through trade shows and through personal contacts of the marketing representatives. The Company expects to spend $100,000 in attending and exhibiting at trade shows during 2000. Promotional literature, including technical evaluations of the product and testimonials from users of the product, expected to cost a further $50,000, will be distributed at the trade shows and by direct mailings to the individuals identified as the decision makers and decision influencers.
Marketing representatives, who will be compensated on a salary and commission basis, will then follow up these leads, with the objective of more fully explaining the product and its benefits to the potential customer. The Company estimates the cost of this initiative, including travel and sales support, to be $750,000 during 2000.
Pilot projects to demonstrate the utility and benefits of the product to the customer are expected to be funded at a break even level by the customer.
In summary, the marketing program is expected to cost between $900,000 and $1,000,000 during 2000.
Developing and Improving Product Agents: While the Company directs a
considerable portion of its activities and budget to the marketing of the
product, work will continue in developing the core functions of the products
and additional product agents and improving existing ones. See "Part I. Item
1. Description of Business; SOCHRYS(TM) Technology".
Product improvements and developments will be in reaction to the responses we get from potential customers. The cost of developing these is primarily a function of the activity currently planned and thus will be subject to a high degree of control. Initial estimates of the cost of this continued research and development effort are $1,000,000 during 2000. The Company plans to raise funds through the private placement of debt and/or equity. In the event that the Company is not able to raise sufficient funds to fund the proposed research and development activities it will scale back the level of activities it does undertake to match the funds available. See "Risk Factors; Immediate need for Additional Capital".
SELECTED FINANCIAL DATA
The following table sets forth selected pro forma financial data for the Company. The financial data was derived from the consolidated financial statements of the Company and should be read in conjunction with the Consolidated Financial Statements and related Notes thereto included herein. The consolidated financial statements for the nine month periods ended September 30, 1999 and 1998 reflect all adjustments which, in the opinion of the Company, are necessary for a fair presentation of the results of operations and the financial position of the Company. The results of operations for the nine months ended September 30, 1999 will not necessarily be indicative of the operating results for the full fiscal year ending December 31, 1999.
Nine Months Nine Months
----------- -----------
Ended Ended Year Ended Year Ended
----- ----- ---------- ----------
September 30, September 30, December 31, December 31,
------------- ------------- ------------ -----------
1999 1998 1998 1997
---- ---- ---- ----
OPERATIONS DATA
Revenues $170,000 $269,000 $311,000 $207,000
Salaries 130,000 83,000 115,000 --
Research and development 72,000 150,000 155,000 182,000
General and administrative 9,000 1,000 1,000 9,000
Depreciation and amortization 17,000 4,000 5,000 12,000
------ ----- ----- ------
Operating income (loss) (58,000) 31,000 35,000 4,000
CASH FLOWS DATA
Net cash from (used in)
operations $(2,000) $56,000 $56,000 $(75,000)
Net cash used in investing
Activities (71,000) (71,000) --
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Net cash from financing
Activities 30,000 -- -- 97,000
Net increase (decrease) in
cash $(28,000) $(15,000) $(15,000) $22,000
BALANCE SHEET DATA
Cash $35,000 $3,000 $7,000 $22,000
Total current assets 35,000 37,000 47,000 76,000
Equipment (net) 55,000 71,000 71,000 4,000
Total assets 90,000 112,000 119,000 83,000
Total current liabilities 19,000 13,000 14,000 5,000
Stockholders' equity 72,000 99,000 105,000 78,000
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THE NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
The Company operates in Switzerland. Its revenues are earned in Swiss francs ("CH") and its expenses are incurred in CH. The financial statements have been conformed to US GAAP and presented in US dollars for purposes of this registration statement on Form 10-SB. The average rate of exchange between the Swiss franc and the US dollar for the nine months ended September 30, 1999 approximated CH1.49:$1. The rate of exchange between the Swiss franc and the US dollar on September 30, 1999 approximated CH1.50:$1. The average rate of exchange between the Swiss franc and the US dollar for the nine months ended September 30, 1998 approximated CH1.39:$1. The rate of exchange between the Swiss franc and the US dollar on September 30, 1998 approximated CH1.48:$1. The rates of exchange between the Swiss franc and US dollar set out above were used to convert the various financial statement balances from Swiss francs to US dollars.
RESULTS OF OPERATIONS
Revenues: Revenues for the nine months ended September 30, 1999 were $170,000 (CH253,000), down 37% from the $269,000(CH400,000) generated during the nine months ended September 30, 1998. The Company had only one contract from which it derived revenues in each of those periods. Pursuant to this contract the Company provided various software solutions to its customer. This contract was not related to the development of the Sochrys products. The decrease in revenues is a result of reduced funds being available from the contractor to fund the research and development activities under the contract.
Salaries and Research and Development Costs: During the nine months ended September 30, 1999 the Company spent $130,000 (CH193,000) on salaries to employees working on research and development projects. A further $72,000 (CH107,000) was paid to a related company for research and development activities. During the nine months ended September 30, 1998 the Company spent $83,000 on salaries to employees working on research and development projects. In addition, the Company paid a related company $150,000 (CH223,000) for research and development activities. The 8% decrease in total research and
development spending is a result of the 37% decrease in revenues. The Company limited the amount spent on salaries and research and development activities to the funds available.
General and Administrative Expenses: General and administrative expenses consist of such items as salaries that have not been allocated to research and development activities and office related expenses. During the nine months ended September 30, 1999 the Company incurred $9,000 (CH13,000), compared to $300 (CH500) for the nine months ended September 30, 1998. The Company's general and administrative costs were low because it shared its facilities with related companies until the September 1999. Management anticipates that general and administrative expenses will increase significantly commencing in the fourth quarter of 1999 because the Company will be paying rent on its Geneva facility. See: "Part I. Item 2. Management Discussion and Analysis; Description of Properties".
Depreciation and Amortization Depreciation and amortization expense of $17,000 (CH22,000) during the nine months ended September 30, 1999 was higher than during the nine months ended September 30, 1998, when the Company recorded depreciation and amortization expense of $12,000 (CH16,000). This was due to the acquisition of computer equipment during 1998 that was subject to depreciation for only a portion of the period.
Gains and Losses from Changes in Foreign Exchange Rates: During the nine months ended September 30, 1999 the Company recorded unrealized losses of $6,300 related to changes in the rates of exchange between the Swiss franc and the US dollar. This is compared to an unrealized gain of $1,300 for the nine months ended September 30, 1998. These gains and losses are the result of translating the operating results and balance sheet accounts from Swiss francs to US dollars. Since the Company has earned its revenues and paid its expenses in Swiss francs, there have not been any realized gains or losses arising from changes in the rates of exchange between the Swiss franc and the US dollar.
Income Taxes: The Company is taxable on income earned in Switzerland at a rate of approximately 40%.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999 the Company had working capital of $16,000, compared to a deficit of $10,000 at September 30, 1998. In addition, accounts receivable are down $40,000 from December 31, 1998 as a result of the collection of an outstanding invoice during January 1999.
Net Cash Flow from Operations: During the nine months ended September 30, 1999 the Company used $2,000 in operations, compared to generating $56,000 during the nine months ended September 30, 1998. This decrease in funds from operations during the nine months
ended September 30, 1999 is a result of the availability of surplus funds accumulated from prior periods and the investment of additional capital during the period.
Net Cash Used in Investing Activities: During the nine months ended September 30, 1999 the Company had no investing activities.
Net Cash From Financing Activities: During the nine months ended September 30, 1999 the Company issued 3,000,000 shares of its common stock for $30,000.
For information concerning the Company's capital requirements see "Plan of Operations" above.
THE YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1997
As noted above, the Company operates in Switzerland during fiscal 1998 and 1997. Its revenues are earned in Swiss francs ("CH") and its expenses are incurred in CH. The financial statements have been conformed to US GAAP and presented in US dollars for purposes of this registration statement on Form 10-SB. The average rate of exchange between the Swiss franc and the US dollar for 1998 approximated CH1.45:$1. The rate of exchange between the Swiss franc and the US dollar on December 31, 1998 approximated CH1.37:$1. The average rate of exchange between the Swiss franc and the US dollar for 1997 approximated CH1.45:$1. The rate of exchange between the Swiss franc and the US dollar on December 31, 1997 approximated CH1.45:$1. The rates of exchange between the Swiss franc and US dollar set out above were used to convert the various financial statement balances from Swiss francs to US dollars.
RESULTS OF OPERATIONS
Revenues: Revenues for the year ended December 31, 1998 were $311,000 (CH450,000), up 50% from the $207,000(CH300,000) generated during the year ended December 31, 1997. The Company had only one contract from which it derived revenues in each of those years. The contract amount was increased during 1998 over the 1997 amount as a result of additional funds being available to the contractor to fund the research and development activities under the contract. This contract was not related to the development of the Sochrys products.
Salaries and Research and Development Costs: During the year ended December 31, 1998 the Company spent $115,000 (CH167,000) on salaries to employees working on research and development projects. A further $155,000 (CH225,000) was paid to unrelated companies for research and development activities. During the year ended December 31, 1997 the Company
paid unrelated companies $182,000 (CH277,000) for research and development activities. The 50% increase in total research and development spending is a result of the increased available funds resulting from the 50% increase in revenues in the period.
General and Administrative Expenses: General and administrative expenses consist of such items as salaries that have not been allocated to research and development activities and office related expenses. During the year ended December 31, 1998 the Company incurred $500 (CH700), compared to $8,500 (CH12,400) for the year ended December 31, 1997. The Company's general and administrative costs were low because it shared its facilities with related companies until the September 1999.
Depreciation and Amortization: During 1998 the Company purchased $71,000 (CH107,000) of computer equipment to support its research and development activities. As such, depreciation and amortization expense during 1998 was significantly higher than during the year ended December 31, 1997, when the Company recorded depreciation and amortization expense of $12,000 (CH16,000).
Gains and Losses from Changes in Foreign Exchange Rates: During the year ended December 31, 1998 the Company recorded unrealized gains of $6,300 related to changes in the rates of exchange between the Swiss franc and the US dollar. This is compared to an unrealized loss of $4,500 for the year ended December 31, 1997. These gains and losses are the result of translating the operating results and balance sheet accounts from Swiss francs to US dollars. Since the Company earned its revenues and paid its expenses in Swiss francs, there have not been any realized gains or losses arising from changes in the rates of exchange between the Swiss franc and the US dollar.
Income Taxes: The Company is taxable on income earned in Switzerland at a rate of approximately 40%.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1998 the Company had working capital of $33,000, compared to $71,000 at December 31, 1997. This decrease in working capital is primarily the result of the acquisition of $71,000 of computer equipment during 1998 that was funded from working capital. In addition, accounts receivable were $40,000 at December 31, 1998, down $14,000 from the $54,000 outstanding at December 31, 1997.
Net Cash Flow from Operations: During the year ended December 31, 1998 the Company generated $52,000 from operations, compared to utilizing $75,000 during the year ended December 31, 1997. This increase of $127,000 is primarily the result of increased net income plus depreciation and amortization and gains and losses on changes in foreign exchange rates, $26,000 in 1998 compared to $13,000 in 1997, and a $102,000 reduction in accounts payable that took place during 1997 as compared to 1996. This reduction in accounts payable
was the result of significant expenditures that were incurred during the last few months of 1996 that were paid in 1997.
Net Cash Used in Investing Activities: During the year ended December 31, 1998 the Company acquired $71,000 of computer equipment. There were no computer equipment purchases during 1997.
Net Cash From Financing Activities: During the year ended December 31, 1998 the Company had no financing activities. During the year ended December 31, 1997 the Company liquidated $98,000 of marketable securities.
For information concerning the Company's capital requirements see "Plan of Operations" above.
ITEM 3. DESCRIPTION OF PROPERTIES
The Company maintains two offices. Its principal executive office is
located at Route de Jussy 29, CH 1226 Thonex-Geneva, Switzerland and its
telephone number is 41-22-869-2070. Its United States office is located at 4651
Roswell Road, Suite B-106, Atlanta, Georgia 30342 and its telephone number is
(404) 256-1963.
The Company's Geneva offices are leased from a non-affiliated party for a period of three years beginning November 1, 1999 through October 31, 2002. The lease covers two separate floors and 10 spaces in the parking garage. The applicable annual charges are provided separately for each space rented:
ANNUAL APPROX. APPROX.
RENTAL US DOLLAR LEASE US DOLLAR
SPACE SPACE RENT UTILITIES COST EQUIVALENT DEPOSIT EQUIVALENT
(Square (Square (Swiss (Swiss (Swiss (Swiss
Meters) Footage) Francs) Francs) Francs) (USD) Francs)
-----------------------------------------------------------------------------------------------------------
2nd Floor 230 2,476 88,008 7,200 95,208 63,472 14,380 9,587
4th Floor 352 3,789 57,504 5,160 62,664 41,776 22 000 14,667
Garage 10 Not 21,000 Not 21,000 14,000
spaces applicable applicable
------------- -------------
119,248 24,253
============= =============
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Providing the terms and conditions of the lease have been met, the lease may be renewed yearly by written request six months prior to expiration. The termination of the lease may be considered with six-months' notice but subject to the regular fulfillment of the terms of the lease.
The Company's Atlanta office is leased from a non-affiliated party per oral arrangement on a month by month basis. The lease provides shared access to and usage of 1,000 square feet.
ITEM 4. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth information as of November 30, 1999, with respect to (1) any person known by the Company to own beneficially more than 5% of the Company's Common Stock; (2) the Company's Common Stock beneficially owned by each officer and director of the Company, and; (3) the total of the Company's Common Stock beneficially owned by the Company's officers, directors and owners of 5% or more of the Company common stock as a group.
Name & Address of Number of Shares Approximate Percent
Beneficial Owner Beneficially Owned of Common Stock
---------------- ------------------ Outstanding (1)
------------------
---------------------------------------------------------------------------------------------------
OFFICERS, DIRECTORS AND EMPLOYEES
Jean Pierre Hofman (4)(6) 3,400,000 29%
Andre Hensler (4)(6) 3,500,000 (2) 30%
Paul Claverie (4)(6) 3,500,000 (2) 30%
Suzette Cousineau (5)(6) 3,420,000 (3) 29%
Antoine Veit (5)(6) 3,500,000 (2) 30%
Waycross Corp. (6) 3,400,000 (2)(3) 29%
29 Rue des Deux Communes
1226 Thonex-Geneva
Switzerland
All Officers, Directors and Employees
As a Group (five Persons) 3,720,000 (2)(3) 31%
FIVE PERCENT STOCKHOLDERS
Valdosta Corp. (7) 2,400,000 21%
P.O. Box 30592
Cayside, 2nd Floor, Harbour Drive
Georgetown, Grand Cayman
Cayman Islands, BWI
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(1) Based upon 11,612,924 shares of Common Stock issued and outstanding as of November 30, 1999 and includes for each person the shares of Common Stock issuable upon exercise of the warrants owned by them.
(2) Includes 100,000 shares of Common Stock issuable to each of Messrs. Hensler, Claverie and Veit upon exercise of the warrants owned by them.
(3) Includes 20,000 shares of Common Stock issuable upon exercise of the warrants owned by Ms. Cousineau.
(4) Executive Officer and/or Director of the Company with an address at the Company's Geneva, Switzerland office.
(5) An employee of the Company with an address at the Company's Geneva, Switzerland office.
(6) Waycross Corporation is a corporation incorporated under the laws of the Cayman Islands. Jean Pierre Hofman, Andre Hensler, Paul Claverie, Suzette Cousineau and Antoine Veit have beneficial interests in Waycross Corporation. Accordingly, the 3,400,000 Shares owned of record by Waycross Corporation have been included as beneficially owned by each of the foregoing individuals, and by all Officers, Directors and employees as a group.
(7) A portfolio management corporation incorporated under the laws of the Cayman Islands.
ITEM 5. Directors and Executive Officers, Promoters and Control Persons
Name Age Position ---- --- -------- Jean Pierre Hofman 53 Chairman, President, Chief Executive Officer and Director Andre Hensler 56 Chief Financial Officer and Director Paul Claverie 59 Secretary/Treasuer and Director |
JEAN PIERRE HOFMAN has been a Director of the Company since August 3, 1999 and the Chairman, President and Chief Executive Officer of the Company since October 12, 1999 and of the Subsidiary (and its predecessors) since 1984. He overseas key management and strategic decisions at the Company and plays an important role in new product development strategy. Since 1996, he focused the research and development on creating the SOCHRYS Universal Computer(TM). Previously, he managed the development and marketing of software, which used multi-thread, interoperable objects interfaced in a multi-windows environment. From 1970 to 1984, Mr. Hofman developed software as a consultant for such companies as L'Oreal, Volkswagen and the Diamond Stock Exchange of Antwerp. Mr. Hofman is a professional engineer from the INSEE Institute in Belgium.
ANDRE HENSLER has been a Director of the Company since August 3, 1999 and the Chief Financial Officer of the Company since October 12, 1999 and of the Subsidiary since April 1995. He has experience in finance and strategic planning, developing and implementing financial and management control systems, and enhancing the reliability and timing of information for decision making. He also has had direct responsibility for mergers and
acquisitions, cash management and foreign exchange operations, handling of commercial credits, capital markets and trade finance business. Since 1991, he has also been the managing director of a Swiss finance company. Earlier, he was First Vice-president of SBP Finance S.A., Vice President of Banque Paribas (Suisse) S.A. and held various positions of increasing responsibility with the Union Bank of Switzerland. He holds a bachelor's degree of commercial and business administration from Ecole Superieure de Commerce, Switzerland and a language degree from Cambridge University.
PAUL CLAVERIE has been the Secretary/Treasurer and a Director of the Company since October 12, 1999 and Secretary/Treasurer of the Subsidiary since 1996. He has experience in corporate administration and finance. He is responsible for administrative management, human resources, planning, information systems and accounting operations. From 1995 to 1996 he was President of Minicom France S.A., a French software company. Previously, he held financial management positions of increasing responsibility at Tissus Lauer - Manufacture des Tapis de Cogolin S.A., where he was elected to the Board and was named manager of its holding company, SEDI. Earlier, he was the chief financial officer at Cooperative Vinicole de Grimaud. Mr. Claverie holds a bachelors degree in commerce from the Ecole Superieure de Commerce et d'Administration in Marseille.
ITEM 6. Executive Compensation
The following table shows all the cash compensation paid or to be paid by the Company or its Subsidiary, as well as certain other compensation paid or accrued, during the fiscal years indicated, to the Chief Executive Officer for such period in all capacities in which he served. No other Executive Officer received total annual salary and bonus in excess of $100,000.
