-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RZmKQM9z2Fw/Us+1qnkQUSowcVrwessBiqwEXiP2zC6bPSa6BldG6N69FUzF10m0 kbIX/oz0s5GKoJyvOxy+nA== 0001012709-01-500045.txt : 20010409 0001012709-01-500045.hdr.sgml : 20010409 ACCESSION NUMBER: 0001012709-01-500045 CONFORMED SUBMISSION TYPE: 10KSB40 PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010402 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JORDAN AMERICAN HOLDINGS INC CENTRAL INDEX KEY: 0000855663 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 650142815 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB40 SEC ACT: SEC FILE NUMBER: 000-18974 FILM NUMBER: 1592048 BUSINESS ADDRESS: STREET 1: 1875 SKI TIME SQUARE DRIVE STREET 2: SUITE ONE CITY: STEAMBOAT SPRINGS STATE: CO ZIP: 80487-9015 BUSINESS PHONE: 9708791189 MAIL ADDRESS: STREET 1: 1875 SKI TIME SQUARE STREET 2: SUITE ONE CITY: STEAMBOAT SPRINGS STATE: CO ZIP: 80487-9015 FORMER COMPANY: FORMER CONFORMED NAME: CHRISTIAN PURCHASING NETWORK INC DATE OF NAME CHANGE: 19920703 10KSB40 1 x10k-301.txt JORDAN AMERICAN HOLDINGS U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 ----------------- Commission File Number 0-18974 Jordan American Holdings, Inc. ------------------------------ Florida 65-0142815 ---------------------------- ----------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 333 W. Vine Street, Suite 206 Lexington, KY 40507 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (859) 254-2240 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $.001 par value ----------------------------- Check whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes [X] No [ ] Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained herein, and will not be contained, to the best of the Company's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] The Company's revenues for fiscal year 2000 were $2,711,620. The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Company is $690,320 based on the closing price of $0.125 as of February 26, 2001, multiplied by 5,522,560 shares of common stock. As of February 26, 2000, the Company had a total of 10,421,266 shares of common stock outstanding. - -------------- *Affiliates for the purpose of this item refer to the officers, directors, and/or persons or firms owning 5% or more of the Company's common stock, both of record and beneficially. 1 DOCUMENTS INCORPORATED BY REFERENCE The following documents are incorporated by reference: Portions of Proxy Statements for 2001 Annual Meeting - Part III INDEX PART 1 PAGE Item 1. Description of Business 2 Item 2. Description of Properties 6 Item 3. Legal Proceedings 6 Item 4. Submission of Matters to a Vote of Security Holders 6 PART II Item 5. Market for Common Equity and Related Stockholder Matters 6 Item 6. Management's Discussion and Analysis 7 Item 7. Financial Statements 8 Item 8. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 8 PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act 8 Item 10. Executive Compensation 9 Item 11. Security Ownership of Certain Beneficial Owners and Management 9 Item 12. Certain Relationships and Related Transactions 9 Item 13. Exhibits and Reports on Form 8-K 9 2 PART I Item 1. Business General - ------- Jordan American Holdings, Inc. ("JAHI" or the "Company"), a Florida corporation incorporated in 1989, is a holding company whose principal wholly-owned subsidiary, Equity Assets Management, Inc. ("EAM") is an investment advisory firm that specializes in the management of accounts, the majority of which are held by semi-affluent individual clients and billed on an incentive fee basis, containing equity securities of United States public companies. EAM manages investment portfolios for individuals, trusts, corporate pension plans, other corporate accounts, foundations and mutual funds. EAM intends to continue to grow its assets under management for semi-affluent individuals and other qualified clients on an incentive fee basis. EAM plans to continue to diversify with respect to its client base by gathering assets under management from individual stock and mutual fund investors through its fixed advisory fee accounts and its mutual fund product that produces revenue based on a percentage of the assets under management. In 2001, EAM plans, with respect to its product line, to offer additional mutual fund products, including an insurance series developed for a variable annuity product. Incentive based advisory fees on assets under management for semi-affluent investors provide the largest portion of the Company's revenues. A semi-affluent investor generally has a total net worth greater than $1 million and less than $10 million. The assets of these and other clients have recently been declining primarily due to investment performance results achieved within the individual accounts. For the year ended December 31, 2000, no single client provided more than 5% of the Company's consolidated revenues. Accordingly, the loss of any single client would not have a material adverse effect on the Company's total investment management business. The investment objective of the individually held portfolios is significant capital appreciation or growth. EAM is compensated for its management of these accounts through two primary methods. EAM receives a fixed advisory fee based on the value of assets under management or an incentive based advisory fee based upon the account's annual performance results. The Company develops prospective clients through seminars, its web site (www.equityassets.com), sales representatives, referrals from clients, securities broker-dealers and other sources. The Company plans to expand its marketing and distribution activities through additional seminars in targeted geographical areas, additional strategic partnership relationships