Dear BHunt,
From the SB-2 ( Note - Have only included the portion that deals with
Stock and Stock Options all other forms of compensation are not included)(MS is the example here, same applies to MM & BS for a total of 48.5% of the Company's issued and Outstanding Shares):
" Compensation and Benefits. As compensation to the Executive for his
execution and delivery of this Employment Agreement and performance
of services required hereunder, the Company shall pay, grant or
provide the Executive, and the Executive agrees to accept, the following salary and other compensations and
benefits (all such amounts calculated in U.S. dollars):
(b) as an inducement to the Executive to agree to the
Executives future employment with the Company under certain terms
and conditions, the Company agreed to issue an initial 1,500,000 shares of common stock, par value $.001, of the Company (the "Common Stock") in accordance with the terms of a compensatory agreement for the Executive's prior services to the Company during the period
commencing October 2, 1996 and ending at the time that the Executive and Company execute a contemplated Employment Agreement. These shares were granted at par value, which were issued in reliance of Rule 701 and are "restricted securities" as defined in Rule 144, as amended through the operation of Rule 701, promulgated under the Securities Act of 1933, as amended ("The Act").
Such Common Stock were granted January 1, 1997 and required certificates representing the granted shares of Common Stock to be issued in the name of the Executive contemporarily with the signing of the Employment Agreement.
(c) In addition, The Executive, upon the signing of this Employment Agreement is hereby granted an option to purchase the Company's Common Stock at a price per share equal to eighty percent (80%) of the per share bid price averaged over five working days prior to the date of this Agreement (the "Grant Date").
The option shall permit the Executive to purchase, at any time while the Executive is employed by the Company, the number of shares of the Company's Common Stock par value $0.001 equal to thirteen and one-half percent (13.5%) of the Company's issued and outstanding shares of Common Stock less; (i) 1,500,000 shares previously issued by the Company to the Executive hereinabove; (ii) and less any shares previously issued to the Executive as a result of the exercise of the option granted to the Executive; and (iii) any shares issued to the Executive in lieu of cash expenses advanced by the Executive or accepted as previously earned consulting fees paid to the Executive in lieu of cash.
The number of the Company's issued and outstanding Common Stock, for the purpose for calculating the total number of shares which may be purchased by the Executive in exercising the option granted hereunder on the exercise date (the "Exercise Date") shall be; (i) the number of shares issued on a fully diluted basis on the later date of the Exercise Date; or (ii) any date between January 31, 1997 and prior to December 31, 1998; providing that (iii) the total number of shares issued on a fully diluted basis utilized in the calculation of the shares available for purchase under the Option shall not exceed the number of shares issued and outstanding at December 31, 1998 as recorded on the Company's stock ledger as reported by the Companys Transfer Agent.
Such options shall expire upon the last date of the Original Employment Term or any extension thereof whether exercised in whole of in part. The option is personal to the Executive and shall not be encumbered or otherwise disposed of, except that in the event of the death of Executive, his estate shall have right, within six (6) months after his death, to exercise the options available to Executive at the time of his death. The option shall be exercised by written
notice as called for in this Employment Agreement.
Delivery of the certificates representing the shares called for under the within option shall be made promptly after receipt of such notice of exercise, against the payment of the purchase price by certified check or cashier's check.
The shares issued pursuant to the grant of the Option in accordance with the terms of this paragraph shall be restricted shares and may not be sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of except as provided for under Rule 144 of the Act.
(i) Said Common Stock must be held indefinitely unless (1) distribution of said Common Stock has been made registered under The Act, (2) a sale of said Common Stock is made in conformity with the provisions of Rule 144 of The Act, or (3) in the opinion of counsel acceptable to the Company, some other exemption from registration is available;
(ii) The Executive will not make any sale, transfer or other disposition of said Common Stock except in compliance with The Act and Rules and Regulations thereunder;
(iii) The Executive is familiar with all of the provisions of Rule 144 including (without limitation) the holding period thereunder;
(iv) The Company is under no obligation to register the sale, transfer or other disposition of said Common Stock by the Executive or on his behalf or to take any other action necessary in order to make compliance with an exemption from registration available;
(v) there will be a restrictive legend placed on the certificates for said Common Stock stating in substance
"The shares represented by this certificate have not been registered under the Securities Act of 1933 and may not be sold, pledged, or otherwise transferred except pursuant to an effective registration statement under said Act, SEC Rule 144 or an opinion of counsel acceptable to the Company that some other exemption from registration is available."
END OF SB-2 CITED
RE:
"The option shall permit the Executive to purchase, at any time while the Executive is employed by the Company,"
As there is no way for the Company to ensure that these shares will be available at any point in the future ie: beyond what is authorized it seems to me that up to 48% ( less whatever has been previously issued ) must be held in escrow if you will and not available to the Company for M & A or anything else. That is my read on it any thoughts?,, AMB,, Barbara
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