Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") among SUNDERLAND
ACQUISITION CORPORATION, a Delaware corporation ("Sunderland"), CAPSOURCE,
INC., a Nevada corporation ("Capsource") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the
"Shareholder"), being the owner of record of all of the issued and
outstanding stock of Capsource.
Whereas, Sunderland wishes to acquire and the Shareholder wishes to
transfer all of the issued and outstanding securities of Capsource in a
transaction intended to qualify as a reorganization within the meaning of
section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
Now, therefore, Sunderland, Capsource, and the Shareholder adopt
this plan of reorganization and agree as follows:
1. EXCHANGE OF STOCK
1.1 Number of Shares. The Shareholder agrees to transfer to
Sunderland at the Closing (defined below) the number of shares of common
stock of Capsource, no par value per share, shown opposite his name in
Exhibit A in exchange for an aggregate of 12,000 shares of voting common
stock of Sunderland, $.0001 par value per share, as provided in paragraph 1.5
below.
1.2 Exchange of Certificates. Each holder of an outstanding
certificate or certificates theretofore representing shares of Capsource
common stock shall surrender such certificate(s) for cancellation to
Sunderland, and shall receive in exchange a certificate or certificates
representing the number of full shares of Sunderland common stock into which
the shares of Capsource common stock represented by the certificate or
certificates so surrendered shall have been converted. The transfer of
Capsource shares by the Shareholder shall be effected by the delivery to
Sunderland at the Closing of certificates representing the transferred shares
endorsed in blank or accompanied by stock powers executed in blank.
1.3 Fractional Shares. Fractional shares of Sunderland common stock
shall not be issued, but in lieu thereof Sunderland shall round up fractional
shares to the next highest whole number.
1.4 Further Assurances. At the Closing and from time to time
thereafter, the Shareholder shall execute such additional instruments and
take such other action as may be required to sell, transfer, and assign the
transferred stock to Sunderland and to confirm Sunderland's title thereto.
1.5 Securities Exchanged. The securities of Capsource owned by the
Shareholder, and the relative securities of Sunderland for which they will be
exchanged, as well as the securities of Sunderland to be issued to ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") are set out in Exhibit A.
1.6 Securities Outstanding After Closing. Immediately following the
Closing, there will be issued and outstanding in Sunderland, 750,000 common
shares issued to TPG Capital Corporation, 2,874,762 common shares issued to
Del Mar Holdings, Inc., 60,000 common shares issued to Del Mar Mortgage,
Inc., 6,000 common shares issued to the Shareholder, and 6,000 common shares
issued to ▇▇▇▇▇▇▇▇.
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 2
--------------------------------------------------------------------------------
2. EXCHANGE OF OTHER SECURITIES. All outstanding warrants, options,
stock rights and all other securities of Capsource owned by the Shareholder,
if any, shall be exchanged and adjusted, subject to the terms contained in
such warrants, options, stock rights or other securities, for similar
securities of Sunderland.
3. CLOSING
3.1 The Closing contemplated herein shall be held at the offices of
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, Las Vegas, Nevada unless
another place or time is agreed upon in writing by the parties without
requiring the meeting of the parties hereof. All proceedings to be taken and
all documents to be executed at the Closing shall be deemed to have been
taken, delivered and executed simultaneously, and no proceeding shall be
deemed taken nor documents deemed executed or delivered until all have been
taken, delivered and executed. The date of Closing may be accelerated or
extended by agreement of the parties. The Closing shall take place on April
9, 1999, or as soon thereafter as practicable.
3.2 Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission required by this Agreement or any
signature required thereon may be used in lieu of an original writing or
transmission or signature for any and all purposes for which the original
could be used, provided that such copy, facsimile telecommunication or other
reproduction shall be a complete reproduction of the entire original writing
or transmission or original signature.
4. UNEXCHANGED CERTIFICATES. Until surrendered, each outstanding
certificate that prior to the Closing represented Capsource common stock
shall be deemed for all purposes, other than the payment of dividends or
other distributions, to evidence ownership of the number of shares of
Sunderland common stock into which it was converted. No dividend or other
distribution shall be paid to the holders of certificates of Capsource common
stock until presented for exchange at which time any outstanding dividends or
other distributions shall be paid.
5. REPRESENTATIONS AND WARRANTIES OF CAPSOURCE
Capsource represents and warrants as follows:
5.1 Corporate Status. Capsource is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Nevada
and is licensed or qualified as a foreign corporation in all states in which
the nature of its business or the character or ownership of its properties
makes such licensing or qualification necessary.
5.2 Capitalization. The authorized capital stock of Capsource
consists of 2,500 shares of common stock, no par value per share, of which
100 shares are outstanding, all duly authorized, validly issued, fully paid
and nonassessable. Capsource has not issued or granted, or agreed to issue or
grant, any warrants, options, stock rights or other securities.
5.3 Subsidiaries. Capsource has no subsidiaries.
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 3
--------------------------------------------------------------------------------
5.4 Financial Statements. All financial statements of Capsource from
its inception to and including the close of the most recent fiscal quarter,
including audited financial statements if available, furnished to Sunderland
accurately and fairly present the financial position of Capsource as of the
respective dates of such financial statements, and the results of its
operations for the respective periods indicated computed on the basis used
for filing Capsource's federal tax returns, consistently applied. Capsource
will deliver to Sunderland within 30 days following the Closing unaudited
financial statements for the period January 1, 1999 through March 31, 1999.
5.5 Undisclosed Liabilities. Capsource has no liabilities of any
nature, except to the extent indicated on Exhibit E, whether accrued,
absolute, contingent, or otherwise, including, without limitation, tax
liabilities and interest due or to become due. The Shareholder shall assume,
pay and otherwise satisfy all liabilities of Capsource, including those shown
on Exhibit E, and shall indemnify and hold harmless Sunderland from all such
liabilities.
5.6 Litigation. There is no litigation or proceeding pending, or to
Capsource's knowledge threatened, against or relating to Capsource, its
properties or business, except as set forth in a list certified by the
president of Capsource and delivered to Sunderland.
5.7 Contracts. Capsource is not a party to any material contracts
other than those listed on Exhibit B. The Shareholder shall assume, pay and
otherwise satisfy all obligations of Capsource under all contracts, including
those shown on Exhibit B, and shall indemnify and hold harmless Sunderland
and from all such obligations of Capsource under all such contracts.
5.8 No Violation. Execution of this Agreement and performance by
Capsource hereunder has been duly authorized by all requisite corporate
action on the part of Capsource, and this Agreement constitutes a valid and
binding obligation of Capsource, performance hereunder will not violate any
provision of any charter, bylaw, indenture, mortgage, lease, or agreement, or
any order, judgment, decree, law, or regulation to which any property of
Capsource is subject or by which Capsource is bound.
5.9 Taxes. Capsource has filed in correct form all federal, state,
and other tax returns of every nature required to be filed by it and has paid
all taxes as shown on such returns and all assessments, fees and charges
received by it to the extent that such taxes, assessments, fees and charges
have become due. Capsource has also paid all taxes which do not require the
filing of returns and which are required to be paid by it. To the extent that
tax liabilities have accrued, but have not become payable, they have been
adequately reflected as liabilities on the books of Capsource and are
reflected in the financial statements furnished hereto.
5.10 Corporate Authority. Capsource has full corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder, and will deliver at the Closing a certified copy of resolutions of
its board of directors authorizing execution of this Agreement by its
officers and performance thereunder.
5.11 Access to Records. From the date of this Agreement to the
Closing, Capsource will (1) give to Sunderland and its representatives full
access during normal business hours to all of its offices, books, records,
contracts, and other corporate documents and properties so that Sunderland
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 4
--------------------------------------------------------------------------------
may inspect and audit them and (2) furnish such information concerning
Capsource's properties and affairs as Sunderland may reasonably request.
5.12 Confidentiality. Until the Closing (and permanently if there is
no Closing), Capsource and the Shareholder will keep confidential any
information which they obtain from Sunderland concerning its properties,
assets, and business. If the transactions contemplated by this Agreement are
not consummated, Capsource and the Shareholder will return to Sunderland all
written matter with respect to Sunderland obtained by them in connection with
the negotiation or consummation of this Agreement.
5.13 Mortgage Company License. The mortgage company license of
Capsource issued by the Nevada Department of Business and Industry, Division
of Financial Institutions ("Division") is in good standing, and Capsource has
never been the subject of any disciplinary action by the Division with
respect to such license.
6. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder, represents and warrants as follows:
6.1 Title to Shares. The Shareholder is the owner, free and clear of
any liens and encumbrances, of the number of Capsource shares which are
listed in Exhibit A and which he has contracted to exchange and which
represent all the issued and outstanding shares of Capsource.
6.2 Litigation. There is no litigation or proceeding pending, or to
the Shareholder's knowledge threatened, against or relating to shares of
Capsource held by the Shareholder.
7. REPRESENTATIONS AND WARRANTIES OF SUNDERLAND
The Sunderland represents and warrants as follows:
7.1 Corporate Status. Sunderland is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware and is licensed or qualified as a foreign corporation in all states
in which the nature of its business or the character or ownership of its
properties makes such licensing or qualification necessary.
7.2 Capitalization. The authorized capital stock of Sunderland
consists of 100,000,000 shares of common stock, $.0001 par value per share,
of which 5,000,000 shares are issued and outstanding, all fully paid and
nonassessable and 20,000,000 shares of non-designated preferred stock, of
which there are no shares issued and outstanding.
7.3 Subsidiaries. Sunderland has no subsidiaries.
7.4 Public Company. Sunderland filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, a
registration statement on Form 10-SB on August 13, 1998, registering its
common stock.
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 5
--------------------------------------------------------------------------------
7.5 Public Filings. Sunderland has timely filed all reports required
to be filed by it under Section 13 of the Securities Exchange Act of 1934.
7.6 Financial Statements. The audited financial statements of
Sunderland of December 31, 1998, or such other period as acceptable to
Capsource ("Sunderland's Financial Statements") furnished to Capsource are
correct and fairly present the financial condition of Sunderland as of the
dates and for the periods involved, and such statements were prepared in
accordance with generally accepted accounting principles consistently
applied. Sunderland will deliver to Capsource within 30 days following the
Closing unaudited financial statements for the period January 1, 1999 through
March 31, 1999.
7.7 Undisclosed Liabilities. Sunderland had no liabilities of any
nature except to the extent reflected or reserved against in Sunderland's
Financial Statements, whether accrued, absolute, contingent, or otherwise,
including, without limitation, tax liabilities and interest due or to become
due, and Sunderland's accounts receivable, if any, are collectible in
accordance with the terms of such accounts, except to the extent of the
reserve therefor in Sunderland's Financial Statements.
7.8 Absence of Material Changes. Between the date of Sunderland's
Financial Statements and the date of this Agreement, there have not been,
except as set forth in a list certified by the president of Sunderland and
delivered to Capsource, (1) any changes in Sunderland's financial condition,
assets, liabilities, or business which, in the aggregate, have been
materially adverse; (2) any damage, destruction, or loss of or to
Sunderland's property, whether or not covered by insurance; (3) any
declaration or payment of any dividend or other distribution in respect of
Sunderland's capital stock, or any direct or indirect redemption, purchase,
or other acquisition of any such stock; or (4) any increase paid or agreed to
in the compensation, retirement benefits, or other commitments to employees.
7.9 Litigation. There is no litigation or proceeding pending, or to
Sunderland's knowledge threatened, against or relating to Sunderland, its
properties or business, except as set forth in a list certified by the
president of Sunderland and delivered to Capsource.
7.10 Contracts. Sunderland is not a party to any material contract
other than those listed on Exhibit C attached hereto.
7.11 No Violation. Execution of this Agreement and performance by
Sunderland hereunder has been duly authorized by all requisite corporate
action on the part of Sunderland, and this Agreement constitutes a valid and
binding obligation of Sunderland, performance hereunder will not violate any
provision of any charter, bylaw, indenture, mortgage, lease, or agreement, or
any order, judgment, decree, law, or regulation to which any property of
Sunderland is subject or by which Sunderland is bound.
7.12 Taxes. Sunderland has filed in correct form all federal, state,
and other tax returns of every nature required to be filed by it and has paid
all taxes as shown on such returns and all assessments, fees and charges
received by it to the extent that such taxes, assessments, fees and charges
have become due. Sunderland has also paid all taxes which do not require the
filing of returns and which are required to be paid by it. To the extent that
tax liabilities have accrued, but
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 6
--------------------------------------------------------------------------------
have not become payable, they have been adequately reflected as liabilities
on the books of Sunderland and are reflected in the financial statements
furnished hereto.
7.13 Title to Property. Sunderland has good and marketable title to
all properties and assets, real and personal, reflected in Sunderland's
Financial Statements, except as since sold or otherwise disposed of in the
ordinary course of business, and Sunderland's properties and assets are
Subject to no mortgage, pledge, lien, or encumbrance, except for liens shown
therein, with respect to which no default exists.
7.14 Corporate Authority. Sunderland has full corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder, and will deliver at the Closing a certified copy of resolutions of
its board of directors authorizing execution of this Agreement by its
officers and performance thereunder.
7.15 Confidentiality. Until the Closing (and permanently if there is
no Closing), Sunderland and its representatives will keep confidential any
information which they obtain from Capsource concerning its properties,
assets, and business. If the transactions contemplated by this Agreement are
not consummated, Sunderland will return to Capsource all written matter with
respect to Capsource obtained by it in connection with the negotiation or
consummation of this Agreement.
7.16 Investment Intent. Sunderland is acquiring the Capsource shares
to be transferred to it under this Agreement for investment and not with a
view to the sale or distribution thereof, and Sunderland has no commitment or
present intention to liquidate Capsource or to sell or otherwise dispose of
its stock.
7.17. Due Diligence. The responses of Sunderland to a certain due
diligence checklist furnished to ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
attached hereto as Exhibit D, and which are incorporated in this Agreement as
though set out in full, are and remain true and accurate.
8. CONDUCT PENDING THE CLOSING
Sunderland, Capsource and the Shareholder covenant that between the
date of this Agreement and the Closing as to each of them:
8.1 No change will be made in the charter documents, by-laws, or
other corporate documents of Sunderland or Capsource.
8.2 The Shareholder will not transfer, assign, hypothecate, lien, or
otherwise dispose or encumber the Capsource shares of common stock owned by
him.
8.3 It is acknowledged and agreed that, prior to the Closing,
Capsource shall distribute all remaining cash or funds in bank accounts of
the Capsource and all supplies, fixtures, furniture and equipment owned by
the Capsource, including, without limitation, computer equipment, and its
rights under the contracts listed on Exhibit B; provided, however that
Capsource shall take no action with respect to its mortgage company license,
which shall remain an asset of Capsource.
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 7
--------------------------------------------------------------------------------
9. CONDITIONS PRECEDENT TO OBLIGATION OF CAPSOURCE AND THE SHAREHOLDER
Capsource's and the Shareholder's obligation to consummate this
exchange shall be Subject to fulfillment on or before the Closing of each of
the following conditions, unless waived in writing by Capsource or the
Shareholder as appropriate:
9.1 Sunderland's Representations and Warranties. The representations
and warranties of Sunderland set forth herein shall be true and correct at
the Closing as though made at and as of that date, except as affected by
transactions contemplated hereby.
9.2 Sunderland's Covenants. Sunderland shall have performed all
covenants required to be performed by it on or before the Closing by this
Agreement and the following covenants pursuant to paragraph 2 of a certain
agreement with TPG Capital Corporation dated February 10, 1999:
9.2.1 TPG will provide, at its expense, a Delaware
corporation (Sunderland) with audited financial statements showing no assets
or liabilities, absolute or contingent, which is a reporting company under
ss.12(g) of the Securities Exchange Act of 1934.
9.2.2 Upon the effective date of this Agreement, the
existing shareholders, officers and directors of Sunderland will take all
actions to appoint and elect new officers and directors as selected by Del
Mar Mortgage, Inc., Del Mar Holdings, Inc. and Capsource (the "Del Mar
Entities"), and will resign as officers and directors themselves.
9.2.3 Sunderland will have authorized capital of
100,000,000 shares of common stock, $.0001 par value per share, and
20,000,000 shares of preferred stock, $.0001 par value per share.
9.2.4 Immediately prior to the effective date of this
Agreement, there will be issued and outstanding by Sunderland 5,000,000
common shares, of which 4,250,000 shares will have been issued pursuant to
Rule 506 and 750,000 shares pursuant to Rule 701.