with securities broker-dealers and the internet by engaging in online marketing with strategic partners through web linking agreements. In addition to providing investment advisory services, the Company, through its other wholly-owned subsidiaries, operates a registered broker/dealer, a mutual fund servicing company, and a tax preparation and tax planning servicing company, which are described more fully under "Operations." Operations - ---------- JAHI historically conducted its investment advisory business under the name Equity Assets Management. In 2000, JAHI formed EAM as a wholly-owned subsidiary and moved its investment advisory business into EAM. The Company managed 251 individual accounts with assets under management of approximately $38 million at December 31, 2000. Approximately 30% of the assets under management in these accounts pay the fixed percentage of assets fee of approximately 1.9% annually. Approximately 70% of the assets under management in these accounts are billed on an incentive fee basis, whereby the Company normally receives 20% of the net realized and unrealized gains, including dividends and interest, in the account following each year of management. Exceptional management performance results in the incentive fee based accounts may cause substantial revenues for the Company while poor performance in the same accounts may yield little or no revenues for the Company. Additionally, because incentive fee based contracts are billed on an annual basis for each respective client, there may be a delay in billing revenue for as long as eleven months from the time when actual account performance results were achieved. Thus, performance in these accounts may or may not benefit the revenues of the Company for nearly one year after such performance results were achieved, depending on the billing cycle of respective clients and the results of investments held in the portfolio during the interim period prior to the calculation of the billing. 3 Management believes, despite EAM's short term investment performance results, its long-term performance history for individually managed accounts provides a basis for marketing the Company's investment advisory services to a growing network of brokers, institutions, and affluent and semi-affluent individuals. At December 31, 2000, the Company's managed accounts, on average, have outperformed the S&P 500 Index on a fifteen-year average annual total return basis. Although past performance is not a guarantee of future results or of profitability of future recommendations, performance history is a very relevant factor in the selection of investment advisors. The Company also manages the Impact Total Return Portfolio (the "Portfolio"), a mutual fund with assets under management of approximately $4 million at December 31, 2000. The Company receives a management fee of 1.25% per annum calculated on the Portfolio's average daily net assets. Of this amount, the Company pays a sub-advisor .60% per annum of the Portfolio's average daily net assets for selecting the securities for the Portfolio. Management believes that a recently acquired strategic partnership with a retail broker/dealer and the recent performance results in calendar year 2000 (where the fund substantially outperformed its index) provides a basis for marketing the Portfolio. In 2001, EAM became the investment advisor for two additional mutual fund products, the Jordan 25 Fund and the Jordan 25 Variable Fund. The Company, through a privately held affiliate, manages the Jordan Index Fund, L.P. (the "JIF"), a limited partnership with assets of approximately $2 million. In exchange for providing administrative services, the Company receives 100% of any net income resulting from the incentive and/or management fees collected by the privately held affiliate. JIF invests in stock index futures contracts and other securities and receives as its fee 20% of the partnership's total profits. The Company operates a registered broker-dealer, IMPACT Financial Network, Inc. ("IFNI"), which is a wholly owned subsidiary of the Company and a member of the National Association of Securities Dealers, Inc. ("NASD") and the Securities Investor Protection Corporation ("SIPC"). Wallace Neal Jordan, Chief Executive Officer of JAHI, founded IFNI in 1986. Approximately 90% of EAM's individually managed accounts maintain brokerage accounts with IFNI for assets placed under EAM's management. IFNI is compensated for securities transactions on behalf of the Company's managed accounts by receipt of commissions for orders executed through Pershing & Co., a division of Donaldson, Lufkin, & Jenrette, a securities corporation. Pershing & Co., a member of SIPC, acts as clearing firm and custodian and processes all confirmations and monthly statements for EAM clients who choose to hold their accounts with IFNI. Clients may decide to custody their accounts at another brokerage institution of their own choosing. IFNI also serves as the national distributor for the Portfolio and other Impact Funds. IFNI receives a fee from the various funds in exchange for marketing and distributing the Funds. The fee varies according to the class of shares distributed. It is used to pay for marketing and distribution expenses related to the mutual fund,including sales commissions. Management believes that IFNI will continue to be a source of revenue for the Company primarily through the commissions earned on securities transactions. The Company operates a mutual fund servicing company, Impact Administrative Services, Inc. ("IASI"), which is a wholly owned subsidiary of the Company and a registered transfer agent with the Securities and Exchange Commission (the "SEC") and a member of the Investment Company Institute. IASI provides