SUMMARY COMPENSATION TABLE
----------- --------- ------------ ------------ ------------ ---------------------------------------------------
Long Term Compensation
----------- --------- ------------ ------------ ------------ ---------------------------------------------------
Annual Compensation
----------- --------- -------------------------------------- ------------ ------------ ------------ ------------
(a) (b) ( c) (d) (e) (f) (g) (h) (i)
----------- --------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
Other Securities All
Name and Annual Restricted Underlying LTIP Other
Principal Compensa- Stock Options/ Payouts Compensa-
Position Year Salary($) Bonus($) tion ($) Award ($) SARs ($) Tion
----------- --------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
----------- --------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
Hofman, Jean 1999 $69,000* 0 0 0 0 0 0
Pierre 1998 $51,000 0 0 0 0 0 0
Chairman, 1997 $51,000 0 0 0 0 0 0
CEO & Pres.
----------- --------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
|
*for the period January 1 to November 30, 1999.
Directors are not compensated for acting in their capacity as Directors. Directors are reimbursed for their accountable expenses incurred in attending meetings and conducting their duties.
There are no employment agreements between the Company and any of its
Executive Officers (see "Part I. Item 1. Description of Business; Risk Factors
- Dependence On Key Personnel").
For further information concerning warrants owned by executive officers, directors and employees See: "Part II. Item 4. Recent Sales of Unregistered Securities".
ITEM 7. Certain Relationships and Related Transactions
During the year ended December 31, 1998 the Company incurred $148,000 of research and development costs under a contract with Sochrys B.V., a company controlled by Jean Pierre Hofman, an Executive officer, director and a prncipal shareholder of the Company.
ITEM 8. Description of Securities
Common Stock
The Company is authorized to issue fifty million (50,000,000) Shares of Common Stock, $.001 par value per Share. Each outstanding Share of Common Stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by the owners thereof at meetings of the stockholders.
At present, the holders of Common Stock (i) have equal ratable rights to dividends from funds legally available therefor, when, and if declared by the Board of Directors of the Company; (ii) are entitled to Share ratably in all of the assets of the Company available for distribution to holders of Common Stock upon liquidation, dissolution or winding up of the affairs of the Company; (iii) do not have preemptive, subscription or conversion rights, or redemption or sinking fund provisions applicable thereto; and (iv) are entitled to one non-cumulative vote per Share on all matters on which stockholders may vote at all meetings of stockholders.
Preferred Stock
The Company is authorized to issue five million (5,000,000) Shares of Preferred Stock, none of which have been issued as of the date of this Registration Statement. The relative rights, privileges and obligations (e.g., voting rights, dividend rights, conversion features, liquidation
preferences) of holders of the Preferred Stock may be determined by the Company's Board of Directors without Shareholder approval.
PART II
ITEM 1. Market Price of and Dividends on the Registrant's Common Equity and Related Shareholder Matters
(a) Marketing Information -- The principal U.S. market in which the Company's Common Stock (all of which are of one class) are traded or will trade is in the over-the-counter market. The stock was quoted on the OTC Bulletin Board (Symbol: "SOCH") until December 1, 1999, after which it became quotable on the Pink Sheets. The Company's stock is not traded or quoted on any Automated Quotation System.
The following table sets forth the range of high and low bid quotes of the Company's Common Stock per quarter during the fiscal years ended December 31, 1997 and 1998 and the first three quarters of fiscal 1999 as reported by the OTC Bulletin Board (which reflect inter-dealer prices without retail mark-up, mark-down or commission and may not necessary represent actual transactions).
MARKET PRICE OF COMMON STOCK
BID ASK
QUARTER ENDING High Low High Low
1997
January 1 to March 31* n/b n/b 0.625 0.625
April 1 to June 30* n/b n/b 0.625 0.625
July 1 to September 30* n/b n/b 0.625 0.625
October 1 to December 31* n/b n/b 0.625 0.625
1998
January 1 to March 31* n/b n/b 0.625 0.625
April 1 to June 30* n/b n/b 0.625 0.625
July 1 to September 30* n/b n/b 0.625 0.625
October 1 to December 31* n/b n/b 0.625 0.625
1999
January 1 to March 31* 0.01 0.001 1.00 0.25
April 1 to April 6* 0.01 0.01 1.00 1.00
April 7 to June 30 0.125 0.125 10.125 10.125
|
July 1 to September 30 5.625 0.125 10.125 3.375 |
* Prior to the one-for-300 reverse split of the issued and outstanding shares of Common Stock effected on April 6, 1999.
(b) Holders -- There were approximately 96 holders of record of the Company's Common Stock as of November 19, 1999 inclusive of those brokerage firms and/or clearing houses holding the Company's securities for their clientele (with each such brokerage house and/or clearing house being considered as one holder). The aggregate number of shares of common stock outstanding as of November 19, 1999 was 11,612,924 shares.
(c) Dividends - The Company has not paid or declared any dividends upon its Common Stock since its inception and, by reason of its present financial status and its contemplated financial requirements, does not contemplate or anticipate paying any dividends upon its Common Stock in the foreseeable future.
ITEM 2. Legal Proceedings.
The Company is not presently a party to any material litigation.
ITEM 3. Changes in and Disagreements with Accountants.
None.
ITEM 4. Recent Sales of Unregistered Securities.
In April 1999, the Company issued 3,000,000 shares of its Common Stock for an aggregate of $30,000 pursuant to Rule 504 of Regulation D under the Act.
In August 1999, the Company issued an aggregate of 8,459,000 shares of
Common Stock and 2,000,000 Common Stock Purchase Warrants to purchase 100% of
the issued and outstanding shares of the Subsidiary's Common Stock pursuant to
Section 4(2) of the Act.
In August 1999 the Company issued warrants to purchase an aggregate of 730,000 shares of Common Stock to certain directors, executive officers, employees and consultants in consideration for services rendered and to be rendered. These warrants may be exercised at any time within 4 years from the date of issue at an exercise price of $3.00 and also carry cashless exercise provisions. The warrants were issued pursuant to Regulation S under the Act.
The following table lists the warrants issued to directors, executive officers and employees:
Exercise EXPIRATION
NAME YEAR OF ISSUE NUMBER PRICE DATE
Andre Hensler 1999 100,000 $3.00 08/31/03
Paul Claverie 1999 100,000 $3.00 08/31/03
Antoine Veit 1999 100,000 $3.00 08/31/03
Andre Maisonneuve 1999 20,000 $3.00 08/31/03
Suzette Cousineau 1999 20,000 $3.00 08/31/03
|
In February 1999, the Company issued 91,667 Shares of Common Stock in exchange for certain mining rights pursuant to Section 4(2) of the Act.
ITEM 5. Indemnification of Directors and Officers.
Section 78.7502 of the Nevada Revised Statutes ("NRS") contains various provisions entitling directors, officers, employees or agents of the Company to indemnification from judgments, fines, amounts paid in settlement and reasonable expenses, including attorney's fees, as the result of an action or proceeding (whether civil, criminal, administrative or investigative) in which they may be involved by reason of being or having been a director, officer, employee or agent of the Company provided said persons acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company (and, with respect to any criminal action or proceeding, had no reasonable cause to believe that the conduct complained of was unlawful).
PART F/S
See the Company's Financial Statements at the end of this Registration Statement.
PART III
ITEMS 1 & 2. Index to Exhibits and Description of Exhibits.
Exhibits
2.a. The Company's Articles of Incorporation
2.b. Amendments to the Company's Articles of Incorporation
2.c. The Company's By-Laws
2.d. Translation summary of material terms of Articles of Incorporation for
Graph-O-Logic S.A.
2.e.* Articles of Incorporation of Sochrys Technologies Inc.
2.f.* By-Laws of Sochrys Technologies Inc.
2.g.* Translation summary of material terms of Articles of Incorporation for
Sochrys Technologies S.A.
3.a.* Text of Common Stock Certificate
4.a. Text of Class A Warrants
4.b. Text of Class B Warrants
4.c. Text of Class C Warrants
6.a. Translation summary of Lease Agreement for Geneva Offices
6.b. Consulting Agreement dated August 30, 1999 between the Company and
Capital House A Finance and Investment Corporation.
* To be filed by amendment.
|
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
SOCHRYS.COM INC
Dated: December 7, 1999 By: /s/ Jean Pierre Hofman
------------------------------
Jean Pierre Hofman
Chief Executive Officer
|
SOCHRYS.COM INC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -------------
ASSETS
Current Assets:
Cash $ 34,799 $ 7,056
Accounts Receivable -- 39,800
-------- --------
Total current assets 34,799 46,856
-------- --------
Office equipment 106,980 106,980
Less accumulated depreciation and
amortization (51,893) (35,900)
-------- --------
Net property and equipment 55,087 71,080
-------- --------
Other assets 256 1,022
-------- --------
$ 90,142 $118,958
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,598 $ 14,096
Stockholders' Equity:
Common stock, no par value 11,612 80,619
Additional paid in capital 146,547
Retained earnings (86,615) 24,243
-------- --------
Total stockholders' equity 71,544 104,862
-------- --------
Total liabilities and stockholders'
equity $ 90,142 $118,958
======== ========
|
See accompanying notes.
SOCHRYS.COM INC
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED
SEPTEMBER 30
1999 1998
-------- --------
Revenues $169,753 $268,637
Expenses:
Salaries 129,552 83,259
Research and development 72,169 149,884
General and administrative 9,071 317
Depreciation and amortization 16,759 3,812
-------- --------
227,551 237,272
-------- --------
Operating income (loss) (57,798) 31,364
(Gain) loss on changes in foreign exchange rates 5,521 (1,292)
Income tax expense -- 11,515
-------- --------
Net income (loss) $(63,319) $ 21,142
======== ========
Net income (loss) per common share (undiluted
and fully diluted) $(0.01) $(211.42)
Weighted average common shares outstanding 5,681,046 100
|
See accompanying notes.
SOCHRYS.COM INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30,
1999 1998
---- ----
OPERATING ACTIVITIES
Net Income (Loss) $(63,319) $ 21,142
Adjustment to reconcile net loss to net cash
provide by operating activities:
Depreciation and amortization 16,759 3,812
Unrealized gains (losses) in foreign currency
exchange rate changes -- 5,754
Changes in operating assets and liabilities:
Accounts receivable 39,802 16,815
Accounts payable and accrued liabilities 4,501 8,235
-------- --------
Net Cash provided by (used in) operating activities (2,257) 55,758
INVESTING ACTIVITIES
Additions to office equipment -- (68,080)
FINANCING ACTIVITIES
Cash on hand at date of acquisition 30,000 --
Net increase (decrease) in cash 27,743 (12,322)
Cash at beginning of year 7,056 22,378
-------- --------
Cash at end of year $ 34,799 $ 10,056
======== ========
|
See accompanying notes.
SOCHRYS.COM INC.
Notes to Unaudited Consolidated Financial Statements
1. BASIS OF PRESENTATION
The accompanying financial statements are unaudited for the interim periods, but include all adjustments (consisting only of normal recurring accruals) which management considers necessary for the fair presentation of results for the nine months ended September 30, 1999.
Moreover, these financial statements do not purport to contain complete disclosure in conformity with generally accepted accounting principles and shoud be read in conjunction with the other financial statements included herein.
The results reflected for the nine months ended September 30, 1999 are not necessarily indicative of the results for the entire fiscal year.
2. BUSINESS COMBINATION
On August 3, 1999 the Company acquired 100% of the outstanding shares of Graph-O-Logic S.A., a corporation incorporated under the laws of Switzerland. The financial statements reflect the activities of Graph-O-Logic S.A. with the exception of $30,000 of cash on hand at the time of the acquisition.
REPORT OF FIDICIAIRE BUJARD, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Graph-O-Logic S.A.
We have audited the accompanying balance sheets of Graph-O-Logic S.A. as of December 31, 1998 and 1997, and the related statements of operations, stockholders' and cash flows for each of the three years in the period ended December 31, 1998, 1997, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with United States generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Graph-O-Logic S.A. as of December 31, 1998, 1995 and 1996, in conformity with United States generally accepted accounting principles.
/s/ Fidiciaire Bujard
Geneva, Switzerland
July 27, 1999
|
GRAPH-O-LOGIC S.A.
BALANCE SHEET
DECEMBER 31
------------------------------------------------
1998 1997
---------------------- ----------------------
ASSETS
Current Assets:
Cash $7,056 $22,378
Marketable securities -- --
Accounts Receivable 39,800 53,631
-------- -------
Total current assets 46,856 76,009
-------- -------
Office equipment (Note 2) 106,980 35,900
Less accumulated depreciation and amortization (Note 2) (35,900) (31,406)
--------- --------
Net property and equipment 71,080 4,494
-------- -------
Other assets (Note 3) 1,022 2,043
-------- -------
$118,958 $82,546
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $14,096 $4,986
Stockholders' Equity: (Note 5)
Common stock, no par value:
Authorized shares - 100 a December 31, 1998 and 1997
Issued and outstanding shares - l00 at December 31, 1998
and 1997. 80,619 80,619
Retained earnings 24,243 (3,059)
-------- --------
Total stockholders' equity 104,862 77,560
-------- -------
Total liabilities and stockholders' equity $118,958 $82,546
======== =======
|
See accompanying notes.
GRAPH-O-LOGIC S.A.
STATEMENT OF OPERATIONS
YEARS ENDED DECEMBER 31
----------------------------------------------------
1998 1997 1996
---- ---- ----
Revenues $310,666 $206,754 $20,245
Expenses:
Salaries 115,298 -- --
Research and development 154,864 182,134 4,211
General and administrative 487 8,560 546
Depreciation and amortization (Notes 2, 3) 5,516 11,792 8,561
---------- -------- --------
276,165 202,486 13,318
---------- -------- --------
Operating income 34,501 4,268 6,927
(Gain) loss on changes in foreign exchange rates (6,326) 4,493 4,605
Income tax expense 13,525 2,818 1,731
------ ----- -----
Net income (loss) $27,302 ($3,043) $ 591
======= ======= ======
Net income (loss) per common share (undiluted
and fully diluted) $273.02 ($30.43) $5.91
Weighted average common shares outstanding
(undiluted and fully diluted) 100 100 100
|
See accompanying notes.
GRAPH-O-LOGIC S.A.
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31
1998 1997 1996
---- ---- ----
OPERATING ACTIVITIES
Net Income $27,302 ($3,043) $591
Adjustment to reconcile net loss to net cash
provide by operating activities:
Depreciation and amortization 5,516 11,792 8,561
Unrealized gains (losses) in foreign currency
exchange rate changes (3,560) 7,317 --
Changes in operating assets and liabilities:
Accounts receivable 13,829 10,948 (27,536)
Accounts payable and accrued liabilities (Note 4) 9,110 (102,346) 17,653
-------- --------- -------
Net Cash provided by operating activities 52,197 (75,332) (731)
INVESTING ACTIVITIES
Additions to office equipment (67,518) -- --
FINANCING ACTIVITIES
Proceeds from marketable securities -- 97,595 --
-------- -------- --------
Net increase (decrease) in cash (15,321) 22,263 (731)
Cash at beginning of year 22,377 114 845
-------- -------- -------
Cash at end of year $7,056 $22,377 $114
======== ======== ======
|
See accompanying notes.
GRAPH-O-LOGIC S.A.
Statement of Stockholders' Equity
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
TOTAL
COMMON STOCK RETAINED SHAREHOLDERS'
SHARES AMOUNT EARNINGS EQUITY
Balance at December 31, 1995 100 $80,619 $ (608) $ 80,011
Net income for the year ended December 31, 1996 591 591
------ ------- ------- --------
Balance at December 31, 1996 100 80,619 (17) 80,602
Net income for the year ended December 31, 1997 (3,043) (3,043)
------ ------- ------- --------
Balance at December 31, 1997 100 80,619 (3,060) 77,559
Net income for the year ended December 31, 1998 27,302 27,302
------ ------- ------- --------
Balance at December 31, 1998 100 $80,619 $24,242 $104,862
====== ======= ======= ========
|
See accompanying notes.
GRAPH-O-LOGIC S.A.
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The Company was incorporated February 15, 1995 under Swiss jurisdiction in the Canton of Geneva.
Mr. Jean-Pierre Hofman holds title to 99 of 100 shares, accounting for 99% of the voting stock. Mr. Andre Hensler holds the remaining 1 share.
The company is devoted to software development, web site implementation, multimedia CD design and computer graphic publications. The professional services provided to its clientele included system analyses, strategic advice and the implementation of software dedicated solutions with respect to the French Minitel and the Internet. In addition, the company is involved in the design and sale of customized computer equipment and software.
PROPERTY AND EQUIPMENT
The company owns office furniture and equipment. The carrying value on the balance sheet was calculated using the historic cost of the tangible assets less depreciation and amortization calculated at a rate of 30% per annum.
The carrying value of the incorporation costs (classified as deferred assets) was calculated using the original outlay less depreciation and amortization was calculated at the rate of 20% per annum.
REVENUE RECOGNITION
The accounting policy for recognizing revenue is at the point at which the services are delivered and invoiced.
INCOME TAXES
Income taxes are accounted for under the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is adjusted by a valuation allowance, if necessary, to recognize the extent to which based on available evidence, the future tax benefits more likely than not will be realized.
GRAPH-O-LOGIC S.A.
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STATEMENT OF CASH FLOWS
The Company considers all highly liquid investments purchase with an original maturity of three months or less to be cash equivalents.
NET INCOME PER COMMON SHARE
Net income per common share is presented in accordance with Statement of Financial Accounting Standards No. 128, Earnings per Share. As the Company incurred net income during each of the years ended December 31, 1998, 1997 and 1996, the net income per common share data is based on the weighted average common shares outstanding on an undiluted basis. The company has issued no securities that might result in a dilution of earnings per share.
CONCENTRATIONS OF CREDIT RISK
Since the company's inception, its revenues are derived from a single source. The single client project is on-going and its disappearance may impede the ability of the Company to carry on business.
FOREIGN CURRENCY
The revenues and expenses are in Swiss Francs.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Because of the use of estimates inherent in the financial reporting process, actual results could differ from these estimates.
GRAPH-O-LOGIC S.A.
Notes to Consolidated Financial Statements (continued)
2. OFFICE EQUIPMENT
Office and computer equipment expenses of 48,548 CHF (42,100 US$) was amortized at a rate of 30% per annum.
NOTE 2: Office Equipment
CHF USD
--- ----
Net book value, January 1, 1997 20,754 $18,031
Depreciation Expense 14,565 12,654
------ -------
Net book value, December 31, 1997 6,189 5,377
Additions, at historic cost 97,800 84,970
Depreciation Expense 6,189 5,377
------ ------
Net book value, December 31, 1998 97,800 $84,970
====== =======
|
3. DEFERRED ASSETS
Incorporation costs of 6,895 CHF (5,990 US$) was amortized at a rate of 20% per annum.
CHF USD
--- ----
Net book value, January 1, 1997 6,895 $5,990
Depreciation Expense 1,379 1,587
----- -----
Net book value, December 31, 1997 5,516 4,792
Depreciation Expense 2,758 2,396
----- -----
Net book value, December 31, 1998 1,379 $1,198
===== ======
|
4. CURRENT AND LONG-TERM DEBT
The company reported a short-term debt in the form of an unsecured demand note in the amount of 67,096 CHF which was retired during 1997. The proceeds from the liquidation of the financial instrument were used to repay the demand note.