9.2.5 TPG will deliver an opinion of counsel as to the
validity of the issuance of the outstanding common shares of Sunderland under
Rules 506 and 701 and that such shares are fully paid and nonassessable. The
Del Mar Entities understand and agree that such opinion may be issued by an
affiliate of TPG.
9.2.6 Incident to the business combinations (the "Business
Combinations") contemplated by this Agreement, by that certain Asset
Acquisition Agreement among Sunderland and Del Mar Mortgage, Inc., and by
that certain Asset Acquisition Agreement among Sunderland and Del Mar
Holdings, Inc. Sunderland shall retire all its outstanding shares issued
pursuant to Rule 506 which shall thereupon become treasury shares.
9.2.7 Incident to the Business Combinations TPG will cause the
name of Sunderland to be changed to "Sunderland Corporation" or such other name
as may be selected by the Del Mar Entities and be available.
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 8
--------------------------------------------------------------------------------
9.3 Board of Director Approval. This Agreement shall have been
approved by the board of directors of Sunderland.
9.4. Regulatory Approvals. Capsource or Sunderland shall have
received all Federal and state regulatory approvals required of them to
complete the transactions contemplated by this Agreement including, without
limitation, the approval of the change in control of Capsource by the
Division ("Financial Institutions Division Approval").
9.5 Supporting Documents of Sunderland. Sunderland shall have
delivered to Capsource and the Shareholder supporting documents in form and
substance reasonably satisfactory to Capsource and the Shareholder, to the
effect that:
(a) Sunderland is a corporation duly organized, validly
existing, and in good standing;
(b) Sunderland's authorized capital stock is as set forth
herein;
(c) Certified copies of the resolutions of the board of
directors of Sunderland authorizing the execution of
this Agreement and the consummation hereof;
(d) Secretary's certificate of incumbency of the officers
and directors of Sunderland;
(e) Sunderland's Financial Statement and unaudited
financial statement from December 31, 1998 to close
of most recent fiscal quarter; and
(f) Any document as may be specified herein or required
to satisfy the conditions, representations and
warranties enumerated elsewhere herein.
10. CONDITIONS PRECEDENT TO OBLIGATION OF SUNDERLAND
Sunderland's obligation to consummate this merger shall be Subject
to fulfillment on or before the Closing of each of the following conditions,
unless waived in writing by Sunderland:
10.1 Capsource's and the Shareholder's Representations and
Warranties. The representations and warranties of Capsource and the
Shareholder set forth herein shall be true and correct at the Closing as
though made at and as of that date, except as affected by transactions
contemplated hereby.
10.2 Capsource's and the Shareholder's Covenants. Capsource and the
Shareholder shall have performed all covenants required by this Agreement to
be performed by them on or before the Closing.
10.3 Board of Director Approval. This Agreement shall have been
approved by the board of directors of Capsource.
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 9
--------------------------------------------------------------------------------
10.4 Shareholder Execution. This Agreement shall have been executed
by the required number of shareholders of Capsource.
10.5 Supporting Documents of Capsource. Capsource shall have
delivered to Sunderland supporting documents in form and Substance reasonably
satisfactory to Sunderland to the effect that:
(a) Capsource is a corporation duly organized, validly
existing, and in good standing;
(b) Capsource's capital stock is as set forth herein;
(c) Certified copies of the resolutions of the board of
directors of Capsource authorizing the execution of
this Agreement and the consummation hereof;
(d) Secretary's certificate of incumbency of the officers
and directors of Capsource;
(e) All financial statements of Capsource from its
inception to and including the close of the most
recent fiscal quarter, including audited financial
statements if available; and
(f) Any document as may be specified herein or required
to satisfy the conditions, representations and
warranties enumerated elsewhere herein.
10.6. Regulatory Approvals. Sunderland or Capsource shall have
received all Federal and state regulatory approvals required of them to
complete the transactions contemplated by this Agreement including, without
limitation, the Financial Institutions Division Approval.
11. INDEMNIFICATION
11.1 Indemnification of Sunderland. Capsource and the Shareholder
severally (and not jointly) agree to indemnify Sunderland against any loss,
damage, or expense (including reasonable attorney fees) suffered by
Sunderland from (1) any breach by Capsource or the Shareholder of this
Agreement or (2) any inaccuracy in or breach of any of the representations,
warranties, or covenants by Capsource or the Shareholder herein; provided,
however, that (a) Sunderland shall be entitled to assert rights of
indemnification hereunder only if and to the extent that it suffers losses,
damages, and expenses (including reasonable attorney fees) exceeding $50,000
in the aggregate and (b) Sunderland shall give notice of any claims hereunder
within twenty-four months beginning on the date of the Closing. No loss,
damage, or expense shall be deemed to have been sustained by Sunderland to
the extent of insurance proceeds paid to, or tax benefits realizable by,
Sunderland as a result of the event giving rise to such right to
indemnification.
11.2 Proportionate Liability. The liability of the Shareholder under
this Section shall in no event exceed 25 percent of the value of the
Sunderland shares received by such Shareholder.
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 10
--------------------------------------------------------------------------------
11.3 Indemnification of Capsource and the Shareholder. Sunderland
agrees to indemnify Capsource and the Shareholder against any loss, damage,
or expense (including reasonable attorney fees) suffered by Capsource or by
the Shareholder from (1) any breach by Sunderland of this Agreement or (2)
any inaccuracy in or breach of any of Sunderland's representations,
warranties, or covenants herein.
11.4 Defense of Claims. Upon obtaining knowledge thereof, the
indemnified party shall promptly notify the indemnifying party of any claim
which has given or could give rise to a right of indemnification under this
Agreement. If the right of indemnification relates to a claim asserted by a
third party against the indemnified party, the indemnifying party shall have
the right to employ counsel acceptable to the indemnified party to cooperate
in the defense of any such claim. As long as the indemnifying party is
defending any such claim in good faith, the indemnified party will not settle
such claim. If the indemnifying party does not elect to defend any such
claim, the indemnified party shall have no obligation to do so.
12. TERMINATION. This Agreement may be terminated: (1) by mutual
consent in writing; or (2) by either Capsource, the Shareholder or Sunderland
if there has been a material misrepresentation or material breach of any
warranty or covenant by any other party.
13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Subject to Paragraph
11 hereof, the representations and warranties of Capsource, the Shareholder
and Sunderland set out herein shall survive the Closing.
14. ARBITRATION
SCOPE. The parties hereby agree that any and all claims (except only
for requests for injunctive or other equitable relief) whether existing now,
in the past or in the future as to which the parties or any affiliates may be
adverse parties, and whether arising out of this agreement or from any other
cause, will be resolved by arbitration before the American Arbitration
Association.
SITUS. The situs of arbitration shall be chosen by the party against
whom arbitration is sought, provided only that arbitration shall be held at a
place in the reasonable vicinity of such party's place of business or primary
residence and shall be within the United States. The situs of counterclaims
will be the same as the situs of the original arbitration. Any disputes
concerning situs will be decided by the American Arbitration Association.
APPLICABLE LAW. The law applicable to the arbitration and this
agreement shall be that of the State of Delaware, determined without regard
to its provisions which would otherwise apply to a question of conflict of
laws. Any dispute as to the applicable law shall be decided by the arbitrator.
DISCLOSURE AND DISCOVERY. The arbitrator may, in its discretion,
allow the parties to make reasonable disclosure and discovery in regard to
any matters which are the Subject of the arbitration and to compel compliance
with such disclosure and discovery order. The arbitrator may order the
parties to comply with all or any of the disclosure and discovery provisions
of the Federal Rules of Civil Procedure, as they then exist, as may be
modified by the arbitrator consistent with the desire to simplify the conduct
and minimize the expense of the arbitration.
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 11
--------------------------------------------------------------------------------
FINALITY AND FEES. Any award or decision by the American Arbitration
Association shall be final, binding and non-appealable except as to errors of
law. The prevailing party in any such arbitration shall be entitled to the
payment by the losing party of its reasonable costs and attorneys' fees.
MEASURE OF DAMAGES. In any adverse action, the parties shall
restrict themselves to claims for compensatory damages and no claims shall be
made by any party or affiliate for lost profits, punitive or multiple damages.
COVENANT NOT TO ▇▇▇. The parties covenant that under no conditions
will any party or any affiliate file any action against the other (except
only requests for injunctive or other equitable relief) in any forum other
than before the American Arbitration Association, and the parties agree that
any such action, if filed, shall be dismissed upon application and shall be
referred for arbitration hereunder with costs and attorney's fees to the
prevailing party.
INTENTION. It is the intention of the parties and their affiliates
that all disputes of any nature between them, whenever arising, from whatever
cause, based on whatever law, rule or regulation, whether statutory or common
law, and however characterized, be decided by arbitration as provided herein
and that no party or affiliate be required to litigate in any other forum any
disputes or other matters except for requests for injunctive or equitable
relief. This agreement shall be interpreted in conformance with this stated
intent of the parties and their affiliates.
15. SECTION 1377(A) ELECTION.
Sunderland and Capsource agree to cause Capsource to close its books
and to file such elections and consents where and if necessary as of the
Closing to close the books of Capsource on the date of Closing pursuant to an
election under Section 1377(a) of the Internal Revenue Code of 1986, as
amended, and to execute and deliver any and all forms necessary in connection
with such election and consent.
16. GENERAL PROVISIONS
16.1 Further Assurances. From time to time, each party will execute
such additional instruments and take such actions as may be reasonably
required to carry out the intent and purposes of this Agreement.
16.2 Waiver. Any failure on the part of either party hereto to
comply with any of its obligations, agreements, or conditions hereunder may
be waived in writing by the party to whom such compliance is owed.
16.3 Brokers. Each party agrees to indemnify and hold harmless the
other party against any fee, loss, or expense arising out of claims by
brokers or finders employed or alleged to have been employed by the
indemnifying party.
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 12
--------------------------------------------------------------------------------
16.4 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given if delivered in person
or sent by prepaid first-class certified mail, return receipt requested, or
recognized commercial courier service, as follows:
If to Sunderland, to:
Sunderland Acquisition Corporation
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Capsource, to
Capsource, Inc.
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
If to the Shareholder, to
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
16.5 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware.
16.6 Assignment. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their successors and assigns;
provided, however, that any assignment by either party of its rights under
this Agreement without the written consent of the other party shall be void.
16.7 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. Signatures
sent by facsimile transmission shall be deemed to be evidence of the original
execution thereof.
16.8 Effective Date. The effective date of this Agreement shall be
April 9, 1999.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the effective date stated above.
SUNDERLAND ACQUISITION CORPORATION
By
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President and Secretary
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 13
--------------------------------------------------------------------------------
CAPSOURCE, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 14
--------------------------------------------------------------------------------
EXHIBIT A
Exchange of Shares
Number of Number of
Capsource Shares Sunderland
To Be Shares To Be Name of
Transferred Received Shareholder/Other Address
---------------- ------------ ----------------- -------
100 6,000 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
0 6,000 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 15
--------------------------------------------------------------------------------
Exhibit B
Contracts of Capsource
1. Lease among Pecos-Sunset Executive Suites and Capsource, dated July 1, 1998.
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 16
--------------------------------------------------------------------------------
Exhibit C
Contracts of Sunderland
None.
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 17
--------------------------------------------------------------------------------
Exhibit D
Due Diligence Checklist and Responses
PLAN OF REORGANIZATION CAPSOURCE, INC. PAGE NUMBER 18
--------------------------------------------------------------------------------
Exhibit E
Liabilities of Capsource
1. Any outstanding balance owed to Federal Express.
2. Any outstanding balance owed to Capsource's local and long distances
telephone service carriers.
3. See Exhibit "B".
PROPOSED TAX-FREE EXCHANGE OF
SUBSTANTIALLY ALL OF THE ASSETS OF
DEL MAR MORTGAGE, INC. AND DEL MAR HOLDINGS, INC.
FOR SHARES OF STOCK OF TPG CAPITAL CORPORATION
DUE DILIGENCE CHECKLIST
Set forth below is a preliminary list of documents and information
which Del Mar Mortgage, Inc. and Del Mar Holdings, Inc. (jointly, "DEL MAR")
would like to review in connection with the proposed exchange of substantially
all of the assets of Del ▇▇▇▇ for shares of stock of TPG Capital Corporation
("TPG"). Please provide the information requested in each item below, or if
there is no information or documentation which is responsive to that particular
request, please place the words "NONE" or "NOT APPLICABLE" opposite such
request. Whenever an inquiry is made with respect to an agreement, please
specify whether the agreement is oral or written and provide information
relating thereto. WE RECOGNIZE THAT SIGNIFICANT PORTIONS OF THIS CHECKLIST MAY
BE INAPPLICABLE TO TPG AND UNDERSTAND THAT THE RESPONSE TO ALL BUT A FEW ITEMS
MAY BE "NONE" OR "NOT APPLICABLE."
A. GENERAL CORPORATE MATTERS
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
1 Articles of Incorporation, as amended to date.
2 Bylaws (or similar document), as amended to date.
3 The last four years of minutes of shareholders' meetings,
including written consents to action without a meeting.
4 The last four years of minutes of board of directors'
meetings, including written consents to action without a
meeting.
5 The last four years of minutes of any committees of the board,
including written consents to action without a meeting.
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
6 Shareholder and other lists setting forth the number of
shares, options, warrants, and other rights to acquire shares
of stock of TPG, listing the names and addresses, amounts, the
dates of grants, and the exercise price and vesting in each
case.
7 List of officers and directors.
8 Management structure organization chart.
9 Written documents pertaining to any material relationships
between (i) TPG and its officers and directors, (ii) officers
and directors of TPG and any of TPG's affiliates or
subsidiaries, and (iii) TPG and its affiliates and
subsidiaries.
10 Agreements related to partnerships or joint venture
affiliations, whether presently in effect or terminated.
11 Any purchase options or buyout obligations with respect to any
affiliate or subsidiary.
12 Agreements relating to mergers, acquisitions, sales, or
licenses of material assets or rights of TPG, or acquisition
of the shares or assets of any other business by TPG since the
date of incorporation.
13 List of all states in which TPG is qualified to do business or
is doing business and describe what sort of activities occur
in each such state.
14 Good Standing Certificate for each such state.
15 Tax status certificate for each such state.
16 Any other permits, licenses or other approvals necessary to
conduct such business, as well as information regarding any
such permit, licenses, etc., whether presently in effect,
expired, or terminated.
17 Agreements relating to the purchase, repurchase, sale, or
issuance of TPG's securities, including any options to
purchase stock.
2
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
18 Agreements relating to the issuance of any warrants to
purchase capital stock of TPG.
19 Agreements relating to registration rights.
20 Agreements relating to the voting of TPG's securities and
restrictive share transfers or any other shareholder
agreements.
21 Agreements relating to preemptive or other preferential rights
to acquire TPG's securities and any waivers thereof.
22 Agreements relating to any redemption rights.
23 Agreements relating to any stock appreciation rights, rights
of first refusal, anti-dilution rights, take-along rights,
bring-along rights, or rights upon change in control of TPG.
24 All agreements restricting the payment of cash dividends.
25 Current stockholders' ledger showing all stockholders and
shares owned and a list showing any outstanding options,
warrants, or other rights to acquire securities of TPG.
3
B. GENERAL BUSINESS INFORMATION
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
1 List of all written contracts entered into by TPG.
2 List of all liabilities and/or obligations (including all
contingent liabilities) of TPG.
4
C. LITIGATION
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
1 Description of all litigation, claims and proceedings settled
or concluded since the date of incorporation.
2 Description of all litigation, claims, and proceedings
threatened or pending, including potential litigation against
either TPG or TPG's employees as a result of their employment
with TPG. Please include potential litigation (e.g., employees
who may be in breach of noncompete agreements with former
employers.)
3 All consent decrees, judgments, settlement documents,
injunctions, or similar matters entered into by TPG in
connection with any litigation.
4 Description of all pending or threatened investigations or
governmental proceedings.
5 All attorneys' letters to auditors since formation.
5
D. COMPLIANCE WITH LAWS
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
1 All citations and notices received from government agencies
since formation or with continuing effect from an earlier
date.
2 All material reports to and correspondence with any government
entity, municipality or agency, including DOL, IRS, EPA and
OSHA, since formation.
3 All documents showing any certification or compliance with, or
any deficiency with respect to, regulatory standards of TPG
since formation.
4 Description of any problems with regulatory compliance,
including ERISA, labor and other federal, state and local
regulations.
5 All material governmental permits, licenses, etc. of TPG
presently in force, together with information regarding any
such permits, licenses, etc., whether presently in effect,
expired, canceled or terminated which are required to carry
out the business or operations of TPG or its subsidiaries or
affiliates.