administrative, dividend disbursement and transfer agent services to the Portfolio and the other Impact Funds. The Company currently receives a fee of .35% per annum of the Portfolio's average daily net assets to pay for costs associated with the administration of the Portfolio. The Company believes that IASI may become a potential revenue source for the Company by providing similar services to other funds and outside small mutual fund families. The Company acquired the assets of a tax preparation and tax planning services company in late 2000 through Impact Tax & Business Services, Inc., (ITABS) a wholly owned subsidiary of the Company formed in November 2000. ITABS, at December 31, 2000 provided tax planning and tax preparation services to approximately 181 individual clients, 55 individuals with sole proprietorships and 12 small businesses. The Company believes ITABS may continue to grow and become a stable revenue source for the Company. Total assets under management and corporate earnings may substantially increase or decrease due to stock market conditions, including the onset of a long-term declining, or bear market; performance returns as influenced by EAM's investment advisory decisions; expense and related effectiveness of marketing efforts; and competition from other investment advisory companies and mutual funds. Other indirect influences, such as interest rate changes by the Federal Reserve Board, economic conditions such as high inflation and/or recession, 4 international events, acts of terrorism, and other factors may also affect assets under management and corporate earnings. The Industry - ------------ Revenues in the investment advisory business are determined primarily by fees based on the value of assets under management and on investment performance results. Therefore, the principal determinants of growth in the industry are the growth of individual assets under management and achieving positive investment performance results. In management's judgment, the major factors which influence growth in the industry are: (1) changes in the market value of securities; (2) net cash flow into or out of existing accounts; (3) gains of new or losses of existing accounts; and (4) the general stock market condition. In general, assets under management in the investment advisory business in the United States as a whole have increased steadily to approximately $17 trillion, according to the Directory of Registered Investment Advisors prepared by Money Market Directories, Inc. This steady increase can be attributed to the fact that Americans shifted household financial assets to securities in a trend that started after World War II, but the trend increased particularly in the last decade. According to the Securities Industry Association ("SIA"), in 1980, 53% of a household's liquid financial assets on average were held in bank deposits, while only 32% were held in equities. Today, there has been a substantial reversal: approximately 44% are held in equities and 23% in bank deposits. The expansion of equity ownership can be primarily attributed to declining interest rates and the prolonged trend, until recently, of rising stock prices, which have prompted many U.S. households to purchase and hold securities. Assets under management could substantially decrease, however, due to changes in stock market conditions, including the onset of a long-term declining or bear market. However, EAM believes that a return to the historical pattern of cyclical market movements would provide a competitive advantage for EAM due to its experience with investing during volatile times. Competition - ----------- EAM competes to manage investment portfolios for individuals, trusts, corporate pension plans, other corporate accounts, and foundations. Management believes that the most important factors affecting competition in the investment advisory business are: (1) the abilities and reputations of investment advisors; (2) the differences in the investment performance results achieved by investment advisory firms; (3) the stability of a firm's workforce, especially of portfolio managers; (4) an effective marketing force and distribution system; and (5) quality of client services. EAM has many competitors, including other investment advisors, investment companies, broker-dealers and financial planners in addition to investment alternatives offered by insurance companies, banks, credit unions, securities dealers and other financial institutions. Many of these institutions possess large sales forces and significant financial resources, are able to engage in more extensive marketing and advertising than EAM and may offer accounts insured by the Federal Deposit Insurance Corporation. EAM's investment strategy centers on understanding the general trend of the market as assisted by certain proprietary analysis. That strategy, coupled with its long-term track record and the experience of its portfolio managers, make it a viable alternative to traditionally-managed mutual funds and money managers who have less experience and thereby disregard general market conditions as part of their investment strategy. Regulation - ---------- EAM is registered with and subject to regulation by the SEC under the Investment Advisers Act of 1940 and, where applicable, under state advisory laws. EAM is also subject to regulation by the SEC under the Investment Company Act of 1940. IFNI is registered as a broker-dealer with the SEC under the Securities Exchange Act of 1934 (the "Exchange Act") and, where applicable, under state securities laws, and is regulated by the SEC, state securities administrators and the NASD. IASI is registered as a transfer agent under the Exchange Act and is regulated by the SEC. The privately held affiliate that manages JIF is regulated by the Commodity Futures Trading Commission and the National Futures Association. By law, investment advisors and broker-dealers are fiduciaries and are required to serve their clients' interests with undivided loyalty. There is a potential conflict of interest because of the affiliation between EAM and IFNI. While EAM believes that its existing relationships are in compliance with applicable laws and regulations, because of this potential conflict of interest, the SEC may closely examine these relationships. 