5. STOCKHOLDERS' EQUITY
There is a single class of common stock with no par value and no limitation of the number of shares of common stock that may be issued.
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
FINANCIAL STATEMENTS
March 31, 1999, December 31, 1998 and 1997
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of Global Science Corporation
We have audited the accompanying balance sheets of Global Science Corporation (a Development Stage Company) as of March 31, 1999, December 31, 1998 and 1997 and the related statements of operations, stockholders' equity and cash flows for the three months ended March 31, 1999 and the years ended December 31, 1998, 1997 and 1996 and from inception on April 12, 1989 through March 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Global Science Corporation (a Development Stage Company) as of March 31, 1999, December 31, 1998 and 1997 and the results of its operations and cash flows for the three months ended March 31, 1999 and the years ended December 31, 1998, 1997 and 1996 and from inception on April 12, 1989 through March 31, 1999 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has minimal assets and no operations and is dependent upon financing to continue operations. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in the Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
April 30, 1999
|
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
Balance Sheets
ASSETS
March 31, 1999 December 31st,
Current Assets 1999 1998 1997
Cash $ -- $ -- $ --
----------- ----------- ----------
Total Current Assets
Unpatented Mining Claims (Note 3) 27,500 -- --
------------ ------------ ----------
Total Assets $ 27,500 $ -- $ --
============ ============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ -- $ -- $ --
----------- ----------- ----------
Total Current Liabilities $ -- $ -- $ --
----------- ----------- ----------
Stockholders' Equity
Preferred Stock, 5,000,000 shares of
$.001 par value authorized, no shares
issued and outstanding. -- -- --
Common Stock, authorized 50,000,000
shares of $.001 par value, 153,000,
61,333 and 61,333 shares issued and
outstanding, respectively. 153 61 61
Additional Paid in Capital 47,387 19,979 19,979
Deficit Accumulated During the
Development Stage (20,040) (20,040) (20,040)
------------- ---------- -----------
Total Stockholders' Equity 27,500 -- --
------------ ------ ---------
Total Liabilities and Stockholders' Equity $ 27,500 $ -- $ --
------------ ---------- ---------
|
Pg. 4 The accompanying notes are an integral part of these financial statements
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
Statements of Operations
For the Deficit
Three Months Accumulated
Ended During the
March 31, For the years ended December 31, development
--------------------------------
1999 1998 1997 1996 Stage
------ --------- --------- --------- ----------
Revenues: $ -- $ -- $ -- $ -- $ --
------------- ------------- ------------- ------------- ------------
Expenses:
Amortization -- -- -- -- --
General &
Administrative -- -- -- -- 340
(19,700)
Total Expenses -- -- -- -- (20,040)
------------- ------------- ------------- ------------- --------
Net (Loss) $ -- $ -- $ -- $ -- $ (20,040)
============= ============= ============= ============= ==========
Net Loss Per Share $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.35)
========== ========== ========== ========== =========
Weighted Average shares
Outstanding 98,412 61,333 61,333 61,333 57,887
========== ========== ========= ========= =========
|
Pg. 5 The accompanying notes are an integral part of these financial statements
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
Statement of Stockholders' Equity
Additional Deficit
Paid-in Accumulated
Capital During the
Common Stock (Discount on Development
Shares Amount Stock) Stage
------ ------ ------ -----
Balance at inception on April 12, 1999 -- $ -- $ -- $ --
Common stock issued for organizational
costs, April 1989 26,667 27 313 --
Common stock issued for cash, July 1990 34,666 34 19,666 --
Net loss from inception through
December 31, 1993 -- -- -- (20,040)
-------- -------- --------- ----------
Balance, December 31, 1993 61,333 61 19,979 (20,040)
Net loss December 31, 1994 -- -- -- --
-------- -------- --------- ---------
Balance, December 31, 1994 61,333 61 19,979 (20,040)
Net loss December 31, 1995 -- -- -- --
-------- -------- --------- ---------
Balance, December 31, 1995 61,333 61 19,979 (20,040)
Net loss December 31, 1996 -- -- -- --
-------- -------- --------- ---------
Balance, December 31, 1996 61,333 61 19,979 (20,040)
Net loss December 31, 1997 -- -- -- --
-------- -------- --------- ---------
Balance, December 31, 1997 61,333 61 19,979 (20,040)
Net loss December 31, 1998 -- -- -- --
-------- -------- --------- ---------
Balance, December 31, 1998 61,333 61 19,979 (20,040)
Common stock issued for mining
Claims, February 1999 91,667 92 27,408 --
Net loss for the three months ended
March 31, 1999 -- -- -- --
-------- -------- --------- --------
Balance, March 31, 1999 153,000 $ 153 $ 47,387 $ (20,040)
======== ========= ========== ===========
|
Pg. 6 The accompanying notes are an integral part of these financial statements
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
Statement of Cash flows
For the From inception
Three Months on April 12,
Ended For the years ended December 31, 1999 Through
March 31, March 31,
1999 1998 1997 1996 1999
-------- --------- --------- --------- ---------
Cash Flows from Operating
Activities
Net Loss $ -- $ -- $ -- $ -- $ (20,040)
Adjustments to reconcile
net loss to net cash
provided by operations
Amortization -- -- -- -- 340
----------- ------------ ------------ ----------- -----------
Net Cash flows used in
Operating Activities -- -- -- -- (19,700)
----------- ------------ ------------ ----------- -----------
Cash flows from Investment
Activities: -- -- -- -- --
----------- ------------ ------------ ----------- -----------
Cash Flows from Financing
Activities:
Stock issued for cash -- -- -- -- (19,700)
----------- ------------ ------------ ----------- -----------
Net increase (decrease) in -- -- -- -- --
cash
Cash, beginning of year -- -- -- -- --
----------- ----------- ----------- ---------- -----------
Cash, end of year $ -- $ -- $ -- $ -- $ --
=========== =========== =========== ========== ===========
Supplemental Cash Flow Information
Cash Paid for:
Interest $ -- $ -- $ -- $ -- $ --
Taxes $ -- $ -- $ -- $ -- $ --
|
Pg. 7 The accompanying notes are an integral part of these financial statements
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
Notes to The Financial Statements
March 31, 1999, December 31, 1998 and 1997
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
Global Science Corporation is a Nevada corporation organized on April 12, 1989 under the name of CCC Funding Corporation, for the purpose of seeking out one or more potential business ventures. The Company changed its name to American Gold Group, Inc. on February 2, 1992. On August 26, 1992, the Company changed its name to American Group, Inc. On December 23, 1993, the Company changed its name to Global Science Corporation.
b. Accounting Method
The Company recognizes income and expenses on the accrual basis of accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the weighted average number of shares outstanding at the date of the financial statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.
e. Organizational Costs
Organizational costs are amortized on a straight line method over five years.
f. Provision for Income Taxes
No provision for income taxes has been recorded due to net operating loss carryforwards totaling approximately $20,040 that will be offset against future taxable income. Since the Company is in the development stage, no provision for income taxes has been made.
Deferred tax assets and the valuation account is as follows at March 31, 1999 and December 31, 1998 and 1997.
March 31, December 31,
1999 1998 1997
------- -------- -------
Deferred tax asset:
NOL carryforward $ 6,814 $ 6,814 $ 6,814
Valuation allowance (6,814) (6,814) (6,814)
------- ------- -------
Total $ -- $ -- $ --
======== ======== ========
|
GLOBAL SCIENCE CORPORATION
(a Development Stage Company)
Notes to the Financial Statements
March 31, 1999, December 31, 1998 and 1997
NOTE 2 - Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company is dependent upon raising capital to continue operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management's plan to raise additional funds to begin its intended operations, or find an operating company to merge with.
NOTE 3 - Mining Claims
In February 1999, the Company issued 91,667 shares of common stock for unpatented mining claims located in Fresno, California. The claims are valued at $27,500.
NOTE 4 - Development Stage Company
The Company is a development stage company as defined in Financial Accounting Standards Board Statement No. 7. It is concentrating substantially all of its efforts in raising capital and developing its business operations in order to generate significant revenues.
NOTE 5 - Stockholders' Equity
In April 1989, 26,667 shares of common stock were issued to officers and directors in exchange for organizational costs valued at $340.
In July 1990, 34,666 shares of common stock were issued for cash of $19,700.
In February 1999, 91,667 shares of common stock were issued for unpatented mining claims valued at $27,500.
NOTE 6 - Stock Splits
In January 1992, the board of directors authorized a four for one forward stock split. In March 1999, the board of directors authorized a one for three hundred reverse stock split. These financial statements have been retroactively restated to reflect these splits.
NOTE 7 - Subsequent Events
In April 1999, the Company issued 3,000,000 shares of common stock for cash of $30,000, pursuant to an exempt 504 Offering.
EXHIBIT INDEX
Exhibit Description
No.
2.a. The Company's Articles of Incorporation
2.b. Amendments to the Company's Articles of Incorporation
2.c. The Company's By-Laws
2.d. Translation summary of material terms of Articles of Incorporation for
Graph-O-Logic S.A.
2.e.* Articles of Incorporation of Sochrys Technologies Inc.
2.f.* By-Laws of Sochrys Technologies Inc.
2.g.* Translation summary of material terms of Articles of Incorporation for
Sochrys Technologies S.A.
3.a.* Text of Common Stock Certificate
4.a. Text of Class A Warrants
4.b. Text of Class B Warrants
4.c. Text of Class C Warrants
6.a. Translation summary of Lease Agreement for Geneva Offices
6.b. Consulting Agreement dated August 30, 1999 between the Company and
Capital House A Finance and Investment Corporation.
---------------------------
|
* To be filed by amendment.
EXHIBIT 2.A
SECRETARY OF STATE
[SEAL OF THE STATE OF NEVADA]
STATE OF NEVADA
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do hereby certify that SOCHRYS.COM INC. did on April 12, 1989 file in this office the original Articles of Incorporation; that said Articles are now on file and of record in the office of the Secretary of State of the State of Nevada, and further, that said Articles contain all the provisions required by the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of State, at my office, in Carson City, Nevada, on August 18, 1999.
[SEAL OF THE STATE OF NEVADA]
/s/ Dean Heller
Secretary of State
By /s/ Jacqueline Curry
Certification Clerk
|
FILIN GFEE-100.00 TS
LEWIS & LEHMAN
136 S. MAIN ST # 721
KEARNS BLDG.
SALT LAKE CITY, UT 84101
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
APR 18 1989
[ILLEGIBLE]
ARTICLES OF INCORPORATION
OF
CCC FUNDING CORP.
The undersigned incorporators being natural persons more than eighteen
(18) years of age acting as all of the incorporators of the above-named
corporation (the "Corporation") hereby adopt the following articles of
incorporation for the Corporation:
ARTICLE I
NAME
The name of the Corporation shall be: CCC FUNDING CORP.
ARTICLE II
PERIOD OF DURATION
The Corporation shall continue in existence perpetually unless sooner dissolved according to law.
ARTICLE III
PURPOSES AND POWERS
The purposes for which the Corporation is organized are:
(a) To acquire by purchase or otherwise, own, hold, lease, rent, mortgage or otherwise, to trade with and deal in real estate, lands and interests in lands and all other property of every kind and nature;
(b) To manufacture, use, work, sell and deal in chemicals, biologicals, pharmaceuticals, electronics and products of all types owned or hereafter owned by it for manufacturing, using and vending any devices or devices, machine or machines or manufacturing, working or producing any or all products;
(c) To borrow money and to execute notes and obligations and security contracts therefor, to lend any of the monies or funds of the Corporation and to take evidence on a general mercantile and merchandise business and to purchase, sell and deal in such goods, supplies and merchandise of every kind and nature;
(d) To guarantee the payment of dividends or interest on any other contract or obligation of any corporation whenever proper or necessary for the business of the Corporation in the judgment of its directors;
(e) To do all and everything necessary, suitable, convenient, or proper for the accomplishment of any or the purposes or the attainment
of any one or more of the objects herein enumerated or incidental to the powers therein named or which shall at any time appear conclusive or expedient for the protection or benefit of the Corporation, with all the powers hereafter conferred by the laws under which this Corporation is organized; and
(f) to conduct any lawful business for which a corporation may be organized under the laws of Nevada.
ARTICLE IV
AUTHORIZED SHARES
The Corporation is authorized to issue a total of 55,000,000 shares consisting of 5,000,000 shares of preferred stock having a par value of $.00l per share (hereinafter the "Preferred Stock"), and 50,000,000 shares of common stock, par value $.001 per share (hereinafter the "Common Stock"). The powers, preferences, rights, qualifications, limitations, or restrictions of the shares of stock of each class and series which the Corporation is authorized to issue, is as follows:
(a) Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series as may from time to time be determined by the board of directors. Each series shall be distinctly designated. All shares of any one series of the Preferred Stock shall be alike in every particular, except that there may be different dates from which dividends thereon, if any, shall be cumulative, if made cumulative. The powers, preferences, participating, optional and other rights of each such series and the qualifications, limitations, or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. Except as hereinafter provided, the board of directors of this Corporation is hereby expressly granted authority to fix by resolution or resolutions adopted prior to the issuance of any shares of each particular series of Preferred Stock, the designation, powers preferences and relative participating, optional and other rights, and the qualifications, limitations and restrictions thereof, if any, of such series, including, without limiting the generality of the foregoing, the following:
(i) The distinctive designation of, and the number of shares of Preferred Stock which shall constitute, each series, which number may be increased (except as otherwise fixed by the board of directors) or decreased (but not below the number of shares thereof outstanding) from time to time by action of the board of directors;
(ii) The rate and times at which, and the terms and conditions upon which, dividends, if any, on shares of the series shall be paid, the extent of preferences or relations, if any, of such dividends to the dividends payable on any other class or classes of stock of the Corporation or on any series of Preferred Stock and whether such dividends shall be cumulative or non-cumulative,
(iii) The right, if any, of the holders of shares of the same series to convert the same into, or exchange the same for, any other class or classes of stock of the Corporation and the terms and conditions of such conversion or exchange;
(iv) Whether shares of the series shall be subject to redemption, and the redemption price or prices including, without limitation, a redemption price or prices payable in shares of any class or classes of stock of the Corporation, cash, or other property and the time or times at which, and the terms and conditions on which, shares of the series may be redeemed;
(v) The rights, if any, of the holders of shares of the series upon voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution, or winding up of the Corporation;
(vi) The terms of any sinking fund or redemption or purchase account, if any, to be provided for shares of the series; and
(vii) The voting powers, if any, of the holders of shares of the series which may, without limiting the generality of the foregoing, include (A) the right to more or less than one vote per share on any or all matters voted on by the shareholders and (B) the right to vote as a series by itself or together with other series of Preferred Stock or together with all series of Preferred Stock as a class, on such matters, under such circumstances, and on such conditions as the board of directors may fix, including, without limitation, the right, voting as a series by itself or together with other series of Preferred Stock or together with all series of Preferred Stock as a class, to elect one or more directors of the Corporation in the event there shall have been a default in the payment of dividends on any one or more series of Preferred Stock or under such other circumstances and on such conditions as the board of directors may determine.
(b) Common Stock. The Common Stock shall have the following powers, rights, qualifications, limitations, and restrictions:
(i) After the requirements with respect to preferential dividends of Preferred Stock, if any, shall have been met and after the Corporation shall comply with all the requirements, if any, with respect to the setting aside of funds as sinking funds or redemption or purchase accounts and subject further to any other conditions which may be required by the laws of the state of Nevada, then, but not otherwise, the holders of Common Stock shall be entitled to receive such dividends, if any, as may be declared from time to time by the board of directors;
(ii) After distribution in full of the preferential amount to be distributed to the holders of Preferred Stock, if any, in the event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding up of the Corporation, the holders of the Common Stock shall be entitled to receive all the remaining assets of the Corporation, tangible and intangible, of whatever kind available for distribution to stockholders, ratably in proportion to the number of shares of the Common Stock held by each; and
(iii) Except as may otherwise be required by law or these articles of incorporation, in all matters as to which the vote or consent of stockholders of the Corporation shall be required or be taken, including, any vote to amend the articles of incorporation, to increase or decrease the par value of any class of stock, effect a stock split or combination of shares, or later or change the powers, preferences, or special rights of any class or series of stock, the holders of the Common Stock shall have one vote per share of Common Stock on all such matters and shall not have the right to cumulate their votes for any purpose.
(c) Other Provisions.
(i) The board of directors of the Corporation shall have authority to authorize the issuance, from time to time without any vote or other action by the stockholders, of any or all shares of the Corporation of any class at any time authorized, and any securities convertible into or exchangeable for such shares, in each case to such persons and for such consideration and on such terms as the board of directors from time to time in its discretion lawfully may determine; provided, however, that the consideration for the issuance of shares of stock of the Corporation having par value shall not be less than such par value. Shares so issued, for which the full consideration determined by the board of directors has been paid to the Corporation, shall be fully paid stock, and the holders of such stock shall not be liable for any further call or assessment thereon.
(ii) Unless otherwise provided in the resolution of the board of directors providing for the issue of any series of Preferred Stock, no holder of shares of any class of the Corporation or of any security of obligation convertible into, or of any warrant, option, or right to purchase, subscribe for, or otherwise acquire, shares of any class of the Corporation, whether now or hereafter authorized, shall, as such holder, have any pre-emptive right whatsoever to purchase, subscribe for, or otherwise acquire shares of any class of the Corporation, whether now or hereafter authorized.
(iii) Anything herein contained to the contrary notwithstanding, any and all right, title, interest, and claim in and to any dividends declared or other distributions made by the Corporation, whether in cash, stock, or otherwise, which are unclaimed by the stockholder entitled thereto for a period of six years after the close of business on the payment date, shall be and be deemed to be extinguished and abandoned; and such unclaimed
dividends or other distributions in the possession of the Corporation, its transfer agents, or other agents or depositories, shall at such time become the absolute property of the Corporation, free and clear of any and all claims of any person whatsoever.
ARTICLE V
LIMITATION ON LIABILITY
A director or officer of the Corporation shall have no personal liability to the Corporation or its stockholders for damages for breach of fiduciary duty as a director or officer, except for damages for breach of fiduciary duty resulting from (a) acts or omissions which involve intentional misconduct, fraud, or a knowing violation of law, or (b) the payment of dividends in violation of section 78,300 of the Nevada Revised Statutes as it may from time to time be amended or any successor provision thereto
ARTICLE VI
PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the Corporation's principal office in the state of Nevada in One East First Street, town of Reno, county of Washoe, state of Nevada. The name of its initial resident agent in the state of Nevada is The Corporation Trust Company of Nevada. Either the registered office of the resident agent may be changed in the manner provided by law.
ARTICLE VII
AMENDMENTS
The Corporation reserves the right to amend, alter, change, or repeal all or any portion of the provisions contained in these articles of incorporation from time to time in accordance with the laws of the state of Nevada, and all rights conferred on stockholders herein are granted subject to this reservation.