6 Evidence of qualification or exemption under applicable
federal and state blue sky laws for the issuance or transfer
of TPG's securities.
6
E. MANAGEMENT AND EMPLOYEES
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
1 All employment or similar agreements entered into with any
employee and independent contractor. including any officer or
director of TPG.
2 All consulting agreements, commissions to agents or
representatives, or similar arrangements between TPG and any
person, entity, or affiliate.
3 Loans to and guarantees for the benefit of any employee,
including directors, officers or shareholders.
4 Agreements or insurance policies providing for the
indemnification or any officers or directors of TPG.
5 Salary information for employees and independent contractors.
(The name of each employee may be deleted, but please provide
job titles.)
6 Schedule of accrued salaries, commissions, vacation time and
sick leave for employees.
7 Copies of any qualified defined benefit or defined
contribution retirement plans, related trusts and summary plan
descriptions of the same, including all affiliate's or
subsidiary's plans whether or not the affiliate's or
subsidiary's plan provides benefits to TPG employees or
consultants.
8 Copies of all employee welfare benefit plans, related trusts
and summary plan descriptions of the same, including all
affiliate's or subsidiary's plans whether or not the
affiliate's or subsidiary's plan provides benefits to TPG
employees or consultants.
9 Copies of any non-qualified executive compensation plans.
10 Copies of any bonus, commission or similar plan or arrangement
covering employees and consultants.
7
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
11 Copies of any Voluntary Employee Benefit Associations
("VEBAs") or any related plans.
12 Copies of any plans relating to severance or termination pay,
vacation, sick leave, loans, or other extensions of credit,
loan guarantees, relocation assistance, educational
assistance, tuition payments, employee benefits, workers'
compensation, executive compensation, or fringe benefits
(including any plan exempted from ERISA by virtue of section
4(b) of ERISA).
13 copies of any actuarial reports for past three years.
14 Copies of all governmental filings relating to any of the
plans or benefits described in this category for the last
three years.
15 Copies of any investment management agreements.
16 Copies of other material documents related to employment and
labor matters or benefits such as, notices of ERISA Title IV
terminations or withdrawal liability, employee handbooks, and
other written or oral communications with employees,
consultants, affiliates, or subsidiaries.
8
F. FINANCIAL INFORMATION
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
1 All debt instruments, credit agreements, and guarantees
entered into by TPG which are currently in effect, and all
mortgages, liens, pledges, indemnifications, security
agreements, charges or encumbrances of any nature whatsoever
to which any of the property or assets of TPG are subject.
2 All notices of default or noncompliance from lenders during
the last three years and all compliance reports submitted by
TPG or its accountants.
3 All loans and guarantees of third party obligations.
4 All loan agreements, guaranty agreements, and other documents
to which any officers, directors, shareholders or other third
persons have guaranteed obligations of TPG.
5 Annual financial reports for the last three years.
6 All agreements pursuant to which TPG is subject to any
obligation to provide funds to or to make investments in any
other person (in the form of a loan, capital contribution or
otherwise).
7 List of financial institutions and types of accounts, with
copies of all material correspondence to with and from lenders
in the past three years for TPG and any subsidiary.
8 All Uniform Commercial Code financing statements filed with
respect to the above.
9 Copies of notes payable to or notes receivable from any
employee, director, member, affiliate, agent, or shareholder
of TPG for the past three years.
9
G. PROPERTY
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
1 All deeds and other instruments of legal title which relate to
any assets or properties of TPG.
2 All operating leases, real property leases and subleases to
which TPG is a party or has a beneficial interest thereunder.
3 Financing leases, sale and lease-back agreements, conditional
sale agreements, or similar agreements which relate to any
assets, properties, or interests of TPG.
10
H. MARKETING ARRANGEMENTS
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
1 All press releases concerning TPG since TPG's formation.
11
I. OTHER AGREEMENTS
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
1 All agreements, contracts or commitments limiting freedom of
TPG to engage in any line of business or to compete with any
other business or person.
2 A schedule of all insurance policies of TPG and associated
annual premiums and limits.
3 Principal documents relating to any acquisition or disposition
of businesses by TPG in the last three years.
4 All other agreements material to the business of TPG.
12
J. TAX MATTERS
RESPONSE
(E.G., "A-1
ATTACHED" OR "N/A"
ITEM NO. DESCRIPTION OF INFORMATION REQUESTED "NONE")
-------- ------------------------------------ -------
1 Copies of all federal tax returns for years 1995, 1996 and
1997.
2 Copies of any correspondence or notice from any foreign,
federal, state or local taxing authority regarding any filed
tax return (or any failure to file) including copies of all
audit reports and descriptions of any pending tax audits by
the IRS or other applicable tax authorities.
13
Due Diligence Checklist
For Proposed Tax-Free Exchange of
Substantially all of the Assets of
Sel Mar Mmortgage, Inc. and Del Mar Holdings, Inc.
For Shares of Stock of Sunderland Acquisition Corporation
The items below correspond to the numbered paragraphs of the due
diligence checklist furnished in regard to the proposed exchange of
substantially all of the assets of Del Mar Mortgage, Inc. and Del Mar
Holdings, Inc. for shares of stock of Sunderland Acquisition Corporation.
A.1 Attached
A.2 Attached
A.3 None
A.4 Attached
A.5 None
A.6 See Form F-10/A attached
A.7 See Form F-10/A attached
A.8 See Form F-10/A attached
A.9 See Form F-10/A attached
A.10 None
A.11 None
A.12 None
A.13 Delaware
A.14 Ordered
A.15 Ordered
A.16 NA
A.17 None
A.18 None
A.19 None
A.20 Attached lock-up agreements
A.21 None
A.22 None
A.23 5-year warrant to be granted to TPG Capital Corporation
A.24 None
A.25 See Form F-10/A attached
B.1 Lock-up agreements with its shareholders
B.2 See financials contained in the Form F-10/A attached
C.1 None
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ None except with the Securities and Exchange Commission in registration
of securities
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ The National Securities Market Improvement Act of 1996 ("NMSIA") limits
the authority of states to impose restrictions upon sales of securities
made pursuant to Sections 4(1) and 4(3) of the Securities Act of 1933,
as amended (the "Securities Act") of companies which file reports under
Sections 13 or 15(d) of the Securities Exchange Act, Sunderland files
such reports. Sales of the common stock in the secondary trading market
by securityholders are expected to be made pursuant to Section 4(1)
(sales other than by an issuer, underwriter or broker) and therefore not
subject to state restrictions.
E.1 None
E.2 None
E.3 None
E.4 The by-laws provide for indemnification of officers and directors to
the fullest extent allowed by Delaware law.
E.5 ▇▇
▇.▇ ▇▇
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ None
E.10 None
E.11 None
E.12 None
E.13 None
E.14 None
E.16 None
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ See Form F-10/A attached
▇.▇ ▇▇▇▇
▇.▇ Checking account maintained at ▇▇▇▇▇ Bank, N.A., ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ ▇▇▇▇
▇.▇ None
H.1 None
I.1 See Form F-10/A attached for scope of business
I.2 None
I.3 None
I.4 None
J.1 Corporation was incorporated in 1998 and no tax return has yet been
filed
J.2 None
State of Delaware
Office of the Secretary of State Page 1
------------------------------------
I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "SUNDERLAND ACQUISITION CORPORATION", FILED IN THIS OFFICE
ON THE SECOND DAY OF JUNE, A.D. 1998, AT 9:01 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
SEAL -----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, SECRETARY OF STATE
AUTHENTICATION: 9115393
DATE: ▇▇-▇▇-▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
DIVISION OF CORPORATIONS
FILED 09:01 AM 06/02/1998
981210158 - 2902945
CERTIFICATE OF INCORPORATION
OF
SUNDERLAND ACQUISITION CORPORATION
ARTICLE ONE
NAME
The name of the Corporation is Sunderland Acquisition Corporation.
ARTICLE TWO
DURATION
The Corporation shall have perpetual existence.
ARTICLE THREE
PURPOSE
The purpose for which this Corporation is organized is to engage in any
lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
ARTICLE FOUR
SHARES
The total number of shares of stock which the Corporation shall have
authority to issue is 120,000,000 shares, consisting of 100,000,000 shares of
Common Stock having a par value of $.0001 per share and 20,000,000 shares of
Preferred Stock having a par value of $.0001 per share.
The Board of Directors is authorized to provide for the issuance of the
shares of Preferred Stock in series and, by filing a certificate pursuant to
the applicable law of the State of Delaware, to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations of restrictions thereof.
CERTIFICATE OF INCORPORATION PAGE NUMBER 2
-----------------------------------------------------------------------------
The authority of the Board of Directors with respect to each series of
Preferred Stock shall include, but not be limited to, determination of the
following:
A. The number of shares constituting that series and the distinctive
designation of that series;
B. The dividend rate of the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on share of that series;
C. Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
D. Whether that series shall have conversion privileges, and, if so, the
terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall
determine;
E. Whether or not the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
F. Whether that series shall have sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
G. The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and
the relative rights of priority, if any, of payment of shares of that series;
and
H. Any other relative rights, preferences and limitations of that
series.
ARTICLE FIVE
COMMENCEMENT OF BUSINESS
The Corporation is authorized to commence business as soon as its
certificate of Incorporation has been filed.
CERTIFICATE OF INCORPORATION PAGE NUMBER 3
-----------------------------------------------------------------------------
ARTICLE SIX
PRINCIPAL OFFICE AND REGISTERED AGENT
The post office address of the initial registered office of the
Corporation and the name of its initial registered agent and its business
address is
The ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation System, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (County of New Castle)
The initial registered agent is a resident of the State of Delaware.
ARTICLE SEVEN
INCORPORATOR
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
ARTICLE EIGHT
PRE-EXEMPTIVE RIGHTS
No Shareholder or other person shall have any pre-emptive rights
whatsoever.
ARTICLE NINE
BY-LAWS
The initial by-laws shall be adopted by the Shareholders or the Board of
Directors. The power to alter, amend, or repeal the by-laws or adopt new
by-laws is vested in the Board of Directors, subject to repeal or change by
action of the Shareholders.
ARTICLE TEN
NUMBER OF VOTES
Each share of Common Stock has one vote on each matter on which the
share is entitled to vote.
CERTIFICATE OF INCORPORATION PAGE NUMBER 4
-----------------------------------------------------------------------------
ARTICLE ELEVEN
MAJORITY VOTES
A majority vote of a quorum of Shareholders (consisting of the holders
of a majority of the shares entitled to vote, represented in person or by
proxy) is sufficient for any action which requires the vote or concurrence of
Shareholders, unless otherwise required or permitted by law or the by-laws of
the Corporation.
ARTICLE TWELVE
NON-CUMULATIVE VOTING
Directors shall be elected by majority vote. Cumulative voting shall not
be permitted.
ARTICLE THIRTEEN
INTERESTED DIRECTORS, OFFICERS AND SECURITYHOLDERS
A. VALIDITY. If Paragraph (B) is satisfied, no contract or other
transaction between the Corporation and any of its directors, officers or
securityholders, or any corporation or firm in which any of them are directly
or indirectly interested, shall be invalid solely because of this
relationship or because of the presence of the director, officer or
securityholder at the meeting of the Board of Directors or committee
authorizing the contract or transaction, or his participation or vote in the
meeting or authorization.
B. DISCLOSURE, APPROVAL, FAIRNESS. Paragraph (A) shall apply only if:
(1) The material facts of the relationship or interest of each such
director, officer or securityholder are known or disclosed:
(a) to the Board of Directors or the committee and it nevertheless
authorizes or ratifies the contract or transaction by a majority of the
directors present, each such interest director to be counted in determining
whether a quorum is present but not in calculating the majority necessary to
carry the vote; or
(b) to the Shareholders and they nevertheless authorize or ratify the
contract or transaction by a majority of the shares present, each such
interested person to be counted for quorum and voting purposes; or
(2) the contract or transaction is fair to the Corporation as of the
time it is authorized or ratified by the Board of Directors, the committee or
the Shareholders.
CERTIFICATE OF INCORPORATION PAGE NUMBER 5
------------------------------------------------------------------------------
ARTICLE FOURTEEN
INDEMNIFICATION AND INSURANCE
A. PERSONS. The Corporation shall indemnify, to the extent provided in
Paragraphs (B), (D) or (F) and to the extent permitted from time to time by
law;
(1) any person who is or was director, officer, agent or employee of
the Corporation, and
(2) any person who serves or served at the Corporation's request as a
director, officer, agent, employee, partner or trustee of another corporation
or of a partnership, joint venture, trust or other enterprise.
B. EXTENT--DERIVATIVE SUITS. In case of a suit by or in the right of
the Corporation against a person named in Paragraph (A) by reason of his
holding a position named in Paragraph (A), the Corporation shall indemnify
him. If he satisfies the standard in Paragraph (C), for expenses (including
attorney's fees but excluding amounts paid in settlement) actually and
reasonably incurred by him in connection with the defense or settlement of
the suit.
C. STANDARD--DERIVATIVE SUITS. In case of a suit by or in the right of
the Corporation, a person named in Paragraph (A) shall be indemnified only if:
(1) he is successful on the merits otherwise, or
(2) he acted in good faith in the transaction which is the subject of
the suit, and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Corporation. However, he shall not be indemnified
in respect of any claim, issue or matter as to which he has been adjudged
liable for negligence or misconduct in the performance of his duty to the
Corporation unless (and only to the extent that) the court in which the suit
was brought shall determine, upon application, that despite the adjudication
but in view of all the circumstances, he is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper.
D. EXTENT--NONDERIVATIVE SUITS. In case of a suit, action or
proceeding (whether civil, criminal, administrative or investigative), other
than a suit by or in the right of the Corporation against a person named in
Paragraph (A) by reason of his holding a position named in Paragraph (A), the
Corporation shall indemnify him, if he satisfies the standard in
Paragraph (E), for amounts actually and reasonably incurred by him in
connection with the defense or settlement of the suit as
(1) expenses (including attorneys' fees),
(2) amounts paid in settlement
(3) judgments, and
(4) fines.
CERTIFICATE OF INCORPORATION PAGE NUMBER 6
------------------------------------------------------------------------------
E. STANDARD--NONDERIVATIVE SUITS. In case of a nonderivative suit, a
person named in Paragraph (A) shall be indemnified only if:
(1) he is successful on the merits or otherwise, or
(2) he acted in good faith in the transaction which is the subject of
the nonderivative suit, and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the Corporation and, with respect to
any criminal action or proceeding, he had no reason to believe his conduct
was unlawful. The termination of a nonderivative suit by judgement, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person failed to satisfy
this Paragraph (E) (2).
F. DETERMINATION THAT STANDARD HAS BEEN MET. A determination that the
standard of Paragraph (C) or (E) has been satisfied may be made by a court of
law or equity or the determination may be made by:
(1) a majority of the directors of the Corporation (whether or not a
quorum) who were not parties to the action, suit or proceeding, or
(2) independent legal counsel (appointed by a majority of the directors
of the Corporation, whether or not a quorum, or elected by the Shareholders
of the Corporation) in a written opinion, or
(3) the Shareholders of the Corporation.
G. PRORATION. Anyone making a determination under Paragraph (F) may
determine that a person has met the standard as to some of the matters but
not as to others, and may reasonably prorate amounts to be indemnified.
H. ADVANCE PAYMENT. The Corporation may pay in advance any expenses
(including attorney's fees) which may become subject to indemnification under
paragraphs (A)-(G) if:
(1) the Board of Directors authorizes the specific payment and
(2) the person receiving the payment undertakes in writing to repay
unless it is ultimately determined that he is entitled to indemnification by
the Corporation under Paragraphs (A)-(G).
L. NONEXCLUSIVE. The indemnification provided by Paragraphs (A)-(G)
shall not be exclusive of any other rights to which a person may be entitled
by law or by by-law, agreement, vote of Shareholders or disinterested
directors, or otherwise.
J. CONTINUATION. The indemnification and advance payment provided by
Paragraphs (A)-(H) shall continue as to a person who has ceased to hold a
position named in paragraph (A) and shall inure to his heirs, executors and
administrators.
CERTIFICATE OF INCORPORATION PAGE NUMBER 7
------------------------------------------------------------------------------
K. INSURANCE. The Corporation may purchase and maintain insurance on
behalf of any person who holds or who has held any position named in
Paragraph (A) against any liability incurred by him in any such positions or
arising out of this status as such, whether or not the Corporation would have
power to indemnify him against such liability under Paragraphs (A)-(H).
L. REPORTS. Indemnification payments, advance payments, and insurance
purchases and payments made under Paragraphs (A)-(K) shall be reported in
writing to the Shareholders of the Corporation with the next notice of
annual meeting, or within six months, whichever is sooner.
