AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER _, 2004
REGISTRATION NO.
UNITED STATES
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 (g) of The Securities
Exchange Act of 1934
Issuer's telephone number (516) 617-3423
Securities to be registered pursuant
to Section 12(b) of the Act.
Title of each class
None
Name of each exchange on which registered
Securities to be registered pursuant
to Section 12 (g) or the Act.
Common Stock, par value $.0001 per share
REGISTRATION STATEMENT
LAWRENCE CONSULTING GROUP, INC.
Lawrence Consulting Group, Inc. ("LCG") is furnishing this Registration Statement with respect to its shares of Common Stock, par value $.0001 per share (the "LCG Stock"). There is no current trading market for LCG Stock.
IN REVIEWING THIS REGISTRATION STATEMENT, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 11.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS REGISTRATION STATEMENT.
Stockholders of LCG with inquiries related to the Registration Statement should contact Dov Perlysky, President of Lawrence Consulting Group, Inc., 2 Lakeside Drive West, Lawrence, New York 11559, telephone (516) 617-3423.
The date of this Registration Statement is ____________, 2004
TABLE OF CONTENTS
Part I
Cautionary Note Regarding Forward-Looking Statements....................... 4
Item 1 Description of Business............................................ 5
Item 2 Managements' Discussion & Analysis of Financial Condition &
Results of Operations.............................................. 9
Item 3 Description of Properties.......................................... 14
Item 4 Security Ownership of Certain Beneficial Owners and
Management......................................................... 15
Item 5 Management......................................................... 16
Item 6 Executive Compensation............................................. 17
Item 7 Related Party Transactions......................................... 18
Item 8 Description of LCG's Capital Stock................................. 19
Part II
Item 1 Trading Market..................................................... 20
Item 2 Legal Proceedings.................................................. 21
Item 3 Changes In And Disagreements With Accountants...................... 21
Item 4 Recent Sales Of Unregistered Securities............................ 22
Item 5 Disclosure of Commission Position of Indemnification for
Securities Act Liabilities......................................... 23
Experts.................................................................... 24
Where You Can Find More Information........................................ 24
Part FS
Part III Index to Financial Statements....................................
Exhibit 3.1 Certificate of Incorporation of Lawrence Consulting
Group, Inc....................................................
Exhibit 3.2 Bylaws of Lawrence Consulting Group, Inc......................
Exhibit 4.1 Form of Warrant...............................................
Exhibit 10.1 Consulting Agreement between LCG and Chocolate
Printing Company, Inc.........................................
Exhibit 10.2 Consulting Agreement between LCG and Rivkalex Corp............
Exhibit 10.3 Employment Agreement between LCG and Dov Perlysky.............
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PART I
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Summary of Certain Information," "Risk Factors," "Business" and elsewhere in this Registration Statement, including any Annexes hereto, constitute forward-looking statements. These statements relate to future events or our future financial performance, and are identified by words such as "may," "will, " "should," "could," "expect," "scheduled," "plan," "intend," "anticipate," "believe," "estimate," "potential," "proposed," "future" or "continue," or the negative of such terms or other similar words. You should read these statements carefully because they discuss our future expectations, and we believe that it is important to communicate these expectations to our investors. However, these statements are only anticipations. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the factors discussed under "Risk Factors" beginning on page 11 hereof. These factors may cause our actual results to differ materially from any forward-looking statement.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, we do not assume any responsibility for the accuracy and completeness of such statements in the future. We do not plan to update any of the forward-looking statements after the date of this Registration Statement to conform such statements to actual results.
ITEM 1. DESCRIPTION OF BUSINESS
OUR COMPANY
LCG is a recently formed professional services firm which delivers consulting services to companies to provide business solutions for interacting with their customers. We provide sales, marketing, customer, manufacturing, finance, and information technology primarily across a number of industry sectors. We work with companies to develop business and information technology strategies, technology solutions and integrated marketing programs, to maximize the relationship between supply and customer demand, and ultimately, improve business performance. In August 2004 LCG entered into a consulting agreements with its first two customers.
We may seek acquisitions or mergers with other entities in our current area of business which are intended to enhance our value. In the event we are unable to identify suitable acquisition or merger candidates, we may elect to acquire or merge with an entity in a related or unrelated field. To date, we have not identified any potential businesses to acquire or merge with.
INDUSTRY BACKGROUND
The adoption of recent technologies, including the Internet, has changed the way organizations do business. The Internet has grown from an information delivery system to an interactive platform through which companies are restructuring the way they market and sell products and services and manage their operations. In addition, the Internet economy has exponentially increased the number and variety of delivery channels through which companies can interface with customers. By integrating the Internet and other related emerging technologies, organizations have a greater opportunity to reduce operating costs, reduce product and marketing cycle times, create and strengthen customer relationships and business alliances, and improve and accelerate communication and the flow of information, both internally and externally.
Companies have adopted these new technologies as integral vehicles for creating new business models, conducting both business-to-consumer and business-to-business transactions, and extending their customer reach and global presence. However, many organizations that made significant investments in building their Web presence, call centers, supply and distribution systems, and data management systems have failed to see significant return on investment. Today, companies are continuing to focus on selective initiatives that offer compelling business value. They are seeking to leverage technology investments, refine organizational support mechanisms and optimize return on investment within tight technology budgets. As a result, we believe they are seeking professional service providers who understand their strategic business needs, and can help them strategically position their technological investments to solve their business problems and improve return on investment.
We believe technology fundamentally affects the ways a company interacts with its customers, employees, business partners, investors and competitors. Therefore, we believe that companies will continue to seek outside consultants that possess the knowledge and expertise necessary to create pragmatic business and information technology strategies, and the resources required to implement those strategies.
LCG focuses on helping clients achieve growth by reorganizing and realizing value from their customer base.
Business Strategy - We help clients develop business and marketing strategies that enable them to maximize business performance. Through a careful evaluation of material forces that impact an organization, we help clients strategically change their products and services, customers and material and organizational change.
Product Strategy - We help our clients improve the performance of their products. Through a careful review and understanding of customers, competitors and evolving market dynamics we help clients maximize value from their products and customer relationships.
Information Technology Strategy - We work with clients to determine the right information technology investments necessary to support their current and anticipated business objectives. We assist our clients to maximize return from their information technology investments.
HISTORICAL OPERATIONS
LCG was organized in the State of Delaware in 2004. Since its formation LCG has raised an aggregate $77,000 from the sale of LCG Stock to its founders and in connection with the private placement which closed in August 2004 (the "Private Placement"). In August 2004 entered into its first two consulting agreements.
LCG believes that its business can grow in two ways. The first would be to expand internally by hiring more employees and entering into additional consulting agreements. The second would be through acquisitions or mergers with other entities in its or related businesses.
SELECTION OF BUSINESS OPPORTUNITIES
LCG anticipates that in the event that it elects to seek a business opportunity, the selection of a business opportunity in which to participate will be complex and extremely risky. Management believes (but has not conducted any research to confirm) that being a public corporation will help the Company find an acquisition candidate for the following reasons; facilitate and improve the terms on which additional equity financing may be sought, provide incentive stock options or similar benefits to key employees, increase the opportunity to use securities for acquisitions, provide liquidity for shareholders and other factors. Management anticipates that business opportunities may be available in many different industries, both within and without the consulting industry and at various stages of development, all of which make the task of comparative investigation and analysis of such business opportunities difficult and complex.
LCG will have limited capital with which to provide the owners of business entities with any cash or other assets, which may be attractive. Management has not conducted market research and is not aware of statistical data to support the perceived benefits of a business combination for the owners of a target company.
The analysis of new business opportunities will be undertaken by, or under the supervision of, LCG's officers and directors, who are not professional business analysts. In analyzing prospective business opportunities, management may consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations; if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of the company after the business combination; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services, or trades; name identification; and other relevant factors.
LCG may acquire a venture which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its business life. It is impossible to predict at this time the status of any business in which LCG may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which LCG may offer.
With respect to negotiations with a target company, management expects to focus on the percentage of the company which target company shareholders would acquire in exchange for their shareholdings in the target company. Any merger or acquisition effected by LCG can be expected to have a significant dilutive effect on the percentage of shares held by LCG's shareholders at such time.
We intend to develop a marketing team which we believe will be crucial to our future growth and success. The marketing team will be engaged full-time to develop our brand and image recognition. We will develop promotional materials and a web site and will participate in executive seminars, trade shows and market research. In addition, we intend to make presentations at seminars to improve our visibility.
CONSULTING AGREEMENTS
As of the date hereof, LCG has entered into consulting agreements with two clients. One consulting agreement provides that LCG will assist its client in developing business and marketing strategies to maximize value from its products and improve performance of its products. This consulting agreement, which has a term of one year with options to renew, provides for a monthly retainer of
$1,000 plus $150 for each hour of services provided (in excess of five per month). The second consulting agreement provides that LCG will assist its client to determine its technology investments, in order to maximize its return on these investments. This consulting agreement, which has a one-year term with options to renew, provides for a fee of $200 per each hour of consulting services provided by LCG to the client.
EMPLOYEES
LCG currently employs one person, its President, who devotes only a portion of his business time to the affairs of LCG.
We may seek to acquire other businesses and to retain qualified professionals from such businesses. In addition, we intend to recruit qualified professionals from other consulting organizations, industry and universities. We will use internal and external recruiting resources, employees referrals and the Internet to attract new professionals.
COMPETITION
The professional service consulting marketplace is highly competitive. Many of our competitors are much larger than us and have far greater resources than us and have been in business for a longer period than we have.
The market for our services is subject to rapid change and increased competition from large existing companies, new entrants, and internal management and information technology groups. However, we believe the market will continue to offer significant opportunity for multiple companies due to the ever-increasing use of the Internet and other new technologies.
We are a Delaware corporation with executive offices located at 2 Lakeside Drive West, Lawrence, New York, 11559 telephone 516/617-3423.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The financial information included herein should be read in conjunction with the Financial Statements, including the Notes thereto.
OPERATIONS
LCG was formed on January 14, 2004. In August 2004 LCG closed the Private Placement and entered into its first two consulting agreements. To date, LCG has had no revenue from operations. Administrative costs incurred to date have been expended in connection with general and administrative expenses related to the Company's formation and organization, and the Private Placement.
LIQUIDITY AND CAPITAL RESOURCES
Since its recent inception, LCG has funded its operations exclusively from the sale of LCG Stock to its founders and in connection with the Private Placement. In addition, the principal stockholder of LCG has agreed to lend the Company up to $25,000. We anticipate that as LCG expands additional funds will be required.
We may seek to borrow funds from banks or other lending institutions although LCG currently has no commitments for any such borrowings and no assurance can be given that any such commitments will be obtained on terms acceptable to LCG.