ARTICLE VIII
ADOPTION AND AMENDMENT OF BYLAWS
The initial bylaws of the Corporation shall be adopted by the board of directors. The power to alter, amend, or repeal the bylaws or adopt new bylaws shall be vested in the board of directors, but the stockholders of the Corporation may also alter, amend, or repeal the bylaws or adopt new bylaws. the bylaws may contain any provisions for the regulation or management of the affairs of the Corporation not inconsistent with the laws of the state of Nevada now or hereafter existing.
ARTICLE IX
DIRECTORS
The governing board of the Corporation shall be known as the board of directors. The number of directors comprising the board of directors shall be fixed and may be increased or decreased from time to time in the manner provided in the bylaws of the Corporation, except that at no time shall there be less than three nor more than nine directors. The original board of directors shall consist of three persons. The name and address of each person who is to serve as a director until the first annual meeting of stockholders and until his or her successor is elected and shall qualify is as follows:
Name Address
---- -------
York Chandler 935 Northcliffe Drive
Salt Lake City, Utah 84103
Hal (Pete) Chandler 430 4th Street
Ogden, Utah 84404
Gale Chandler 935 Northcliffe Drive
Salt Lake City, Utah 84103
|
ARTICLE X
INCORPORATOR
The name and mailing address of the sole incorporator signing these articles of incorporation is as follows:
Name Address
---- -------
York Chandler 935 Northcliffe Drive
Salt Lake City, Utah 84103
|
The undersigned, being the incorporator of the Corporation herein before named, hereby make and file these articles of incorporation, declaring that the facts herein are true.
DATED this 4 day of April, 1989.
/s/ York Chandler ------------------------------ York Chandler |
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE) )
|
On this 4th day of April, 1989, before me, a notary public, personally appeared York Chandler, who on being first duly sworn, acknowledged to me that he executed the foregoing articles of incorporation.
/s/ Clark Jackson
--------------------------------
NOTARY PUBLIC
Residing in Salt Lake City, Utah
--------------------
My Commission Expires:
8-13-89
----------------------
RECEIVED
APR - 7 1999
|
EXHIBIT 2.B
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
GLOBAL SCIENCE CORP.
The undersigned, being the President and Secretary of Global Science Corp., a Nevada Corporation, hereby certify that by majority vote of the Board of Directors and majority vote of the stockholders at a meeting held on August 3, 1999, it was agreed by unanimous vote that this CERTIFICATE AMENDING ARTICLES OF INCORPORATION be filed.
The undersigned further certify that the original Articles of Incorporation of Global Science Corp. were filed with the Secretary of State of Nevada on the 12th day of April, 1989. The undersigned further certify that ARTICLES FIRST of the original Articles of Incorporation filed on the 12th day of April, 1989, herein is amended to read as follows:
ARTICLE FIRST
FIRST. The name shall be:
Sochrys.com Inc.
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
GLOBAL SCIENCE CORP.
CONTINUED
The undersigned hereby certify that they have on the 3rd day of August, 1999, executed this Certificate Amending the original Articles of Incorporation heretofore filed with the Secretary of State of Nevada.
/s/ [ILLEGIBLE]
---------------------------------
President
/s/ Fred [ILLEGIBLE]
---------------------------------
Secretary
|
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 09 1999
Dean Heller
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
GLOBAL SCIENCE CORP.
The undersigned, being the President and Secretary of Global Science Corp., a Nevada Corporation, hereby certify that by majority vote of the Board of Directors and majority vote of the stockholders at a meeting held on August 3, 1999, it was agreed by unanimous that this CERTIFICATE AMENDING ARTICLES OF INCORPORATION be filed.
The undersigned further certify that the original Articles of Incorporation of Global Science Corp. were filed with the Secretary of State of Nevada on the 12th day of April, 1989. The undersigned further certify that ARTICLES FIRST of the original Articles of Incorporation filed on the 12th day of April, 1989, herein is amended to read as follows:
ARTICLE FIRST
FIRST. The name shall be:
Sochrys.com Inc.
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
GLOBAL SCIENCE CORP.
CONTINUED
The undersigned hereby certify that they have on the 3rd day of August, 1999, executed this Certificate Amending the original Articles of Incorporation heretofore filed with the Secretary of State of Nevada.
/s/ [ILLEGIBLE]
---------------------------------
President
/s/ Fred [ILLEGIBLE]
---------------------------------
Secretary
|
STATE OF NEVADA
SECRETARY OF STATE
CERTIFICATE OF REINSTATEMENT
I, DEAN HELLER, the duly elected Secretary of State of the State of Nevada, do hereby certify that GLOBAL SCIENCE CORP. a corporation formed under the laws of the State of NEVADA having paid all filing fees, licenses, penalties and costs, in accordance with the provisions of Title 7 of the Nevada Revised Statutes as amended, for the years and in the amounts as follows:
1995-1996 List of Officers + penalty $100.00 1996-1997 List of Officers + penalty $100.00 1997-1998 List of Officers + penalty $100.00 1998-1999 List of Officers + penalty $100.00 Reinstatement $50.00 total $450.00 |
and otherwise complied with the provisions of said section, the said corporation has been reinstated, and that by virtue of such reinstatement it is authorized to transact its business in the same manner as if the aforesaid filing fees, licenses, penalties and costs had been paid when due.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of State, at my office in Carson City, Nevada, on February 10, 1999.
[SEAL OF THE STATE OF NEVADA]
/s/ Dean Heller
Secretary of State
By: /s/ [ILLEGIBLE]
Deputy
|
FILING FEE: $75.00 DF C00136 EXPEDITE #E55120
GEORGE A. J. MONTEITH
AMERICAN GROUP, INC.
2450 NORTH WEST SHORE BLVD., #212, TAMPA, FL 33607-5715
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
DEC 23 1993
CHERYL A LAU SECRETARY OF STATE
/s/ Cheryl A Lau
No. 3107-89
----------------------------
|
CERTIFICATE OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
AMERICAN GROUP, INC.
THE UNDERSIGNED President and Secretary of AMERICAN GROUP, INC., a Nevada Corporation, pursuant to the provisions of Sections 78.385 and 78.390 of the Nevada Revised Statutes, for the purpose of amending the Articles of Incorporation of said Corporation, do hereby certify as follows:
That the Board of Directors of said corporation at a meeting duly convened and held on the 10th day of December, 1993, adopted a resolution to amend the Articles of Incorporation of the Corporation as follows:
FIRST: Article I shall be amended to read as follows:
"ARTICLE I
The name of the Corporation shall be: Global Science Corp."
The foregoing amendment to the Articles of Incorporation was duly adopted by written consent of the shareholders of the Corporation pursuant to Section 78.320 of the Nevada Revised Statutes on the 10th day of December, 1993.
The number of shares of the corporation outstanding and entitled to vote on the foregoing amendment to the Articles of Incorporation is 18,550,000; and that said amendment was approved and consented to by 10,000,000 shares which represents more than a 50% majority of the issued and outstanding shares of the Corporation's common stock.
DATED this 10th day of December, 1993.
The undersigned President and Secretary of the Corporation hereby declare that the foregoing Certificate of Amendment to the Articles of Incorporation are true and correct to the best of their knowledge and belief.
/s/ George A. J. Monteith
------------------------------
President
|
FILING FEE: $75.00 C56155 PI
GEORGE I. NORMAN III
AMERICAN GROUP, INC.
%GIN/FINANCIAL SERVICES
P.O BOX 2894
SALT LAKE CITY, UT 84110
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 26 1992
3107-89
CHERYL A LAU SECRETARY OF STATE
/s/ Cheryl A Lau
--------------------------------
|
CERTIFICATE OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
AMERICAN GOLD GROUP, INC.
THE UNDERSIGNED President and Secretary of AMERICAN GOLD GROUP, INC., a Nevada corporation, pursuant to the provisions of Sections 78.385 and 78.390 of the Nevada Revised Statutes, for the purpose of amending the Articles of Incorporation of said Corporation, do hereby certify as follows:
That the Board of Directors of said corporation at a meeting duly convened and held on the 15th day of May, 1992, adopted a resolution to amend the Articles of Incorporation of the Corporation as follows:
FIRST: Article I shall be amended to read as follows:
"ARTICLE I
The name of the Corporation shall be: AMERICAN GROUP, INC."
The foregoing amendment to the Articles of Incorporation was duly adopted by written consent of the shareholders of the Corporation pursuant to Section 78.320 of the Nevada Revised Statutes on the 15th day of May, 1992.
The number of shares of the corporation outstanding and entitled to vote on the foregoing amendment to the Articles of Incorporation is 18,400,000; and that said amendment was approved and consented to by 10,000,000 shares which represents more than a 50% majority of the issued and outstanding shares of the Corporations common stock.
DATED this 16TH day of JULY, 1992.
The undersigned President and Secretary of the Corporation hereby declare that the foregoing Certificate Of Amendment To The Articles of Incorporation are true and correct to the best of their knowledge and belief.
/s/ George A. J. Monteith --------------------------------- GEORGE A. J. MONTEITH, President /s/ George S. Cross --------------------------------- GEORGE S. CROSS, Secretary |
FILING FEE: $75.00 DF C33564 EXPEDITE #E020279
GEORGE I. NORMAN III
GIN/FINANCIAL SERVICES
149 EAST 900 SOUTH
SALT LAKE CITY, UT 84111
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE FEB 03 1992
STATE OF NEVADA
FEB 03 PAID
CHERYL A LAU SECRETARY OF STATE
/s/ Cheryl A Lau
No. 3107-89
----------------------------
|
CERTIFICATE OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
CCC FUNDING CORP.
THE UNDERSIGNED President and Secretary of CCC FUNDING CORP., a Nevada corporation, pursuant to the provisions of Sections 78.385 and 78.390 of the Nevada Revised Statutes, for the purpose of amending the Articles of Incorporation of said Corporation, do hereby certify as follows:
That the Board of Directors of said corporation at a meeting duly convened and held on the 31st day of January, 1992, adopted a resolution to amend the Articles of Incorporation of the Corporation as follows:
FIRST: Article I shall be amended to read as follows:
"ARTICLE I
The name of the Corporation shall be: AMERICAN GOLD GROUP INC."
The foregoing amendment to the Articles of Incorporation was duly adopted by written consent of the shareholders of the Corporation pursuant to Section 78.320 of the Nevada Revised Statutes on the 31st day of JANUARY, 1992.
The number of shares of the corporation outstanding and entitled to vote on the foregoing amendment to the Articles of Incorporation is 4,600,000; and that said amendment was approved and consented to by 2,500,000 shares which represents more than a 50% majority of the issued and outstanding shares of the Corporation's common stock.
DATED this 1st day of FEBRUARY, 1992.
The undersigned President and Secretary of the Corporation hereby declare that the foregoing Certificate Of Amendment To The Articles of Incorporation are true and correct to the best of their knowledge and belief.
/s/ Gayle G. Chandler --------------------------------- GAYLE G. CHANDLER, Secretary |
EXHIBIT 2.C
TABLE OF CONTENTS
Section Title Page
CORPORATE OFFICES
1.1 Nevada Office ...................................... 1
1.2 Other Offices ...................................... 1
MEETINGS OF THE STOCKHOLDERS
2.1 Place .............................................. 1
2.2 Annual Meetings .................................... 1
2.3 Special Meetings ................................... 1
2.4 Notice ............................................. 1
2.5 Quorum ............................................. 2
2.6 Majority ........................................... 2
2.7 Proxies and Voting ................................. 2
2.8 Holder of Record ................................... 2
2.9 Written Consent .................................... 3
2.10 Registered Stockholders ............................ 3
DIRECTORS
3.1 Number and Election ................................ 3
3.2 Vacancies .......................................... 4
3.3 Authority .......................................... 4
3.4 Removal ............................................ 4
3.5 Meetings ........................................... 4
3.5 Regular Meetings ................................... 4
3.7 Special Meetings ................................... 4
3.8 Written Consent .................................... 5
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3.9 Conference Telephone ............................... 5
3.10 Quorum Majority .................................... 5
3.11 No Statement of Purpose
of Meeting Required .............................. 5
3.12 Committees of Directors ............................ 5
3.13 Compensation of Directors .......................... 5
3.14 Interested Directors/Officers or
Stockholders ..................................... 6
OFFICERS
4.1 Designation ........................................ 7
4.2 Chairman ........................................... 7
4.3 President .......................................... 7
4.4 Vice Presidents .................................... 7
4.5 Secretary .......................................... 7
4.6 Assistant Secretaries .............................. 7
4.7 Treasurer .......................................... 7
4.3 Assistant Treasurers ............................... 8
4.9 Delegation ......................................... 8
4.10 Vacancies .......................................... 8
4.11 Term/Removal ....................................... 8
4.12 Bonds .............................................. 8
4.13 Indemnification .................................... 8
4.14 Indemnification Insurance .......................... 10
4.15 Loans .............................................. 10
SHARE CERTIFICATES
5.1 Certificates ....................................... 10
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5.2 Lost Certificates .................................. 11
5.3 Transfer of Shares ................................. 11
GENERAL PROVISIONS
6.1 Dividends .......................................... 11
6.2 Reserves ........................................... 11
6.3 Checks ............................................. 11
6.4 Fiscal Year ........................................ 12
6.5 Seal ............................................... 12
6.6 Notices ............................................ 12
6.7 Securities of Other Corporations ................... 12
6.3 Resignation ........................................ 12
6.9 Construction ....................................... 12
6.10 Invalid Provisions ................................. 12
5.12 Table of Contents - Headings ....................... 12
AMENDMENTS
7.1 .................................................... 13
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SOCHRYS.com Inc.
--oo0oo--
BYLAWS
No. 1
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CORPORATE OFFICES
1.1: Nevada Office. The office of the Corporation in the State of Nevada shall be at the office of The Corporation Trust Company of Nevada, One East First Street, Reno, Washoe County, Nevada 89501 or at such other address of The Corporation Trust Company of Nevada as it may hereafter maintain in Nevada.
1.2: Other Offices. The Corporation may also have offices at such other places both within and without the State of Nevada as the Corporation's Board of Directors (the "Board") may from time to time determine or the business of the Corporation may require.
MEETINGS OF THE STOCKHOLDERS
2.1: Place. All meetings of the stockholders, may be held at such place, within or without the State of Nevada, as shall be determined by the Board and stated in the notice of the meeting or in a duly executed waiver of notice thereof.
2.2: Annual Meetings. An annual meeting of the stockholders shall be held at such time and date during the third month following the last month in the Corporation's fiscal year at which the stockholders shall elect by a plurality vote the members of the Board, and transact such other business as may properly be brought before the meeting. The Board shall establish the day and time within such third month for said meeting.
2.3: Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Articles of Incorporation, may be called by the President and shall be called by the President or Secretary at the request in writing of a majority of the members of the Board, or at the request in writing of stockholders owning a majority in amount of the entire common shares of the Corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.
2.4: Notice. Written notice of each annual and special meeting of the stockholders shall be delivered personally or mailed to each stockholder of record entitled to vote thereat at such address as appears on the books of the Corporation, at least 10 days, but not more than 60 days, prior to the meeting. Each such notice shall state the purpose or purposes for which the meeting is called and the time and place where it is to be held.
2.5: Quorum. The holders of a majority of the shares issued and outstanding and entitled to vote thereat, present in person or represented by proxy shall be requisite and shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute, by the Articles of Incorporation or by these Bylaws. If, however, such quorum shall not be present or represented at a meeting of the stockholders, the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time, without notice other than an announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally called.
2.6: Majority. When a quorum is present at a meeting, the vote of the holders of a majority of the shares having voting power present or represented in person or by proxy shall decide any question brought before such meeting, unless the question is one upon which express provision of the statutes or of the Articles of Incorporation or of these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question.
2.7: Proxies and Voting. At any meeting of the stockholders every stockholder having the right to vote shall be entitled to vote in person or by proxy duly appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than 6 months prior to said meeting, unless said instrument expressly provides for a longer period, which in no event shall exceed 7 years from the date of its execution. Each stockholder shall have one vote for each share having voting power, registered in his name on the books of the Corporation.
2.8: Holder of Record.
2.8.1: Closing of Transfer Books. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive a distribution by the Corporation (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or a share dividend, or in order to make a determination of stockholders for any other proper purpose, the Board may provide that the share transfer books shall be closed for a stated period but not to exceed, in any case, 60 days. If the share transfer books shall be closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least 10 days immediately preceding such meeting.
2.8.2: Record Date. In lieu of closing the share transfer books as aforesaid, the Board may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than 60 days and, in case of a meeting of stockholders, not less than 10 days prior to the date on which the particular action requiring such determination of stockholders is to be taken.
2.8.3: Alternative. If the share transfer books are not closed and no record date is fixed for the determination of stockholders entitled to notice of or to vote at a meeting of the stockholders, or stockholders entitled to receive a distribution by the Corporation (other than a purchase or redemption by the Corporation of any of its own shares) or a share dividend, the date on which notice of the meeting is mailed or the date stated in the resolution of the Board declaring such distribution or share dividend, as the case may be, shall be the record date for such determination of stockholders.
2.9: Written Consent. Whenever the vote of the stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action, other than the election of directors, such action may be taken without a meeting if authorized by written consent of stockholders holding at least a majority of the voting power, provided that if any greater proportion of voting power is required by these Bylaws for such action at a meeting, then such greater proportion of written consents shall be required, and this provision for action by written consent shall not supersede any specific provision for action by written consent otherwise provided by the laws of the State of Nevada.
2.10: Registered Stockholders. The Corporation shall be entitled to treat the holder of record of any share or shares as the holder in fact thereof, and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Nevada.
DIRECTORS
3.1: Number and Election. The number of Directors which shall constitute the entire Board shall be not less than three nor more than nine. The number of initial Directors shall be the number fixed in the Articles of Incorporation, and thereafter, within the limits above specified, the number of Directors shall be determined by resolution of the entire Board. The Directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3.2 of these Bylaws, and each Director elected shall hold office until his successor shall be elected and shall qualify. Directors need not be stockholders nor residents of the State of Nevada.
3.2: Vacancies. If any vacancies occur in the Board cause by death, resignation, retirement, disqualification or removal from office of any Directors or otherwise, or any new directorship is created by any increase in the authorized number of Directors, a majority of the remaining Directors may choose a successor or successors, or fill the newly created directorship, and the Directors so chosen shall hold office until the next annual election of Directors and until their successors shall be duly elected and qualified, unless sooner displaced. If, after any vacancy occurs, there are no Directors remaining, then the President shall immediately call a special meeting of stockholders to fill such vacancy.
3.3: Authority. The property and business of the Corporation shall be managed by its Board which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.
3.4: Removal. Any Director may be removed from his position as Director, either with or without cause, by the vote or written consent of stockholders representing not less than two-thirds of the issued and outstanding stock of the Corporation entitled to voting power.