M. AMENDMENT OF ARTICLE. Any changes in the General Corporation Law of
Delaware increasing, decreasing, amending, changing or otherwise effecting
the indemnification of directors, officers, agents, or employees of the
Corporation shall be incorporated by reference in this Article as of the date
of such changes without further action by the Corporation, its Board of
Directors, of Shareholders, it being the intention of this Article that
directors, officers, agents and employees of the Corporation shall be
indemnified to the maximum degree allowed by the General Corporation Law of
the State of Delaware at all times.
ARTICLE FIFTEEN
Limitation On Director Liability
A. SCOPE OF LIMITATION. No person, by virtue of being or having been a
director of the Corporation, shall have any personal liability for monetary
damages to the Corporation or any of its Shareholders for any breach of
fiduciary duty except as to the extent provided in Paragraph (B).
B. EXTENT OF LIMITATION. The limitation provided for in this Article
shall not eliminate or limit the liability of a director to the director to
the Corporation or its Shareholder (i) for any breach of the director's duty
of loyalty to the Corporation or its Shareholders (ii) for any acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law (iii) for any unlawful payment of dividends or
unlawful stock purchases or redemptions in violation of Section 174 of the
General Corporation Law of Delaware or (iv) for any transaction for which the
director derived an improper personal benefit.
IN WITNESS WHEREOF, the incorporator hereunto has executed this
certificate of incorporation on this 1st day of June, 1998.
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇, Incorporator
SUNDERLAND ACQUISITION CORPORATION
BY-LAWS
ARTICLE I
The Stockholders
Section 1.1. ANNUAL MEETING. The annual meeting of the stockholders of
Sunderland Acquisition Corporation (the "Corporation") shall be held on the
third Thursday in May of each year at 10:30 a.m. local time, or at such other
date or time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, for the election of
directors and for the transaction of such other business as may come before
the meeting.
Section 1.2. SPECIAL MEETINGS. A special meeting of the stockholders
may be called at any time by the written resolution or request of two-thirds
or more of the members of the Board of Directors, the president, or any
executive vice president and shall be called upon the written request of the
holders of two-thirds or more in amount, of each class or series of the
capital stock of the Corporation entitled to vote at such meeting on the
matters(s) that are the subject of the proposed meeting, such written
request in each case to specify the purpose or purposes for which such
meeting shall be called, and with respect to stockholders proposals, shall
further comply with the requirements of this Article.
Section 1.3. NOTICE OF MEETINGS. Written notice of each meeting of
stockholders, whether annual or special, stating the date, hour and place
where it is to be held, shall be served either personally or by mail, not
less than fifteen nor more than sixty days before the meeting, upon each
stockholder of record entitled to vote at such meeting, and to any other
stockholder to whom the giving of notice may be required by law. Notice of a
special meeting shall also state the purpose or purposes for which the
meeting is called and shall indicate that it is being issued by, or at the
direction of, the person or persons calling the meeting. If, at any meeting,
action is proposed to be taken that would, if taken, entitle stockholders to
receive payment for their stock, the notice of such meeting shall include a
statement of that purpose and to that effect. If mailed, notice shall be
deemed to be delivered when deposited in the United States mail or with any
private express mail service, postage or delivery fee prepaid, and shall be
directed to each such stockholder at his address, as it appears on the
records of the stockholders of the Corporation, unless he shall have
previously filed with the secretary of the Corporation a written request that
notices intended for him be mailed to some other address, in which case, it
shall be mailed to the address designated, in such request.
Section 1.4. FIXING DATE OF RECORD. (a) 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.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting (to the
extent that such action by written consent is permitted by law, the
Certificate of Incorporation or these By-Laws), 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 stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required
by 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 its state of
incorporation, 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 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.
(c) 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.
Section 1.5 INSPECTORS. At each meeting of the stockholders, the polls
shall be opened and closed and the proxies and ballots shall be received and
be taken in charge. All questions touching on the qualification of voters and
the validity of proxies and the acceptance or rejection of votes, shall be
decided by one or more inspectors. Such inspectors shall be appointed by the
Board of Directors before or at the meeting, or, if no such appointment shall
have been made, then by the presiding officer at the meeting. If for any
reason any of the inspectors previously appointed shall fail to attend or
refuse or be unable to serve, inspectors in place of any so failing to attend
or refusing or unable to serve shall be appointed in like manner.
SECTION 1.6 QUORUM. At any meeting of the stockholders, the holders of a
majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum of the stockholders for all purposes, unless the
representation of a larger number shall be required by law, and, in that
case, the representation of the number so required shall constitute a quorum.
If the holders of the amount of stock necessary to constitute a quorum
shall fail to attend in person or by proxy at the time and place fixed in
accordance with these By-Laws for an annual or special meeting, a majority in
interest of the stockholders present in person or by proxy may adjourn, from
time to time, without notice other than by announcement at the meeting, until
holders of the amount of stock requisite to constitute a quorum shall attend.
At any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting as
originally notified.
SECTION 1.7 BUSINESS. The chairman of the Board, if any, the president,
or in his absence the vice-chairman, if any, or an executive vice president,
in the order named, shall call meetings of the stockholders to order, and
shall act as chairman of such meeting; provided, however, that the Board of
Directors or executive committee may appoint any stockholder to act as
chairman of any meeting in the absence of the chairman of the Board. The
secretary of the Corporation shall act as secretary at all meetings of the
stockholders, but in the absence of the secretary at any meeting of the
stockholders, the presiding officer may appoint any person to act as
secretary of the meeting.
SECTION 1.8 STOCKHOLDER PROPOSALS. No proposal by a stockholder shall be
presented for vote at a special or annual meeting of stockholders unless such
stockholder shall, not later than the close of business on the fifth day
following the date on which notice of the meeting is first given to
stockholders, provide the Board of Directors or the secretary of the
Corporation with written notice of intention to present a proposal for action
at the forthcoming meeting of stockholders, which notice shall include the
name and address of such stockholder, the number of voting securities that he
holds of record and that he holds beneficially, the text of the proposal to
be presented to the meeting and a statement in support of the proposal.
Any stockholder who was a stockholder of record on the applicable record
date may make any other proposal at an annual meeting or special meeting of
stockholders and the same may be discussed and considered, but unless stated
in writing and filed with the Board of Directors or the secretary prior to
the date set forth herein above, such proposal shall be laid over for action
at an adjourned, special, or annual meeting of the stockholders taking place
sixty days or more thereafter. This provision shall not prevent the
consideration and approval or disapproval at the annual meeting of reports of
officers, directors, and committees, but in connection with such reports, no
new business proposed by a stockholder, QUA stockholder, shall be acted upon
at such annual meeting unless stated and filed as herein provided.
Notwithstanding any other provision of these By-Laws, the Corporation
shall be under no obligation to include any stockholder proposal in its proxy
statement materials or otherwise present any such proposal to stockholders at
a special or annual meeting of stockholders if the Board of Directors
reasonably believes the proponents thereof have not complied with Sections 13
or 14 of
the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder; nor shall the Corporation be required to include any
stockholder proposal not required to be included in its proxy materials to
stockholders in accordance with any such section, rule or regulation.
SECTION 1.9 PROXIES. At all meetings of stockholders, a stockholder
entitled to vote may vote either in person or by proxy executed in writing by
the stockholder or by his duly authorized attorney-in-fact. Such proxy shall
be filed with the secretary before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
SECTION 1.10 VOTING BY BALLOT. The votes for directors, and upon the
demand of any stockholder or when required by law, the votes upon any
question before the meeting, shall be by ballot.
SECTION 1.11 VOTING LISTS. 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 entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares of stock 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 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.
SECTION 1.12 PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the state of incorporation, as the place of
meeting for any annual meeting or any special meeting called by the Board of
Directors. If no designation is made or if a special meeting is otherwise
called, the place of meeting shall be the principal office of the Corporation.
SECTION 1.13 VOTING OF STOCK OF CERTAIN HOLDERS. Shares of capital stock
of the Corporation standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the by-laws of such
corporation may prescribe, or in the absence of such provision, as the board
of directors of such corporation may determine.
Shares of capital stock of the Corporation standing in the name of a
deceased person, a minor ▇▇▇▇ or an incompetent person may be voted by his
administrator, executor, court-appointed guardian or conservator, either in
person or by proxy, without a transfer of such stock into the name of such
administrator, executor, court-appointed guardian or conservator. Shares of
capital stock of the Corporation standing in the name of a trustee may be
voted by him, either in person or by proxy.
Shares of capital stock of the Corporation standing in the name of a
receiver may be voted, either in person or by proxy, by such receiver, and
stock held by or under the control of a receiver
may be voted by such receiver without the transfer thereof into his name if
authority to do so is contained in any appropriate order of the court by
which such receiver was appointed.
A stockholder whose stock is pledged shall be entitled to vote such
stock, either in person or by proxy, until the stock has been transferred
into the name of the pledgee, and thereafter the pledgee shall be entitled to
vote, either in person or by proxy, the stock so transferred.
Shares of its own capital stock belonging to this Corporation shall not
be voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding stock at any given time, but
shares of its own stock held by it in a fiduciary capacity may be voted and
shall be counted in determining the total number of outstanding stock at any
given time.
ARTICLE II
Board of Directors
SECTION 2.1. GENERAL POWERS. The business, affairs, and the property
of the Corporation shall be managed and controlled by the Board of Directors
(the "Board"), and, except as otherwise expressly provided by law, the
Certificate of Incorporation or these By-Laws, all of the powers of the
Corporation shall be vested in the Board.
SECTION 2.2. NUMBER OF DIRECTORS. The number of directors which shall
constitute the whole Board shall be no fewer than one nor more than five.
Within the limits above specified, the number of directors shall be
determined by the Board of Directors pursuant to a resolution adopted by a
majority of the directors then in office.
SECTION 2.3. ELECTION, TERM AND REMOVAL. Directors shall be elected at
the annual meeting of stockholders to succeed those directors whose terms
have expired. Each director shall hold office for the term for which elected
and until his or her successor shall be elected and qualified. Directors
need not be stockholders. A director may be removed from office at a meeting
expressly called for that purpose by the vote of not less than a majority of
the outstanding capital stock entitled to vote an election of directors.
SECTION 2.4. VACANCIES. Vacancies in the Board of Directors, including
vacancies resulting from an increase in the number of directors, may be filled
by the affirmative vote of a majority of the remaining directors then in
office, though less than a quorum; except that vacancies resulting from
removal from office by a vote of the stockholders may be filled by the
stockholders at the same meeting at which such removal occurs provided that
the holders of not less than a majority of the outstanding capital stock of
the Corporation (assessed upon the basis of votes and not on the basis of
number of shares) entitled to vote for the election of directors, voting
together as a single class, shall vote for each replacement director. All
directors elected to fill vacancies shall hold office for a term expiring at
the time of the next annual meeting of stockholders and upon election and
qualification of his successor. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of an incumbent
director.
SECTION 2.5. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice to the president or to the secretary of the
Corporation. The resignation of any director shall take effect at the time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 2.6. PLACE OF MEETINGS, ETC. The Board of Directors may hold
its meetings, and may have an office and keep the books of the Corporation
(except as otherwise may be provided for by law), in such place or places in
or outside the state of incorporation as the Board from time to time may
determine.
SECTION 2.7. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held as soon as practicable after adjournment of the
annual meeting of stockholders at such time and place as the Board of
Directors may fix. No notice shall be required for any such regular meeting
of the Board.
SECTION 2.8. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be held at places and times fixed by resolution of the Board
of Directors, or upon call of the chairman of the Board, if any, or
vice-chairman of the Board, if any, the president, an executive vice
president or two-thirds of the directors then in office.
The secretary or officer performing the secretary's duties shall give
not less than twenty-four hours' notice by letter, telegraph or telephone (or
in person) of all special meetings of the Board of Directors, provided that
notice need not given of the annual meeting or of regular meetings held at
times and places fixed by resolution of the Board. Meetings may be held at
any time without notice if all of the directors are present, or if those not
present waive notice in writing either before or after the meeting. The
notice of meetings of the Board need not state the purpose of the meeting.
SECTION 2.9. PARTICIPATION BY CONFERENCE TELEPHONE. Members of the Board
of Directors of the Corporation, or any committee thereof, may participate in
a regular or special or any other meeting of the Board or committee by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meetings.
SECTION 2.10. ACTION BY WRITTEN CONSENT. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if prior or subsequent to such action
all the members of the Board or such committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of the Board or committee.
SECTION 2.11. QUORUM. A majority of the total number of directors then
in office shall constitute a quorum for the transaction of business; but if at
any meeting of the Board there be less than a quorum present, a majority of
those present may adjourn the meeting from time to time.
SECTION 2.12. BUSINESS. Business shall be transacted at meetings of
the Board of Directors in such order as the Board may determine. At all
meetings of the Board of Directors, the chairman of the Board, if any, the
president, or in his absence the vice-chairman, if any, or an executive vice
president, in the order named, shall preside.
SECTION 2.13. INTEREST OF DIRECTORS IN CONTRACTS. (a) No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one ore more of the Corporation's
directors or officers, are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board or committee which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the
disinterested directors be less than a quorum: or
(2) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the stockholders;
or
(3) The contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of
Directors, a committee of the Board of Directors or the
stockholders.
(b) Interested directors may be counted in determining the presence of
a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
SECTION 2.14. COMPENSATION OF DIRECTORS. Each director of the
Corporation who is not a salaried officer or employee of the Corporation, or
of a subsidiary of the Corporation, shall receive such allowances for serving
as a director and such fees for attendance at meetings of the Board of
Directors or the executive committee or any other committee appointed by the
Board as the Board may from time to time determine.
SECTION 2.15. LOANS TO OFFICERS OR EMPLOYEES. The Board of Directors
may lend money to, guarantee any obligation of, or otherwise assist, any
officer or other employee of the Corporation or of any subsidiary, whether or
not such officer or employee is also a director of the Corporation, whenever,
in the judgment of the directors, such loan, guarantee, or assistance may
reasonably be expected to benefit the Corporation; provided, however, that
any such loan, guarantee, or other assistance given to an officer or employee
who is also a director of the Corporation must be authorized by a majority of
the entire Board of Directors. Any such loan, guarantee, or other assistance
may be made with or without interest and may be unsecured or
secured in such manner as the Board of Directors shall approve, including,
but not limited to, a pledge of shares of the Corporation, and may be made
upon such other terms and conditions as the Board of Directors may determine.
SECTION 2.16 NOMINATION. Subject to the rights of holders of any class
or series of stock having a preference over the common stock as to dividends
or upon liquidation, nominations for the election of directors may be made by
the Board of Directors or by any stockholder entitled to vote in the election
of directors generally. However, any stockholder entitled to vote in the
election of directors generally may nominate one or more persons for election
as directors at a meeting only if written notice of such stockholder's intent
to make such nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the secretary of the
Corporation not later than (i) with respect to an election to be held at an
annual meeting of stockholders the close of business on the last day of the
eighth month after the immediately preceding annual meeting of stockholders,
and (ii) with respect to an election to be held at a special meeting of
stockholders for the election of directors, the close of business on the
fifth day following the date on which notice of such meeting is first given
to stockholders. Each such notice shall set forth: (a) the name and address
of the stockholder who intends to make the nomination and of the person or
persons to be nominated; (b) a representation that the stockholder is a
holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder; (d) such
other information regarding each nominee proposed by such stockholder as
would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission, had the nominee been
nominated, or intended to be nominated, by the Board of Directors, and;
(e) the consent of each nominee to serve as a director of the Corporation if
so elected. The presiding officer at the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedure.
ARTICLE III
Committees
SECTION 3.1. COMMITTEES. The Board of Directors, by resolution adopted
by a majority of the number of directors then fixed by these By-Laws or
resolution thereto, may establish such standing or special committees of the
Board as it may deem advisable, and the members, terms, and authority of such
committees shall be set forth in the resolutions establishing such committee.
SECTION 3.2. EXECUTIVE COMMITTEE NUMBER AND TERM OF OFFICE. The Board
of Directors may, at any meeting, by majority vote of the Board of Directors,
elect from the directors an executive committee. The executive committee
shall consist of such number of members as may be fixed from time to time by
resolution of the Board of Directors. The Board of Directors may designate a
chairman of the committee who shall preside at all meetings thereof, and the
committee shall designate a member thereof to preside in the absence of the
chairman.