In addition we may seek to sell additional shares of LCG Stock in a private placement or public offering or our Board of Directors may authorize the sale of LCG Preferred Stock. No such stock offering is currently contemplated and no assurance can be given that any such offering will be successfully completed.
Finally, LCG has recently begun operations, having entered into its first two consulting agreements in August 2004.
RISK FACTORS
The following factors should be considered carefully in evaluating the Company and its business. Additional risks and uncertainties not presently known to us may also effect our business operations. If any of the following risks actually occur, our business, financial condition or operating results could be materially adversely affected.
We Are Recently Formed.
LCG was incorporated on January 14, 2004. To date, LCG has engaged in only limited business operations. In August 2004, LCG completed the Private Placement and entered into consulting agreements with its first two clients.
We have no Operating History, Revenue and Only Minimal Assets.
We have no operating history nor any revenues or earnings from operations to date. We have no significant assets or financial resources, except for the funds raised in the Private Placement and funds contributed by LCG's founders. No assurance can be given that we will be able to develop our business or find a suitable merger or acquisition candidates.
Our failure to meet client expectations could result in losses and negative publicity.
We will create, implement and maintain business solutions and other applications that are often critical to our clients' businesses. Errors in the development, deployment and execution of our solutions or failure to meet clients' expectations could result in:
o Delayed or lost revenue to adverse client reaction;
o Requirements to provide additional services to a client at no charge;
o Negative publicity, which could damage our reputation and adversely affect our ability to attract or retain clients; and
o Claims for substantial damages against us, regardless of our responsibility for such failure.
We depend on our senior management team, and the loss of any member may adversely affect our business.
We believe that our success will depend on the continued employment of Mr. Perlysky, our sole Officer and Director. We will also need to hire additional members of senior management. This dependence is particularly important to our business since personal relationships are a critical element of obtaining and maintain client engagements. If one or more members of our senior management team were unable or unwilling to continue in their present positions, such persons may be difficult to replace and our business could be seriously harmed. Accordingly our inability to hire any members of senior management, or the loss of one or more members of our senior management team, could impact our future revenue. In addition, if any of these key employees were to join a competitor or form a competing company, some of our clients might choose to use the services of that competitor or new company instead of our own. Furthermore, clients or other companies seeking to develop in-house capabilities may hire away some of our key employees. Employee defections to clients could not only result in the loss of key employees but could also result in the loss of a client relationship or a new business opportunity. Any losses of client relationships could seriously harm our business.
We must recruit and retain qualified professionals to succeed in our labor-intensive business.
Our future success will depend in large part on our ability to recruit and retain qualified managers, business strategists, and other technical personnel, and sales and marketing professionals. Qualified professionals are in demand and are likely to remain a limited resource in the foreseeable future. Any inability to recruit and retain a sufficient number of qualified employees could hinder the growth of our business.
Potential future acquisitions could be difficult to integrate and could therefore, adversely affect our operating results.
One of our strategies for growth is the acquisition of businesses. Currently, we do not have any acquisitions pending. We may not be able to find and consummate acquisitions on terms and conditions reasonably acceptable to us. The acquisitions we do undertake may involve a number of special risks, including:
o Diversion of management's attention;
o Potential failure to retain key acquired personnel
o Assumptions of unanticipated legal liabilities and other problems
o Difficulties integrating systems, operations and cultures; and
o Amortization of acquired intangible assets.
Our failure to successfully manage future acquisitions could seriously harm our operating results. It is anticipated that acquisitions will be funded through a combination of cash from operations or from debt or equity financings and/or by the issuance of LCG Stock directly to the acquired entity or its shareholders.
We may not be able to protect our confidential information and proprietary rights.
While we intend to require our employees to execute confidentiality agreements, we cannot assure that this will be adequate to deter misappropriation of our confidential information and internet commerce model. In addition, we may not be able to detect unauthorized use of our intellectual property and take appropriate steps to enforce our rights. If third parties infringe or misappropriate our trademarks or other proprietary information, our business could be seriously harmed. In addition, other parties may assert infringement claims against us or claim that we have violated their intellectual property rights. Such claims, even if not true, could result in significant legal and other costs and may be a distraction to management.
Our business will be harmed if the growth of commerce on the Internet is slower than expected.
If commerce on the Internet does not continue to grow, or grows more slowly than expected, our growth would decline and our business would be harmed. The widespread acceptance and adoption of the Internet for conducting business is likely only in the event that the Internet provides businesses with greater efficiencies and operating improvements. Factors which may affect Internet usage or electronic commerce adoption include:
o Actual or perceived lack of security of information;
o Lack of access and ease of use;
o Congestion of Internet traffic or other usage delays;
o Inconsistent quality of service;
o Increases in access costs to the Internet;
o Excessive government regulation;
o Uncertainty regarding intellectual property ownership;
o Reluctance to adopt new business methods;
o Costs associated with the obsolescence of existing infrastructure; and
o Economic viability of the Internet commerce model.
Competition could result in price reductions, reduced profitability and loss of market share.
Competition in the professional marketplace is strong.
The market for our services is subject to rapid technological change and increased competition from large existing players, new entrants, and internal management and information technology groups.
Our business will be negatively affected if we do not keep pace with the latest technological changes and client preferences.
Our market and the leading technologies used by our clients are characterized by rapid technological change. If we are unable to respond successfully to these technological developments or do not respond in a timely or cost-effective way, our business and operating results will be seriously harmed. In addition, we must recruit and retain professionals who are familiar with technological advances and developments so that they can fulfill the needs of our clients.
Current Management Devotes Limited Time to Company.
Management anticipates devoting only part of its time to the business of the Company. The Company's only officer is Dov Perlysky, President, Secretary and Treasurer. Mr. Perlysky has a written employment agreement with the Company but will not receive any compensation thereunder until annualized revenue of LCG exceeds $500,000, on a quarterly basis. The Company has not obtained key man life insurance on Mr. Perlysky. Notwithstanding the limited time commitment of management, loss of the services of Mr. Perlysky would adversely affect development of the Company's business.
Our Sole Officer and Director will continue to have substantial control over the Company after the Offering.
Our sole officer and director indirectly owns 120,000 shares of Common
Stock, which represents 43.5% of the outstanding LCG Stock. Consequently, he may
be able to control the direction of the Company. Mr. Perlysky also indirectly
owns 480,000 warrants to purchase LCG Stock at an exercise price of $0.12 per
share. Mr. Perlysky as well as certain other shareholders of the Company have
agreed to escrow their shares until the earlier of (i) September __, 2007 or
(ii) the date on which the closing price of the shares of LCG Stock has equaled
or exceeded $1.00 per share on the NASDAQ Bulletin Board, NASDAQ National Market
System or on the American or New York Stock Exchange for at least ten (10)
consecutive trading days. While in escrow the holders of the shares will be able
to vote such shares but may not sell them.
Reporting requirements may delay or preclude acquisition.
Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act") requires companies subject thereto to provide certain information about significant acquisitions including audited financial statements for the company acquired covering one or two years, depending on the relative size of the acquisition. The time and additional costs that may be incurred by some target companies to prepare such financial statements may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by LCG. Acquisition prospects that do not have or are unable to obtain the required audited statements may not be appropriate for acquisition so long as the reporting requirements of the Exchange Act are applicable.
LCG's officers and directors have limited liability and have indemnity rights which may discourage stockholders from bringing an action against them.
LCG's Certificate of Incorporation provides that LCG will indemnify its officers and directors against losses sustained or liabilities incurred which arise from any transaction in that officer's or director's respective managerial capacity unless that officer or director violates a duty of loyalty, did not act in good faith, engaged in intentional misconduct or knowingly violated the law, approved an improper dividend, or derived an improper benefit from the transaction. LCG's Certificate of Incorporation also provides for the indemnification by it of its officers and directors against any losses or liabilities incurred as a result of the manner in which the officers and directors operate LCG's business or conduct its internal affairs, provided that in connection with these activities they act in good faith and in a manner which they reasonably believe to be in, or not opposed to, the best interests of LCG and their conduct does not constitute gross negligence, misconduct or breach of fiduciary obligations. The existence of these provisions may discourage holders of LCG Stock from bringing an action against management because LCG may be responsible for paying all costs associated therewith, which could negatively impact the value of the LCG Stock.
LCG has no intention of paying dividends on its common stock in the near future and holders of LCG Stock will have to rely on the appreciation thereof to realize any monies from holding these securities.
LCG has not paid any dividends on the LCG Stock and does not anticipate paying cash dividends in the foreseeable future. LCG intends to retain any earnings to finance the growth of its business. Management of LCG cannot assure you that LCG will ever pay cash dividends. Accordingly, holders of LCG Stock will have to rely on the appreciation thereof to realize any monies from holding these securities.
ITEM 3. DESCRIPTION OF PROPERTIES
LCG has no properties and at this time has no agreements to acquire any properties. LCG currently uses the offices of management at no cost. Management has agreed to continue this arrangement until LCG requires larger space. Management believes that office space will be available at reasonable rents when such space is needed.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of September 1, 2004, regarding the beneficial ownership of LCG Stock by (1) each director and officer of LCG; (2) each person or group known by LCG to beneficially own 5% or more of the outstanding shares of LCG Stock; and (3) all executive officers and directors of LCG as a group. Unless otherwise noted, the persons named below have sole voting and investment power with respect to the shares shown as beneficially owned by them.
NAME AND ADDRESS AMOUNT OF PERCENTAGE OF OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP1 OUTSTANDING SHARES OWNED2 ------------------------ --------------------- ------------------------- Krovim LLC 120,000 shares3 43.5% Nesher LLC, Manager Dov Perlysky4, Manager 2 Lakeside Drive West Lawrence, New York 11559 Alison Bell 27,400 shares3 9.9% 1035 Fifth Avenue New York, New York 10028 Pamela Turkel5 24,400 shares3 8.8% 440 East 23rd Street New York, New York 10010 Pamela Katz 24,400 shares3 8.8% One Leeds Drive Port Washington, New York 11050 Rosalind Davidowitz 52,000 shares 18.8% 7 Sutton Place South Lawrence, New York 11556 All officers and director as a group (1 person) 120,000 shares3,4,6 43.5% ---------- |
1 The shares set forth in this chart are being held in escrow pursuant to an
agreement among these Shareholders. Such shares shall be released from escrow
upon the occurrence of certain events.
2 Based on a total of 276,000 shares outstanding as of September 1, 2004.
3 Does not include warrants to purchase 480,000, 109,600, 97,600 and 97,600
shares of common stock beneficially owned by Krovim LLC, Mrs. Bell, Mrs. Turkel
and Mrs. Katz, respectively, each at an exercise price of $.12 per share.
4 Dov Perlysky is the managing member of the manager of Krovim LLC.
5 Includes 4,400 shares held by Mrs. Turkel as custodian for her daughter Liza
Turkel.