3.5: Meetings. The Board may hold its meetings, both regular and special, either within or without the State of Nevada. The first meeting of each newly elected Board shall immediately follow the annual stockholders' meeting, or in the President's discretion, may be held within 30 days of such meeting upon giving 2 days' notice to each Director, either personally, by telephone, or by prepaid telex or telegram, or upon giving 4 days' notice to each Director by prepaid registered or certified mail, return receipt requested, addressed to the respective address of each Director last known to the Corporation. Upon the President's failure to call such meeting within 30 days after such annual stockholders meeting, such meeting may be called by any 2 Directors in a like manner and on like notice. Such notice shall be deemed to be given at the time when the same shall be thus communicated, transmitted or mailed, as the case may be.
3.6: Regular Meetings. Regular meetings of the Board shall be held without notice at such time and place as shall from time to time be determined by the Board pursuant to a duly adopted resolution.
3.7: Special Meetings. Special meetings of the Board may be called by the President on 2 days' notice to each Director, either personally, or by mail or by telegram; special meetings may be
called by the President or Secretary in like manner and on like notice on the written request of 2 Directors.
3.8: Written Consent. Any action required or permitted to be taken at any meeting of the Board, or a committee thereof, may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board or committee thereof, as the case may be.
3.9: Conference Telephone. Members of the Board or any committee thereof may participate in a meeting of the Board or such committee by means of a conference telephone network or a similar communications method by which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this Section constitutes presence in person at such meeting. Each person participating in the meeting shall sign the minutes thereof. The minutes may be signed in counterparts.
3.10: Quorum Majority. At all meetings of the Board the presence of 50 percent or more of the Directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board, except as may be otherwise specifically provided by statute or by the Articles of Incorporation or by these Bylaws. If a quorum shall not be present at any meeting of the Board, the Directors present thereat may adjourn the meeting from time to time, without notice other than an announcement to such effect at the meeting, until a quorum shall be present.
3.11: No Statement of Purpose of Meeting Required. Neither the business proposed to be transacted nor the purpose of any regular or special meeting of the Board need be specified in the notice or waiver of notice of such meeting.
3.12: Committees of Directors. The Board may, by resolution passed by a majority of the whole Board, designate one or more committees; each committee shall consist of 2 or more of the members of the Board, which to the extent provided in said resolution, shall have and may exercise the powers of the Board in the management of the business and affairs of the Corporation and may have power to authorize the seal of the Corporation to be affixed to all papers on which the Corporation desires to place a seal. Such committee or committees shall have such name or names as may be determined from time to time by a resolution adopted by the Board. The committees shall keep regular minutes of their proceedings and report the same to the Board when required.
3.13: Compensation of Directors. Directors, as such, shall not receive any stated salary for their services, but by resolution of the Board a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the
Board; provided that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.
3.14: Interested Directors/Officers or Stockholders.
3.14.1 Directors and officers shall exercise their powers in good faith and with a view to the interests of the Corporation. No contract or other transaction between the Corporation and one or more of its Directors or Officers, or between the Corporation any corporation, firm or association in which one or more of its directors or officers are Directors or Officers or are financially interested, is either void or voidable solely for this reason or solely because any such Director or Officer is present at the meeting of the Board or a committee thereof which authorizes or approves the contract or transaction, or because the vote or votes of common or interested Directors are counted for such purpose, if the circumstances specified in any of the following paragraphs exist:
(a) The fact of the common directorship or financial interest is disclosed or known to the Board or committee and noted in the minutes, and the Board or committee authorizes, approves or ratifies the contract or transaction in good faith by a vote sufficient for the purpose without counting the vote or votes of such Director or Directors.
(b) The fact of the common directorship or financial interest is disclosed or known to the stockholders, and they approve or ratify the contract or transaction in good faith by a majority vote or written consent of stockholders holding a majority of the shares entitled to vote; the votes of the common or interested Directors or Officers shall be counted in any such vote of stockholders.
(c) The contract or transaction is fair as to the Corporation at the time it is authorized or approved.
3.14.2: Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board or a committee thereof which authorized, approves or ratifies a contract or transaction, and if the votes of the common or interested Directors are not counted at such meeting, then a majority of the disinterested Directors may authorize, approve or ratify a contract or transaction.
3.14.3: Unless otherwise provided in the Articles of Incorporation or the Bylaws, the Board may fix the compensation of Directors for services in any capacity.
3.14.4: Nothing in this section or subsection hereafter shall be construed to invalidate any contract or transaction which would be valid in the absence of this section.
OFFICERS
4.1: Designation. The Officers of the Corporation shall be elected by the Directors and shall be a President, a Secretary and a Treasurer who shall be elected for one year by the Directors at their first meeting after the annual meeting of stockholders and who shall hold office until their successors are duly elected and qualified. The Board may also choose a Chairman of the Board, Vice Presidents, Assistant Secretaries and Assistant Treasurers and such other officers and agents as may be deemed necessary. Any two or more offices may be held by the same person.
4.2: Chairman. The Chairman, if there shall be such an officer, shall, if present, preside at all meetings of the Board and exercise such other powers and duties as may from time to time be assigned to the Chairman or prescribed by these Bylaws.
4.3: President. The President shall be the Corporation's chief executive officer, shall have general supervision of the affairs of the Corporation and shall exercise all powers as are incident to the offices of chief executive officer under applicable laws and other duties required of him by the Board.
4.4: Vice Presidents. The Vice Presidents in the order designated by the Board shall exercise all the functions of the President during the absence or disability of the President. Each Vice President shall have such powers and discharge such duties as may be assigned him from time to time by the Board. The Board may designate one or more Vice Presidents as Executive Vice Presidents or Senior Vice Presidents or may assign such other designations as the Board deems appropriate from time to time.
4.5: Secretary. The Secretary shall issue notices for all meetings, shall keep minutes of all meetings, shall have charge of the seal and the corporate books, and shall make such reports and perform such other duties as are incident to his office or are properly required of him by the Board.
4.5: Assistant Secretaries. The Assistant Secretaries in the order of their seniority shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board shall prescribe.
4.7: Treasurer. The Treasurer shall have the custody of all monies and securities of the Corporation and shall keep regular books of account. He shall disburse the funds of the Corporation as directed by the Board, taking proper vouchers for such
disbursements and shall render to the Board from time to time as may be required of him an account of all his transactions as Treasurer and of the financial condition of the Corporation. He shall perform all duties incident to his office or that are properly required of him by the Board.
4.8: Assistant Treasurers. The Assistant Treasurers in the order of their relative seniority shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board shall prescribe.
4.9: Delegation. In the case of absence or inability to act of any Officer of the Corporation, and of any person herein authorized to act in his place, the Board may from time to time delegate the powers or duties of such Officer to any other Officer or any Director or other person whom it may select.
4.10: Vacancies. Vacancies in any office arising from any cause may be filled by the Board or any authorized committee thereof at any regular or special meeting.
4.11: Term/Removal. The Officers of the Corporation shall hold office until their successors are duly elected and qualified. Any Officer elected or appointed by the Board may be removed at any time with or without cause by the affirmative vote of a majority of the entire Board.
4.12: Bonds. The Board may by resolution require any and all of the Officers to give bonds to the Corporation with sufficient surety or sureties, conditioned for the faithful performance of the duties of their respective offices and to comply with such other conditions as may from time to time be required by the Board.
4.13: Indemnification.
4.13.1: The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he is or was a Director, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding 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 Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The indemnification set forth in this paragraph is intended to apply to any such action, suit or proceeding even though same results from, or in any way relates to, the negligence of the indemnified person, but not to any matters as to which such indemnified person shall be adjudged in such action, suit or proceeding to be guilty of gross negligence or willful misconduct.
4.13.2: The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a Director, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or 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 Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper.
4.13.3: To the extent that a Director, Officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 4.13.1 or 4.13.2 or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.
4.13.4: Any indemnification under Section 4.13.1 or 4.13.2 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 4.13.1 or 4.13.2. Such determination shall be made by the Board by a majority vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding, or if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or by the stockholders.
4.13.5: Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board in the specific case upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in Sections 4.13.1 through 4.13.5.
4.13.6: The indemnification provided by Sections 4.13.1 through 4.13.5 shall not be deemed exclusive of any other rights to which one seeking indemnification may be entitled under any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, any shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. If the scope of any indemnification set forth in Sections 4.13.1 through 4.13.5 is judicially determined to be too broad to permit accomplishment of such indemnification to its full extent, then such indemnification shall be accomplished to the maximum extent permitted by applicable law, and, if necessary, the scope of any such indemnification may be judicially modified (to the minimum extent necessary to comply with applicable law) and thereafter fully accomplished.
4.14: Indemnification Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a Director, Officer, agent or employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer, agent or employee of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under these Bylaws or applicable law.
4.15: Loans. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution by the Board. Such authority may be general or confined to specific instances.
SHARE CERTIFICATES
5.1: Certificates. The certificates of shares of the Corporation shall be numbered and shall be entered in the books of the Corporation as they are issued. They shall exhibit the
holder's name and number of shares and shall be signed by the President or Vice President and the Secretary or Assistant Secretary. If any certificate is signed by a Transfer Agent or an Assistant Transfer Agent or by a Transfer Clerk acting on behalf of the Corporation and a Registrar, the signature of any such Officer of the Corporation may be a facsimile.
5.2: Lost Certificates. The Board may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing such issuance of a new certificate or certificates, the Board may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed.
5.3: Transfer of Shares. Upon surrender to the Corporation or the Transfer Agent of the Corporation of a share certificate duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Corporation or its Transfer Agent shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon the books of the Corporation.
GENERAL PROVISIONS
6.1: Dividends. Dividends may be declared by the Board and paid out of the annual net profits of the Corporation or out of its net assets in excess of its capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of the Corporation's assets.
5.2: Reserves. Before payment of any distribution there may be set aside out of any funds of the Corporation available for distributions such sum as the Board from time to time, in its absolute discretion, thinks proper as a reserve fund to meet contingencies, or for equalizing distributions, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Board shall determine to be in the best interest of the Corporation, and the Board may modify or abolish any such reserve in the same manner in which it was created.
6.3: Checks. The monies of the Corporation shall be deposited in the name of the Corporation in such bank or banks or trust companies, brokerage firms or other financial entities as the
Board shall designate and shall be drawn out only by checks or drafts signed by persons designated by resolution of the Board.
6.4: Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board.
6.5: Seal. The corporate seal of the Corporation shall have inscribed thereon the name of the Corporation. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
6.6: Notices. Whenever under the provisions of the statutes or of the Articles of Incorporation or of these Bylaws, notice is required to be given to any Director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such Director or stockholder at such address as appears on the books of the Corporation, and such notice shall be deemed to be given at the time when the same shall be thus mailed.
6.7: Securities of Other Corporations. Whenever the Corporation is the holder of any securities (including without limitation, shares, debentures, notes and convertible securities of any kind) of any other corporation, any right or power of the Corporation as a holder of any such securities (including without limitation, the attendance, acting and voting at any meeting of the holders of such securities and the execution of waivers, consents, proxies and other instruments relating thereto) may be exercised on behalf of the Corporation by the President or any Vice President of the Corporation or by such other person as the Board may authorize.
6.8: Resignation. Any Director, Officer, or agent may resign by giving written notice to the President or the Secretary. The resignation shall take effect at the time specified therein, or immediately if no time is so specified. The acceptance of such resignation shall not be necessary to make it effective unless such resignation is so conditioned.
6.9: Construction. Whenever the context so requires, the masculine shall include the feminine and neuter, and the singular shall include the plural and vice versa.
6.10: Invalid Provisions. If any part of these Bylaws shall be held invalid or inoperative for any reason, then so far as possible and reasonable, the remaining part shall be valid and operative, and effect shall be given so far as possible to the intent manifested by the part held invalid or inoperative.
6.11: Table of Contents - Headings. The Table of Contents and headings used in these Bylaws have been inserted for convenience
only and do not constitute matter to be construed in interpretation and construction.
AMENDMENTS
7.1: Alterations, amendments or repeals of these Bylaws may be made by a majority of the stockholders entitled to vote at any regular or special meeting if the notice of such meeting contains a statement of the proposed alteration, amendment or repeal, or by the Board by a majority vote of the entire Board at any regular or special meeting provided notice of such alteration, amendment or repeal has been given to each Director in writing at lease 2 days prior to said meeting.
Dated October 12, 1999
/s/ Andre Hensler ----------------- Andre Hensler /s/ Paul Claverie ----------------- Paul Claverie |
EXHIBIT 2.D
Summary Translation of
Articles of Incorporation
GRAPH-O-LOGIC SA
(the "Company")
The Articles relate to the following subjects:
Title I NAME OF THE COMPANY/HEADQUARTERS/GOALS/LIFETIME Title II SHARE CAPITAL Title III GENERAL ASSEMBLY Title IV COUNSEL OF DIRECTORS Title V AUDITORS Title VI ANNUAL ACCOUNTS/RESERVES/DIVIDENDS Title VII DISSOLUTION AND LIQUIDATION OF COMPANY Title VIII PUBLICATION / JURISDICTION |
The Company was constituted on February 14, 1995 as a joint-stock company under Articles 620 to 761 of the Swiss Law of General Obligations with headquarters in Geneva, Switzerland with the following objects:
o purchase and sale of hardware and software,
o development and distribution of software,
o engineering and development relating to the foregoing,
o participation in other companies of any kind except in Swiss real estate companies.
o management tasks relating to the foregoing
The Company is authorized to effect any commercial or financial transactions relating directly or indirectly to the any of the objects.
The life of the company is indefinite.
Share capital of the Company is CH 100'000, divided in 100 shares of CH 1,000 each.
The share capital is fully paid-up.
Shares issued to the bearer.
Some extracts of the different titles of importance:
Title III GENERAL ASSEMBLY
(aka General Meeting of Shareholders) can adopt and modify the articles elect and discharge the members of the counsel of directors and the auditors; approve the annual accounts; decide about the distribution of profit;
The General Assembly is to take place within 6 months after closing of annual accounts.
10% of shareholders can ask for General Assembly.
The president of the counsel of directors acts as chairman of the General Assembly.
Title IV COUNSEL OF DIRECTORS
May have one or more members, a majority of whom must be Swiss nationals.
If one only one member, he must be a Swiss national and a Swiss resident.
Members are elected for one year, indefinitely re-eligible.
Tasks: Management of company and issuing of necessary instructions; Fixing of organisation of company; fixing of basis for book-keeping, financial control, business-plan; name and withdraw members of management; issue of annual accounts and reporting to GA; to inform the justice in case of debts in excess.
Title V AUDITORS
Elected for one year, re-eligible. The auditors must be qualified and independent from the company.
Title VI ANNUAL ACCOUNTS, GENERAL
Fiscal year starts 1st January and ends 31st of December. 5% of annual profit must be allocated to the general reserve until such time as the reserve reaches 20% of share capital. In case of payment of dividend of 5% or more, 10% of distribution must be paid in to the general reserve in addition to the 5% profit allocation. Withholding tax of 35% to be paid on dividends.
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SAID ACT.
SOCHRYS.COM INC.
WARRANT TO PURCHASE COMMON STOCK
WARRANT NO.: NUMBER OF WARRANT SHARES:
SERIES A
DATE OF ISSUANCE: AUGUST 31, 1999
Sochrys.com Inc. a Nevada corporation (the "COMPANY"), hereby certifies that,
for value received, [NAME], (the "HOLDER") is entitled, subject to the terms set
forth below, to purchase from the Company upon surrender of this Warrant, at any
time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time
on the Expiration Date (as defined herein) [NO. OF SHARES] fully paid
nonassessable shares of Common Stock (as defined in Section 1(b)) of the Company
(the "WARRANT SHARES") at the purchase price per share provided in Section 1(b)
below (the "EXERCISE PRICE"); provided, however, that in no event shall the
Holder be entitled to exercise this Warrant for a number of Warrant Shares in
excess of that number of Warrant Shares which, upon giving effect to such
exercise, would cause the aggregate number of shares of Common Stock
beneficially owned by the Holder and its affiliates to exceed 4.99% of the
outstanding shares of the Common Stock following such exercise. For purposes of
the foregoing proviso, the aggregate number of shares of Common Stock
beneficially owned by the Holder and its affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which the determination of such proviso is being made, but shall exclude shares
of Common Stock which would be issuable upon (i) exercise of the remaining,
unexercised Warrants beneficially owned by the Holder and its affiliates and
(ii) exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company beneficially owned by the Holder and its
affiliates (including, without limitation, any convertible notes, convertible
preferred stock, warrants or rights to receive shares of Common Stock) subject
to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. The Holder may waive the foregoing limitations by written notice to the Company upon not less than 61 days prior notice (with such waiver taking effect only upon the expiration of such 61 day notice period).
Section 1.
(a) Definitions. The following words and terms as used in this Warrant shall have the following meanings:
"BUSINESS DAY" means any day except Saturday, Sunday and any day which is designated in the State of New York as a legal holiday or a day on which banking institutions are authorized or legally required or other government action to close.
"CLOSING BID PRICE" means, for any security as of any date, the last closing bid price for such security on The Nasdaq SmallCap Market as reported by Bloomberg Financial Markets ("BLOOMBERG"), or, if The Nasdaq SmallCap Market is not the principal trading market for such security, the last closing bid price of such security on a Subsequent Market (as defined below) on which such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holders the Common Stock Warrants. If the Company and the Holders of the Common Stock Warrants are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Section 2(a) of this Warrant with the term "Closing Bid Price" being substituted for the term "Market Price." (All such determinations to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period).
"COMMON STOCK" means the Company's common stock, par value $.001 per share, and (ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock.
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Section
8 or
Convertible Securities (as defined in Section 8) are actually exercisable or convertible at such time, but excluding any shares of Common Stock issuable upon exercise of the Common Stock Warrants.
"ESCROW AGENT" means Alan R. Turem, P.C. having an office at 4651 Roswell Road, Suite B-105 Atlanta, Georgia 30342.
"EXERCISE PRICE" shall be $2.00, subject to adjustment as hereinafter provided.
"EXPIRATION DATE" means December 31, 2004.
"OTHER SECURITIES" means (i) those securities, convertible securities, options and warrants of the Company issued prior to, and outstanding on, the date of issuance of this Warrant, (ii) shares of Common Stock, and warrants or other securities that are convertible into or exchangeable for shares of Common Stock, issuable in connection with the subsequent acquisitions by the Company.
"PERSON" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof, or any other entity or organization.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"WARRANT" means this Warrant and all Warrants issued in exchange, transfer or replacement thereof.
"WARRANT SHARES" means the shares of Common Stock issuable upon the exercise of this Warrant.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the Company's successors and (B) to any applicable law defined or referred to herein, shall be deemed references to such applicable law as the same may have been or may be amended or supplemented from time to time.
(ii) When used in this Warrant, the words "HEREIN," "HEREOF," and "HEREUNDER," and words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words "SECTION," "SCHEDULE," and "EXHIBIT" shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa.