5 Many aspects of the financial services industry involve substantial liability risks, including exposure under federal and state securities laws in connection with the distribution of securities and investment advisor activities. Although the Company currently maintains errors and omission insurance policies insuring against this risk, such insurance does not necessarily protect the Company against loss in all events. There can be no assurance that any changes to existing laws, regulations or rulings promulgated by government entities having jurisdiction over the Company's investment advisory, broker-dealer, investment company and commodities trading business will not have an adverse effect upon the business of the Company. Employees - --------- At March 1, 2001, the Company employed 12 full-time personnel, three of whom are executive officers of the Company. The Company utilizes the services of independent contractors to assist the employees in the operation of the Company's business. Item 2. Properties The Company currently maintains its headquarters at 333 West Vine Street, Suite 206, Lexington, Kentucky. The Company also currently has satellite offices in Boston, Massachusetts, Pittsburgh, Pennsylvania and Steamboat Springs, Colorado. All current properties are leased for a total of approximately $5,400 per month. Item 3. Legal Proceedings In connection with a late 1997 examination of the Company, the SEC raised certain issues regarding possible violations of the federal securities laws in connection with the private placement of debentures of Boston Restaurant Associates, Inc. Management of the Company does not expect the resolution of this matter to have any material adverse effect on the Company's financial condition, results of operations or business. Other than the foregoing, the Company is not a party in any material litigation, and management has no knowledge of any threatened material litigation against the Company. Item 4. Submission of Matters to a Vote of Security Holders During the fourth quarter of the fiscal year covered by this report, no matters were submitted to a vote of security holders through the solicitation of proxies or otherwise. PART II Item 5. Market for Common Equity and Related Stockholder Matters Market for Common Stock - ----------------------- The Company's common stock currently trades on the OTC Bulletin Board under the symbol "JAHI." The following are the high and low sales prices for JAHI for the two-year period ended December 31, 2000. Such prices may represent high and low bid quotations or prices between dealers in securities and do not include retail markup, markdown, or commissions and may not necessarily represent actual transactions. Common Stock Prices Year Ended December 31, 1999 High Low First Quarter $0.23 $0.08 Second Quarter $0.20 $0.11 Third Quarter $0.16 $0.06 Fourth Quarter $0.19 $0.05 Year Ended December 31, 2000 High Low First Quarter $0.42 $0.20 Second Quarter $0.38 $0.13 Third Quarter $0.29 $0.15 Fourth Quarter $0.32 $0.13 On February 26, 2001, the closing price of the Company's common stock was $0.125. As of February 26, 2001, approximately 813,000 shares of its common stock were held in accounts of EAM clients, which represented approximately 8% of the Company's outstanding shares of common stock as of December 31, 2000. Wallace Neal Jordan owned approximately 33% of the Company's outstanding shares of common stock at December 31, 2000. 6 Dividends - --------- COMMON - ------ The Company has not paid or declared cash dividends on its common stock since inception and does not anticipate paying dividends in the foreseeable future. At December 31, 2000, the Company's policy was to retain all earnings for application in its business. Payment of future cash dividends is at the discretion of the Board of Directors and will depend upon earnings, financial requirements of the Company and other such factors as the Board of Directors may deem relevant. PREFERRED - --------- From February 1993 until June 30, 1998, the Company made semi-annual cash dividend payments on its cumulative convertible non-voting preferred stock at a rate of 8% per annum. The Company did not make any dividend payments on this stock in 1999 and 2000. On December 29, 2000, the company entered into a preferred stock exchange agreement (the "Agreement") with its sole preferred shareholder (the "Shareholder"). The Shareholder was the owner of 3,000,000 shares of the Company's 8% Convertible Redeemable Cumulative Preferred Stock (the "Outstanding Preferred Stock"). The Company was in arrears with respect to the payment of dividends on the Outstanding Preferred Stock, which arrearages totaled $600,000 as of December 31, 2000 (the "Dividend Arrearage"). The Agreement provided that the Company declare and pay a cash dividend of $100,000 on the Outstanding Preferred Stock and exchange 3,500,000 shares of a new 2000 Convertible Preferred Stock (the "New Preferred Stock") for the 3,000,000 shares of the Outstanding Preferred Stock and cancellation of the $500,000 balance of the Dividend Arrearage. The New Preferred Stock is convertible into JAHI common stock at the rate of one share of common stock for each $3.50 of the face amount of the New Preferred Stock