6 All of such shares are owned by Krovim LLC. Mr. Perlysky is the managing
member of the manager of Krovim LLC.
MANAGEMENT
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table lists, as of September 1, 2004, LCG's directors, executive officers and key employees, as well as promoters and control persons of LCG:
NAME AGE TITLE ------- ----- ----- Dov Perlysky 41 President, Treasurer, Secretary & Director |
Dov Perlysky has been the managing member of Nesher, LLC, a private investment firm since 2000. From 1998 until 2002, Mr. Perlysky was a Vice President in the Private Client Group of Laidlaw Global Securities, a registered broker-dealer. He received his B.S. in Mathematics and Computer Science from the University of Illinois in 1985 and a Masters in Management from the JL Kellogg Graduate School of Management of Northwestern University in 1991. Mr. Perlysky is a director of Engex, Inc., a closed-end mutual fund.
Krovim LLC ("Krovim") owns 120,000 shares of LCG Stock which represents 43.5% of the outstanding LCG Stock. In addition, Krovim owns warrants to purchase an additional 480,000 shares of LCG Stock at an exercise price of $.12 per share. As such, Krovim may be deemed a control person of LCG. The manager of Krovim is Nesher LLC and Nesher's manager is Mr. Perlysky.
All directors hold office until the next annual meeting of stockholders and until their successors have been elected and qualified. The Board of Directors appoints officers as necessary.
Mr. Perlysky engages in other business activities. Accordingly, he will not devote his entire efforts or time to the affairs of LCG.
COMMITTEES OF THE BOARD
The Board does not have an audit, nominating or a compensation committee. The selection of nominees for the Board of Directors is made by the entire Board of Directors. Compensation of management is determined by the entire Board of Directors.
LCG expects that at such time as the business grows it will formulate appropriate committees of the board.
ITEM 6. EXECUTIVE COMPENSATION
To date no compensation has been paid to Mr. Perlysky. In August 2004, Mr. Perlysky entered into an employment agreement (the "Perlysky Agreement") with LCG. This agreement has an initial term of three years and provides that Mr. Perlysky will receive compensation of $50,000 per annum once LCG's annualized revenues exceed $500,000 on a quarterly basis. The Perlysky Agreement does not require Mr. Perlysky to devote his full time and effort to the business of LCG.
COMPENSATION OF DIRECTORS
Directors do not receive any direct or indirect compensation for serving in such capacity. LCG will reimburse directors for all reasonable costs and expenses incurred in connection with attending or participating in meetings of the Board.
EMPLOYMENT AGREEMENTS
Other than the Perlysky Agreement, LCG is not party to any employment agreements with management.
STOCK BASED COMPENSATION
LCG does not have a stock option or compensation plan and has never issued any stock based compensation. No stock options or restricted stock grants have been issued through the date of this Registration Statement.
ITEM 7. RELATED PARTY TRANSACTIONS
The Company has issued 120,000 shares of its common stock and warrants to purchase an additional 480,000 shares of common stock at $.12 per share to Krovim LLC in exchange for an aggregate of $600. In addition Krovim has agreed to loan the Company up to $25,000, which loan will bear interest at the rate of prime plus 2% per annum. No such loans are currently outstanding.
On August 20, 2004, the Company entered into a one year consulting agreement with Rivkalex Corp. to assist Rivkalex Corp. to determine the necessary technology investments in order to maximize its return on those investments. The company will be paid at the rate of $200 per hour for such consulting services
ITEM 8. DESCRIPTION OF LCG'S CAPITAL STOCK
COMMON STOCK
The Company is authorized to issue up to 10,000,000 shares of LCG Stock par value $.0001. As of September 1, 2004, 276,000 shares of LCG Stock were outstanding.
Each outstanding share of LCG Stock is entitled to one vote upon each matter submitted to a vote at a meeting of shareholders. At each election for directors, every shareholder entitled to vote at such election has the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be elected and for whose election he has a right to vote.
Holders of LCG Stock are entitled to receive ratably, such dividends, if any, as may be declared by the Board of Directors out of funds legally available therefore. Upon liquidation, dissolution or winding up of LCG, the holders of LCG Stock are entitled to receive ratably the net assets of LCG after payment of all debts and liabilities. Holders of LCG Stock have no preemptive, subscription, redemption or conversion rights.
PREFERRED STOCK
The Board of Directors is authorized to issue up to 2,000,000 shares of preferred stock, $0.0001 par value per share (the "Preferred Stock") which may be issued in series from time to time with such designations, rights, preferences and limitations as the Board of Directors may declare by resolution. To date no shares of Preferred Stock have been issued.
The rights, preferences and limitations of separate series of Preferred Stock may differ with respect to such matters as may be determined by the Board of Directors, including, without limitation, the rate of dividends, method and nature of payment of dividends, terms of redemption, amounts payable on liquidation, sinking fund provisions (if any), conversion rights (if any) and voting rights. The potential exists, therefore, that additional shares of Preferred Stock might be issued which would grant dividend preferences and liquidation preferences to preferred stockholders over common stockholders. Unless the nature of a particular transaction and applicable statute require such approval, the Board of Directors has the authority to issue shares of Preferred Stock without stockholder approval. The issuance of Preferred Stock may have the effect of delaying or preventing a change in control without any further action by stockholders.
PART II
ITEM 1. TRADING MARKET
As of the date hereof, none of LCG's securities is traded on any public market. LCG will explore the possibility of causing the LCG Stock to be admitted for quotation on the Over the Counter Electronic Bulletin Board ("OTCBB"); however, management of LCG cannot assure you that it will pursue such course of action, that it will identify a broker to sponsor such listing, that the LCG Stock will be admitted for trading or if admitted for trading that a liquid market for the securities ever will develop. See "Risk Factors- There is no assurance that a public market for the LCG Stock will develop."
NUMBER OF SHAREHOLDERS OF RECORD
As of September 1, 2004, there were approximately 70 holders of record of the LCG Stock.
DIVIDEND POLICY
LCG currently intents to retain all available earnings, if any, generated by its operations. Accordingly, LCG does not anticipate paying cash dividends on the LCG Stock in the foreseeable future. Any future determination as to the payment of dividends will be in the discretion of LCG's Board of Directors and will be dependent upon LCG's results of operations, financial condition and other factors deemed relevant by LCG's Board.
SHARES ELIGIBLE FOR FUTURE SALE
As of the date hereof, there are a total of 276,000 shares of LCG Stock outstanding. Of such shares 120,000 shares (43.5%) of LCG Stock are owned by officers, directors, affiliates and entities controlled by them and are subject to the limitations of Rule 144. Affiliates may rely on Rule 144 with respect to the resale of all of such shares.
Rule 144: Under Rule 144 as currently in effect, a person who beneficially has owned restricted securities for at least one year, including persons who may be deemed affiliates of LCG are entitled to sell within any three-month period a number of shares that does not exceed the greater of:
o one percent of the number of shares of common stock then outstanding, which will equal approximately 2,760 shares; or
o The average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a Form 144 with respect to such sale.
Sales of restricted securities under Rule 144 also are subject to certain manner of sale provisions and notice requirements and to the availability of current public information about LCG. These limitations apply to both restricted and unrestricted shares held by persons who are affiliates of LCG.
In addition, Krovim and certain other shareholders of LCG owning in the aggregate 200,000 shares of LCG Stock have agreed to escrow their shares until the earlier of (i) September 1, 2007 or (ii) the date on which the closing price of the shares of LCG Stock has equaled or exceeded $1.00 per shares on the NASDAQ Bulletin Board, NASDAQ, National Market System or the American or New York Stock Exchange for at least ten (10) consecutive trading days. During the time such shares are held in escrow they may be voted by the holders thereof but may not be sold.
Rule 144(k): Under Rule 144(k), a person who is not deemed to have been an "affiliate" of LCG at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner except an affiliate, is entitled to sell those shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.
51,000 shares of LCG stock are owned by non-affiliated shareholders. These shares were acquired in the Private Placement pursuant to an exemption from registration set forth in Rule 504 of Regulation D. The offering was registered in the State of Nevada and each investor was provided with a substantive disclosure document prior to the sale.
Management of LCG can make no prediction as to the effect, if any, that market sales of shares of LCG Stock or the availability of shares for sale will have on the market price prevailing from time to time. Nevertheless, sales of significant numbers of shares of LCG Stock in the public market could adversely affect the market price of the LCG Stock and could impair LCG's future ability to raise capital through an offering of its equity securities.
Item 2. LEGAL PROCEEDINGS
LCG is not presently party to any material legal proceeding nor are we aware of any material pending or potential legal proceeding which might be instituted against LCG.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None
ITEM 4. RECENT SALES OF UNREGISTERD SECURITIES
In January, 2004, LCG sold 200,000 shares of LCG stock and Warrants to purchase an additional 800,000 shares of LCG Stock at an exercise price of $0.12 per share, to its founders, for a total consideration of $1,000. In March 2004, LCG sold 25,000 shares of LCG stock to one shareholder in exchange for a note in the principal amount of $25,000 (the "Note"). Such sales were made is reliance upon an exemption from registration provided under Section 4(2).
In August 2004, LCG closed the Private Placement pursuant to which it sold 51,000 shares of LCG Stock for an aggregate of $51,000. All of such sales were made in reliance upon an exemption from registration provided by Section 3(b) of the Act.
Item 5. DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
LCG is incorporated in the State of Delaware. Under Section 145 of the General Corporation Law of the State of Delaware, a Delaware corporation has the power, under specified circumstances, to indemnify its directors, officers, employees and agents in connection with actions, suits or proceedings brought against them by a third party or in the right of the corporation, by reason of the fact that they were or are such directors, officers, employees or agents, against expenses incurred in any action, suit or proceeding. LCG's Certificate of Incorporation provides for indemnification of its directors and officers to the fullest extent permitted by the General Corporation Law of the State of Delaware.
The General Corporation Law of the State of Delaware provides that a Certificate of Incorporation may contain a provision eliminating the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director provided that such provision shall not eliminate or limit the liability of a director:
(1) for any breach of the director's duty of loyalty to the corporation or its stockholders,
(2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law,
(3) under Section 174 (relating to liability for unauthorized acquisitions or redemptions of, or dividends on, capital stock) of the General Corporation Law of the State of Delaware, or
(4) for any transaction from which the director derived an improper personal benefit.
LCG's Certificate of Incorporation contains such a provision.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Act"), may be permitted to directors, officers or control persons pursuant to the foregoing provisions, it is the opinion of the Securities and Exchange Commission that such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Form 10-SB may include "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. LCG intends the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. All statements regarding LCG's expected financial position and operating results, its business strategy, financing plans and the outcome of any contingencies are forward-looking statements. These statements can sometimes be identified by the use of forward-looking words such as "may," "believe," "plan," "will," "anticipate," "estimate," "expect," "intend" and other phrases of similar meaning. Known and unknown risks, uncertainties and other factors could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and was derived using numerous assumptions. Although management believes that its expectations that are expressed in these forward-looking statements are reasonable, it cannot promise that its expectations will turn out to be correct. LCG's actual results could be materially different from management's expectations.