SECTION 3.3. EXECUTIVE COMMITTEE POWERS. The executive committee may,
while the Board of Directors is not in session, exercise all or any of the
powers of the Board of Directors in all cases in which specific directions
shall not have been given by the Board of Directors; except that the
executive committee shall not have the power or authority of the Board of
Directors to (i) amend the Certificate of Incorporation or the By-Laws of
the Corporation, (ii) fill vacancies on the Board of Directors, (iii) adopt
an agreement or certification of ownership, merger or consolidation, (iv)
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, or a dissolution
of the Corporation or a revocation of a dissolution, (v) declare a dividend,
or (vi) authorize the issuance of stock.
SECTION 3.4. EXECUTIVE COMMITTEE MEETINGS. Regular and special meetings
of the executive committee may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-Laws for regular and special meetings of the Board of Directors. Special
meetings of the executive committee may be called by any member thereof.
Unless otherwise indicated in the notice thereof, any and all business may be
transacted at a special or regular meeting of the executive meeting if a
quorum is present. At any meeting at which every member of the executive
committee shall be present, in person or by telephone, even though without
any notice, any business may be transacted. All action by the executive
committee shall be reported to the Board of Directors at its meeting next
succeeding such action.
The executive committee shall fix its own rules of procedure, and shall
meet where and as provided by such rules or by resolution of the Board of
Directors, but in every case the presence of a majority of the total number
of members of the executive committee shall be necessary to constitute a
quorum. In every case, the affirmative vote of a quorum shall be necessary
for the adoption of any resolution.
SECTION 3.5 EXECUTIVE COMMITTEE VACANCIES. The Board of Directors, by
majority vote of the Board of Directors then in office, shall fill vacancies
in the executive committee by election from the directors.
ARTICLE IV
THE OFFICERS
SECTION 4.1. NUMBER AND TERM OF OFFICE. The officers of the Corporation
shall consist of, as the Board of Directors may determine and appoint from
time to time, a chief executive officer, a president, one or more executive
vice-presidents, a secretary, a treasurer, a controller, and/or such other
officers as may from time to time be elected or appointed by the Board of
Directors, including such additional vice-presidents with such designations,
if any, as may be determined by the Board of Directors and such assistant
secretaries and assistant treasurers. In addition, the Board of Directors may
elect a chairman of the Board and may also elect a vice-chairman as officers
of the Corporation. Any two or more offices may be held by the same person.
In its discretion, the Board of Directors may leave unfilled any office
except as may be required by law.
The officers of the Corporation shall be elected or appointed from time
to time by the Board of Directors. Each officer shall hold office until his
successor shall have been duly elected or appointed or until his death or
until he shall resign or shall have been removed by the Board of Directors.
Each of the salaried officers of the Corporation shall devote his entire
time, skill and energy to the business of the Corporation, unless the
contrary is expressly consented to by the Board of Directors or the executive
committee.
SECTION 4.2. REMOVAL. Any officer may be removed by the Board of
Directors whenever, in its judgment, the best interests of the Corporation
would be served thereby.
SECTION 4.3. THE CHAIRMAN OF THE BOARD. The chairman of the Board, if
any, shall preside at all meetings of stockholders and of the Board of
Directors and shall have such other authority and perform such other duties
as are prescribed by law, by these By-Laws and by the Board of Directors. The
Board of Directors may designate the chairman of the Board as chief executive
officer, in which case he shall have such authority and perform such duties
as are prescribed by these By-Laws and the Board of Directors for the chief
executive officer.
SECTION 4.4. THE VICE-CHAIRMAN. The vice-chairman, if any, shall have
such authority and perform such other duties as are prescribed by these
By-Laws and by the Board of Directors. In the absence or inability to act of
the chairman of the Board and the president, he shall preside at the meetings
of the stockholders and of the Board of Directors and shall have and exercise
all of the powers and duties of the chairman of the Board. The Board of
Directors may designate the vice-chairman as chief executive officer, in which
case he shall have such authority and perform such duties as are prescribed
by these By-Laws and the Board of Directors for the chief executive officer.
SECTION 4.5. THE PRESIDENT. The president shall have such authority and
perform such duties as are prescribed by law, by these By-Laws, by the Board
of Directors and by the chief executive officer (if the president is not the
chief executive officer). The president, if there is no chairman of the
Board, or in the absence or the inability to act of the chairman of the
Board, shall preside at all meetings of stockholders and of the Board of
Directors. Unless the Board of Directors designates the chairman of the Board
or the vice-chairman as chief executive officer, the president shall be the
chief executive officer, in which case he shall have such authority and
perform such duties as are prescribed by these By-Laws and the Board of
Directors for the chief executive officer.
SECTION 4.6. THE CHIEF EXECUTIVE OFFICER. Unless the Board of Directors
designates the chairman of the Board or the vice-chairman as chief executive
officer, the president shall be the chief executive officer. The chief
executive officer of the Corporation shall have, subject to the supervision
and direction of the Board of Directors, general supervision of the business,
property and affairs of the Corporation, including the power to appoint and
discharge agents and employees, and the powers vested in him by the Board of
Directors, by law or by these By-Laws or which usually attach or pertain to
such office.
SECTION 4.7. THE EXECUTIVE VICE-PRESIDENTS. In the absence of the
chairman of the Board, if any, the president and the vice-chairman, if any,
or in the event of their inability or refusal to act, the executive
vice-president (or in the event there is more than one executive vice-
president, the executive vice-presidents in the order designated, or in the
absence of any designation, then in the order of their election) shall
perform the duties of the chairman of the Board, of the president and of the
vice-chairman, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the chairman of the Board, the president
and the vice-chairman. Any executive vice-president may sign, with the
secretary or an authorized assistant secretary, certificates for stock of the
Corporation and shall perform such other duties as from time to time may be
assigned to him by the chairman of the Board, the president, the
vice-chairman, the Board of Directors or these By-Laws.
SECTION 4.8. THE VICE-PRESIDENTS. The vice-presidents, if any, shall
perform such duties as may be assigned to them from time to time by the
chairman of the Board, the president, the vice-chairman, the Board of
Directors, or these By-Laws.
SECTION 4.9. THE TREASURER. Subject to the direction of chief executive
officer and the Board of Directors, the treasurer shall have charge and
custody of all the funds and securities of the Corporation; when necessary or
proper he shall endorse for collection, or cause to be endorsed, on behalf of
the Corporation, checks, notes and other obligations, and shall cause the
deposit of the same to the credit of the Corporation in such bank or banks or
depositary as the Board of Directors may designate or as the Board of
Directors by resolution may authorize; he shall sign all receipts and
vouchers for payments made to the Corporation other than routine receipts and
vouchers, the signing of which he may delegate; he shall sign all checks made
by the Corporation (provided, however, that the Board of Directors may
authorize and prescribe by resolution the manner in which checks drawn on
banks or depositories shall be signed, including the use of facsimile
signatures, and the manner in which officers, agents or employees shall be
authorized to sign); unless otherwise provided by resolution of the Board of
Directors, he shall sign with an officer-director all bills of exchange and
promissory notes of the Corporation; whenever required by the Board of
Directors, he shall render a statement of his cash account; he shall enter
regularly full and accurate account of the Corporation in books of the
Corporation to be kept by him for that purpose; he shall, at all reasonable
times, exhibit his books and accounts to any director of the Corporation upon
application at his office during business hours; and he shall perform all
acts incident to the position of treasurer. If required by the Board of
Directors, the treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such sure ties as the Board of Directors may
require.
SECTION 4.10. THE SECRETARY. The secretary shall keep the minutes of
all meetings of the Board of Directors, the minutes of all meetings of the
stockholders and (unless otherwise directed by the Board of Directors) the
minutes of all committees, in books provided for that purpose; he shall
attend to the giving and serving all notices of the Corporation; he may sign
with an officer-director or any other duly authorized person, in the name of
the Corporation, all contracts authorized by the Board of Directors or by the
executive committee, and, when so ordered by the Board of Directors or the
executive committee, he shall affix the seal of the Corporation thereto; he
may sign with the president or an executive vice-president all certificates
of shares of the capital
stock; he shall have charge of the certificate books, transfer books and
stock ledgers, and such other books and papers as the Board of Directors or
the executive committee may direct, all of which shall, at all reasonable
times, be open to the examination of any director, upon application at the
secretary's office during business hours; and he shall in general perform all
the duties incident to the office of the secretary, subject to the control of
the chief executive officer and the Board of Directors.
SECTION 4.11. THE CONTROLLER. The controller shall be the chief
accounting officer of the Corporation. Subject to the supervision of the
Board of Directors, the chief executive officer and the treasurer, the
controller shall provide for and maintain adequate records of all assets,
liabilities and transactions of the Corporation, shall see that accurate
audits of the Corporation's affairs are currently and adequately made and
shall perform such other duties as from time to time may be assigned to him.
SECTION 4.12. THE ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers shall respectively, if required by the Board of
Directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors may determine. The assistant
secretaries as thereunto authorized by the Board of Directors may sign with
the chairman of the Board, the president, the vice-chairman or an executive
vice-president, certificates for stock of the Corporation, the issue of which
shall have been authorized by a resolution of the Board of Directors. The
assistant treasurers and assistant secretaries, in general, shall perform
such duties as shall be assigned to them by the treasurer or the secretary,
respectively, or chief executive officer, the Board of Directors, or these
By-Laws.
SECTION 4.13. SALARIES. The salaries of the officers shall be fixed from
time to time by the Board of Directors, and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a director
of the Corporation.
SECTION 4.14. VOTING UPON STOCKS. Unless otherwise ordered by the Board
of Directors or by the executive committee, any officer, director or any
person or persons appointed in writing by any of them, shall have full power
and authority in behalf of the Corporation to attend and to act and to vote
at any meetings of stockholders of any corporation in which the Corporation
may hold stock, and at any such meeting shall possess and may exercise any
and all the rights and powers incident to the ownership of such stock, and
which, as the owner thereof, the Corporation might have possessed and
exercised if present. The Board of Directors may confer like powers upon any
other person or persons.
ARTICLE V
Contracts and Loans
SECTION 5.1. CONTRACTS. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of
and on behalf of the Corporation, and such authority may be general or
confined to specific instances.
SECTION 5.2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such authority
may be general or confined to specific instances.
ARTICLES VI
Certificates for Stock and Their Transfer
SECTION 6.1. CERTIFICATES FOR STOCK. Certificates representing stock of
the Corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by the chairman of the Board,
the president, the vice-chairman or an executive vice-president and/or by the
secretary or an authorized assistant secretary and shall be sealed with the
seal of the Corporation. The seal may be a facsimile. If a stock certificate
is countersigned (i) by a transfer agent other than the Corporation or its
employee, or (ii) by a registrar other than the Corporation or its employee,
any other signature on the certificate may be a facsimile. In the event that
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. All certificates
for stock shall be consecutively numbered or otherwise identified. The name
of the person to whom the shares of stock represented thereby are issued,
with the number of shares of stock and date of issue, shall be entered on the
books of the Corporation. All certificates surrendered to the Corporation for
transfer shall be canceled and no new certificates shall be issued until the
former certificate for a like number of shares of stock shall have been
surrendered and canceled, except that, in the event of a lost, destroyed or
mutilated certificate, a new one may be issued therefor upon such terms and
indemnity to the Corporation as the Board of Directors may prescribe.
SECTION 6.2. TRANSFER OF STOCK. Transfers of stock of the Corporation
shall be made only on the books of the Corporation by the holder of record
thereof or by his legal representative, who shall furnish proper evidence of
authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the secretary of the Corporation, and
on surrender for cancellation of the certificate for such stock. The person
in whose name stock stands on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation.
ARTICLE VII
Fiscal Year
SECTION 7.1. FISCAL YEAR. The fiscal year of the Corporation shall
begin on the first day of January in each year and end on the last day of
December in each year.
ARTICLE VIII
Seal
SECTION 8.1. SEAL. The Board of Directors shall approve a corporate
seal which shall be in the form of a circle and shall have inscribed thereon
the name of the Corporation.
ARTICLE IX
Waiver of Notice
SECTION 9.1. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of these By-Laws or under the provisions of the
Certificate of Incorporation or under the provisions of the corporation law
of the state of incorporation, waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Attendance
of any person at a meeting for which any notice is required to be given under
the provisions of these By-Laws, the Certificate of Incorporation or the
corporation law of the state of incorporation shall constitute a waiver of
notice of such meeting except when the person attends 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.
ARTICLE X
Amendments
SECTION 10.1. AMENDMENTS. These By-Laws may be altered, amended or
repealed and new By-Laws may be adopted at any meeting of the Board of
Directors of the Corporation by the affirmative vote of a majority of the
members of the Board, or by the affirmative vote of a majority of the
outstanding capital stock of the Corporation (assessed upon the basis of
votes and not on the basis of number of shares) entitled to vote generally in
the election of directors, voting together as a single class.
ARTICLE XI
Indemnification
SECTION 11.1. INDEMNIFICATION. The Corporation shall indemnify its
officers, directors, employees and agents to the fullest extent permitted by
the General Corporation Law of Delaware, as amended from time to time.
[END]
SUNDERLAND ACQUISITION CORPORATION
CONSENT OF DIRECTOR
IN LIEU OF ORGANIZATION MEETING
AS OF JUNE 9, 1998
The undersigned, being the sole director of Sunderland Acquisition
Corporation (the "Corporation") does hereby consent to the taking of the
following action in lieu of an organizational meeting and hereby waives any
notice required to be given therewith:
RESOLVED by the Board of Directors of the Corporation that;
1. ELECTION OF OFFICERS. The following persons be, and hereby are,
elected to the respective offices indicated to serve until further action of
the Board.
President ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
2. ADOPTION OF BY-LAWS. The by-laws attached hereto be, and hereby are,
adopted by the Corporation, and the Secretary is directed to file a
certified copy thereof in the minute book of the Corporation.
3. CORPORATE RECORDS. The President or Secretary be, and hereby is,
authorized and directed: to procure all corporate books, books of account and
stock books required by the statutes of the place of incorporation or
necessary or appropriate in connection with the business of the Corporation;
to obtain a seal of the Corporation bearing the words and figures.
"SUNDERLAND ACQUISITION CORPORATION, 1998"
which is hereby approved and adopted as and for the corporate seal of the
Corporation, provided that at any time the Secretary or designee may use a
facsimile of such seal; and to obtain certificates for the shares of the
Corporation, which shall be effective upon the endorsement of such
certificates by the authentic or facsimile signature of the President and
specimens of which certificates shall be annexed to this consent, and, which
shall be adopted as the form of certificate for the Corporation.
4. FISCAL YEAR. The fiscal year of the Corporation be, and hereby is,
shall be January 1 to December 31.
5. ISSUANCE OF STOCK. The President be, and hereby is, authorized and
directed to accept from time to time the subscription(s) for the stock of
the Corporation and upon receipts of payment for such stock, the designated
shares of the stock of the Corporation shall be issued to such subscriber(s),
as fully paid and nonassessable, in the full amount of the subscription.
CONSENT OF DIRECTOR IN LIEU OF MEETING PAGE NUMBER 2
------------------------------------------------------------------------------
The Corporation hereby issues to ▇▇▇▇▇▇ Mill Associates, Inc. 4,250,000
shares of its Common Stock pursuant to Rule 506 of Regulation D of the
General Rules and Regulations of the Securities and Exchange Commission at
par for a purchase price of $425. The Corporation hereby issues 750,000 shares
of its Common Stock to ▇▇▇▇▇▇▇ & Associates pursuant to Rule 701 for services.
Subscriber Number of Shares Payment
---------- ---------------- -------
▇▇▇▇▇▇ Mill Associates, Inc. 4,250,000 $425
▇▇▇▇▇▇▇ & Associates 750,000 -0-
6. BANK ACCOUNTS. The President or his designee be and hereby is,
authorized to designate any bank or banks as he shall deem appropriate as a
depositary or depositaries for the funds of the Corporation; that the banking
resolutions required by such bank or banks in order to open an ordinary
checking account and such other accounts as the President of the Corporation
shall deem appropriate be, and they hereby are, adopted as the resolutions of
the Board of Directors as if fully set forth herein; and that the President
be, and hereby is, authorized to designate signatories to execute checks and
other documents on behalf of the Corporation with respect to such accounts;
and that the officers of the Corporation be, and hereby are, authorized and
directed to execute and deliver, in the name and on behalf of the Corporation
and under its corporate seal or otherwise, any and all certificates,
agreements, undertakings, authorizations, and other instruments or documents
as such bank or banks may require and as shall be necessary or appropriate to
carry out the intent and accomplish the purposes of this resolution; and that
copies of any banking resolutions so executed shall be inserted in the minute
book of the Corporation.