and will have a dividend rate of 3% for each of the calendar years 2001 through 2003, 4% for calendar year 2004, 5% for calendar year 2005, 6% for calendar year 2006, 7% for calendar year 2007, and 8% for calendar year 2008 and thereafter. The Company relied upon the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended, for the issuance of the New Preferred Stock. Shareholders - ------------ At December 31, 2000, there were 10,421,266 outstanding shares of the Company's common stock and 247 shareholders of record. Item 6. Management's Discussion and Analysis Safe Harbor for Forward-Looking Statements - ------------------------------------------ Information found in this report contains forward-looking implications, which may differ materially from actual results due to the success, or lack thereof, of JAHI's management decisions, marketing and sales effectiveness, investment decisions, and the management of clients' stock portfolios and pooled investments as influenced by market conditions, Federal Reserve Board policy, economic trends, political developments, domestic and international events, and other factors. There can be no guarantee that any forward-looking implications discussed and/or referenced in this report will have any impact, positive or negative, upon the earnings, value and/or operations of the Company. Results of Operations - --------------------- Net loss for 2000 was $4,013 or $0.02 per common share and share equivalent compared to a net income of $1,152,749 or $0.09 per common share and share equivalent for 1999. The decrease in net income was primarily caused by the unrealized and realized losses on trading equity securities during 2000. Revenues from investment advisory fees for 2000 totaled $2,753,348 compared to $1,975,232 for 1999, an increase of 39%. Realized losses on trading equity securities for 2000 were $283,407 compared to realized gains on trading equity securities of $5,030 for 1999. Commission revenues decreased for 2000 to $241,679, as compared to $351,429 for 1999, a decrease of approximately 31%. This decrease was primarily due to a decrease in the volume of securities transactions for client accounts by the Company based on its investment strategy, market conditions and other factors. 7 Selling, general, and administrative ("SG&A") expenses of $2,221,318 were incurred during 2000, compared to SG&A expenses of $1,771,540 for 1999, an increase of approximately 25%. The increase in SG&A expenses stems primarily from an increase in selling expenses related to fees paid to investment advisory sales representatives and an increase in bonuses tied to investment performance achieved in the accounts billed on an incentive-basis. Total other income (loss) was ($452,446) for 2000, compared to $592,598 for 1999. The decrease in other income can be primarily attributed to unrealized losses on trading equity securities of $619,943 in 2000. Liquidity and Capital Resources - ------------------------------- At December 31, 2000, the Company had cash and cash equivalents of $1,029,173 versus $580,757 at December 31, 1999. This increase is primarily due to the increase in net cash provided by operating activities. Marketable securities were valued at $328,609 at December 31, 2000, as compared to $607,882 at December 31, 1999, a decrease of approximately 46%. The decrease in marketable securities can be primarily attributed to a significant decrease in the market value of several of the Company's holdings at December 31, 2000 when compared to the previous year-end value. Net investment advisory fees receivable were $195,253 at December 31, 2000, as compared to $846,907 at December 31, 1999, a decrease of approximately 77%. This decrease can be primarily attributed to significantly lower incentive-based billings in the fourth quarter of 2000 as compared to the fourth quarter of 1999. Accounts payable and accrued expenses were $195,359 at December 31, 2000, as compared to $387,986 at December 31, 1999, a decrease of approximately 50%. The decrease in accounts payable and accrued expenses can be primarily attributed to lower accrued expenses for fees due investment advisor sales representatives. Accruals are based upon actual expenses incurred as well as unbilled expenses. Net cash provided by operating activities for fiscal year 2000 was $834,502 compared to $166,909 for the same period in 1999. This change was due primarily to a decrease in investment advisory fees receivables. Net cash used in investing activities for fiscal year 2000 was $286,086 compared to $81,774 for 1999. This change was due primarily to the issuance of a note receivable related to the Company's investment in a start-up business as an "angel" investor. Net cash used in financing activities for fiscal year 2000 was $100,000 compared to $0.00 for 1999. This change was due primarily to the Board of Directors' decision to pay a Preferred Stock dividend during 2000. Management of the Company believes short-term cash needs will continue to be met through management fees, brokerage revenues and/or the liquidation of marketable securities. At December 31, 2000, the Company had $1,357,782 in cash and marketable securities. Item 7. Financial Statements Financial statements contained in this report reflect no change from the preceding year in any accounting principles or practices or in the method of application of those principles or practices. Information with respect to this item is contained in the consolidated financial statements beginning on page 11 of this report. Such information is incorporated herein by reference. Item 8. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure None PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16 (a) of the Exchange Act. The response to this item will be included in a definitive proxy statement filed within 120 days after the end of the Company's fiscal year, which response is incorporated herein by reference. 