Section 2. Exercise of Warrant.
(a) Exercise may be done at any time during normal business hours on any business day on or after the opening of business on the date hereof and prior to 11:59 P.M. Eastern Time on the Expiration Date by delivery to the Escrow Agent and the Company in the manner specified below of (i) a written notice of such Holder's election to exercise this Warrant which notice shall be in the form attached as Exhibit A hereto, (the "EXERCISE NOTICE"), and shall specify the number of Warrant Shares to be purchased and the other information set out therein, (ii) payment to the Company of an amount equal to the Exercise Price multiplied by the number of Warrant Shares as to which the Warrant is being exercised (the "AGGREGATE EXERCISE PRICE") in cash or by check or wire transfer payable to the Company in immediately available funds, and (iii) the surrender of this Warrant. Provided, that if such Warrant Shares are to be issued in any name other than that of the registered Holder of this Warrant, such issuance shall be deemed a transfer and the provisions of Section 7 shall be applicable and the Exercise Notice shall be accompanied by such additional documentation as may be required by that Section. Such Exercise Notice, payment, Warrant and other documentation required for exercise shall be delivered to the Escrow Agent at the address set out in Section 1 with a copy of the Exercise Notice being delivered simultaneously to the Company.
(b) In the event of any exercise of the rights represented by this Warrant in compliance with this Section 2(a), a certificate or certificates for the Warrant Shares so purchased, in such denominations as may be requested by the Holder hereof and registered in the name of, or as directed by, the Holder, shall be delivered at the Company's expense to, or as directed by, such Holder as soon as practicable after such rights shall have been so exercised, and in any event no later than five (5) business days after delivery of the Exercise Notice to the Escrow Agent. In the case of a dispute as to the determination of the Exercise Price of a security or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the Holder via facsimile within one business day of receipt of the Holder's subscription notice. If the Holder and the Company are unable to agree upon the determination of the Exercise Price or arithmetic calculation of the Warrant Shares within one day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall immediately submit via facsimile (i) the disputed determination of the Exercise Price to an independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares to its independent, outside accountant. The Company shall cause the investment banking firm or the accountant, as
the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than two (2) Business Days from receipt of the disputed determinations or calculations. Such investment banking firm's or accountant's determination or calculation, as the case may be, shall be deemed conclusive absent manifest error.
(c) Unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, as soon as practicable and in no event later than five business days after any exercise and at its own expense, issue a new Warrant identical in all respects to the Warrant exercised except (i) it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior to such exercise under the Warrant exercised, less the number of Warrant Shares with respect to which such Warrant is exercised, and (ii) the Holder thereof shall be deemed for all corporate purposes to have become the Holder of record of such Warrant Shares immediately prior to the close of business on the date on which the Warrant is surrendered and payment of the amount due in respect of such exercise and any applicable taxes is made, irrespective of the date of delivery of certificates evidencing such Warrant Shares, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are properly closed, such person shall be deemed to have become the Holder of such Warrant Shares at the opening of business on the next succeeding date on which the stock transfer books are open.
(d) No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock issued upon exercise of this Warrant shall be rounded up or down to the nearest whole number.
Section 3. Covenants as to Common Stock; Certain Registrations. The Company hereby covenants and agrees as follows:
(a) This Warrant is, and any Common Stock Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized and validly issued.
(b) All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.
(c) During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved at least 100% of the number of shares of Common Stock needed to provide for the exercise of the rights then represented by this Warrant and the par value of said shares will at all times be less than or equal to the applicable Exercise Price.
(d) The Company will not, by amendment of its charter or through any reorganization, transfer of assets, consolidation, 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 by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
(e) This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets.
Section 4. Taxes. The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.
Section 5. Warrant Holder Deemed Not a StockHolder. Except as otherwise specifically provided herein, no Holder, as such, of this Warrant shall be entitled to vote or receive dividends or be deemed the Holder of shares of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of this Warrant of the Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on such Holder to purchase any securities or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 5, the Company will provide the Holder of this Warrant with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.
Section 6. Representations of Holder. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account for investment and not with a view to, or for sale in connection with, any distribution hereof or of any of the shares of Common Stock or other securities issuable upon the exercise thereof, and not with any present intention of distributing any of the same. The holder of this Warrant further represents, by acceptance hereof, that, as of this date,
such holder is an accredited investor as such term is defined in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act (an "ACCREDITED INVESTOR"). Upon exercise of this Warrant, the holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so purchased are being acquired solely for the holder's own account and not as a nominee for any other party, for investment, and not with a view toward distribution or resale other than pursuant to an effective registration statement or an exemption under the Securities Act and that such holder is an Accredited Investor. Notwithstanding the foregoing, by making the representations herein, the holder does not agree to hold the Warrant or the Warrant Shares for any minimum or other specified term and reserves the right to dispose of the Warrant and the Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. If such holder cannot make such representations because they would be factually incorrect, it shall be a condition to such holder's exercise of the Warrant that the Company receive such other representations as the Company considers reasonably necessary to assure the Company that the issuance of its securities upon exercise of the Warrant shall not violate any United States or state securities laws.
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the Holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person in whose name any Warrant is registered on the register as the owner and Holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant.
(b) The Holder of this Warrant understands that this Warrant has not been and is not expected to be, registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (a) subsequently registered thereunder, or (b) such Holder shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration; provided that (i) any sale of such securities made in reliance on Rule 144 promulgated under the Securities Act may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the Securities and Exchange Commission thereunder; and (ii) except as provided below, neither the Company nor any other person
is under any obligation to register the Common Stock Warrants under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder except as may be expressly set out herein.
(c) The Company is obligated to register the Warrant Shares for resale under the Securities Act and the Holder of this Warrant is not entitled to the registration rights in respect of the Warrant Shares, unless and until the Company enters into a Registration Rights Agreement with the Holder of these Warrants, at the sole discretion of the Company.
Section 8. Adjustment of Exercise Price and Number of Shares. In order to prevent dilution of the rights granted under this Warrant, the Exercise Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted from time to time as follows:
(a) Adjustment of Exercise Price upon Subdivision or Combination of Common Stock. If the Company at any time after the date of issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately increased. If the Company at any time after the date of issuance of this Warrant combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately decreased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person (as defined below) or other transaction which is effected in such a way that Holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as "ORGANIC CHANGE." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance satisfactory to the Holders of the Common Stock Warrants representing a majority of the shares of Common Stock issuable upon exercise of such Common Stock Warrants then outstanding) to ensure that each of the Holders of the Common Stock Warrants will thereafter have the right to acquire and receive in lieu of or addition to (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the exercise of such Holder's Common Stock Warrants, such shares of stock, securities or assets as may be issued or payable in the Organic Change with respect to or in exchange for the number of shares of Common Stock immediately theretofore acquirable and receivable upon the exercise of such Holder's Common Stock Warrants had such Organic Change not taken place (without taking into account any limitations or restrictions on exercise). In any such case, the Company will make appropriate provision (in form and substance satisfactory to the Holders of the Common Stock Warrants representing a majority of the shares of Common Stock issuable upon exercise of such Common Stock Warrants then outstanding) with respect to such Holders' rights and interests to insure that the provisions of this Section 8 and Section 9 will thereafter be applicable to the Common Stock Warrants (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Exercise Price to the value for the Common Stock reflected by the terms of such consolidation, merger or sale, and a corresponding immediate adjustment in the number of shares of shares of Common Stock acquirable and receivable upon exercise of the Common Stock Warrants, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger or sale). The terms of any documents evidencing an Organic Change shall include such terms as to give effect to the tenor of this provision and evidencing the obligation to deliver to each Holder of Common Stock Warrants such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to acquire.
(c) Distribution of Assets. If the Company shall declare or make any distribution of its assets (or rights to acquire its assets) to Holders of Common Stock as a partial liquidating dividend, by way or return of capital or otherwise (including any dividend or distribution to the Company's stockholders of cash or shares (or rights to acquire shares) of capital stock of a subsidiary) (a "DISTRIBUTION"), at any time after the issuance of this Warrant, then the Holder of this Warrant shall be entitled upon exercise of this Warrant for the purchase of any or all of the shares of Common Stock subject hereto, after the record date for determining shareholders entitled to receive such Distribution, to receive the amount of such assets (or rights) which would have been payable to the Holder had such Holder been the Holder of such shares of Common Stock on the record date for determination of stockholders entitled to such Distribution.
(d) Notices.
(i) Immediately upon any adjustment of the Exercise Price, the Company will give written notice thereof to the Holder of this Warrant, setting forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company will give written notice to the Holder of this Warrant at least twenty (20) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to Holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change, dissolution or
liquidation and in no event shall such notice be provided to such Holder prior to such information being made known to the public.
(iii) The Company will also give written notice to the Holder of this Warrant at least twenty (20) days prior to the date on which any Organic Change, dissolution or liquidation will take place and in no event shall such notice be provided to such Holder prior to such information being made known to the public.
Section 9. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company shall, on receipt of an indemnification undertaking, issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Section 10. Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) upon receipt, when delivered by a delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
Sochrys.com Inc.
4651 Roswell Road
suite B-106
Atlanta, Georgia 30342
Telephone: (404) 256-1963
Telefax: (404) 256-2500
Attention: Jean Pierre Hoffman, President
|
If to a Holder of this Warrant, to it at the address set forth below such Holder's signature on the signature page hereof.
Each party shall provide five days' prior written notice to the other party of any change in address or facsimile number.
Section 11. Miscellaneous.
(a) No Voting Rights; Limitation of Liability - Prior to exercise, this Warrant will not entitle the Holder to any voting rights or other rights as a stockholder of the Company. No provision hereof, in the absence of affirmative action by the Holder to
exercise this Warrant, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of the Warrant Shares pursuant to the exercise hereof.
(b) Waiver and Modification This Warrant and any term hereof may be changed, waived, discharged, or terminated only by an instrument in writing signed by the party or Holder hereof against which enforcement of such change, waiver, discharge or termination is sought.
(c) Headings - The headings in this Warrant are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
(d) Governing Law - THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA. The Holder hereby submits to the jurisdiction of the State of Georgia and agrees that service of all writs, process and summonses in any such suit, action or proceeding brought in the United States against the Company may be made upon the Escrow Agent and shall be governed by and interpreted under the laws of the State of Georgia without regard to principles of conflicts of law thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its duly authorized officer as of the date first indicated above.
SOCHRYS.COM INC.
By: /s/JEAN PIERRE HOFMAN ------------------------- Name: Jean Pierre Hofman Title: President By: /s/ PAUL CLAVERIE ------------------------- Name: Paul Claverie Title: Vice President |
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE THEREOF (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY OTHER UNITED STATES FEDERAL OR STATE SECURITIES OR BLUE SKY LAWS OR APPLICABLE NON-UNITED STATES SECURITIES LAWS, AND HAVE BEEN ISSUED IN A MANNER INTENDED TO COMPLY WITH THE CONDITIONS CONTAINED IN REGULATION S UNDER THE ACT. NO OFFER, SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION (COLLECTIVELY, A "DISPOSAL") OR EXERCISE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY BE MADE (A) IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF ANY "U.S. PERSON" (AS DEFINED IN REGULATION S) UNLESS (i ) REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR (ii) SOCHRYS.COM INC. (THE "COMPANY") RECEIVES A WRITTEN OPINION OF UNITED STATES LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO IT TO THE EFFECT THAT SUCH DISPOSAL IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS OR (B) OUTSIDE THE UNITED STATES TO, OR FOR THE ACCOUNT OR BENEFIT OF ANY PERSON WHO IS NOT A "U.S. PERSON" UNLESS PRIOR TO SUCH DISPOSAL ( i ) THE BENEFICIAL OWNER OF SUCH SECURITIES AND THE PROPOSED TRANSFEREE SUBMIT CERTAIN CERTIFICATIONS TO THE COMPANY (FORMS OF WHICH ARE AVAILABLE FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES) AND ( ii ) THE COMPANY RECEIVES THE LEGAL OPINION DESCRIBED IN (A) (ii) ABOVE. THE SECURITIES ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THIS WARRANT.
SOCHRYS.COM INC.
WARRANT TO PURCHASE COMMON STOCK
WARRANT NO.: NUMBER OF WARRANT SHARES:
SERIES B
DATE OF ISSUANCE: AUGUST 31, 1999
Sochrys.com Inc. a Nevada corporation (the "COMPANY"), hereby certifies that, for value received, [NAME], (the "HOLDER") is entitled, subject to the terms set forth below, to purchase from the Company upon surrender of this Warrant, at any time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date (as defined herein) [NO. OF SHARES] fully paid nonassessable shares of Common Stock (as
defined in Section 1(b)) of the Company (the "WARRANT SHARES") at the purchase price per share provided in Section 1(b) below (the "EXERCISE PRICE"); provided, however, that in no event shall the Holder be entitled to exercise this Warrant for a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to such exercise, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates to exceed 4.99% of the outstanding shares of the Common Stock following such exercise. For purposes of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such proviso is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised Warrants beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by the Holder and its affiliates (including, without limitation, any convertible notes, convertible preferred stock, warrants or rights to receive shares of Common Stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. The Holder may waive the foregoing limitations by written notice to the Company upon not less than 61 days prior notice (with such waiver taking effect only upon the expiration of such 61 day notice period).
Section 1.
(a) Definitions. The following words and terms as used in this Warrant shall have the following meanings:
"BUSINESS DAY" means any day except Saturday, Sunday and any day which is designated in the State of New York as a legal holiday or a day on which banking institutions are authorized or legally required or other government action to close.
"CLOSING BID PRICE" means, for any security as of any date, the last closing bid price for such security on The Nasdaq SmallCap Market as reported by Bloomberg Financial Markets ("BLOOMBERG"), or, if The Nasdaq SmallCap Market is not the principal trading market for such security, the last closing bid price of such security on a Subsequent Market (as defined below) on which such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security as reported in the "pink sheets" by the
National Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holders the Common Stock Warrants. If the Company and the Holders of the Common Stock Warrants are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Section 2(a) of this Warrant with the term "Closing Bid Price" being substituted for the term "Market Price." (All such determinations to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period).
"COMMON STOCK" means the Company's common stock, par value $.001 per share, and (ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock.
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to Section 8 or Convertible Securities (as defined in Section 8) are actually exercisable or convertible at such time, but excluding any shares of Common Stock issuable upon exercise of the Common Stock Warrants.
"ESCROW AGENT" means Alan R. Turem, P.C. having an office at 4651 Roswell Road, Suite B-105 Atlanta, Georgia 30342.
"EXERCISE PRICE" shall be $3.00, subject to adjustment as hereinafter provided.
"EXPIRATION DATE" means December 31, 2004.
"DEEMED MAXIMUM MARKET PRICE" means, with respect to any security for any date, the amount of $6.00.
"OTHER SECURITIES" means (i) those securities, convertible securities, options and warrants of the Company issued prior to, and outstanding on, the date of issuance of this Warrant, (ii) shares of Common Stock, and warrants or other securities that are convertible into or exchangeable for shares of Common Stock, issuable in connection with the subsequent acquisitions by the Company.
"PERSON" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof, or any other entity or organization.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSEQUENT MARKET" means any of the New York Stock Exchange, American Stock Exchange or Nasdaq National Market, Nasdaq SmallCap Market or any other public stock exchange on which the Company's Securities are listed for trading.
"TRADING DAY" means (a) a day on which the Common Stock is quoted on the OTC BB or listed for trading on a Subsequent Market or (b) if the Common Stock is not quoted on the OTC BB or is not listed on a Subsequent Market, a day on which the Common Stock is quoted in the over-the-counter market, as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a) and (b) hereof, then a Trading Day shall be a Business Day.
"WARRANT" means this Warrant and all Warrants issued in exchange, transfer or replacement thereof.
"WARRANT SHARES" means the shares of Common Stock issuable upon the exercise of this Warrant.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the Company's successors and (B) to any applicable law defined or referred to herein, shall be deemed references to such applicable law as the same may have been or may be amended or supplemented from time to time.
(ii) When used in this Warrant, the words "HEREIN," "HEREOF," and "HEREUNDER," and words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words "SECTION," "SCHEDULE," and "EXHIBIT" shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa.
Section 2. Exercise of Warrant.
(a) Exercise may be done at any time during normal business hours on any business day on or after the opening of business on the date hereof and prior to 11:59 P.M. Eastern Time on the Expiration Date by delivery to the Escrow Agent and the Company in the manner specified below of (i) a written notice of such Holder's election to exercise this Warrant which notice shall be in the form attached as Exhibit A hereto, (the "EXERCISE NOTICE"), and shall specify the number of Warrant Shares to be purchased and the other information set out therein, (ii) payment to the Company of an amount equal to the Exercise Price multiplied by the number of Warrant Shares as to which the Warrant is being exercised (the "AGGREGATE EXERCISE PRICE") in cash or by check or wire transfer payable to the Company in immediately available funds, and (iii) the surrender of this Warrant. Provided, that if such Warrant Shares are to be issued in any name other than that of the registered Holder of this Warrant, such issuance shall be deemed a transfer and the provisions of Section 7 shall be applicable and the Exercise Notice shall be accompanied by such additional documentation as may be required by that Section. Such Exercise Notice, payment, Warrant and other documentation required for exercise shall be delivered to the Escrow Agent at the address set out in Section 1 with a copy of the Exercise Notice being delivered simultaneously to the Company.
(b) In the event of any exercise of the rights represented by this Warrant in compliance with this Section 2(a), a certificate or certificates for the Warrant Shares so purchased, in such denominations as may be requested by the Holder hereof and registered in the name of, or as directed by, the Holder, shall be delivered at the Company's expense to, or as directed by, such Holder as soon as practicable after such rights shall have been so exercised, and in any event no later than five (5) business days after delivery of the Exercise Notice to the Escrow Agent. In the case of a dispute as to the determination of the Exercise Price of a security or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the Holder via facsimile within one business day of receipt of the Holder's subscription notice. If the Holder and the Company are unable to agree upon the determination of the Exercise Price or arithmetic calculation of the Warrant Shares within one day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall immediately submit via facsimile (i) the disputed determination of the Exercise Price to an independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares to its independent, outside accountant. The Company shall cause the investment banking firm or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than two (2) Business Days from receipt of the disputed determinations or calculations. Such investment banking firm's or accountant's determination or calculation, as the case may be, shall be deemed conclusive absent manifest error.
(c) Unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, as soon as practicable and in no event later than five business days after any exercise and at its own expense, issue a new Warrant identical in all respects to the Warrant exercised except (i) it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior to such exercise under the Warrant exercised, less the number of Warrant Shares with respect to which such Warrant is exercised, and (ii) the Holder thereof shall be deemed for all corporate purposes to have become the Holder of record of such Warrant Shares immediately prior to the close of business on the date on which the Warrant is surrendered and payment of the amount due in respect of such exercise and any applicable taxes is made, irrespective of the date of delivery of certificates evidencing such Warrant Shares, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are properly closed, such person shall be deemed to have become the Holder of such Warrant Shares at the opening of business on the next succeeding date on which the stock transfer books are open.