When you consider these forward-looking statements, you should keep in mind these risk factors and other cautionary statements in this prospectus. LCG's forward-looking statements speak only as of the date made.
EXPERTS
The financial statements of LCG as of June 30, 2004 and for the period then ended included in this Information Statement have been audited by Silverstein & Weiss, independent accountants, as set forth in their report contained herein. These financial statements have been included in reliance upon the report of Silverstein & Weiss, given upon the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
You may read and copy all or any portion of the Form 10-SB registration statement of which this Registration Statement forms a part or any other information LCG files at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. LCG's SEC filings, including the Form 10-SB registration statement, are also available to you on the SEC's web site (http://www.sec.gov).
As a result of the filing of the Form 10-SB, LCG will become subject to the information and reporting requirements of the Securities Exchange Act, and, in accordance with those requirements, will file periodic reports, proxy statements and other information with the SEC.
LAWRENCE CONSULTING GROUP, INC. FINANCIAL STATEMENTS
JUNE 30, 2004
SILVERSTEIN AND WEISS
CERTIFIED PUBLIC ACCOUNTANTS
SILVERSTEIN & WEISS
CERTIFIED PUBLIC ACCOUNTANTS
300 MERRICK ROAD
LYNBROOK, N.Y. 11563
MR. DOV PERLYSKY, PRESIDENT
LAWRENCE CONSULTING GROUP, INC.
2 LAKESIDE DRIVE WEST
LAWRENCE, NY.Y. 11550
DEAR MR. PERLYSKY:
WE HAVE AUDITED THE STATEMENT OF FINANCIAL CONDITION OF LAWRENCE CONSULTING GROUP, INC. AS OF JUNE 30, 2004 AND THE RELATED STATEMENTS OF OPERATIONS, CHANGES IN STOCKHOLDERS' EQUITY AND CASH FLOWS FOR THE PERIOD FROM INCEPTION TO JUNE 30, 2004. 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 GENERALLY ACCEPTED AUDITING STANDARDS. THOSE STANDARDS REQUIRE THAT WE PLAN AND PERFORM THE AUDIT TO OBTAIN REASONABLE ASSURANCE ABOUT WETHER THE FINANCIAL STAEMENTS ARE FREE OF MATERIAL MISSATEMENT. AN AUDIT INCLUDES EXAMINING, ON A TEST BASIS, EVIDENCE SUPPORTING THE AMOUNTS AND DISCLOUSRES IN THE ACCOUTNING PRINCIPLES USED AND SIGNIFICANT ESTIMATES MADE BY STATEMENT PRESENTATION. WE BELIEVE THAT OUR AUDIT PROVIDES A REASONABLE BASIS FOR OUR OPINION.
IN OUR OPINION, THE FINANCIAL SAAEMENTS REFERRED TO ABOVE PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL POSTION OF LAWRENCE CONSULTING GROUP, INC. AS OF JUNE 30, 2004, AND THE RESULTS OF ITS OPERATION AND ITS CASH FLOWS FOR THE PERIOD THEN ENDED IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
SILVERSTEIN AND WEISS
CERTIFIED PUBLIC ACCOUNTANTS
LYNBROOK, N.Y.
AUGUST 28, 2004
SILVERSTEIN AND WEISS
CERTIFIED PUBLIC ACCOUNTANTS
LAWRENCE CONSULTING GROUP, INC. STATEMENT OF FINANCIAL CONDITION
JUNE 30, 2004
ASSETS
CASH IN BANK $ 942
NOTE RECEIVABLE 25,000
ORGANIZATION COSTS 7,661
--------
TOTAL ASSETS $ 33,603
========
LIABILITIES AND STOCKHOLDERS' EQUITY
ACCRUED LIABILITIES $ 10,717
--------
STOCKHOLDERS' EQUITY
COMMON STOCK $.0001 PAR VALUE,
AUTHORIZED 10,000,000 SHARES, ISSUED
AND OUTSTANDING 225,000 SHARES 23
PREFERRED STOCK $.0001 PAR VALUE,
AUTHORIZED 2,000,000 SHARES, ISSUED-NONE -0-
ADDITIONAL PAID IN CAPITAL 25,977
RETAINED EARNINGS (DEFICIT) (3,114)
--------
TOTAL STOCKHOLDERS' EQUITY 22,886
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 33,603
========
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THE ACCOMPANYING NOTES AND INDEPENDENT AUDITORS' REPORT ARE AN INTEGRAL PART OF THIS STATEMENT.
SILVERSTEIN AND WEISS
CERTIFIED PUBLIC ACCOUNTANTS
LAWRENCE CONSULTING GROUP, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED JUNE 30, 2004
TOTAL COMMON PREFERRED ADDITIONAL RETAINED
STOCKHOLDERS' STOCK STOCK PAID-IN EARNINGS
EQUITY CAPITAL (DEFICIT)
INCEPTION $ -0- $ -0- $ -0- $ -0- $ -0-
ACTIVITY 22,886 23 -0- 25,977 (3,114)
-------- ----- ----- ------- -------
ENDING $ 22,886 $ 23 $ -0- $25,977 ($3,114)
======== ===== ===== ======= =======
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THE ACCOMPANYING NOTES AND INDEPENDENT AUDITORS' REPORT ARE AN INTEGRAL PART OF THIS STATEMENT.
SILVERSTEIN AND WEISS
CERTIFIED PUBLIC ACCOUNTANTS
LAWRENCE CONSULTING GROUP, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED JUNE 30, 2004
CASH FLOWS FROM OPERATING ACTIVITIES
NET LOSS ($3,114)
INCREASE IN CAPITAL STOCK 23
INCREASE IN PAID IN CAPITAL 25,977
INCREASE IN ORGANIZATION COSTS (7,661)
INCREASE IN ACCRUED LIABILITIES 10,717
INCREASE IN NOTE RECEIVABLE (25,000)
--------
NET INCREASE IN CASH $ 942
========
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THE ACCOMPANYING NOTES AND INDEPENDENT AUDITORS' REPORT ARE AN INTEGRAL PART OF THIS STATEMENT.
SILVERSTEIN AND WEISS
CERTIFIED PUBLIC ACCOUNTANTS
CERTIFIED PUBLIC ACCOUNTANTS
LAWRENCE CONSULTING GROUP, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2004
REVENUES $ -0-
-------
EXPENSES
PROFESSIONAL FEES 2,950
MISC. COSTS 164
-------
NET LOSS FOR THE PERIOD $(3,114)
=======
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THE ACCOMPANYING NOTES AND INDEPENDENT AUDITORS' REPORT ARE AN INTEGRAL PART OF THIS STATEMENT.
SILVERSTEIN AND WEISS
CERTIFIED PUBLIC ACCOUNTANTS
LAWRENCE CONSULTING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004
1) THE CORPORATION WAS INCORPORATED ON JANUARY 14, 2004 IN THE STATE OF DELAWARE, UNDER THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE.
2) THE CORPORATION IS A START-UP STAGE ENTITY, WHOSE ACTIVITY INCLUDES THE ISSUANCE OF COMMON STOCK.
3) THE CORPORATION ALSO HAS OUTSTANDING WARRANTS TO PURCHASE AN AGGREGATE OF 800,000 SHARES OF COMMON STOCK AT AN EXERCISE PRICE OF $0.12 PER SHARE. THE WARRANTS EXPIRE JANUARY 16, 2014.
4) THE NOTE RECEIVABLE WAS PAID ON AUGUST 13, 2004.
THESE NOTES TO THE FINANCIAL STATEMENT ARE AN INTEGRAL PART OF THE INDEPENDENT AUDITORS' REPORT.
SILVERSTEIN AND WEISS
CERTIFIED PUBLIC ACCOUNTANTS
PART III
ITEM 1. INDEX TO EXHIBITS.
3.1 Certificate of Incorporation of LCG. 3.2 By-Laws of LCG. 4.1 Form of Warrant. 10.1 Consulting Agreement between LCG and Chocolate Printing Company, Inc. 10.2 Consulting Agreement between LCG and Rivkalex Corp. 10.3 Employment Agreement between LCG and Dov Perlysky |
ITEM 2. DESCRIPTION OF EXHIBITS.
(a) Financial Statements see Index to Financial Statements on page F-1 of the Registration Statement, which is incorporated herein by reference.
(b) Exhibits See Exhibit Index.
3.1 Certificate of Incorporation of LCG 3.2 Bylaws of LCG 4.1 Form of Warrant 10.1 Consulting Agreement between LCG and Chocolate Printing Company, Inc. 10.2 Consulting Agreement between LCG and Rivkalex Corp. 10.3 Employment Agreement between LCG and Dov Perlysky |
III-1
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.
Dated: September 22, 2004 LAWRENCE CONSULTING GROUP, INC.
By: /s/ Dov Perlysky
-----------------------------
Dov Perlysky
President
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Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
LAWRENCE CONSULTING GROUP, INC.
The undersigned, a natural person, for the purpose of organizing a corporation for conducting the business and promoting the purposes hereinafter stated, under the provisions and subject to the requirements of the laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the acts amendatory thereof and supplemental thereto, and known, identified, and referred to as the "General Corporation Law of the State of Delaware"), hereby certifies that:
FIRST: The name of the corporation (hereinafter called the "corporation") is Lawrence Consulting Group, Inc.
SECOND: The address, including street, number, city, and county, of the registered office of the corporation in the State of Delaware is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. The name of the registered agent of the corporation in the State of Delaware at such address is Corporation Service Company.
THIRD: The nature of the business and the purposes to be conducted and promoted by the corporation, shall be to conduct any lawful business, to promote any lawful purpose, and to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the corporation shall have authority to issue is 12,000,000 consisting of 10,000,000 shares of Common Stock, par value $0.0001 per share and 2,000,000 shares of Preferred Stock, par value $0.0001 per share (the "Preferred Stock").
The Board of Directors is hereby empowered to authorize by resolution or resolutions from time to time the issuance of one or more classes or series of Preferred Stock and to fix the voting powers, designations, powers, preferences and/or restrictions thereof, if any, with respect to each such class or series of Preferred Stock and the number of shares constituting each such class or series, and to increase or decrease the number of shares of any such class or series to the extent permitted by Delaware law.
FIFTH: The name and the mailing address of the incorporator are as follows:
NAME MAILING ADDRESS
Jonathan Turkel 44 Wall Street
2nd Floor
New York, New York 10005
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SIXTH: The corporation is to have perpetual existence.
SEVENTH: The personal liability of the directors of the corporation is hereby eliminated to the fullest extent permitted by the provisions of paragraph (7) of subsection (b) of ss. 102 of the General Corporate Law of the State of Delaware, as the same be amended or supplanted.