8 Item 10. Executive Compensation The response to this item will be included in a definitive proxy statement filed within 120 days after the end of the Company's fiscal year, which response is incorporated herein by reference. Item 11. Security Ownership of Certain Beneficial Owners and Management The response to this item will be included in a definitive proxy statement filed within 120 days after the end of the Company's fiscal year, which response is incorporated herein by reference. Item 12. Certain Relationships and Related Transactions The response to this item will be included in a definitive proxy statement filed within 120 days after the end of the Company's fiscal year, which response is incorporated herein by reference. Item 13. Exhibits and Reports on Form 8-K (a) Exhibits: See Exhibit Index. (b) Reports on Form 8-K: None Exhibit Index Exhibit Description Page Number 3.1 Articles of Incorporation, as amended (1) 3.2 Bylaws, as amended (2) 4.1 Specimen Certificate of Common Stock (2) 4.2 Specimen Warrant Certificate (2) 4.3 Form of Warrant Agreement, as amended (2) 4.4 Form of IPO Underwriter's Warrant (2) 4.5 Specimen Certificate of 2000 Variable Rate Convertible Cumulative Preferred Stock (1) 10.1 Employment Agreement between the Company and Wallace Neal Jordan (3) 10.2 Non-Competition Agreement between the Company and Wallace Neal Jordan (3) 10.3 Assets Purchase Agreement by and among IMPACT Tax and Business Services, Inc; A.J. Elko & Associates, LLC; and A.J. Elko Individually, dated as of November 20, 2000 (1) 21 Subsidiaries of the Company (1) 23.1 Spicer Jeffries & Co., Consent (1) (1) Filed herewith. (2) Incorporated herein from certain exhibits to the Company's Registration Statement on Form S-1, File No. 33-31324, as declared effective by the Securities and Exchange Commission on June 5, 1990. (3) Incorporated herein from certain exhibits to the Company's Current Report on Form 8-K dated August 15, 1991. 9 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. JORDAN AMERICAN HOLDINGS, INC. (Registrant) Dated March 26, 2001 By: /s/ Wallace Neal Jordan --------------------------------- Wallace Neal Jordan, Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Dated March 26, 2001 By: /s/ Wallace Neal Jordan --------------------------------- Wallace Neal Jordan, Chairman of the Board, Chief Executive Officer, Chief Investment Officer Dated March 26, 2001 By: /s/ Charles R. Clark --------------------------------- Charles R. Clark, Director, Chief Market Analyst, Senior Assistant Portfolio Manager Dated March 26, 2001 By: /s/ A.J. Elko --------------------------------- A.J. Elko, Director, Chief Operating Officer, Chief Financial Officer Dated March 26, 2001 By: /s/ Terri Williams Abady --------------------------------- Terri Williams Abady, Director Dated March 26, 2001 By: /s/ Herald Stout --------------------------------- Herald Stout, Director 10 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS TABLE OF CONTENTS ================= Page ---- Independent Auditors' Report 12 Consolidated Balance Sheets 13 Consolidated Statements of Operations 15 Consolidated Statements of Changes in Stockholders' Equity 16 Consolidated Statements of Cash Flows 17 Notes to Consolidated Financial Statements 19 11 INDEPENDENT AUDITORS' REPORT To the Board of Directors Jordan American Holdings, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheets of Jordan American Holdings, Inc. and Subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Jordan American Holdings, Inc. and Subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles. SPICER, JEFFRIES & CO. Denver, Colorado March 16, 2001 12 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ===========================
December 31, 2000 1999 ---- ---- ASSETS ------ ASSETS: Cash and cash equivalents $ 1 029 173 $ 580 757 Marketable securities 328 609 607 882 Investment advisory fees receivable, net of allowance for doubtful accounts of $27,820 195 253 846 907 Receivable from clearing broker -- 5 435 Deposit with clearing broker 25 000 25 000 Other receivables, net of allowance for doubtful accounts of $127,177 and $63,750 73 548 79 638 Other assets 46 051 101 288 Intangible assets, net of accumulated amortization of $939 (Note 5) 83 564 -- Property, equipment and leasehold improvements, at cost net of accumulated amortization and deprecation of $169,110 and $133,005, respectively 110 148 88 229 Receivable from officer (Note 5) 61 697 26 556 Notes receivable (Note 3) 650 000 500 000 ----------- ----------- TOTAL ASSETS $ 2 603 043 $ 2 861 692 =========== ===========
The accompanying notes are an integral part of these statements. 13 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS =========================== (Continued)
December 31, 2000 1999 ---- ---- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ LIABILITIES: Accounts payable and accrued expenses $ 195 359 $ 387 986 Payable to officer (Note 5) 26 166 -- Deferred investment advisory fees 27 025 35 300 ----------- ----------- TOTAL LIABILITIES 248 550 423 286 ----------- ----------- COMMITMENTS AND CONTINGENCIES (Notes 8 and 9) STOCKHOLDERS' EQUITY (Note 4): Variable rate, cumulative, convertible, non-voting preferred stock, $0.01 par value, $1.00 liquidation value, authorized 5,000,000 shares; issued and outstanding 3,500,000 shares 35 000 -- 8% cumulative, convertible, non-voting preferred stock, $0.01 par value, $1.00 liquidation value, authorized 5,000,000 shares; issued and outstanding 3,000,000 shares -- 30 000 Common stock, $0.001 par value, authorized 20,000,000 shares; issued and outstanding 10,421,266 shares 10 421 10 421 Additional paid-in capital 4 417 953 4 502 853 Deficit (2 108 881) (2 104 868) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 2 354 493 2 438 406 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2 603 043 $ 2 861 692 =========== ===========