7. APPOINTMENT OF AGENTS. For the purpose of authorizing the
Corporation to do business in any state, territory, or possession of the
United States or any foreign country in which it is necessary or expedient
for the Corporation to do business, the officers of the Corporation be, and
hereby are, authorized to appoint and substitute all necessary agents or
attorneys for service of process, to designate and change the location of all
necessary statutory offices, and to make and file all necessary certificates,
reports, powers of attorney, and other instruments as may be required by the
laws of such state, territory, possession, or country to authorize the
Corporation to do business therein, and whenever it is expedient for the
Corporation to cease doing business therein and withdraw therefrom to revoke
any appointment of agent or attorney for services of process and to file any
necessary certificate, report, revocation of appointment, or
surrender of authority of the Corporation to do business therein.
8. EXECUTIVE COMMITTEE. Pursuant to the by-laws of the Corporation,
the President be, and hereby is, designated and constitutes an Executive
Committee of the Corporation.
9. RATIFICATION OF PRIOR ACTIONS. All actions heretofore taken or
authorized by the incorporators with respect to the organization or business
of the Corporation including filings and amendments thereto be, and hereby
are, ratified, approved and confirmed in all aspects.
CONSENT OF DIRECTOR IN LIEU OF MEETING PAGE NUMBER 3
------------------------------------------------------------------------------
10. GENERAL AUTHORITY. The officers of the Corporation be, and hereby
are, authorized to take any and all other actions which they shall deem
necessary or appropriate to complete the organization of the Corporation and
to permit the Corporation legally to commence business within the state of
its jurisdiction.
Effective as of the date hereinabove written.
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, director
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A#2
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
SUNDERLAND ACQUISITION CORPORATION
------------------
(Name of Small Business Issuer)
Delaware ▇▇-▇▇▇▇▇▇▇
------------------- --------------------
(State or Other Jurisdiction of I.R.S. Employer Identification Number
Incorporation or Organization)
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
-------------------------------------------
(Address of Principal Executive Offices including Zip Code)
202/387-5400
------------
(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act: None
Securities to be Registered Under Section 12(g) of the Act:
Common Stock, $.0001 Par Value
(Title of Class)
PART I
ITEM 1. BUSINESS.
Sunderland Acquisition Corporation (the "Company"), was incorporated on
June 2, 1998 under the laws of the State of Delaware to engage in any lawful
corporate undertaking, including, but not limited to, selected mergers and
acquisitions. The Company has been in the developmental stage since inception
and has no operations to date other than issuing shares to its original
shareholders.
The Company will attempt to locate and negotiate with a business entity
for the merger of that target company into the Company. In certain instances,
a target company may wish to become a subsidiary of the Company or may wish
to contribute assets to the Company rather than merge. No assurances can be
given that the Company will be successful in locating or negotiating with any
target company.
The Company has been formed to provide a method for a foreign or
domestic private company to become a reporting ("public") company whose
securities are qualified for trading in the United States secondary market.
PERCEIVED BENEFITS
There are certain perceived benefits to being a reporting company with a
class of publicly-traded securities. These are commonly thought to include
the following:
* the ability to use registered securities to make acquisitions of
assets or businesses;
* increased visibility in the financial community;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in subsequently raising capital;
* compensation of key employees through stock options;
* enhanced corporate image;
* a presence in the United States capital market.
POTENTIAL TARGET COMPANIES
A business entity, if any, which may be interested in a business
combination with the Company may include the following:
* a company for which a primary purpose of becoming public is the use
of its securities for the acquisition of assets or businesses;
* a company which is unable to find an Underwriter of its securities or
is unable to find an underwriter of securities on terms acceptable to
it;
* a company which wishes to become public with less dilution of its
common stock than would occur upon an underwriting;
* a company which believes that it will be able obtain investment
capital on more favorable terms after it has become public;
* a foreign company which may wish an initial entry into the United
States securities market;
* a special situation company, such as a company seeking a public ▇▇▇▇
to satisfy redemption requirements under a qualified Employee Stock
Option Plan:
* a company seeking one or more of the other perceived benefits of
becoming a public company.
A business combination with a target company will normally involve the
transfer to the target company of the majority of the issued and outstanding
common stock of the Company, and the substitution by the target company of
its own management and board of directors.
No assurances can be given that the Company will be able to enter into a
business combination, as to the terms of a business combination, or as to the
nature of the target company.
The proposed business activities described herein classify the Company
as a blank check company. See "GLOSSARY". The Securities and Exchange
Commission and many states have enacted statutes, rules and regulations
limiting the sale of securities of blank check companies. Management does not
intend to undertake any efforts to cause a market to develop in the Company's
securities until such time as the Company has successfully implemented its
business plan described herein. Accordingly, the shareholders of the Company
have executed and delivered a "lock-up" letter agreement affirming that such
shareholders will not sell or otherwise transfer their shares of the
Company's common stock except in connection with or following completion of a
merger or acquisition resulting in the Company no longer being classified as
a blank check company. The shareholders have deposited their stock
certificates with the Company's management, who will not release the
certificates except in connection with or following the completion of a
merger or acquisition.
The Company is voluntarily filing this Registration Statement with the
Securities and Exchange Commission and is under no obligation to do so under
the Securities Exchange Act of 1934.
RISK FACTORS
The Company's business is subject to numerous risk factors, including
the following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The Company has had
no operating history nor any revenues or earnings from operations. The
Company has no significant assets or financial resources. The Company will,
in all likelihood, sustain operating expenses without corresponding revenues,
at least until the consummation of a business combination. This may result in
the Company incurring a net operating loss which will increase continuously
until the Company can consummate a business combination with a target
company. There is no assurance that the Company can identify such a target
company and consummate such a business combination.
SPECULATIVE NATURE OF THE COMPANY'S PROPOSED OPERATIONS. The success of
the Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified target
company. While management will prefer business combinations with entities
having established operating histories, there can be no assurance that the
Company will be successful in locating candidates meeting such criteria. In
the event the Company completes a business combination, of which there can be
no assurance, the success of the Company's operations will be dependent upon
management of the target company and numerous other factors beyond the
Company's control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with and acquisitions of business entities. A
large number of established and well-financed entities, including venture
capital firms, are active in mergers and acquisitions of companies which may
be merger or acquisition target candidates for the Company. Nearly all such
entities have significantly greater financial resources, technical expertise
and managerial capabilities than the Company and, consequently, the Company
will be at a competitive disadvantage in identifying possible business
opportunities and successfully completing a business combination. Moreover,
the Company will also compete with numerous other small public companies in
seeking merger or acquisition candidates.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION--NO STANDARDS
FOR BUSINESS COMBINATION. The Company has no current arrangement, agreement
or understanding with respect to engaging in a merger with or acquisition of
a specific business entity. There can be no assurance that the Company will
be successful in identifying and evaluating suitable business opportunities
or in concluding a business combination. Management has not identified any
particular industry or specific business within an industry for evaluation by
the Company. There is no assurance that the Company will be able to negotiate
a business combination. Management has not identified any particular industry
or specific business within an industry for evaluation by the Company THere is
no assurance that the Company will be able to negotiate a business
combination on terms favorable to the Company. The Company has not
established a specific length of operating history or a specified level of
earnings, assets, net worth or other criteria which it will require a target
company to have achieved, or without which the Company would not consider a
business combination with such business entity. Accordingly, the Company may
enter into a business combination with a business entity having no
significant operating history, losses, limited or no potential form immediate
earnings limited assets, negative net worth or other negative characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While seeking
a business combination, management anticipates devoting only a limited amount
of time per month to the business of the Company. The Company's sole officer
has not entered into a written employment agreement with the Company and he
is not expected to do so in the foreseeable future. The Company has not
obtained key man life insurance on its officer and director. Notwithstanding
the combined limited experience and time commitment of management, loss of
services and of this individual would adversely affect development of the
Company's business and its likelihood of continuing operations.
CONFLICTS OF INTEREST--GENERAL. The Company's officer and director and
director participates in other business ventures which may compete directly
with the Company. Additional conflicts of interest and non-arms length
transactions may also arise in the future. Management has adopted a policy
that the Company will not seek a merger with, or acquisition of, any entity
in which any member of management serves as an officer, director or partner,
or in which they or their family members own or hold any ownership interest.
See "ITEM 5, DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL
PERSONS--Conflicts of Interest."
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 certified 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 the Company.
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.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has
neither conducted, nor have others made available to it, market research
indicating that demand exists for the transactions contemplated by the
Company. Even in the event demand exists for a merger or acquisition of the
type contemplated by the Company, there is no assurance the Company will be
successful in completing any such business combination.
LACK OF DIVERSIFICATION. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a
business combination with only one business entity. Consequently, the
Company's activities will be limited to those engaged in by the businesses
entity which the Company merges with or
acquires. The Company's inability to diversify its activities into a number
of areas may subject the Company to economic fluctuations within a particular
business or industry and therefore increase the risks associated with the
Company's operations.
REGULATION UNDER INVESTMENT COMPANY ACT. Although the Company will be
subject to regulation under the Exchange Act, management believes the Company
will not be subject to regulation under the Investment Company Act of 1940,
insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests
in a number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required
to register as an investment company and could be expected to incur
significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act could subject the Company to material
adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination
involving the issuance of the Company's common stock will, in all likelihood,
result in shareholders of target company obtaining a controlling interest in
the Company. Any such business combination may require shareholders of the
Company to sell or transfer all or a portion of the Company's common stock
held by them. The resulting change in control of the Company will likely
result in removal of the present officer and director of the Company and a
corresponding reduction in or elimination of his participation in the future
affairs of the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS COMBINATION.
The Company's primary plan of operation is based upon a business combination
with a business entity which, in all likelihood, will result in the Company
issuing securities to shareholders of such business entity. The issuance of
previously authorized and unissued common stock of the Company would result
in reduction in percentage of shares owned by the present shareholders of the
Company and would most likely result in a change of control or management of
the Company.
TAXATION. Federal and state tax consequences will, in all likelihood,
be major considerations in any business combination the Company may
undertake. Currently, such transactions may be structured so as to result in
tax-free treatment to both companies, pursuant to various federal and state
tax provisions. The Company intends to structure any business combination so
as to minimize the federal and state tax consequences to both the Company and
the target company; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free reorganization
or that the parties will obtain the intended tax-free treatment upon a
transfer of stock or assets. A non-qualifying reorganization could result in
the imposition of both federal and state taxes which may have an adverse
effect on both parties to the transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Management of the Company will request that any potential
business opportunity provide audited financial statements. One or more
attractive business opportunities may choose to forego the possibility of a
business combination with the Company rather than incur the expenses
associated with preparing audited financial statements. In such case, the
Company may choose to obtain certain assurances as to the target company's
assets, liabilities, revenues and expenses prior to consummating a business
combination, with further assurances that an audited financial statement
would be provided after closing of such a transaction. Closing documents
relative thereto may include representations that the audited financial
statements will not materially differ from the representations included in
such closing documents.
ITEM 2. PLAN OF OPERATION
The Company intends to merge with or acquire a business entity in
exchange for the Company's securities. The Company has no particular
acquisition in mind and has not entered into any negotiations regarding such
an acquisition. Neither the Company's officer and director nor any affiliate
has engaged in any negotiations with any representative of any company
regarding the possibility of an acquisition or merger between the Company and
such other company.
Management anticipates seeking out a target company through
solicitation. Such solicitation may include newspaper or magazine
advertisements, mailings and other distributions to law firms, accounting
firms, investment bankers, financial advisors and similar persons, the use of
one or more World Wide Web sites and similar methods. No estimate can be made
as to the number of persons who will be contacted or solicited. Management
may engage in such solicitation directly or may employ one ore more other
entities to conduct or assist in such solicitation. Management and its
affiliates pay referral fees to consultants and others who refer target
businesses for mergers into public companies in which management and its
affiliates have an interest. Payments are made if a business combination
occurs, and may consist of cash or a portion of the stock in the Company
retained by management and its affiliates, or both.
The Company has no full time employees. The Company's president has
agreed to allocate a portion of his time to the activities of the Company,
without compensation. The president anticipates that the business plan of the
Company can be implemented by his devotion no more than 10 hours per month to
the business affairs of the Company and, consequently, conflicts of interest
may arise with respect to the limited time commitment by such officer.
Management is currently involved with other blank check companies, and
is involved in creating additional blank check companies similar to this one.
A conflict may arise in the event that another blank check company with which
management is affiliated is formed and actively seeks a target company.
Management anticipates that target companies will be located for the Company
and other blank check companies in chronological order of the date of
formation of such blank check companies or by lot. However, other blank check
companies that may be formed may differ from the Company in certain items
such as place of incorporation, number of shares and shareholders, working
capital, types of authorized securities, or other items. It may be that a
target company may be more suitable for or may prefer a certain blank check
company formed after the Company. In such case, a business combination might
be negotiated on behalf of the more suitable or preferred blank check company
regardless of date of formation or choice by lot. See "ITEM 5, DIRECTORS,
EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS--Current Blank Check
Companies."
The Certificate of Incorporation of the Company provides that the
Company may indemnify officers and/or directors of the Company for
liabilities, which can include liabilities arising under the securities laws.
Therefore, assets of the Company could be used or attached to satisfy any
liabilities subject to such indemnification.
General Business Plan
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in a business equity which desires to seek the
perceived advantages of a corporation which has a class of securities
registered under the Exchange Act. The Company will not restrict its search
to any specific business, industry, or geographical location and the Company
may participate in a business venture of virtually any kind of nature.
Management anticipates that it will be able to participate in only one
potential business venture because the Company has nominal assets and limited
financial resources. See ITEMS F/S, "FINANCIAL STATEMENTS." This lack of
diversification should be considered a substantial risk to the shareholders
of the Company because it will not permit the Company to offset potential
losses from one venture against gains from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate
purposes. The Company may acquire assets and establish wholly-owned
subsidiaries in various businesses or acquire existing businesses as
subsidiaries.
The Company anticipates that 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 there are business
entities seeking the perceived benefits of a publicly registered
corporation. Such perceived benefits may include facilitating or improving
the terms on which additional equity financing may be sought, providing
liquidity for
incentive stock options or similar benefits to key employees, increasing the
opportunity to use securities for acquisitions, providing liquidity for
shareholders and other factors. Business opportunities may be available in
many different industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of such business
opportunities difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business entities with any cash or other assets.
However, management believes the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in a public company without incurring the cost and time required to
conduct an initial public offering. Management has not conducted market
research and is not aware of statistical data to support the perceived
benefits of a merger or acquisition transaction for the owners of a business
opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the officer and director of the Company, who is not
a professional business analyst. In analyzing prospective business
opportunities, management will 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; the potential for further research, development, or
exploration; specific risk factors not now foreseeable but which then may be
anticipated to impact the proposed activities of the Company; 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. This discussion of the proposed
criteria is not meant to be restrictive of the Company's virtually unlimited
discretion to search for and enter into potential business opportunities.
The Exchange Agent requires that any merger or acquisition candidate
comply with certain reporting requirements, which include providing audited
financial statements to be included in the reporting filings made under the
Exchange Act. The Company will not acquire or merge with any company for
which audited financial statements cannot be obtained at or within a
reasonable period of time after closing of the proposed transaction.
The Company may enter into a business combination with a business entity
that desires to establish a public trading market for its shares. A target
company may attempt to avoid what it deems to be adverse consequences of
undertaking its own public offering by seeking a business combination with
the Company. Such consequences may include, but are not limited to, time
delays of the registration process, significant expenses to be incurred in
such an offering, loss of voting control to public shareholders or the
inability to obtain an underwriter or to obtain an underwriter on
satisfactory terms.
The Company will not restrict its search for any specific kind of
business entities, but 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 the Company 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 the Company may offer.
Management of the Company, which in all likelihood will not be
experienced in matters relating to the business of a target company, will
rely upon its own efforts in accomplishing the business purposes of the
Company. Outside consultants or advisors may be utilized by the Company to
assist in the search for qualified target companies. If the Company does
retain such an outside consultant or advisor, any cash fee earned by such
person will need to be assumed by the target company, as the Company has
limited cash assets with which to pay such obligation.
Following a business combination the Company may benefit from the
services of others in regard to accounting, legal services, underwritings and
corporate public relations. If requested by a target company, management may
recommend one ore more underwriters, financial advisors, accountants, public
relations firms or other consultants to provide such services.
A potential target company may have an agreement with a consultant or
advisor providing that services of the consultant or advisor be continued
after any business combination. Additionally, a target company may be
presented o the Company only on the condition that the services of a
consultant or advisor be continued after a merger or acquisition. Such
preexisting agreements of target companies for the continuation of the
services of attorneys, accountants, advisors or consultants could be a factor
in the selection of a target company.