EIGHTH: The corporation shall, to the fullest extent permitted by the provisions of ss. 145 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, 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, and 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.
NINTH: From time to time any of the provisions of this certificate of incorporation may be amended, altered, or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the corporation by this certificate of incorporation are granted subject to the provisions of this Article NINTH.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, does make this Certificate, hereby declaring and certifying that this is any act and deed and the facts herein stated are true, and accordingly have hereunto set any hands this 14 day of January, 2004.
[SEAL] Incorporator
Exhibit 3.2
BYLAWS
OF
Lawrence Consulting Group, Inc.
(a Delaware corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in the corporation shall be signed by, or in the name of, the corporation by the Chairman or Vice-Chairman of the Board of Directors, if any, or by the President or a Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the corporation. Any or all the signatures on any such certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one class of stock or more than one series of any class of stock, and whenever the corporation shall issue any shares of its stock as partly paid stock, the certificates representing shares of any such class or series or of any such partly paid stock shall set forth thereon the statements prescribed by the General Corporation Law. Any restrictions on the transfer or registration of transfer of any shares of stock of any class or series shall be noted conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated shares in place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the Board of Directors may require the owner of the lost, stolen, or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the General Corporation Law, the Board of Directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the corporation shall be uncertificated shares. Within a reasonable time after the issuance or transfer of any uncertificated shares, the corporation shall send to the registered owner thereof any written notice prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be required to, issue fractions of a share. If the corporation does not issue fractions of a share, it shall (1) arrange for the disposition of fractional interests by those entitled thereto, (2) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or (3) issue scrip or warrants in registered form (either represented by a certificate or uncertificated) or bearer form (represented by a certificate) which shall entitle the holder to receive a full share upon the surrender of such scrip or warrants aggregating a full share. A certificate for a fractional share or an uncertificated fractional share shall, but scrip or warrants shall not unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the corporation in the event of liquidation. The Board of Directors may cause scrip or warrants to be issued subject to the conditions that they shall become void if not exchanged for certificates representing the full shares of uncertificated full shares before a specified date, or subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the corporation and the proceeds thereof distributed to the holders of scrip or warrants, or subject to any other conditions which the Board of Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the transfer or registration of transfer of shares of stock, if any, transfers or registration of transfers of shares of stock of the corporation shall be made only on the stock ledger of the corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation or with a transfer agent or a registrar, if any, and, in the case of shares represented by certificates, on surrender of the certificate or certificates for such shares of stock properly endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining the stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by the General Corporation Law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the General Corporation Law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion, or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to notice of a meeting of stockholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding share or shares of stock and to a holder or holders of record of outstanding shares of stock when the corporation is authorized to issue only one class of shares of stock, and said reference is also intended to include any outstanding share or shares of stock and any holder or holders of record of outstanding shares of stock of any class upon which or upon whom the certificate of incorporation confers such rights where there are two or more classes or series of shares of stock or upon whom the certificate of incorporation confers such rights where there are two or more classes or series of shares of stock or upon which or upon whom the General Corporation Law confers such rights notwithstanding that the certificate of incorporation may provide for more than one class or series of shares of stock, one or more of which are limited or denied such rights thereunder; provided, however, that no such rights shall vest in the event of an increase or a decrease in the authorized number of shares of stock of any class or series which is otherwise denied voting rights under the provisions of the certificate of incorporation, except as any provision of law may otherwise require.
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time fixed, from time to time, by the directors, provided, that the first annual meeting shall be held on a date within thirteen months after the organization of the corporation, and each successive annual meeting shall be held on a date within thirteen months after the date of the preceding annual meeting. A special meeting shall be held on the date and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shall be held at such place, within or without the State of Delaware, as the directors may, from time to time, fix. Whenever the directors shall fail to fix such place, the meeting shall be held at the registered office of the corporation in the State of Delaware.
- CALL. Annual meetings and special meetings may be called by the directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be given, stating the place, date, and hour of the meeting and stating the place within the city or other municipality or community at which the list of stockholders of the corporation may be examined. The notice of an annual meeting shall state that the meeting is called for the election of directors and for the transaction of other business which may properly come before the meeting, and shall (if any other action which could be taken at a special meeting is to be taken at such annual meeting) state the purpose or purposes. The notice of a special meeting shall in all instances state the purpose or purposes for which the meeting is called. The notice of any meeting shall also include, or be accompanied by, any additional statements, information, or documents prescribed by the General Corporation Law. Except as otherwise provided by the General Corporation Law, a copy of the notice of any meeting shall be given, personally or by mail, not less than ten days nor more than sixty days before the date of the meeting, unless the lapse of the prescribed period of time shall have been waived, and directed to each stockholder at his record address or at such other address which he may have furnished by request in writing to the Secretary of the corporation. Notice by mail shall be deemed to be given when deposited, with postage thereon prepaid, in the United States Mail. If a meeting is adjourned to another time, not more than thirty days hence, and/or to another place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the directors, after adjournment, fix a new record date for the adjourned meeting. Notice need not be given to any stockholder who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of a stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city or other municipality or community where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the corporation, or to vote at any meeting of stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting - The Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice-President, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the stockholders. The Secretary of the corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the Chairman of the meeting shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally.
- INSPECTORS. The directors, in advance of any meeting, may, but need not, appoint one or more inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspectors at such meeting with strict impartially and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots, or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots, or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspector or inspectors, if any, shall make a report in writing of any challenge, question, or matter determined by him or them and execute a certificate of any fact found by him or them. Except as otherwise required by subsection (e) of Section 231 of the General Corporation Law, the provisions of that Section shall not apply to the corporation.
- QUORUM. The holders of a majority of the outstanding shares of stock shall constitute a quorum at a meeting of stockholders for the transaction of any business. The stockholders present may adjourn the meeting despite the absence of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof to one vote. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Any other action shall be authorized by a majority of the votes cast except where the General Corporation Law prescribes a different percentage of votes and/or a different exercise of voting power, and except as may be otherwise prescribed by the provisions of the certificate of incorporation and these Bylaws. In the election of directors, and for any other action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the General Corporation Law to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Action taken pursuant to this paragraph shall be subject to the provisions of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the corporation shall be managed by or under the direction of the Board of Directors of the corporation. The Board of Directors shall have the authority to fix the compensation of the members thereof. The use of the phrase "whole board" herein refers to the total number of directors which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be stockholder, a citizen of the United States, or a resident of the State of Delaware. The initial Board of Directors shall consist of one person. Thereafter, the number of directors constituting the whole board shall be at least one. Subject to the foregoing limitation and except for the first Board of Directors, such number may be fixed from time to time by action of the stockholders or of the directors, or, if the number is not fixed, the number shall be one. The number of directors may be increased or decreased by action of the stockholders or of the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members thereof shall have been named in the certificate of incorporation, shall be elected by the incorporator or incorporators and shall hold office until the first annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Any director may resign at any time upon written notice to the corporation. Thereafter, directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Except as the General Corporation Law may otherwise require, in the interim between annual meetings of stockholders or of special meetings of stockholders called for the election of directors and/or for the removal of one or more directors and for the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the removal of directors for cause or without cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, of the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. Notice need not be given to any director or to any member of a committee of directors who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of any such person at a meeting shall constitute a waiver of notice such meeting, except when he attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute a quorum except when a vacancy or vacancies prevents such majority, whereupon a majority of the directors in office shall constitute a quorum, provided, that such majority shall constitute at least one-third of the whole Board. A majority of the directors present, whether or not a quorum is present, may adjourn a meeting to another time and place. Except as herein otherwise provided, and except as otherwise provided by the General Corporation Law, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. The quorum and voting provisions herein stated shall not be construed as conflicting with any provisions of the General Corporation Law and these Bylaws which govern a meeting of directors held to fill vacancies and newly created directorships in the Board or action of disinterested directors.
Any member of members of the Board of Directors or of any committee designated by the Board, may participate in a meeting of the Board, or any such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the Board, if any and if present and acting, or the President, if present and acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the General Corporation Law, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of any such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise the powers and authority of the Board of Directors in the management of the business and affairs of the corporation with the exception of any authority the delegation of which is prohibited by Section 141 of the General Corporation Law, and may authorize the seal of the corporation to be affixed to all papers which may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President and/or Chief Operating Officer, a Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board, an Executive Vice-President, one or more other Vice-President, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers with such titles as the resolution of the Board of Directors choosing them shall designate. Except as may otherwise be provided in the resolution of the Board of Directors choosing him, no officer other than the Chairman or Vice-Chairman of the Board, if any, need be a director. Any number of offices may be held by the same person, as the directors may determine.
Unless otherwise provided in the resolution choosing him, each officer shall be chosen for a term which shall continue until the meeting of the Board of Directors following the next annual meeting of stockholders and until his successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform such duties in the management and operation of the corporation as shall be prescribed in the resolutions of the Board of Directors designating and choosing such officers and prescribing their authority and duties, and shall have such additional authority and duties as are incident to their office except to the extent that such resolutions may be inconsistent therewith. The Secretary or an Assistant Secretary of the corporation shall record all of the proceedings of all meetings and actions in writing of stockholders, directors, and committees of directors, and shall exercise such additional authority and perform such additional duties as the Board shall assign to him. Any officer may be removed, with or without cause, by the Board of Directors. Any vacancy in any office may be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors shall prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and the provisions of the General Corporation Law, the power to amend, alter, or repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of the Bylaws of Lawrence Consulting Group, Inc., a Delaware corporation, as in effect on the date hereof.
Dated: January 15, 2004
Exhibit 4.1
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (ii) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE SECURITIES ACT IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS SUCH TRANSFER IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED UPON ANY WARRANT ISSUED IN EXCHANGE FOR THIS WARRANT OR ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT.
WARRANT TO PURCHASE COMMON STOCK
OF
LAWRENCE CONSULTING GROUP, INC.
No. 1
This is to Certify that ________________________ or assigns ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from Lawrence Consulting Group, Inc., a Delaware Corporation (the "Company") ________ shares of fully paid, validly issued and nonassessable shares of stock of the Company ("Common Stock") at a price of $0.12 per share at any time or from time to time during the period from January 16, 2004 until January 16, 2014 ("Exercise Period"), subject to adjustment as set forth herein. The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for each share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time, are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price".