The accompanying notes are an integral part of these statements. 14 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ===================================== Year Ended December 31, 2000 1999 ---- ---- REVENUE: Investment advisory fees $ 2 753 348 $ 1 975 232 Commission income 241 679 351 429 Realized gain (loss) on trading securities (283 407) 5 030 ----------- ----------- TOTAL REVENUE 2 711 620 2 331 691 ----------- ----------- OPERATING EXPENSES: Salaries and related expenses 743 679 643 797 Commission expense 519 292 368 143 General and administrative 245 368 277 909 Professional fees 224 679 156 174 Communications and data processing 96 482 85 562 Licenses, registrations and franchise taxes 59 658 22 702 Insurance 74 731 52 325 Travel 72 673 20 428 Marketing 62 577 3 181 Clearing costs 54 992 53 777 Depreciation and amortization 37 044 46 842 Occupancy 30 143 40 700 ----------- ----------- TOTAL OPERATING EXPENSES 2 221 318 1 771 540 ----------- ----------- OPERATING INCOME 490 302 560 151 ----------- ----------- OTHER INCOME: Unrealized gain (loss) on trading securities (619 943) 438 429 Interest and dividends 149 477 91 366 Other, net 18 020 62 803 ----------- ----------- TOTAL OTHER INCOME (LOSS) (452 446) 592 598 ----------- ----------- NET INCOME BEFORE INCOME TAXES 37 856 1 152 749 Provision for state income taxes (Note 6) (41 869) -- ----------- ----------- NET INCOME (LOSS) $ (4 013) $ 1 152 749 =========== =========== Basic and diluted earnings (loss) per common share $ (.02) $ .09 =========== =========== Basic and diluted weighted-average number of common shares outstanding 10 421 266 10 421 266 =========== =========== The accompanying notes are an integral part of these statements. 15 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY ==========================================================
Preferred Stock Common Stock Additional Total $ 0.01 Par Value $ 0.001 Par Value Paid-in Stockholders' Shares Amount Shares Amount Capital Deficit Equity ------ ------ ------ ------ ------- ------- ------ BALANCES, December 31, 1998 3 000 000 $ 30 000 10 421 266 $ 10 421 $ 4 502 853 $(3 257 617) $ 1 285 657 Net Income -- -- -- -- -- 1 152 749 1 152 749 ----------- ----------- ---------- ----------- ----------- ----------- ----------- BALANCES, December 31, 1999 3 000 000 30 000 10 421 266 10 421 4 502 853 1 152 749 1 152 749 Retirement of preferred stock (3 000 000) (30 000) -- -- (2 970 000) -- (3 000 000) Issuance of preferred stock 3 500 000 35 000 -- -- 3 465 000 -- 3 500 000 Dividends on preferred stock -- -- -- -- (600 000) -- (600 000) Issuance of stock options in connection with asset purchase -- -- -- -- 20 100 -- 20 100 Net loss -- -- -- -- -- (4 013) (4 013) ----------- ----------- ---------- ----------- ----------- ----------- ----------- BALANCES, December 31, 2000 3 500 000 $ 35 000 10 421 266 $ 10 421 $ 4 417 953 $(2 108 881) $ 2 354 493 =========== =========== ========== =========== =========== =========== ===========
The accompanying notes are an integral part of these statements. 16 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ===================================== INCREASE (DECREASE) IN CASH
Year Ended December 31, 2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (4 013) $ 1 152 749 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 37 044 46 842 Decrease in receivable from clearing broker 5 435 98 453 Decrease (increase) in other receivables 11 915 (48 067) (Increase) decrease in investment advisory fees receivable 651 654 (800 922) (Increase) decrease in trading marketable securities 279 273 (444 872) (Increase) decrease in other assets 56 284 (51 173) Increase (decrease) in accounts payable and accrued expenses (194 815) 208 302 Increase (decrease) in deferred investment advisory fees (8 275) 5 597 ----------- ----------- Net cash provided by operating activities 834 502 166 909 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Increase in receivable from officer (35 141) (11 556) Increase in payable to officer 26 166 -- Capital expenditures, net (42 111) (70 218) Issuance of note receivable (150 000) -- Purchase of assets from related entity (85 000) -- ----------- ----------- Net cash used in investing activities (286 086) (81 774) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends on preferred stock (100 000) -- ----------- -----------
The accompanying notes are an integral part of these statements. 17 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ===================================== INCREASE (DECREASE) IN CASH (CONTINUED)
Year Ended December 31, 2000 1999 ---- ---- NET INCREASE IN CASH AND CASH EQUIVALENTS 448 416 85 135 CASH AND CASH EQUIVALENTS, beginning of year 580 757 495 622 ----------- ------------ CASH AND CASH EQUIVALENTS, end of year $ 1 029 173 $ 580 757 =========== ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 3 608 $ 5 766 =========== ============ Income taxes paid $ 52 851 $ -- =========== ============ SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Issuance of preferred stock for retirement of preferred stock and dividends in arrears $ 3 500 000 $ -- =========== ============ During the year ended December 31, 2000, the Company purchased assets from a related entity for cash and common stock options. In connection with the acquisition, liabilities were assumed as follows: Fair value of assets acquired $ 107 288 Cash paid (85 000) Common stock options issued (20 100) ----------- Liabilities assumed $ 2 188 ===========