ACQUISITION OPPORTUNITIES
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may
also acquire stock or assets of an existing business. On the consummation of
a transaction, it is likely that the present management and shareholders of
the Company will no longer be in control of the Company. In addition, it is
likely that the Company's officer and director will, as part of the terms of
the acquisition transaction, resign and be replaced by one or more new
officers and directors.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all
or a part of such securities immediately after the transaction is consummated
or at specified times thereafter. If such registration occurs, of which there
can be no assurance, it will be undertaken by the surviving entity after the
Company has entered into an agreement for a business combination or has
consummated a business combination and the Company is no longer considered a
blank check company. Until such time as this occurs, the Company will not
register any additional securities. The issuance of additional securities and
their potential sale into any trading market which may develop in the
Company's securities may depress the market value of the Company's securities
in the future if such a market develops, of which there is no assurance.
While the terms of a business transaction to which the Company may be a
party cannot be predicted, it is expected that the parties to the business
transaction will desire to avoid the creation of a taxable event and thereby
structure the acquisition in a "tax-free" reorganization under Sections 351
or 368 of the Internal Revenue Code of 1986, as amended (the "Code").
With respect to any merger or acquisition 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. Depending upon, among other things, the target
company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage of ownership may
be subject to significant reduction in the event the Company acquires a
target company with substantial assets. Any merger or acquisition effected by
the Company can be expected to have a significant dilutive effect on the
percentage of shares held by the Company's shareholders at such time.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of
such agreements cannot be predicted, generally such agreements will require
certain representations and warranties of the parties thereto, will specify
certain events of default, will detail the terms of closing and the conditions
which must be satisfied by the parties prior to and after such closing, will
outline the manner of bearing costs, including costs associated with the
Company's attorneys and accountants, and will include miscellaneous other
terms.
The Company will not acquire or merger with any entity which cannot
provide audited financial statements at or within a reasonable period of time
after closing of the proposed transaction. The Company is subject to all of
the reporting requirements including the Exchange Act. Included in these
requirements is the duty of the Company to file audited financial statements
as part of or within 60 days following its Form 8-K to be filed with the
Securities and Exchange Commission upon consummation of a merger or
acquisition, as well as the Company's audited financial
statements included in its annual report on Form 10-K (or 10-KSB, as
applicable). If such audited financial statements are not available at
closing, or within time parameters necessary to insure the Company's
compliance with the requirements of the Exchange Act, or if the audited
financial statements provided do not conform to the representations made by
the target company, the closing documents may provide that the proposed
transaction will be voidable at the discretion of the present management of
the Company.
▇▇▇▇▇▇ Mill Associates, Inc. the principal shareholder of the Company,
has agreed that it will advance to the Company any additional funds which the
Company needs for operating capital and for costs in connection with
searching for or completing an acquisition or merger. Such advances will be
made without expectation of repayment unless the owners of the business which
the Company acquires or mergers with agree to repay all or a portion of such
advances. There is no minimum or maximum amount ▇▇▇▇▇▇ Mill will advance to
the Company. The Company will not borrow any funds to make any payments to
the Company's promoters, management or their affilites or associates.
The Board of Directors has passed a resolution which contains a policy
that the Company will not seek an acquisition or merger with any entity in
which the Company's officer, director, and shareholders or any affiliate or
associate serves as an officer or director or holds any ownership interest.
COMPETITION
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's combined extremely limited financial
resources and limited management availability, the Company will continue to
be at a significant competitive disadvantage compared to the Company's
competitors.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company has no properties and at this time has no agreements to
acquire any properties. The Company currently uses the offices of ▇▇▇▇▇▇ Mill
Associates at no cost to the Company. ▇▇▇▇▇▇ Mill Associates has agreed to
continue this arrangement until the Company completes an acquisition or
merger.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of June 25, 1998, each person known
by the Company to be the beneficial owner of five percent or more of the
Company's Common Stock, all directors individually and all directors and
officers of the Company as a group. Except as noted, each person has sole
voting and investment power with respect to the shares shown.
Name and Address Amount of Beneficial
of Beneficial Owner Ownership Percentage of Class
------------------- -------------------- -------------------
▇▇▇▇▇▇ Mill Associates, Inc. (1)(2) 4,250,000 85%
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ & Associates (2) 750,000 15%
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (2) 5,000,000 100%
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
All Executive Officers and
Directors as a Group (1 Person) 5,000,000 100%
(1) ▇▇▇▇▇▇ Mill Associates, Inc. is an affiliate of ▇▇▇▇▇▇▇ &
Associates, the law firm prepared this registration statement and of which
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ is a principal. ▇▇▇▇▇ ▇▇▇▇▇▇▇ is the sole shareholder of
▇▇▇▇▇▇ Mill Associates. ▇▇▇▇▇▇ Mill Associates provides services for ▇▇▇▇▇▇▇
& Associates, particularly in regard to locating private companies which may
wish to go public, and acts as an initial shareholder in certain companies
formed by ▇▇▇▇▇▇▇ & Associates. Since ▇▇▇▇▇▇ Mill Associates has fewer than
100 shareholders and is not making and does not intend to make a public
offering of its securities, management believes that it is not deemed to be
an investment company by virtue of an exemption provided under the Investment
Company Act of 1940, as amended.
(2) ▇▇. ▇▇▇▇▇▇▇ owns 100% of ▇▇▇▇▇▇ Mill Associates and is principal of
▇▇▇▇▇▇▇ & Associates, a Washington, D.C. securities law firm, and is
considered the beneficial owner of the shares of common stock of the Company
issued to them.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS.
The Company has one Director and Officer as follows:
Name Age Positions and Offices Held
---------------- --- --------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 63 President, Secretary,
Director
There are no agreements or understandings for the officer or director to
resign at the request of another person and the above-named officer and
director is not acting on behalf of nor will act at the direction of any
other person.
Set forth below is the name of the director and officer of the Company,
all positions and offices with the Company held, the period during which he
has served as such, and the business experience during at least the last five
years:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., ▇.▇., LL.M., received a Bachelor of Science
in Languages and Linguistics from Georgetown University in 1960, a Bachelor
of Laws from The Catholic University School of Law in 1963, and a Master of
Laws in Taxation from The Georgetown University School of Law in 1968. From
1963-1964, ▇▇. ▇▇▇▇▇▇▇ was law clerk to the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇ of the
United States District Court for the Southern District of New York. From
1964-1965, ▇▇. ▇▇▇▇▇▇▇ was law clerk to the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ of the
United States Court of Appeals for the District of Columbia. From 1969-1975,
▇▇. ▇▇▇▇▇▇▇ was an associate of the law firm of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and a
principal in the law firm of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Washington, D.C. From 1975 to
date, ▇▇. ▇▇▇▇▇▇▇ has been a principal in the law firm of ▇▇▇▇▇▇▇ &
Associates, Washington, D.C. and its predecessors, specializing in securities
law and related corporate and federal taxation matters. ▇▇. ▇▇▇▇▇▇▇ is a
member of the bar of the District of Columbia and is admitted to practice
before the United States Tax Court and the United States Supreme Court.
PREVIOUS BLANK CHECK COMPANIES
In 1988, management was involved in two blank check offerings. ▇▇.
▇▇▇▇▇▇▇ was vice president, a director and a shareholder of First Agate
Capital Corporation and Consolidated Financial Corporation. In August, 1988,
First Agate Capital Corporation offered 50,000 units at $10.00 for an
aggregate of $500,000 in an underwritten offering of its common stock and
warrants. First Agate Capital is no longer a public company and has had no
activity since 1991. In November, 1988, Consolidated Financial Corporation
offered 50,000 units at $10.00 for an aggregate of
$500,000 in an underwritten offering of its common stock and warrants. In
1990, in connection with the change in control of Consolidated Financial
Corporation. ▇▇. ▇▇▇▇▇▇▇ transferred all his shares of Consolidated Financial
Corporation common stock without compensation or any financial benefit and
resigned as an officer and director of that company. ▇▇. ▇▇▇▇▇▇▇ has had no
further relationship or transactions with Consolidated Financial Corporation
since 1990. As described in public filings made by the company, in June,
1991, the new management of Consolidated Financial Corporation effected its
merger with A.B.E Industrial Holdings.
CURRENT BLANK CHECK COMPANIES
▇▇. ▇▇▇▇▇▇▇ is the president, sole director and a beneficial shareholder
of Sheffield Acquisitions, Inc., Tunlaw International Corporation, Chatsworth
Acquisition Corporation and Aberdeen Acquisition Corporation. Until
December 30, 1997, ▇▇. ▇▇▇▇▇▇▇ was the sole director and beneficial shareholder
of ▇▇▇▇▇▇▇▇ Technologies Corporation. Sheffield Acquisitions, Inc. has filed
a registration statement on Form S-1 under the Securities Act which has not
yet been declared effective. Tunlaw International Corporation, ▇▇▇▇▇▇▇▇
Technologies Corporation, Chatsworth Acquisition Corporation and Aberdeen
Acquisition Corporation have filed registration statements on Forms 10-SB
under the Exchange Act which have become effective and each files periodic
reports under the Exchange Act. The initial business purpose of each of these
companies was to engage in a merger or acquisition with an unidentified
company or companies and each will be classified as a blank check company
until completion of a business acquisition. ▇▇. ▇▇▇▇▇▇▇ is the sole director
and beneficial shareholder of Barhill Acquisition Corporation and Westford
Acquisition Corporation for which registration statements on Form 10-SB have
been filed with the Commission on August 13, 1998 and August 27, 1998,
respectively. The initial business purpose of these two companies is to
engage in a merger or acquisition with an unidentified company or companies
and each will be classified as a blank check company until completion of a
business acquisition.
▇▇. ▇▇▇▇▇▇▇ anticipates being involved with additional blank check
companies filed under the Securities Act or under the Exchange Act.
RECENT TRANSACTIONS BY BLANK CHECK COMPANIES
On December 30, 1997, Prime Management, Inc., a California corporation,
merged with and into ▇▇▇▇▇▇▇▇ Technologies Corporation. ▇▇▇▇▇▇▇▇ Technologies
Corporation was formed on March 27, 1997 to engage in a merger or acquisition
with an unidentified company or companies and was structured substantially
identically to the Company, including identical management and shareholders.
Prime Management, Inc. is an operating transportation company which has two
wholly-owned subsidiaries, Mid-Cal Express, a long-haul trucking company
hauling shipments of general commodities, including temperature-sensitive
goods, in both intrastate and interstate commerce and Mid-Cal Logistics, a
freight brokerage company. Pursuant to the merger, ▇▇▇▇▇▇▇▇ Technologies
Corporation changed its name to Prime Companies, Inc., and ▇▇▇▇▇▇▇▇
Technologies Corporation filed a Form 8-K with the Securities and Exchange
Commission describing the merger. The Common stock of Prime Companies, Inc.
trades on the NASD OTC Bulletin Board under the symbol PRMC. Detailed
information concerning Prime Companies, Inc. may be obtained from its filings
under the Exchange Act which are found the ▇▇▇▇▇ archives page of the
Securities and Exchange Commission's Website at ▇▇▇.▇▇▇.▇▇▇.
CONFLICTS OF INTEREST
The Company's officer and director has organized and expects to organize
other companies of a similar nature and with similar purpose as the Company.
Consequently, there are potential inherent conflicts of interest in acting as
an officer and director of the Company. Insofar as the officer and director
is engaged in other business activities, management anticipates that it will
devote only a minor amount of time to the Company's affairs. The Company does
not have a right of first refusal pertaining to opportunities that come to
management's attention insofar as such opportunities may relate to the
Company's proposed business operations.
A conflict may arise in the event that another blank check company with
which management is affiliated is formed and actively seeks a target company.
It is anticipated that target companies will be located for the Company and
other blank check companies in chronological order of the date of formation
of such blank check companies or by lot. However, any blank check companies
that may be formed may differ from the Company in certain items such as place
of incorporation, number of shares and shareholders, working capital, types
of authorized securities, or other items. It may be that a target company may
be more suitable for or may prefer a certain blank check company formed after
the Company. In such case, a business combination might be negotiated on
behalf of the more suitable or preferred blank check company regardless of
date of formation or choice by lot. ▇▇. ▇▇▇▇▇▇▇ will be responsible for
seeking, evaluating, negotiating and consummating a business combination with
a target company which may result in terms providing benefits to ▇▇. ▇▇▇▇▇▇▇.
▇▇. ▇▇▇▇▇▇▇ is the principal of ▇▇▇▇▇▇▇ & Associates, a securities law
firm located in Washington, D.C. As such, demands may be placed on the time
of ▇▇. ▇▇▇▇▇▇▇ which will detract from the amount of time he is able to
devote to the Company. ▇▇. ▇▇▇▇▇▇▇ intends to devote as much time to the
activities of the company as required. However, should such a conflict
arise, there is no assurance that ▇▇. ▇▇▇▇▇▇▇ would not attend to other
matters prior to those of the Company. ▇▇. ▇▇▇▇▇▇▇ projects that initially up
to ten hours per month of his time may be spent locating a target company
which amount of time would increase when the analysis of, and negotiations
and consummation with, a target company are conducted.
▇▇. ▇▇▇▇▇▇▇ owns 100% of ▇▇▇▇▇▇ Mill Associates which, in turn, owns
4,250,000 shares of common stock of the Company and is a principal of
▇▇▇▇▇▇▇ & Associates, a securities law firm, which owns 750,000 shares of the
Company's common stock. No other securities, or rights to securities, of the
Company will be issued to management or promoters, or their affiliates or
associates, prior to the completion of a business combination. At the time of
a business combination, management expects that some or all of the shares of
Common Stock owned by ▇▇▇▇▇▇▇ & Associates will be purchased by the target
company. The amount of Common Stock sold or continued to be owned by ▇▇▇▇▇▇
Mill Associates or ▇▇▇▇▇▇▇ & Associates cannot be determined at this time.
The terms of business combination may include such terms as ▇▇. ▇▇▇▇▇▇▇
remaining a director or officer of the Company and/or the continuing
securities or other legal work of the Company being handled by the law firm
of which ▇▇. ▇▇▇▇▇▇▇ is the principal. The terms of a business combination
may provide for a payment by cash or otherwise to ▇▇▇▇▇▇ Mill Associates or
▇▇▇▇▇▇▇ & Associates for the purchase of all or part of their common stock of
the Company by a target company. ▇▇. ▇▇▇▇▇▇▇ would directly benefit from such
employment or payment. Such benefits may influence ▇▇. ▇▇▇▇▇▇▇'▇ choice of a
target company.
The Company may agree to pay finder's fees, as appropriate and allowed,
to unaffiliated persons who may bring a target company to the Company where
that reference results in a business combination. The amount of any finder's
fee will be subject to negotiation, and cannot be estimated at this time. No
finder's fee of any kind will be paid to management or promoters of the
Company or to their associates or affiliates. No loans of any type have, or
will be, made to management or promoters of the Company or to any of their
associates or affiliates.
The Company's officer and director, its promoter and their affiliates or
associates have not had any negotiations with and there are no present
arrangements or understandings with any representatives of the owners of any
business or company regarding the possibility of a business combination with
the Company.
The Company will not enter into a business combination, or acquire any
assets of any kind for its securities, in which management or promoters of
the Company or any affiliates or associates have any interest, direct or
indirect.
Management has adopted certain policies involving possible conflicts of
interest, including prohibiting any of the following transactions involving
management, promoters, shareholders or their affiliates:
(i) Any lending by the company to such persons;
(ii) The issuance of any additional securities to such persons prior to
a business combination;
(iii) The entering into any business combination or acquisition of
assets in which such persons have any interest, direct or indirect;
or
(iv) The payment of any finder's fees to such persons.
These policies have been adopted by the Board of Directors of the
Company, and any changes in these provisions require the approval of the
Board of Directors. Management does not intend to propose any such action and
does not anticipate that any such action will occur.
There are no binding guidelines or procedures for resolving potential
conflicts of interest. Failure by management to resolve conflicts of interest
in favor of the Company could result in liability of management to the
Company. However, any attempt by shareholders to enforce a liability of
management to the Company would most likely be prohibitively expensive and
time consuming.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities
Act of 1933 and the Securities Exchange Act of 1934, management believes the
Company will not be subject to regulation under the Investment Company Act of
1940 insofar as the Company will not be engaged in the business of investing
or trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests
in a number of entities the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required
to register as an investment company and could be expected to incur
significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940. Any violation
of such Act would subject the Company to material adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION
The Company's officer and director does not receive any compensation for
his services rendered to the Company, has not received such compensation in
the past, and is not accruing any compensation pursuant to any agreement with
the Company.