(a) EXERCISE OF WARRANT; CANCELLATION OF WARRANT
(1) This Warrant may be exercised in whole or in part at any time or from time to time during the Exercise Period; provided, however, that (i) if either such day is a day on which banking institutions in the State of New York are authorized by law to close, then on the next succeeding day which shall not be such a day, and (ii) in the event of any merger, consolidation or sale of substantially all the assets of the Company as an entirety, resulting in any distribution to the Company's stockholders, prior to expiration of the Exercise Period (the "Expiration Date"), the Holder shall have the right to exercise this Warrant commencing at such time through Expiration Date into the kind and amount of shares of stock and other securities and property (including cash) receivable by a holder of the number of shares of Common Stock into which this Warrant might have been exercisable immediately prior thereto. This Warrant may be exercised by presentation and surrender hereof to the Company at its principal office with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. As soon as practicable after each such exercise of the warrants, but not later than seven (7) days following the receipt of good and available funds, the Company shall issue and deliver to the Holder a certificate or certificate for the Warrant Shares issuable upon such exercise, registered in the name of the Holder or its designee. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be physically delivered to the Holder.
(2) At any time during the Exercise Period, the Holder may, at its
option, exercise this Warrant on a cashless basis by exchanging this Warrant, in
whole or in part (a "Warrant Exchange"), into the number of Warrant Shares
determined in accordance with this Section (a)(2), by surrendering this Warrant
at the principal office of the Company or at the office of its stock transfer
agent, accompanied by a notice stating such Holder's intent to effect such
exchange, the number of Warrant Shares to be exchanged and the date on which the
Holder requests that such Warrant Exchange occur (the "Notice of Exchange"). The
Warrant Exchange shall take place on the date specified in the Notice of
Exchange or, if later, the date the Notice of Exchange is received by the
Company (the "Exchange Date"). Certificates for the shares issuable upon such
Warrant Exchange and, if applicable, a new warrant of like tenor evidencing the
balance of the shares remaining subject to this Warrant, shall be issued as of
the Exchange Date and delivered to the Holder within seven (7) days following
the Exchange Date. In connection with any Warrant Exchange, this Warrant shall
represent the right to subscribe for and acquire the number of Warrant Shares
equal to (i) the number of Warrant Shares specified by the Holder in its Notice
of Exchange (the "Total Number") less (ii) the number of Warrant Shares equal to
the quotient obtained by dividing (A) the product of the Total Number and the
existing Exercise Price by (B) the current market value of a share of Common
Stock. Current market value shall have the meaning set forth Section (c) below,
except that for purposes hereof, the date of exercise, as used in such Section
(c), shall mean the Exchange Date.
(b) RESERVATION OF SHARES. The Company shall at all times reserve for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of the Warrants.
(c) FRACTIONAL SHARES. No fractional shares or script representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of a share, determined as follows:
(1) If the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such exchange or listed for trading on the Nasdaq National Market, the current market value shall be the last reported sale price of the Common Stock on such exchange or market on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the average of the closing bid and asked prices for such day on such exchange or market; or
(2) If the Common Stock is not so listed or admitted to unlisted trading privileges, but is traded on the Nasdaq SmallCap Market, the current market value shall be the average of the closing bid and asked prices for such day on such market and if the Common Stock is not so traded, the current market value shall be the mean of the last reported bid and asked prices reported by the NASD Electronic Bulletin Board on the last business day prior to the date of the exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current market value shall be an amount, not less than book value thereof as at the end of the most recent fiscal year of the Company ending prior to the date of the exercise of the Warrant, determined in such reasonable manner as may be prescribed by the Board of Directors of the Company.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the principal office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein.
(f) ANTI-DILUTION PROVISIONS. Subject to the provisions of Section l hereof, the Exercise Price in effect at any time and the number and kind of securities purchasable upon the exercise of the Warrants shall be subject to adjustment from time to time upon the happening of certain events as follows:
(1) In case the Company shall hereafter (i) declare a dividend or make a distribution on its outstanding shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into a greater number of shares, or (iii) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, combination or reclassification shall be adjusted so that it shall equal the price determined by multiplying the Exercise Price by a fraction, the denominator of which shall be the number of shares of Common Stock outstanding after giving effect to such action, and the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such action. Such adjustment shall be made successively whenever any event listed above shall occur.
(2) In case the Company shall fix a record date for the issuance of rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price (the "Subscription Price") (or having a conversion price per share) less than the current market price on such record date or less than the Exercise Price, the Exercise Price shall be adjusted so that the same shall equal the lower of (i) the price determined by multiplying the Exercise Price in effect immediately prior to the date of such issuance by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding on the record date mentioned below and the number of additional shares of Common Stock so which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered) would purchase at such current market price per share of the Common Stock, and the denominator of which shall be the sum of the number of additional shares of Common Stock offered for subscription or purchase (or into which the convertible securities so offered are convertible) or (ii) in the event the Subscription Price is equal to or higher than the current market price but is less than the Exercise Price, the price determined by multiplying the Exercise Price in effect immediately prior to the date of issuance by a fraction, the numerator of which shall be the sum of the number of shares outstanding on the record date mention below and the number of additional shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered) would purchase at the Exercise Price in effect immediately prior to the date of such issuance, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding on the record ate mentioned below and the number of additional shares of Common Stock offered for subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such rights or warrants are issued and shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights or warrants; and to the extent that shares of Common Stock are not delivered (or securities convertible into Common Stock are not delivered) after the expiration of such rights or warrants the Exercise Price shall be readjusted to the Exercise Price which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made upon the basis of delivery of only the number of shares of Common Stock (or securities convertible into Common Stock) actually delivered.
(3) In case the Company shall hereafter distribute to the holders of its Common Stock evidences of its indebtedness or assets (excluding cash dividends or distributions and dividends or distributions referred to in Subsection (1) above or subscription rights or warrants (excluding those referred to in Subsection (2) above), then in each such case the Exercise Price in effect thereafter shall be determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the current market price per share of Common Stock, less the fair market value (as determined by the Company's Board of Directors) of said assets or evidences of indebtedness so distributed or of such rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such current market price per share of Common Stock. Such adjustment shall be made successively whenever such a record date is fixed. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution.
(4) In case the Company shall hereafter issue shares of its Common
Stock (excluding shares issued (i) in any of the transactions
described in Subsection (1) above, (ii) upon exercise of options,
warrants, convertible securities and convertible debentures
outstanding as of the date hereof, or exercise of the Warrants, or
(iii) to shareholders of any corporation which merges into the
Company in proportion to their stock holdings of such corporation
immediately prior to such merger, upon such merger, but only if no
adjustment is required pursuant to any other specific subsection of
this Section (f) with respect to the transaction giving rise to such
rights) for a consideration per share (the "Offering Price") less
than the current market price on the date the Company fixes the
offering price of such additional shares or less than the Exercise
Price, the Exercise Price shall be adjusted immediately thereafter
so that it shall equal (i) the price determined by multiplying the
Exercise Price in effect immediately prior thereto by a fraction,
the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such
additional shares and the number of shares of Common Stock which the
aggregate consideration received for the issuance of such additional
shares would purchase at such current market price per share of
Common Stock, and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after the issuance of
such additional shares or (ii) in the event the Offering Price is
equal to or higher than the current market price per share but less
than the Exercise Price, the price determined by multiplying the
Exercise Price in effect immediately prior to the date of issuance
by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to the issuance of
such additional shares and the number of shares of Common Stock
which the aggregate consideration received for the issuance of such
additional shares would purchase at the Exercise Price in effect
immediately prior to the date of such issuance, and the denominator
of which shall be the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares. Such
adjustment shall be made successively whenever such an issuance is
made.
(5) In case the Company shall hereafter issue any securities convertible into or exchangeable or exercisable for its Common Stock (excluding securities issued in transactions described in Subsections (1) and (3) above) for a consideration per share of Common Stock (the "Exercise Price") initially deliverable upon conversion, exercise or exchange of such securities (determined as provided in Subsection (7) below) less than the current market price in effect immediately prior to the issuance of such, or less than the Exercise Price, the Exercise Price shall be adjusted immediately thereafter so that it shall equal the lower of (i) the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such securities and the number of shares of Common Stock which the aggregate consideration received for such securities (or the aggregate exercise price in the case of options or warrants) would purchase at such current market price per share of Common Stock, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance and the maximum number of shares of Common Stock of the Company deliverable upon conversion or exercise of or in exchange for such securities at the initial conversion, exercise or exchange price or rate or (ii) in the event the Exchange Price is equal to or higher than the current market price per share but less than the Exercise Price, the price determined by multiplying the Exercise Price in effect immediately prior to the date of issuance by a fraction, the numerator of which shall be the sum of the number of shares outstanding immediately prior to the issuance of such securities and the number of shares of Common Stock which the aggregate consideration received for such securities would purchase at the Exercise Price in effect immediately prior to the date of such issuance, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such securities and the maximum number of shares of Common Stock of the Company deliverable upon conversion of or in exchange for such securities at the initial conversion or exchange price or rate. Such adjustment shall be made successively whenever such an issuance is made.
(6) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Subsections (1), (2), (3), (4) and
(5) above, the number of Shares purchasable upon exercise of this
Warrant shall simultaneously be adjusted by multiplying the number
of Shares initially issuable upon exercise of this Warrant by the
Exercise Price in effect on the date hereof and dividing the product
so obtained by the Exercise Price, as adjusted.
(7) For purposes of any computation respecting consideration received pursuant to Subsections (4) and (5) above, the following shall apply:
(A) in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith;
(B) in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Company (irrespective of the accounting treatment thereof), whose determination shall be conclusive; and
(C) in the case of the issuance of securities convertible into or exchangeable for shares of Common Stock, the aggregate consideration received therefor shall be deemed to be the consideration received by the Company for the issuance of such securities plus the additional minimum consideration, if any, to be received by the Company upon the conversion or exchange thereof (the consideration in each case to be determined in the same manner as provided in clauses (A) and (B) of this Subsection (7)).
(8) For the purpose of any computation under Subsections (1), (3),
(4) and (5) above, the current market price per share of Common
Stock at any date shall be determined in the manner set forth in
Section (c).
(9) No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one tenth of one cent ($0.001) in such price; provided, however, that any adjustments which by reason of this Subsection (9) are not required to be made shall be carried forward and taken into account in any subsequent adjustment required to be made hereunder. All calculations under this Section (f) shall be made to the nearest tenth of a cent or to the nearest one-hundredth of a share, as the case may be. Anything in this Section (f) to the contrary notwithstanding, the Company shall be entitled, but shall not be required, to make such changes in the Exercise Price, in addition to those required by this Section (f), as it shall determine, in its sole discretion, to be advisable in order that any dividend or distribution in shares of Common Stock, or any subdivision, reclassification or combination of Common Stock, hereafter made by the Company shall not result in any Federal Income tax liability to the holders of Common Stock or securities convertible into Common Stock (including Warrants).