(d) No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock issued upon exercise of this Warrant shall be rounded up or down to the nearest whole number.
(e) Notwithstanding anything contained herein to the contrary, the Holder of this Warrant may, at its election exercised in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the "Net Number" of shares of Common Stock determined according to the following formula:
Net Number = Y x (A - B)/B
For purposes of the foregoing formula:
Y = the total number shares with respect to which this Warrant is then being exercised.
A = is the lesser of (i) the Deemed Maximum Market Price and (ii) the average of the closing bid prices of the common stock for 5 trading days immediately prior to but not including the Exercise Date.
B = the Exercise Price then in effect at the time of such exercise.
For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder hereof, and the holding period for the Warrant Shares shall be deemed to have been commenced, on the issue date.
Section 3. Covenants as to Common Stock; Certain Registrations. The Company hereby covenants and agrees as follows:
(a) This Warrant is, and any Common Stock Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized and validly issued.
(b) All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.
(c) During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved at least 100% of the number of shares of Common Stock needed to provide for the exercise of the rights then represented by this Warrant and the par value of said shares will at all times be less than or equal to the applicable Exercise Price.
(d) The Company will not, by amendment of its charter or through any reorganization, transfer of assets, consolidation, 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 by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
(e) This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets.
Section 4. Taxes. The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.
Section 5. Warrant Holder Deemed Not a StockHolder. Except as otherwise specifically provided herein, no Holder, as such, of this Warrant shall be entitled to vote or receive dividends or be deemed the Holder of shares of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of this Warrant of the Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on such Holder to purchase any securities or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 5, the Company will provide the Holder of this Warrant with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.
Section 6. Representations of Holder. The Holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account for investment and not as a nominee or with a view to, or for sale in connection with, any distribution hereof or of any of the shares of Common Stock or other securities issuable upon the exercise thereof, and not with any present intention of distributing any of the same. The Holder of this Warrant further represents, by acceptance of this Warrant, that, as of this date, such Holder is not a "U.S. Person" and acknowledges that this warrant is being acquired by it in an "offshore transaction" and not pursuant to any "directed selling efforts" having occurred in the United States (as the captioned terms are defined in Regulation S of the Act). Upon exercise or transfer of this Warrant, the Holder shall upon request by the Company and as a condition of such transfer or being issued any Warrant Shares as the case may be, provide the foregoing representations again and in writing as of the date of such exercise. Notwithstanding the foregoing, by making the representations herein, the Holder does not agree to hold the Warrant or the Warrant Shares for any minimum or other specified term and reserves the right to dispose of the Warrant and the Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. If such Holder cannot make such representations because they would be factually incorrect, it shall be a condition
to such Holder's exercise of the Warrant that the Company receive such other representations as the Company considers reasonably necessary to assure the Company that the issuance of its securities upon exercise of the Warrant shall not violate any United States or state securities laws.
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the Holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person in whose name any Warrant is registered on the register as the owner and Holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant.
(b) The Holder of this Warrant understands that this Warrant has not been and is not expected to be, registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (a) subsequently registered thereunder, or (b) such Holder shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration; provided that (i) any sale of such securities made in reliance on Rule 144 promulgated under the Securities Act may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the Securities and Exchange Commission thereunder; and (ii) except as provided below, neither the Company nor any other person is under any obligation to register the Common Stock Warrants under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder except as may be expressly set out herein.
(c) The Company is obligated to register the Warrant Shares for resale under the Securities Act and the Holder of this Warrant is not entitled to the registration rights in respect of the Warrant Shares, unless and until the Company enters into a Registration Rights Agreement with the Holder of these Warrants, at the sole discretion of the Company.
Section 8. Adjustment of Exercise Price and Number of Shares. In order to prevent dilution of the rights granted under this Warrant, the Exercise Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted from time to time as follows:
(a) Adjustment of Exercise Price upon Subdivision or Combination of Common Stock. If the Company at any time after the date of issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately increased. If the Company at any time after the date of issuance of this Warrant combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately decreased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person (as defined below) or other transaction which is effected in such a way that Holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as "ORGANIC CHANGE." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance satisfactory to the Holders of the Common Stock Warrants representing a majority of the shares of Common Stock issuable upon exercise of such Common Stock Warrants then outstanding) to ensure that each of the Holders of the Common Stock Warrants will thereafter have the right to acquire and receive in lieu of or addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the exercise of such Holder's Common Stock Warrants, such shares of stock, securities or assets as may be issued or payable in the Organic Change with respect to or in exchange for the number of shares of Common Stock immediately theretofore acquirable and receivable upon the exercise of such Holder's Common Stock Warrants had such Organic Change not taken place (without taking into account any limitations or restrictions on exercise). In any such case, the Company will make appropriate provision (in form and substance satisfactory to the Holders of the Common Stock Warrants representing a majority of the shares of Common Stock issuable upon exercise of such Common Stock Warrants then outstanding) with respect to such Holders' rights and interests to insure that the provisions of this Section 8 and Section 9 will thereafter be applicable to the Common Stock Warrants (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Exercise Price to the value for
the Common Stock reflected by the terms of such consolidation, merger or sale, and a corresponding immediate adjustment in the number of shares of shares of Common Stock acquirable and receivable upon exercise of the Common Stock Warrants, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger or sale). The terms of any documents evidencing an Organic Change shall include such terms as to give effect to the tenor of this provision and evidencing the obligation to deliver to each Holder of Common Stock Warrants such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to acquire.
(c) Distribution of Assets. If the Company shall declare or make any distribution of its assets (or rights to acquire its assets) to Holders of Common Stock as a partial liquidating dividend, by way or return of capital or otherwise (including any dividend or distribution to the Company's stockholders of cash or shares (or rights to acquire shares) of capital stock of a subsidiary) (a "DISTRIBUTION"), at any time after the issuance of this Warrant, then the Holder of this Warrant shall be entitled upon exercise of this Warrant for the purchase of any or all of the shares of Common Stock subject hereto, after the record date for determining shareholders entitled to receive such Distribution, to receive the amount of such assets (or rights) which would have been payable to the Holder had such Holder been the Holder of such shares of Common Stock on the record date for determination of stockholders entitled to such Distribution.
(d) Notices.
(i) Immediately upon any adjustment of the Exercise Price, the Company will give written notice thereof to the Holder of this Warrant, setting forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company will give written notice to the Holder of this Warrant at least twenty (20) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to Holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change, dissolution or liquidation and in no event shall such notice be provided to such Holder prior to such information being made known to the public.
(iii) The Company will also give written notice to the Holder of this Warrant at least twenty (20) days prior to the date on which any Organic Change, dissolution or liquidation will take place and in no event shall such notice be provided to such Holder prior to such information being made known to the public.
Section 9. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company shall, on receipt of an indemnification
undertaking, issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Section 10. Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) upon receipt, when delivered by a delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
Sochrys.com Inc.
4651 Roswell Road
suite B-106
Atlanta, Georgia 30342
Telephone: (404) 256-1963 Telefax: (404) 256-2500 Attention: Jean Pierre Hoffman, President |
If to a Holder of this Warrant, to it at the address set forth below such Holder's signature on the signature page hereof.
Each party shall provide five days' prior written notice to the other party of any change in address or facsimile number.
Section 11. Miscellaneous.
(a) No Voting Rights; Limitation of Liability - Prior to exercise, this Warrant will not entitle the Holder to any voting rights or other rights as a stockholder of the Company. No provision hereof, in the absence of affirmative action by the Holder to exercise this Warrant, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of the Warrant Shares pursuant to the exercise hereof.
(b) Waiver and Modification. This Warrant and any term hereof may be changed, waived, discharged, or terminated only by an instrument in writing signed by the party or Holder hereof against which enforcement of such change, waiver, discharge or termination is sought.
(c) Headings - The headings in this Warrant are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
(d) Governing Law - THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA. The Holder hereby submits to the jurisdiction of the State of Georgia and agrees that service of all writs, process and summonses in any such suit, action or proceeding brought in the United States against the Company may be made upon the Escrow Agent and shall be governed by and interpreted under the laws of the State of Georgia without regard to principles of conflicts of law thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its duly authorized officer as of the date first indicated above.
SOCHRYS.COM INC.
By: /s/ JEAN PIERRE HOFMAN --------------------------- Name: Jean Pierre Hofman Title: President By: /s/ PAUL CLAVERIE ---------------------- Name: Paul Claverie Title: Vice President |
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SAID ACT.
SOCHRYS.COM INC.
WARRANT TO PURCHASE COMMON STOCK
WARRANT NO.: NUMBER OF WARRANT SHARES:
SERIES C
DATE OF ISSUANCE: AUGUST 31, 1999
Sochrys.com Inc. a Nevada corporation (the "COMPANY"), hereby certifies that,
for value received, [NAME], (the "HOLDER") is entitled, subject to the terms set
forth below, to purchase from the Company upon surrender of this Warrant, at any
time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time
on the Expiration Date (as defined herein) [NO. OF SHARES] fully paid
nonassessable shares of Common Stock (as defined in Section 1(b)) of the Company
(the "WARRANT SHARES") at the purchase price per share provided in Section 1(b)
below (the "EXERCISE PRICE"); provided, however, that in no event shall the
Holder be entitled to exercise this Warrant for a number of Warrant Shares in
excess of that number of Warrant Shares which, upon giving effect to such
exercise, would cause the aggregate number of shares of Common Stock
beneficially owned by the Holder and its affiliates to exceed 4.99% of the
outstanding shares of the Common Stock following such exercise. For purposes of
the foregoing proviso, the aggregate number of shares of Common Stock
beneficially owned by the Holder and its affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which the determination of such proviso is being made, but shall exclude shares
of Common Stock which would be issuable upon (i) exercise of the remaining,
unexercised Warrants beneficially owned by the Holder and its affiliates and
(ii) exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company beneficially owned by the Holder and its
affiliates (including, without limitation, any convertible notes, convertible
preferred stock, warrants or rights to receive shares of Common Stock) subject
to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. The Holder may waive the foregoing limitations by written notice to the Company upon not less than 61 days prior notice (with such waiver taking effect only upon the expiration of such 61 day notice period).
Section 1.
(a) Definitions. The following words and terms as used in this Warrant shall have the following meanings:
"BUSINESS DAY" means any day except Saturday, Sunday and any day which is designated in the State of New York as a legal holiday or a day on which banking institutions are authorized or legally required or other government action to close.
"CLOSING BID PRICE" means, for any security as of any date, the last closing bid price for such security on The Nasdaq SmallCap Market as reported by Bloomberg Financial Markets ("BLOOMBERG"), or, if The Nasdaq SmallCap Market is not the principal trading market for such security, the last closing bid price of such security on a Subsequent Market (as defined below) on which such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holders the Common Stock Warrants. If the Company and the Holders of the Common Stock Warrants are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved pursuant to Section 2(a) of this Warrant with the term "Closing Bid Price" being substituted for the term "Market Price." (All such determinations to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period).
"COMMON STOCK" means the Company's common stock, par value $.001 per share, and (ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock.
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to Section 8 or
Convertible Securities (as defined in Section 8) are actually exercisable or convertible at such time, but excluding any shares of Common Stock issuable upon exercise of the Common Stock Warrants.
"ESCROW AGENT" means Alan R. Turem, P.C. having an office at 4651 Roswell Road, Suite B-105 Atlanta, Georgia 30342.
"EXERCISE PRICE" shall be $5.00, subject to adjustment as hereinafter provided.
"EXPIRATION DATE" means December 31, 2004.
"OTHER SECURITIES" means (i) those securities, convertible securities, options and warrants of the Company issued prior to, and outstanding on, the date of issuance of this Warrant, (ii) shares of Common Stock, and warrants or other securities that are convertible into or exchangeable for shares of Common Stock, issuable in connection with the subsequent acquisitions by the Company.
"PERSON" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof, or any other entity or organization.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"WARRANT" means this Warrant and all Warrants issued in exchange, transfer or replacement thereof.
"WARRANT SHARES" means the shares of Common Stock issuable upon the exercise of this Warrant.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the Company's successors and (B) to any applicable law defined or referred to herein, shall be deemed references to such applicable law as the same may have been or may be amended or supplemented from time to time.
(ii) When used in this Warrant, the words "HEREIN," "HEREOF," and "HEREUNDER," and words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words "SECTION," "SCHEDULE," and "EXHIBIT" shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa.
Section 2. Exercise of Warrant.
(a) Exercise may be done at any time during normal business hours on any business day on or after the opening of business on the date hereof and prior to 11:59 P.M. Eastern Time on the Expiration Date by delivery to the Escrow Agent and the Company in the manner specified below of (i) a written notice of such Holder's election to exercise this Warrant which notice shall be in the form attached as Exhibit A hereto, (the "EXERCISE NOTICE"), and shall specify the number of Warrant Shares to be purchased and the other information set out therein, (ii) payment to the Company of an amount equal to the Exercise Price multiplied by the number of Warrant Shares as to which the Warrant is being exercised (the "AGGREGATE EXERCISE PRICE") in cash or by check or wire transfer payable to the Company in immediately available funds, and (iii) the surrender of this Warrant. Provided, that if such Warrant Shares are to be issued in any name other than that of the registered Holder of this Warrant, such issuance shall be deemed a transfer and the provisions of Section 7 shall be applicable and the Exercise Notice shall be accompanied by such additional documentation as may be required by that Section. Such Exercise Notice, payment, Warrant and other documentation required for exercise shall be delivered to the Escrow Agent at the address set out in Section 1 with a copy of the Exercise Notice being delivered simultaneously to the Company.
(b) In the event of any exercise of the rights represented by this Warrant in compliance with this Section 2(a), a certificate or certificates for the Warrant Shares so purchased, in such denominations as may be requested by the Holder hereof and registered in the name of, or as directed by, the Holder, shall be delivered at the Company's expense to, or as directed by, such Holder as soon as practicable after such rights shall have been so exercised, and in any event no later than five (5) business days after delivery of the Exercise Notice to the Escrow Agent. In the case of a dispute as to the determination of the Exercise Price of a security or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the Holder via facsimile within one business day of receipt of the Holder's subscription notice. If the Holder and the Company are unable to agree upon the determination of the Exercise Price or arithmetic calculation of the Warrant Shares within one day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall immediately submit via facsimile (i) the disputed determination of the Exercise Price to an independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares to its independent, outside accountant. The Company shall cause the investment banking firm or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than two (2) Business Days from receipt of the disputed determinations or calculations. Such investment banking firm's or accountant's determination or calculation, as the case may be, shall be deemed conclusive absent manifest error.
(c) Unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, as soon as practicable and in no event later than five business days after any exercise and at its own expense, issue a new Warrant identical in all respects to the Warrant exercised except (i) it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior to such exercise under the Warrant exercised, less the number of Warrant Shares with respect to which such Warrant is exercised, and (ii) the Holder thereof shall be deemed for all corporate purposes to have become the Holder of record of such Warrant Shares immediately prior to the close of business on the date on which the Warrant is surrendered and payment of the amount due in respect of such exercise and any applicable taxes is made, irrespective of the date of delivery of certificates evidencing such Warrant Shares, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are properly closed, such person shall be deemed to have become the Holder of such Warrant Shares at the opening of business on the next succeeding date on which the stock transfer books are open.
(d) No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock issued upon exercise of this Warrant shall be rounded up or down to the nearest whole number.
Section 3. Covenants as to Common Stock; Certain Registrations. The Company hereby covenants and agrees as follows:
(a) This Warrant is, and any Common Stock Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized and validly issued.
(b) All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.
(c) During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved at least 100% of the number of shares of Common Stock needed to provide for the exercise of the rights then represented by this Warrant and the par value of said shares will at all times be less than or equal to the applicable Exercise Price.
(d) The Company will not, by amendment of its charter or through any reorganization, transfer of assets, consolidation, 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 by it hereunder, but will at
all times in good faith assist in the carrying out of all the provisions of this Warrant. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
(e) This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets.
Section 4. Taxes. The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.
Section 5. Warrant Holder Deemed Not a StockHolder. Except as otherwise specifically provided herein, no Holder, as such, of this Warrant shall be entitled to vote or receive dividends or be deemed the Holder of shares of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of this Warrant of the Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on such Holder to purchase any securities or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 5, the Company will provide the Holder of this Warrant with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.
Section 6. Representations of Holder. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account for investment and not with a view to, or for sale in connection with, any distribution hereof or of any of the shares of Common Stock or other securities issuable upon the exercise thereof, and not with any present intention of distributing any of the same. The holder of this Warrant further represents, by acceptance hereof, that, as of this date, such holder is an accredited investor as such term is defined in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act (an "ACCREDITED INVESTOR"). Upon exercise of this Warrant, the holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so purchased are being acquired solely for the holder's own account and not as a
nominee for any other party, for investment, and not with a view toward distribution or resale other than pursuant to an effective registration statement or an exemption under the Securities Act and that such holder is an Accredited Investor. Notwithstanding the foregoing, by making the representations herein, the holder does not agree to hold the Warrant or the Warrant Shares for any minimum or other specified term and reserves the right to dispose of the Warrant and the Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. If such holder cannot make such representations because they would be factually incorrect, it shall be a condition to such holder's exercise of the Warrant that the Company receive such other representations as the Company considers reasonably necessary to assure the Company that the issuance of its securities upon exercise of the Warrant shall not violate any United States or state securities laws.
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the Holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person in whose name any Warrant is registered on the register as the owner and Holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant.
(b) The Holder of this Warrant understands that this Warrant has not been and is not expected to be, registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (a) subsequently registered thereunder, or (b) such Holder shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration; provided that (i) any sale of such securities made in reliance on Rule 144 promulgated under the Securities Act may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the Securities and Exchange Commission thereunder; and (ii) except as provided below, neither the Company nor any other person is under any obligation to register the Common Stock Warrants under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder except as may be expressly set out herein.
(c) The Company is obligated to register the Warrant Shares for resale under the Securities Act and the Holder of this Warrant is not entitled to the registration rights in respect of the Warrant Shares, unless and until the Company enters into a Registration Rights Agreement with the Holder of these Warrants, at the sole discretion of the Company.