The officer and director of the Company will not receive any finder's
fee, either directly or indirectly, as a result of his efforts to implement
the Company's business plan outlined herein. However, the officer and
director of the Company anticipates receiving benefits as a beneficial
shareholder of the Company. See "ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT."
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Company for the
benefit of its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has issued a total of 5,000,000 shares of Common Stock to
the following persons for a total of $500 in cash:
NAME NUMBER OF TOTAL SHARES CONSIDERATION
------------------------ ----------------------- -------------
▇▇▇▇▇▇ Mill Associates, Inc. 4,250,000 $425
▇▇▇▇▇▇▇ & Associates 750,000 $75
The proposed business activities described herein classify the Company
as a blank check company. See "GLOSSARY". The Securities and Exchange
Commission and many states have enacted statutes, rules and regulations
limiting the sale of securities of blank check companies. Management does not
intend to undertake any efforts to cause a market to develop in the Company's
securities until such time as the Company has successfully implemented its
business plan described herein. Accordingly, the shareholders of the Company
have executed and delivered a "lock-up" letter agreement, affirming that such
shareholders shall not sell their shares of the Company's common stock except
in connection with or following completion of a merger or acquisition
resulting in the Company no longer being classified as a blank check company.
The shareholders have deposited their stock certificates with the Company's
management, who will not release the certificates except in connection with
or following the completion of a merger or acquisition.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, par value $.0001 per share, and 20,000,000 shares of
Preferred Stock, par value $.0001 per share. The following statements
relating to the capital stock set forth the material terms of the Company's
securities, however, reference is made to the more detailed provisions of,
and such statements are qualified in their entirety by reference to, the
Certificate of Incorporation and the By-laws, copies of which are filed as
exhibits to this registration statement.
COMMON STOCK
Holders of shares of common stock are entitled to one vote for each
share on all matters to be voted on by the stockholders. Holders of common
stock do not have cumulative voting rights. Holders of common stock are
entitled to share ratably in dividends, if any, as may be declared from time
to time by the Board of Directors in its discretion from funds legally
available therefor. In the event of a liquidation, dissolution or winding up
of the Company, the holders of common stock are entitled to share pro rata
all assets remaining after payment in full of all liabilities. All of the
outstanding shares of common stock are fully paid and non-assessable.
Holders of common stock have no pre-emptive rights to purchase the
Company's common stock. There are no conversion or redemption rights or
sinking fund provisions with respect to the common stock.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of
20,000,000 shares of preferred stock, $.0001 par value per share, of which no
shares have been issued. The Board of Directors is authorized to provide for
the issuance of shares of preferred stock in series and, by filing a
certificate pursuant to the applicable law of Delaware, to establish from
time to time the number of shares to be included in each such series, and to
fix the designation, powers, preferences and rights of the shares of each
such series and the qualifications, limitations or restrictions thereof
without any further vote or action by the shareholders. Any shares of
preferred stock so issued would have priority over the common stock with
respect to dividend or liquidation rights. Any future issuance of preferred
stock may have the effect of delaying, deferring or preventing a change in
control of the Company without further action by the shareholders and may
adversely affect the voting and other rights of the holders of common stock.
At present, the Company has no plans to issue any preferred stock nor adopt
any series, preferences or other classification of preferred stock.
The issuance of shares of Preferred Stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of Preferred Stock might
impede a business combination by including class voting rights that would
enable the holder to block such a transaction, or facilitate a business
combination by including voting rights that would provide a required
percentage vote of the stockholders. In addition, under certain
circumstances, the issuance of Preferred Stock could adversely affect the
voting power of the holders of the Common Stock. Although the Board of
Directors is required to make my determination to issue such stock based on
its judgment as to the best interests of the stockholders of the
Company, the Board of Directors could act in a manner that would discourage
an acquisition attempt or other transaction that some, or a majority, of the
stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then market
price of such stock. The Board of Directors does not at present intend to
seek stockholder approval prior to any issuance of currently authorized
stock, unless otherwise required by law or stock exchange rules. The Company
has no present plans to issue any Preferred Stock.
Dividends
Dividends, if any, will be contingent upon the Company's revenues and
earnings, if any, capital requirements and financial conditions. The payment
of dividends, if any, will be within the discretion of the Company's Board of
Directors. The Company presently intends to retain all earnings, if any, for
use in its business operations and accordingly, the Board of Directors does
not anticipate declaring any dividends prior to a business combination.
Glossary
"Blank Check" COMPANY As defined in Section 7(b)(3) of the Securities Act, a "blank check" company is a
development stage company that has no specific business plan or purpose or has indicated
that its business plan is to engage in a merger or acquisition with an unidentified company
or companies and is issuing "▇▇▇▇▇ stock" securities as defined in Rule 3a51-1 of the
Exchange Act.
The Company Sunderland Acquisition Corporation, the company whose common stock is subject of this
registration statement.
Exchange Act The Securities Act of 1934, as amended.
"▇▇▇▇▇ Stock" Security As defined in Rule 3a51-1 of the Exchange Act, a "▇▇▇▇▇ stock" security is any equity
security other than a security (i) that is a reported security (ii) that is issued by an
investment company (iii) that is a put or call issued by the Option Clearing Corporation
(iv) that has a price of $5.00 or more (except for purposes of Rule 419 of the Securities
Act) (v) that is registered on a national securities exchange (vi) that is authorized for
quotation of the Nasdaq Stock Market, unless other provisions of Rule 3a51-1 are not
satisfied, or (vii) that is issued by an issuer with (a) net tangible assets in excess of
$2,000,000, if in continuous operation for more than three years or $5,000,000 if in
operation for less than three years or (b) average revenue of at least $6,000,000 for the
last three years.
▇▇▇▇▇▇ Mill Associates ▇▇▇▇▇▇ Mill Associates, Inc., a private company owned by management of the Company. ▇▇▇▇▇▇
Mill Associates provides services for ▇▇▇▇▇▇▇ & Associates, particularly in regard to
locating private companies which may wish to go public, and acts as an initial shareholder
in certain companies formed by ▇▇▇▇▇▇▇ & Associates.
Securities Act The Securities Act of 1933, as amended.
Small Business Issuer As defined in Rule 12b-2 of the Exchange Act, a "Small Business Issuer" is an entity (i)
which has revenues of less than $25,000,000 (ii) whose public float (the outstanding
securities not held by affiliates) has a value of less than $25,000,000 (iii) which is a
United States or Canadian issuer (iv) which is not an Investment Company and (v) if a
majority-owned subsidiary, whose parent corporation is also a small business issuer.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) MARKET PRICE. There is no trading market for the Company's Common
Stock at present and there has been no trading market to date. There is no
assurance that a trading market will ever develop or, if such a market does
develop, that it will continue.
The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "▇▇▇▇▇ stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00
per share or with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a ▇▇▇▇▇ stock, unless
exempt, the rules require: (i) that a broker or dealer approve a person's
account for transactions in ▇▇▇▇▇ stocks and (ii) the broker or dealer
receive from the investor a written agreement to the transaction, setting
forth the identity and quantity of the ▇▇▇▇▇ stock to be purchased. In order
to approve a person's account for transactions in ▇▇▇▇▇ stocks, the broker or
dealer must (i) obtain financial information and investment experience and
objectives of the person; and (ii) make a reasonable determination that the
transactions in ▇▇▇▇▇ stocks are suitable for that person and that person has
sufficient knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in ▇▇▇▇▇ stocks. The broker or dealer
must also deliver, prior to any transaction in a ▇▇▇▇▇ stock, a disclosure
schedule prepared by the Commission relating to the ▇▇▇▇▇ stock market,
which, in highlight form, (i) sets forth the basis on which the broker or
dealer made the suitability determination and (ii) that the broker or dealer
received a signed, written agreement from the investor prior to the
transaction. Disclosure also has to be made about the risks of investing in
▇▇▇▇▇ stocks in both public offerings and in secondary trading, and about
commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in ▇▇▇▇▇ stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the ▇▇▇▇▇ stock held in the account and information on
the limited market in ▇▇▇▇▇ stocks.
In order to qualify for listing on the Nasdaq SmallCap Market, a company
must have at lease (i) net tangible assets of $4,000,000 or market
capitalization of $50,000,000 or net income for two of the last three years
of $750,000; (ii) public float of 1,000,000 shares with a market value of
$5,000,000; (iii) a bid price of $4.00; (iv) three market makers; (v) 300
shareholders and (vi) an operating history of one year or, if less than one
year, $50,000,000 in market capitalization. For continued listing on the
Nasdaq SmallCap Markets, a company must have at least (i) net tangible assets
of $2,000,000 or market capitalization of $35,000,000 or net income for two
of the last three years of $500,000; (ii) a public float of 500,000 shares
with a market value of $1,000,000; (iii) a bid price of $1.00 (iv) two market
makers; and (v) 300 shareholders.
If, after a merger or acquisition, the Company does not meet the
qualifications for listing on the Nasdaq SmallCap Market, the Company's
securities may be traded in the over-the-counter ("OTC") market. The OTC
market differs from national and regional stock exchanges in that it (1) is
not sited in a single location but operates through communication of bids,
offers and confirmations between broker-dealers and (2) securities admitted
to quotation are offered by one or more broker-dealers rather than the
"specialist" common to stock exchanges. The Company may apply for listing on
the NASD OTC Bulletin Board or may offer its securities in what are commonly
referred to as the "pink sheets" of the National Quotation Bureau, Inc. To
qualify for listing on the NASD OTC Bulletin Board, an equity security must
have one registered broker-dealer, known as the market maker, willing to list
bid or sale quotations and to sponsor the company for listing on the Bulletin
Board.
If the Company is unable initially to satisfy the requirements for
quotation on the Nasdaq SmallCap Market or becomes unable to satisfy the
requirements for continued quotation thereon, and trading, if any, is
conducted in the OTC market, a shareholder may find it more difficult to
dispose of, or to obtain accurate quotations as to the market value of, the
Company's securities.
(b) HOLDERS. There are two holders of the Company's Common Stock. On
June 9, 1998, the Company issued 5,000,000 of its Common Shares to these
shareholders for cash at $.0001 per share for a total price of $500. The
issued and outstanding shares of the Company's Common Stock were issued in
accordance with the exemptions from registration afforded by Sections 3(b)
and 4(2) of the Securities Act of 1933 and Rules 506 and 701 promulgated
thereunder.
(c) DIVIDENDS. The Company has not paid any dividends to date, and has
no plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AN ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there
are no disagreements with the findings of its accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has sold securities which were
not registered as follows:
Date Name Number of Shares Consideration
----------- ------- ---------------- -------------
June 9, 1998 ▇▇▇▇▇▇ Mill 4,250,000 $425
Associates, Inc.(1)
June 9, 1998 ▇▇▇▇▇▇▇ & Associates(2) 750,000 $75
-------------------
(1) ▇▇. ▇▇▇▇▇▇▇, the president and sole director of the Company, is the
sole director and shareholder of ▇▇▇▇▇▇ Mill Associates, Inc. and is therefore
considered to be the beneficial owner of the common stock of the Company
issued to ▇▇▇▇▇▇ Mill Associates, Inc. With respect to the sales made to
▇▇▇▇▇▇ Mill Associates, Inc., the Company relied on Section 4(2) of the
Securities Act of 1933, as amended and Rule 506 promulgated thereunder.
(2) ▇▇. ▇▇▇▇▇▇▇ is a principal of ▇▇▇▇▇▇▇ & Associates, a Washington,
D.C. securities law firm, and is therefore considered to be the beneficial
owner of the common stock of the Company issued to ▇▇▇▇▇▇▇ & Associates. With
respect to the sales made to ▇▇▇▇▇▇▇ & Associates, the Company relied
upon Section 3(b) of the Securities Act of 1933, as amended and Rule 701
promulgated thereunder.
The shareholders of the Company have executed and delivered a "lock-up"
letter agreement which provides that such shareholders shall not sell the
securities except in connection with or following the consummation of a
merger or acquisition. Further, each shareholder has placed its stock
certificates with the Company until such time. Any liquidation by the current
shareholders after the release from the "lock-up" selling limitation period
may have a depressive effect upon the trading price of the Company's
securities in any future market which may develop.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides that a Delaware corporation has the power, under specified
circumstances, to indemnify its directors, officers, employees and agents,
against expenses incurred in any action, suit or proceeding. The Certificate
of Incorporation and the By-laws of the Company
provide for indemnification of 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 (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
(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 (iv) for any transaction from which the director derived an
improper personal benefit. The Company's Certificate of Incorporation
contains such a provision.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS
CONTROLLING THE COMPANY 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 ACT AND IS THEREFORE
UNENFORCEABLE.
PART F/S
FINANCIAL STATEMENTS.
Attached are audited financial statements for the Company for the period
ended June 10, 1998. The following financial statements are attached to this
report and filed as a part thereof.
1) Table of Contents - Financial Statements
2) Independent Auditors' Report
3) Balance Sheet as of June 10, 1998
4) Notes to Balance Sheet as of June 10, 1998
INDEX TO FINANCIAL STATEMENTS
SUNDERLAND ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
Independent Auditors' Report F-1
Balance Sheet as of June 10, 1998 F-2
Notes to Balance Sheet as of June 10, 1998 F-3, F-4
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Sunderland Acquisition Corporation
(A Development Stage Company)
We have audited the accompanying balance sheet of Sunderland Acquisition
Corporation (a development stage company) as of June 10, 1998. This financial
statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement 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 whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall balance sheet
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly in all
material respects, the financial position of Sunderland Acquisition
Corporation (a development state company) as of June 10, 1998, in conformity
with generally accepted accounting principles.
▇▇▇▇▇▇▇▇ & COMPANY, P.A.
Boca Raton, Florida
June 12, 1998
SUNDERLAND ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF JUNE 10, 1998
----------------------------------
ASSETS
------
Cash $ 500
Organization cost 75
-----
TOTAL ASSETS $ 575
------------ -----
-----
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES $ --
-----
STOCKHOLDERS' EQUITY
Preferred Stock, $.0001 par value, 20 million
shares authorized, zero issued and outstanding --
Common Stock, $.0001 par value, 100 million
shares authorized 5,000,000 issued and
outstanding 500
Capital in excess of par 75
-----
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 575
------------------------------------------ -----
-----
See accompanying notes to balance sheet.
F-2
SUNDERLAND ACQUISITION CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF JUNE 10,1998
----------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION AND BUSINESS OPERATIONS
Sunderland Acquisition Corporation (a development stage
company)(the "Company") was incorporated in Delaware on June 2, 1998
to serve as a vehicle to effect a merger, exchange of capital stock,
asset acquisition or other business combination with a domestic of
foreign private business. At June 10, 1998, the Company had not yet
commenced any formal business operations, and all activity to date
relates to the Company's formation and proposed fund raising. The
Company's fiscal year end is December 31.
The Company's ability to commence operations is contingent upon its
ability to identify a prospective target business and raise the
capital it will require through the issuance of equity securities,
debt securities, bank borrowings or a combination thereof.
B. USE OF ESTIMATES
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
NOTE 2. STOCKHOLDERS' EQUITY
A. PREFERRED STOCK
The Company is authorized to issue 20,000,000 shares of preferred
stock at $.0001 par value, with such designations, voting and other
rights and preferences as may be determined from time to time by the
Board of Directors.
B. COMMON STOCK
The Company is authorized to issue 100,000,000 shares of common
stock at $.0001 par value. The Company issued 4,250,000 and 750,000
shares to ▇▇▇▇▇▇ Mill Associates, Inc. and ▇▇▇▇▇▇▇ & Associates,
respectively.
NOTE 3. RELATED PARTIES
Legal counsel to the Company is a firm owned by a director of the
Company who also owns 100% of the outstanding stock of ▇▇▇▇▇▇ Mill
Associates, Inc. The same party is also the controlling owner of
▇▇▇▇▇▇▇ & Associates.
PART III
ITEM 1. INDEX TO EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
(2) Articles of Incorporation and By-laws:
2.1** Certificate of Incorporation
2.2** By-Laws
(3) Instruments Defining the Rights of Holders
3.1** Lock-Up Agreement with ▇▇▇▇▇▇ Mill Associates
3.2** Lock-Up Agreement with ▇▇▇▇▇▇▇ & Associates
(10)(a) Consents-Experts
10.1** Consent of Accountants
--------------
**Previously Filed
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this registration statement to be signed on its behalf
by the undersigned thereunto duly authorized.
SUNDERLAND ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Director and President
September 24, 1998