(10) Whenever the Exercise Price is adjusted, as herein provided,
the Company shall promptly but no later than 10 days after any
request for such an adjustment by the Holder, cause a notice setting
forth the adjusted Exercise Price and adjusted number of Shares
issuable upon exercise of each Warrant, and, if requested,
information describing the transactions giving rise to such
adjustments, to be mailed to the Holders at their last addresses
appearing in the Warrant Register, and shall cause a certified copy
thereof to be mailed to its transfer agent, if any. The Company may
retain a firm of independent certified public accountants selected
by the Board of Directors (who may be the regular accountants
employed by the Company) to make any computation required by this
Section (f), and a certificate signed by such firm shall be
conclusive evidence of the correctness of such adjustment.
(11) In the event that at any time, as a result of an adjustment made pursuant to Subsection (1) above, the Holder of this Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Subsections (1) to (8), inclusive above.
(12) Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of this Warrant, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in the similar Warrants initially issuable pursuant to this Agreement.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as required by the provisions of the foregoing Section, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer's certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer's certificate shall be made available at all reasonable times for inspection by the holder or any holder of a Warrant executed and delivered pursuant to Section (a) and the Company shall, forthwith after each such adjustment, mail a copy by certified mail of such certificate to the Holder or any such holder.
(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be outstanding, (i) if the Company shall pay any dividend or make any distribution upon the Common Stock or (ii) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any share of any class or any other rights or (iii) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least fifteen days prior the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of any consolidation or merger of the Company with or into another corporation (other than a merger with a subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease or conveyance to another corporation of the property of the Company as an entirety, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the Holder shall have the right thereafter by exercising this Warrant at any time prior to the expiration of the Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section (i) shall similarly apply to successive reclassifications, capital reorganizations and changes of shares of Common Stock and to successive consolidations, mergers, sales or conveyances. In the event that in connection with any such capital reorganization or reclassification, consolidation, merger, sale or conveyance, additional shares of Common Stock shall be issued in exchange, conversion, substitution or payment, in whole or in part, for a security of the Company other than Common Stock, any such issue shall be treated as an issue of Common Stock covered by the provisions of Subsection (1) of Section (f) hereof.
(j) REGISTRATION RIGHTS.
(1) The Company hereby agrees with the holders of the Warrants and the Warrant Shares or their transferees (collectively, the "Holders") that upon notice by Holders beneficially owning at least 50% of the Warrants and Warrant Shares, it will, at any time during the five year period commencing six months after the Company has completed an initial public offering or is otherwise publicly traded (the Registration Period"), within three weeks of such notice prepare and file with the Securities and Exchange Commission ("SEC") a registration statement under the Securities Act of 1933, as amended (the "Act") covering the resale of the Warrant Shares and use its best efforts to cause such registration statement to become effective as soon as practicable thereafter. If the Company shall determine to proceed during the Registration Period with the actual preparation and filing of a registration statement under the Act in connection with the proposed offer and sale of any of its securities by it or any of its security holders (other than a registration statement on Form S-4, S-8 or other limited purpose form), then the Company will give written notice of its determination to all record holders of the Warrants and Warrant Shares. Upon the written request from any Holder, the Company will, except as herein provided, cause all such Warrant Shares to be included in such registration statement, all to the extent requisite to permit the sale or other disposition by the prospective seller or sellers of the Warrant Shares to be so registered; provided, further, that nothing herein shall prevent the Company from, at any time, abandoning or delaying any registration. If any registration pursuant to this Section j(1) shall be underwritten in whole or in part, the Company may require that the Warrant Shares requested for inclusion by the Holders be included in the underwriting on the same terms and conditions as the securities otherwise being sold through the underwriters.
(2) The Company will, until such time as the Warrant Shares may be sold under Rule 144 without volume limitation:
(A) prepare and file with the SEC such amendments to such registration statement and supplements to the prospectus contained therein as may be necessary to keep such registration statement effective;
(B) furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities;
(C) use its best efforts to register or qualify the securities covered by such registration statement under such state securities or blue sky laws of such jurisdictions as the Holders may reasonably request in writing within twenty (20) days following the original filing of such registration statement, except that the Company shall not for any purpose be required to execute a general consent to service of process or to qualify to do business as a foreign corporation in any jurisdiction wherein it is not so qualified or subject itself to taxation in any such jurisdiction;
(D) notify the Holders, promptly after it shall receive notice thereof, of the time when such registration statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed;
(E) notify the Holders promptly of any request by the SEC for the amending or supplementing of such registration statement or prospectus or for additional information;
(F) prepare and file with the SEC, promptly upon the request of any Holders, any amendments or supplements to such registration statement or prospectus which, in the opinion of counsel for such Holders (and concurred in by counsel for the Company), is required under the Act or the rules and regulations thereunder in connection with the distribution of Common Stock by such Holders;
(G) prepare and promptly file with the SEC and promptly notify such Holders of the filing of such amendment or supplement to such registration statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Act, any event shall have occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading; and
(H) advise the Holders, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for that purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued.
The Company may require each Holder of Warrant Shares as to which any registration is being effected to furnish to the Company such information regarding the distribution of such Warrant Shares as the Company may from time to time reasonably request in writing.
(3) All fees, costs and expenses of and incidental to such registration, inclusion and public offering in connection therewith shall be borne by the Company, provided, however, that the Holders shall bear their pro rata share of the underwriting discount and commissions and transfer taxes. The fees, costs and expenses of registration to be borne by the Company as provided above shall include, without limitation, all registration, filing, and NASD fees, printing expenses, fees and disbursements of counsel and accountants for the Company, and all legal fees and disbursements and other expenses of complying with state securities or blue sky laws of any jurisdictions in which the securities to be offered are to be registered and qualified (except as provided above). Fees and disbursements of counsel and accountants for the Holders and any other expenses incurred by the Holders not expressly included above shall be borne by the Holders.
(4) The Company will indemnify and hold harmless each Holder of Warrant Shares which are included in a registration statement pursuant to the provisions of Section (j)(1) hereof, its directors and officers, and any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Holder or such underwriter within the meaning of the Act, from and against, and will reimburse such Holder and each such underwriter and controlling person with respect to, any and all loss, damage, liability, cost and expense to which such Holder or any such underwriter or controlling person may become subject under the Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue statement or alleged untrue statement of any material fact contained in such registration statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; provided, however, that the Company will not be liable in any such case to the extent that any such loss, damage, liability, cost or expenses arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Holder, such underwriter or such controlling person in writing specifically for use in the preparation thereof.
(5) Each Holder of Warrant Shares included in a registration pursuant to the provisions of Section (j)(1) hereof will indemnify and hold harmless the Company, its directors and officers, any controlling person and any underwriter from and against, and will reimburse the Company, its directors and officers, any controlling person and any underwriter with respect to, any and all loss, damage, liability, cost or expense to which the Company or any controlling person and/or any underwriter may become subject under the Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue statement or alleged untrue statement of any material fact contained in such registration statement, any prospectus contained therein or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in strict conformity with written information furnished by or on behalf of such Holder specifically for use in the preparation thereof.
(6) Promptly after receipt by an indemnified party pursuant to the
provisions of Sections (j)(4) or (5) of notice of the commencement
of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof
is to be made against the indemnifying party pursuant to the
provisions of said Sections (j)(4) or (5), promptly notify the
indemnifying party of the commencement thereof; but the omission to
so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than
hereunder. In case such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to participate
in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party,
provided, however, if counsel for the indemnifying party concludes
that a single counsel cannot under applicable legal and ethical
considerations, represent both the indemnifying party and the
indemnified party, the indemnified party or parties have the right
to select separate counsel to participate in the defense of such
action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party pursuant to the
provisions of said Sections (j)(4) or (5) for any legal or other
expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed
counsel in accordance with the provisions of the preceding sentence,
(ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after the notice of the commencement
of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of
the indemnifying party.
LAWRENCE CONSULTING GROUP, INC.
By: ___________________________________
Dov Perlysky
President
Dated: January 16, 2004
PURCHASE FORM
Dated
The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing shares of Common Stock and hereby makes payment of in payment of the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
(Please typewrite or print in block letters)
ASSIGNMENT FORM
(Please typewrite or print in block letters)
the right to purchase Common Stock represented by this Warrant to the extent of shares as to which such right is exercisable and does hereby irrevocably constitute and appoint Attorney, to transfer the same on the books of the Company with full power of substitution in the premises.
Exhibit 10.1
Chocolate Printing Company, Inc.
600 Bayview Avenue
Inwood, New York 11096
August 30, 2004
Mr. Dov Perlysky
President
Lawrence Consulting Group, Inc.
2 Lakeside Drive West
Lawrence, New York 11559
Dear Mr. Perlysky:
The purpose of this letter is to set forth the terms under which Lawrence Consulting Group, Inc. (the "Advisor") will provide services to Chocolate Printing Company, Inc ("CPC").
1. The term of this agreement shall commence on the date hereof and shall continue until terminated as provided in paragraph 4 hereof (the "Engagement Period"). During the Engagement Period, Advisor will (i) assist CPC in developing its business and marketing strategies to maximize its value from its products, (ii) assist CPC in improving the performance of its products (iii) assist CPC in determining necessary technology investments in order to maximize its return on these investments. Advisor agrees to furnish such time to CPC as Advisor and CPC deem necessary to accomplish Advisor's obligations hereunder.
2. As full compensation for Advisor's services hereunder, Advisor will be paid a fee equal to $1,000 per month payable monthly plus $150 per hour for every hour of consulting services per month (in excess of five per month) provided by Advisor to CPC.
Advisor shall be entitled to reimbursement of any out-of-pocket expenses incurred by it in connection with its activities hereunder provided that Advisor provides CPC with signed vouchers or other satisfactory evidence of the occurrence of such expenses.
3. Advisor is not authorized to enter into any agreement or commitment on CPC's behalf and shall have no right, power or authority to do so or to bind CPC in any way.
4. This Agreement shall be for a term of one (1) year from the date hereof and shall automatically be renewed for additional one (1) year periods unless terminated in writing by either party no later than thirty (30) days prior to the end of the then existing term.
5. All notices and other communications under this Agreement shall be in writing and deemed to have been duly given if mailed by first class, registered mail, return receipt requested, postage and registry fees prepaid, and addressed to either of the parties at the addresses set forth herein, or to such other address as either party may give to the other under this Agreement.
6. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successes and assigns. Neither this Agreement nor any term thereof may be amended, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom the enforcement of such amendment, waiver, discharge, or termination is sought. This Agreement comprises the entire agreement and understanding between the parties hereto and there are no additional agreements or understandings of any kind either written or oral which relate to the subject matter hereof.
7. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New York applicable to contracts made and to be performed solely within such State. The parties hereto hereby consent to the exclusive jurisdiction of the courts of the State of New York or the Federal Courts located in New York City or Nassau County, New York to resolve any disputes hereunder.
8. If any one or more of the provisions of this Agreement shall be held to be invalid illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions or any part thereof shall not in any way be affected or impaired thereby.