Section 8. Adjustment of Exercise Price and Number of Shares. In order to prevent dilution of the rights granted under this Warrant, the Exercise Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted from time to time as follows:
(a) Adjustment of Exercise Price upon Subdivision or Combination of Common Stock. If the Company at any time after the date of issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately increased. If the Company at any time after the date of issuance of this Warrant combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately decreased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person (as defined below) or other transaction which is effected in such a way that Holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as "ORGANIC CHANGE." Prior to the consummation of any Organic Change, the Company will make appropriate provision (in form and substance satisfactory to the Holders of the Common Stock Warrants representing a majority of the shares of Common Stock issuable upon exercise of such Common Stock Warrants then outstanding) to ensure that each of the Holders of the Common Stock Warrants will thereafter have the right to acquire and receive in lieu of or addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the exercise of such Holder's Common Stock Warrants, such shares of stock, securities or assets as may be issued or payable in the Organic Change with respect to or in exchange for the number of shares of Common Stock immediately theretofore acquirable and receivable upon the exercise of such Holder's Common Stock Warrants had such Organic Change not taken place (without taking into account any limitations or restrictions on exercise). In any such case, the Company will
make appropriate provision (in form and substance satisfactory to the Holders of the Common Stock Warrants representing a majority of the shares of Common Stock issuable upon exercise of such Common Stock Warrants then outstanding) with respect to such Holders' rights and interests to insure that the provisions of this Section 8 and Section 9 will thereafter be applicable to the Common Stock Warrants (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment of the Exercise Price to the value for the Common Stock reflected by the terms of such consolidation, merger or sale, and a corresponding immediate adjustment in the number of shares of shares of Common Stock acquirable and receivable upon exercise of the Common Stock Warrants, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger or sale). The terms of any documents evidencing an Organic Change shall include such terms as to give effect to the tenor of this provision and evidencing the obligation to deliver to each Holder of Common Stock Warrants such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to acquire.
(c) Distribution of Assets. If the Company shall declare or make any distribution of its assets (or rights to acquire its assets) to Holders of Common Stock as a partial liquidating dividend, by way or return of capital or otherwise (including any dividend or distribution to the Company's stockholders of cash or shares (or rights to acquire shares) of capital stock of a subsidiary) (a "DISTRIBUTION"), at any time after the issuance of this Warrant, then the Holder of this Warrant shall be entitled upon exercise of this Warrant for the purchase of any or all of the shares of Common Stock subject hereto, after the record date for determining shareholders entitled to receive such Distribution, to receive the amount of such assets (or rights) which would have been payable to the Holder had such Holder been the Holder of such shares of Common Stock on the record date for determination of stockholders entitled to such Distribution.
(d) Notices.
(i) Immediately upon any adjustment of the Exercise Price, the Company will give written notice thereof to the Holder of this Warrant, setting forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company will give written notice to the Holder of this Warrant at least twenty (20) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to Holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change, dissolution or liquidation and in no event shall such notice be provided to such Holder prior to such information being made known to the public.
(iii) The Company will also give written notice to the Holder of this Warrant at least twenty (20) days prior to the date on which any Organic Change, dissolution or liquidation will take place and in no event shall such notice be provided to such Holder prior to such information being made known to the public.
Section 9. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company shall, on receipt of an indemnification undertaking, issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Section 10. Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) upon receipt, when delivered by a delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
Sochrys.com Inc.
4651 Roswell Road
suite B-106
Atlanta, Georgia 30342
Telephone: (404) 256-1963 Telefax: (404) 256-2500 Attention: Jean Pierre Hoffman, President |
If to a Holder of this Warrant, to it at the address set forth below such Holder's signature on the signature page hereof.
Each party shall provide five days' prior written notice to the other party of any change in address or facsimile number.
Section 11. Miscellaneous.
(a) No Voting Rights; Limitation of Liability - Prior to exercise, this Warrant will not entitle the Holder to any voting rights or other rights as a stockholder of the Company. No provision hereof, in the absence of affirmative action by the Holder to exercise this Warrant, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of the Warrant Shares pursuant to the exercise hereof.
(b) Waiver and Modification. This Warrant and any term hereof may be changed, waived, discharged, or terminated only by an instrument in writing signed by the party or Holder hereof against which enforcement of such change, waiver, discharge or termination is sought.
(c) Headings - The headings in this Warrant are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
(d) Governing Law - THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA. The Holder hereby submits to the jurisdiction of the State of Georgia and agrees that service of all writs, process and summonses in any such suit, action or proceeding brought in the United States against the Company may be made upon the Escrow Agent and shall be governed by and interpreted under the laws of the State of Georgia without regard to principles of conflicts of law thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its duly authorized officer as of the date first indicated above.
SOCHRYS.COM INC.
By: /s/ JEAN PIERRE HOFMAN --------------------------- Name: Jean Pierre Hofman Title: President By: /s/ PAUL CLAVERIE ---------------------- Name: Paul Claverie Title: Vice President |
EXHIBIT 6.A
Synopsis of Office Leases in Geneva offices
Lessor: L'Agence Immobiliere
Gerard Rosset
Rue des Charmilles 28
1203 Geneva
Lessee: SOCHRYS Technologies SA
Route de Jussy 29
1226 Geneva
|
The company's Geneva offices are leased for a period of three years beginning November 1, 1999 through October 31, 2002. The lessor has no affiliation with the issuer. The lease covers two separate floors and 10 spaces in the parking garage. The applicable annual charges are provided separately for each space rented:
Annual Approx. Deposit Approx.
Rental US Dollar on US Dollar
Space Space Rent Utilities Cost Equivalent Lease Equivalent
(Square (Square (Swiss (Swiss (Swiss (Swiss
Meters) Footage) Francs) Francs) Francs) (USD) Francs)
2nd Floor 230 2 476 88 008 7 200 95 208 63 472 14 380 9 587
4th Floor 352 3 789 57 504 5 160 62 664 41 776 22 000 14 667
------
Garage 10 n.a. 21 000 n.a. 21 000 14 000
spaces -------
119 248 24 253
======= ======
|
Providing the terms and conditions of the lease have been met, the lease may be renewed yearly by written request six months prior to expiration. The termination of the lease may be considered with six-months' notice but subject to the regular fulfillment of the terms of the lease.
EXHIBIT 6.B
FEE AGREEMENT DATED THIS 30TH DAY OF AUGUST 1999
BETWEEN
Sochrys.com Inc. a Nevada Corporation having an office at Route de Jussy 29, CH 1226 Thonex-Geneva, Switzerland
(Herein the "Company")
AND
Capital House A Finance And Investment Corporation a Canadian company having an office at 30 Metcalfe Street, Suite 620, Ottawa, Canada K1P 5L4
(Herein "CH")
WHEREAS:
i. The Company is a company whose common shares currently are quoted for trading on the Over The Counter Bulletin Board in the U.S.; and
ii. The Company desires to obtain equity and debt financing ("Financing" as defined below) and to enter into certain transactions ("Transactions" as defined below); and
iii. CH represents that it has the ability to advise and to assist certain Financing(s) and Transactions.
THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties agree as follows:
1. DEFINITION OF FINANCING
"Consideration" means the aggregate value of all cash, securities, the assumption of debt by the Target or the Company and any other forms of payment received or to be received, directly or indirectly, by the Target or the Company or the shareholders of the Target or the Company pursuant to a Transaction including the total of all interest-bearing indebtedness of the Target or the Company (both long term and short term including capitalized leases) outstanding, assumed or refinanced at the closing of a Transaction and also including any infusions of cash, securities, assets or other forms of value into the Target or the Company pursuant to a Transaction. The term "Consideration" expressly includes the amount paid for all options and warrants assumed or purchased in connection with a Transaction; (ii) all payments to the existing officers, directors and employees of the Target or the Company, including, but not limited to, cash, securities, options and warrants paid in connection with a Transaction, as well as amounts paid pursuant to consulting agreements, non-competitive agreements, employment agreements and all other agreements entered into in connection with a Transaction provided that such consulting, non-competitive and employment agreements represent no less than 5% of the total Consideration; and (iii) any letters of credit, standby letters of credit and other types of third part guarantees used to secure indebtedness or otherwise as a form of payment (regardless of whether any underlying indebtedness is repaid as part of the Transaction), subject to the proviso that there will be no double counting of any forms of value or of payment in calculating the Consideration including, but not limited to, the definition of consideration above. The value of all option and warrants
included as part of Consideration will be determined by mutually acceptable techniques between the Company and CH. If part or all of the Consideration is represented by securities, the value thereof for the purpose of computing the Transaction Fee shall be determined as follows:
(xx) For securities which are publicly traded prior to the consummation of such Transaction, the average last sale price for such securities for the twenty trading day prior to the consummation of such Transaction;
(yy) for newly-issued, publicly-traded securities, the average last sale price for such securities for the first ten trading days subsequent to the consummation of such Transactions, with such portion of the Transaction Fee being payable the eleventh trading day subsequent to the consummation of such Transaction; and
(zz) for securities for which no market exists, the mutual agreement of the Company and CH as determined prior to the closing of such Transactions.
If part of the Consideration is contingent upon the occurrence of some future event (e.g., the realization of earnings projections), then such portion of the Transaction Fee shall be paid by the Company to CH upon the earlier of the determination or receipt of such Consideration.
1.2 "Financing" means the gross proceeds or gross value of any equity financing or debt financing or other forms of financing including but not limited to limited partnerships arranged by or through CH for the Company within 24 months of the termination or completion of this agreement by sources introduced by CH to the Company. Notwithstanding the generality of the foregoing, it is understood and agreed that Financing shall be limited to a private placement of common or preferred stock of the Company ("Securities") and includes:
i. any common or preferred stock of the Company issued in connection with the acquisition of or merger with another company;
ii. any common or preferred stock of the Company issued in connection with the acquisition of any technology or other assets.
1.3 "Target" means any person, group of persons, partnership, joint venture, corporation or other entity, including subsidiaries, operations and assets thereof other than those of the Company, that is part of a "Transaction".
1.4 "Transaction" means (a) any merger, consolidation, reorganization, recapitalization, business combination or other transaction pursuant to which a Target or a material subsidiary or other business unit of a Target acquires, is acquired by, or combined with, the Company or (b) the acquisition, directly or indirectly, of or by the Company (or by one or more persons acting together with the Company pursuant to a written agreement or otherwise), in a single transaction or a series of transactions, (i) all or substantially all of the assets of a Target or of the Company or a material subsidiary or other business unit of a Target or of the Company or (ii) fifty percent or more of a Target's, or of the Company's, outstanding common stock (whether by way of tender or exchange offer, open market purchases, negotiated purchases or otherwise).
2. CONSULTATIVE SERVICES
The Company hereby engages CH as the Company' financial advisor ("Financial Advisor") with respect to a proposed Financing on a private placement basis or Transaction. CH shall provide such consultative services in respect of any Financing or Transaction as may reasonably be required by the Company but, it is expressly understood and agreed, that the acceptance of the terms of any Financing or Transaction shall be within the sole discretion and control of the Company.
3. FEES & EXPENSES
As compensation for providing the services described hereunder, the Company agrees to pay CH:
3.1 A Retainer Fee of $5,000 U.S. per month, payable quarterly in advance on the first day of each calendar quarter during the term hereof provided that the Retainer Fees payable in respect of the current quarter shall be deemed to be $7,500 in total and shall be paid upon the execution thereof;
3.2 All reasonable out-of-pocket expenses incurred by CH from time to time pursuant to the performance of its services hereunder, provided that the Company shall not be liable for expenditures in excess of $5,000 U.S. per calendar quarter unless the Company has approved the expenditures in excess of that amount prior to their being incurred by CH;
3.3 A cash success fee (the "Success Fee") of 5% of each Financing payable at the closing of each Financing directly to CH out of the proceeds of the Financing;
3.4 The Company agrees to pay CH a transaction fee (the "Transaction Fee") as a percentage of the Consideration of any Transaction equal to:
(i) 1.5% of up to and including $50 million of Consideration;
(ii) 1.25% of Consideration between $50 million and $100 million;
(iii) 1.0% of Consideration in excess of $100 million.
3.5 If a Transaction is not consummated, but instead the Company acquires any subsidiary, business segment or operation, division, assets or securities of the Target, not constituting a Transaction as set forth above, or the Target acquires any subsidiary, business segment or operation, division, assets or securities of the Company (an "Alternate Transaction"), a cash fee calculated in accordance with the fee schedule set forth in subparagraphs 3.4.
3.6 Warrants for 390,000 shares of Common Stock of the Company at an exercise price of $3.00 per share and with provisions for cashless exercise. The issuance and exercise of the warrants are to be pursuant to Regulation S as promulgated under the Securities Act of 1933.
3.7 If the Company requests CH to assist in arranging a transaction or perform investment banking services that are not otherwise covered by the provisions of this Agreement and CH agrees to assist in arranging such transaction or perform such investment banking services, the Company agrees to pay CH mutually acceptable
compensation taking into account, among other things, the results obtained and the custom and practice among investment bankers acting in similar transactions.
Notwithstanding the foregoing, the Retainer Fees and the Warrants shall be deemed to be earned upon receipt by CH but no Success Fee or Transaction Fee shall be payable to CH unless and until: (a) the proceeds of the Financing are payable to or by the Company; or (b) the Consideration for any Transaction is payable to or by the Company or its shareholders.
4. COMPLIANCE WITH SECURITIES LAWS
The Company will not make any offer or sale of any securities of the same or similar class as the Securities, or take any action, the result of which would cause the offer and sale of the Securities to fail to be eligible for offer and sale pursuant to the provisions of Regulation D or Regulation S promulgated pursuant to the Securities Act of 1933 (the "Act") and will comply with all provisions of Regulation D or Regulation S applicable to the offering of the Securities.
5. INDEMNIFICATION
The Company shall jointly and severally indemnify CH and associated companies, its directors, officers, shareholders and employees and hold them and each of them harmless against any loss, liability or expense incurred by them or any of them arising out of or in connection with the exercise or performance of any of CH's obligations, powers or duties under this Agreement excepting only those acts or omissions taken or performed in bad faith or with gross negligence of CH.
CH shall indemnify and save harmless the Company, its officers, directors, shareholders and employees, as well as its subsidiaries, and their respective officers, directors and employees, against any and all claims or demands for fees, costs, expenses or other payments made from or by any Funder or any third party pursuant to any agreement with CH with respect to any Financing provided by any of the Funders.
The rights of indemnification hereunder shall survive the termination of this agreement or the discharge of the CH hereunder.
6. BEST EFFORTS
It is understood that CH's commitment under this Agreement is to use CH's best efforts throughout the period that CH serves as the Company' exclusive Financial Advisor as set forth herein. CH's commitment is not intended to provide any assurance that any Financing or Transaction will be consummated. In the event that any Financing or Transaction is not consummated during the period of time CH acts as the Company's Financial Advisor and the Company consummates a Financing or Transaction within 12 months thereafter with a source introduced by CH to the Company, the Company agrees to pay CH the Success Fee or Transaction Fee, respectively.
7. CONFIDENTIALITY
The Company will furnish CH with such information as CH may reasonably request for CH's use in connection with any Financing or Transaction. The Company recognizes and confirms that (i) CH will use and rely primarily on the information furnished to CH by the Company and on information available to CH from generally recognized public sources without having
independently verified the same and (ii) CH does not assume responsibility for the accuracy or completeness of said information. The Company hereby represents and warrants the information furnished by it to CH, taken as a whole, will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not false or misleading. The Company further agrees that it will immediately notify CH of the occurrence of any event or circumstance that results in the above representation regarding such information not continuing to be true during the entire term of CH's engagement hereunder.
CH shall keep this agreement and the fact of the Company's negotiations for any Financing or Transaction and any information or documentation about or received from the Company strictly confidential as between CH and the Company until such time as and to the extent only that it becomes publicly available otherwise than by a breach of this or any other confidentiality agreement to which the Company is a party. CH acknowledges that breach of this obligation will cause irreparable harm to the Company that may not be compensable in damages and agrees that, without limitation to any other right or remedy to which the Company may otherwise be entitled in consequence thereof, such breach may be restrained by injunction without proof of actual damage.
8. TERM.
The term of this Agreement shall commence on the date hereof and end twenty four (24) months thereafter. Notwithstanding the foregoing, either party may terminate this Agreement at any time prior to the end of the twenty four month period by giving the other party at least thirty (30) days prior written notice of such termination, at which time the Company shall pay to CH all fees earned and all reasonable expenses incurred to the date of such termination, subject to and in accordance with paragraphs 3 and 5 hereof, respectively. Upon termination of this Agreement, any periodic Retainer payments payable following termination will cease to be payable to CH. The Company agrees to pay CH any fees specified in paragraph 3 if the events specified therein shall occur during the term of this Agreement or if any source of financing is identified during the term of this Agreement but a Financing or Transaction is consummated within 12 months after the termination or expiration of this Agreement. Any obligation pursuant to paragraph 3 shall survive the termination or expiration of this Agreement. This Agreement may be renewed upon mutual written agreement of CH and the Company.
9. TOMBSTONES
All tombstones, announcements or other marketing materials used by CH with respect to any Financing or Transaction in which the Company's name is used shall be approved by the Company in advance of their release and such approval shall not be unreasonable withheld.
10. NON-ASSIGNABLE
This agreement shall not be assignable by CH, unless to associated companies, without written approval by the Company and any assignment purported to be made by CH in violation of this provision shall be void and of no effect.
11. COMPLETE AGREEMENT
This agreement contains the complete agreement between the parties and replaces and supercedes all oral or written agreements, understandings or representations made by either party to the other prior to or contemporaneous with this agreement.
12. AUTHORITY
Neither party has the authority to bind the other or hold itself out as having the authority to bind the other or to make any representations or to execute any document, including general correspondence, on behalf of the other.
13. COUNTERPARTS & TELEFACSIMILE
This agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which shall constitute one agreement. A telefacsimile of this Agreement may be relied upon as full and sufficient evidence as an original.
14. JURISDICTION
This agreement shall be governed by the laws of the province of Ontario, Canada.
IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT THIS 30TH DAY OF
AUGUST 1999.
CAPITAL HOUSE A FINANCE. SOCHRYS.COM INC.
AND INVESTMENT CORPORATION
/s/ BRUCE BENN /s/ Jean Pierre Hofman
----------------------- -----------------------
PER: BRUCE BENN PER: JEAN PIERRE HOFMAN
/s/ Pierre Claverie
-----------------------
PER: PIERRE CLAVERIE
|
| ARTICLE 5 |
| PERIOD TYPE | 9 MOS |
| FISCAL YEAR END | DEC 31 1998 |
| PERIOD START | JAN 01 1999 |
| PERIOD END | SEP 30 1999 |
| CASH | 35,000 |
| SECURITIES | 0 |
| RECEIVABLES | 0 |
| ALLOWANCES | 0 |
| INVENTORY | 0 |
| CURRENT ASSETS | 35,000 |
| PP&E | 55,000 |
| DEPRECIATION | 0 |
| TOTAL ASSETS | 90,000 |
| CURRENT LIABILITIES | 19,000 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 0 |
| OTHER SE | 0 |
| TOTAL LIABILITY AND EQUITY | 90,000 |
| SALES | 170,000 |
| TOTAL REVENUES | 0 |
| CGS | 0 |
| TOTAL COSTS | 0 |
| OTHER EXPENSES | 0 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 0 |
| INCOME PRETAX | 0 |
| INCOME TAX | 0 |
| INCOME CONTINUING | (58,000) |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 0 |
| EPS BASIC | 0 |
| EPS DILUTED | 0 |