9. This Agreement may be executed in counterparts.
If the foregoing correctly sets forth your understanding of the matters set forth above, would you please signify your agreement thereto by signing a copy of this letter in the space provided below and returning it to us, whereupon this letter will become a binding agreement between Advisor and CPC.
Very truly yours,
CHOCOLATE PRINTING COMPANY, INC.
By:________________________
Leonid Kofman
President
LAWRENCE CONSULTING GROUP, INC.
By:____________________________________
Dov Perlysky
President
Exhibit 10.2
Rivkalex Corp.
7 Sutton Place South
Lawrence, New York 11559
August 20, 2004
Mr. Dov Perlysky
President
Lawrence Consulting Group, Inc.
2 Lakeside Drive West
Lawrence, New York 11559
Dear Mr. Perlysky:
The purpose of this letter is to set forth the terms under which Lawrence Consulting Group, Inc. (the "Advisor") will provide services to Rivkalex Corp. ("Rivkalex").
1. The term of this agreement shall commence on the date hereof and shall continue until terminated as provided in paragraph 4 hereof (the "Engagement Period"). During the Engagement Period, Advisor will assist Rivkalex in determining necessary technology investments in order to maximize its return on these investments. Advisor agrees to furnish such time to Rivkalex as Advisor and Rivkalex deem necessary to accomplish Advisor's obligations hereunder.
2. As full compensation for Advisor's services hereunder, Advisor will be paid a fee equal to $200 per hour for every hour of consulting services provided by Advisor to Rivkalex.
Advisor shall be entitled to reimbursement of any out-of-pocket expenses incurred by it in connection with its activities hereunder provided that Advisor provides Rivkalex with signed vouchers or other satisfactory evidence of the occurrence of such expenses.
3. Advisor is not authorized to enter into any agreement or commitment on Rivkalex's behalf and shall have no right, power or authority to do so or to bind Rivkalex in any way.
4. This Agreement shall be for a term of one (1) year from the date hereof and shall automatically be renewed for additional one (1) year periods unless terminated in writing by either party no later than thirty (30) days prior to the end of the then existing term.
5. All notices and other communications under this Agreement shall be in writing and deemed to have been duly given if mailed by first class, registered mail, return receipt requested, postage and registry fees prepaid, and addressed to either of the parties at the addresses set forth herein, or to such other address as either party may give to the other under this Agreement.
6. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successes and assigns. Neither this Agreement nor any term thereof may be amended, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom the enforcement of such amendment, waiver, discharge, or termination is sought. This Agreement comprises the entire agreement and understanding between the parties hereto and there are no additional agreements or understandings of any kind either written or oral which relate to the subject matter hereof.
7. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New York applicable to contracts made and to be performed solely within such State. The parties hereto hereby consent to the exclusive jurisdiction of the courts of the State of New York or the Federal Courts located in New York City or Nassau County, New York to resolve any disputes hereunder.
8. If any one or more of the provisions of this Agreement shall be held to be invalid illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions or any part thereof shall not in any way be affected or impaired thereby.
9. This Agreement may be executed in counterparts.
If the foregoing correctly sets forth your understanding of the matters set forth above, would you please signify your agreement thereto by signing a copy of this letter in the space provided below and returning it to us, whereupon this letter will become a binding agreement between Advisor and Rivkalex.
Very truly yours,
RIVKALEX CORP.
By:________________________
Rosalind Davidowitz
President
LAWRENCE CONSULTING GROUP, INC.
By:____________________________________
Dov Perlysky
President
Exhibit 10.3
EMPLOYMENT AGREEMENT
This Agreement is entered into by Lawrence Consulting Group, Inc., a Delaware corporation, ("Employer", or Company") and Dov Perlysky, 2 Lakeside Drive West, Lawrence, New York, 11559, ("Employee") as of this 20 of August 2004.
1. Employment. Employer agrees to employ Employee and Employee agrees to accept employment upon the terms and conditions set forth in this Agreement.
2. Duties and Services. During the term of this Agreement, Employee shall be employed in the business of the Employer as its President and Chief Executive Officer to supervise Employer's business. In the performance of these duties, Employee shall report to and be subject to the direction of the Employer's Board of Directors, and Employee agrees to comply with the policies, standards and regulations of Employer. Employee shall devote such amount of his working time to the performance of his duties under this Agreement as Employer and Employee shall determine is necessary for the performance of his duties hereunder, provided however that, he may not engage in any activity which is competitive with the business of the Company, as provided in Section 10 hereof.
3. Term. The term of this Agreement shall commence on the date hereof ("Effective Date") and continue for thirty-six (36) months (the "Initial Term") unless terminated earlier or extended as herein provided (the "Term"). This Agreement shall be extended from year-to-year after the Initial Term unless either Employer or Employee provides written notice to the other of its or his intention not to extend this Agreement not later than ninety (90) days prior to the expiration of the then current Term.
4. Compensation. Employee shall not be entitled to any cash compensation from the Company for his services hereafter until Employer's annualized revenues exceeds $500,000 on a quarterly basis. At such time Employee shall be entitled to receive a salary of $50,000 subject to adjustment as shall be approved by a majority of the members of Employer's Board (other than Employee) or if no such members exists by a majority of the shareholders of Employer (not including Employee or any affiliate of Employee).
5. Expenses. Employee shall be entitled to prompt reimbursement for all reasonable travel and other out-of-pocket business expenses necessarily incurred in the performance of his duties hereunder. Employee's claims for reimbursement and Employer's payments thereof shall be in accordance with Employer's then current business expense reimbursement policies and procedures.
6. Termination. Subject to the provisions of this Section 6, Employer shall have the right to terminate Employee's employment, and Employee shall have the right to resign from his employment with Employer, at any time during the Term of this Agreement. Employer may only terminate Employee's employment for "Cause". Termination for "Cause" shall mean termination of Employee's employment by the Employer because of (i) any act or omission which constitutes a material breach by Employee of his obligations or agreements under this Agreement after written notification by the Employer specifying and describing any such breach and the actions required to cure them, and failure of Employee to cure each such breach in the manner specified in the notice or in a manner otherwise acceptable to the Employer within thirty (30) days of receipt thereof, (ii) the conviction of Employee for any crime of moral tupitude or any felony or (iii) any act or omission by Employee which, constitutes a breach of Employee's fiduciary duty to Employer. If, prior to the expiration of the Term, Employee's employment is terminated by Employer for any reason or if Employee resigns from his employment hereunder Employee shall be entitled to payment of the pro rata portion of the Employee's then salary, if any, hereof through and including the date of termination or resignation.
7. Termination Due to Death or Disability.
Death.In the event of Employee's death, Employer shall be entitled to terminate his employment and the provisions of Section 6 shall apply.
Disability. In the event Employee is unable to perform the services contemplated hereunder by reason of disability ("Disability" shall mean any physical illness or incapacity, other than death, which renders Employee unable to perform the duties required under this Agreement for more than 60 days in any 90 day consecutive period), Employer shall be entitled to terminate Employee's employment and the provisions of Section 6 shall apply.
8. Expiration of Term. Upon the expiration of the Term of this Agreement, whether by non-extension or non-renewal by the Employer or Employee, all rights and obligations of both the Employer and Employee shall expire except (i) as provided in Sections 9, 10, 11, and 16 herein, and (ii) for any unpaid compensation due Employee which may have been accrued as of the expiration of the Term of this Agreement.
9. Confidential Information. Employee acknowledges that during the course of his recruitment and employment hereunder Employee has and will become acquainted with confidential information regarding Employer's business. From the date hereof and until the end of the Term (the "Non-Competition Period") Employee will not, without the prior written consent of the Employer, disclose or make use of any such confidential information except as may be required in the course of his employment hereunder.
10. Non-Competition. Employee hereby represents, warrants and agrees that, during the Non-Competition Period, Employee will not compete with the business of the Employer within Nwe York or New Jersey (the "Prohibited Territory") as employee, consultant, principal, agent, trustee or through the agency of any corporation, partnership, association, agent or agency, or other enterprise, engaged in any business that during the Non-Competition Period is in competition with the business of the Employer as such business existed at any time during the Term (the "Prohibited Activity"). It is expressly agreed that if any restrictions set forth in this Section 10 are found by any Court having jurisdiction to be unreasonable because they are too broad in any respect, then and in each such case, the remaining restrictions herein contained shall, nevertheless, remain effective, and this Agreement, or any portion thereof, shall be considered to be amended so as to be considered reasonable and enforceable by such Court, and the Court shall specifically have the right to restrict the business or geographical scope of such restrictions to any portion of the business or geographic areas described above to the extent the Court deems such restriction to be necessary to cause the covenants to be enforceable, and in such event, the covenants shall be enforced to the extent so permitted.
11. Non-Solicitation. Employee covenants and agrees, during the Non-Competition Period, that Employee will not canvass or solicit any person or entity who is a customer or business partner of Employer about whom Employee obtained significant business information during the Term of his employment, for the purpose of directly or indirectly furnishing services competitive with Employer and will not solicit for employment or employ any employee of Employer. The parties agree that the geographic scope of this non-solicitation covenant is not limited to the Prohibited Territory.
12. Representations, Warranties and Covenants. Employee represents and warrants to Employer that (i) Employee is under no contractual or other restriction or obligation which is inconsistent with his execution of this Agreement or performance of his duties hereunder, (ii) Employee has no physical or mental disability that would hinder his performance of his duties under this Agreement, and (iii) he has had the opportunity to consult with an attorney of his choosing in connection with the negotiation of this Agreement.
13. Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be sent by certified mail, by personal delivery or by overnight courier to the Employee at his residence (as set forth in Employer's corporate records) or to the Employer at its principal office.
14. Waiver of Breach. The waiver of either the Employer or Employee of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by the Employer or Employee.
15. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of both Employer and Employee and heir respective successors, heirs or legal representatives, but neither this Agreement nor any rights hereunder may be assigned by either Employer or Employee without the written consent of the other party.
16. Governing Law. This Agreement shall be governed by the laws of the State of New York without regard to the principles of the conflict of laws. The parties hereto hereby unconditionally and irrevocably consent to the exclusive jurisdiction of the federal and state courts located in New York, New York or Nassau County, New York in connection with any lawsuit, claim or other proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
17. Entire Contract: Counterparts. This instrument contains the entire agreement of the parties. It may not be changed orally but only by an agreement approved in writing by the Employer and approved in writing by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. This Agreement may be executed in one or more counterparts, each of which shall be considered one and the same instrument.
18. No Third Party Beneficiaries. This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement.
19. Headings. The headings in this Agreement are solely for convenience and shall not be given any effect in the construction or interpretation of this Agreement.
Dated: August 20, 2004
EMPLOYEE:
EMPLOYER:
LAWRENCE CONSULTING GROUP, INC.
By: ______________________
Dov Perlysky
President