The accompanying notes are an integral part of these statements. 18 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - ------------ Jordan American Holdings, Inc. and Subsidiaries (JAHI/the Company) was incorporated in Florida in May 1989. JAHI historically conducted its investment advisory business under the name Equity Assets Management. In 2000, JAHI formed Equity Assets Management, Inc. ("EAM"), a wholly owned subsidiary, and moved its investment advisory business into that entity. EAM provides investment advisory and portfolio management services to individual investors, pooled accounts and its mutual fund with its customers located substantially in the United States. EAM is registered as an investment advisor under the Investment Advisor Act of 1940. The Company also owns 100% of the issued and outstanding common stock of IMPACT Financial Network, Inc. (IFNI), IMPACT Administrative Services, Inc. (IASI) and IMPACT Tax and Business Services, Inc. (ITABS). IASI provides operational and administrative support to Impact Management Investment Trust (see Note 2). EAM's customer investment transactions are primarily brokered through IFNI, a registered broker-dealer in securities acting as a non-clearing introducing broker. ITABS, created in September 2000, provides tax preparation and tax planning services to individuals and small businesses (see Note 5). The accompanying consolidated financial statements include the accounts of JAHI and its subsidiaries; all significant intercompany transactions have been eliminated during consolidation. SIGNIFICANT ACCOUNTING POLICIES - ------------------------------- Investment advisory fees received in advance are deferred and amortized into income over the period in which services are performed. Investment advisory fees based on a percentage of the annual increase in the market value of a customer's portfolio (including interest and dividends) are recognized at the contract anniversary date. Fees due sales representatives are recognized when such fees are earned. Commission income is recognized on a settlement date basis, which does not differ materially from the trade date basis of accounting. For purposes of the statements of cash flows, the Company considers money market funds at brokers with maturities of three months or less to be cash equivalents. 19 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== (Continued) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) - ------------------------------- Marketable securities consist principally of corporate stocks. These securities are carried at market value, as determined by nationally recognized securities exchanges. Restricted securities are valued based on the judgment of the Company's management reflecting various factors as to the amount that the Company might reasonably expect to receive upon disposition to a willing purchaser. Consideration is given to factors such as earnings history, financial condition, recent sales prices of the issuer's securities and the proportion of securities owned. The cost of marketable securities was $613,373 and $272,703 at December 31, 2000 and 1999 respectively. The Company has entered into an agreement with a clearing broker that requires a minimum restricted cash balance of $25,000. Due to the restricted nature of the cash deposit, it is not considered a "cash equivalent" for financial reporting purposes. Property, equipment and leasehold improvements are carried at cost. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the related assets ranging from three to seven years. Intangible assets are amortized on a straight-line basis over a period of fifteen years. The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Earnings per share requires presentation of both basic earnings per common share and diluted earnings per common share. Common stock equivalents are not included in the weighted average calculation since their effect would be anti-dilutive. Net income (loss) per common share has been adjusted to reflect preferred stock dividends paid or in arrears of $240,000 for the years ending December 31, 2000 and 1999 (see Note 4). The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements. Certain 1999 amounts have been reclassified to conform to the current year presentation. 20 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== (Continued) NOTE 2 - IMPACT MANAGEMENT INVESTMENT TRUST The Company formed Impact Management Investment Trust (the Trust), which is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company (mutual fund). Impact Total Return Portfolio (the Portfolio) is the initial Series of the Trust. EAM is the investment advisor of the Trust and IFNI is the primary distributor of the Trust. IFNI executed the majority of the Trust's transactions through April 30, 1999. At December 31, 2000 and 1999, the market value of the Company's investment in the Portfolio was $1,348 and $-0-, respectively, which is included in marketable securities in the accompanying consolidated balance sheets. As investment advisor of the Portfolio, the Company receives an annual investment advisory fee equal to 1.25% of the Portfolio's average daily net assets. Of this amount, 60 basis points is paid to the sub advisor of the Trust. NOTE 3 - NOTES RECEIVABLE The Company owns a $500,000 variable rate convertible subordinated debenture from Boston Restaurant Associates, Inc. (BRAI). The principal balance of the debenture is due and payable on December 31, 2011. The debenture has a conversion price of $1.25 per share and bears interest at a rate of 12% for 1999 and 14% thereafter. In connection with the purchase of the debenture, the Company also acquired, at no cost, warrants to subscribe for the purchase from BRAI up to 500,000 fully paid and nonassessable shares of BRAI's common stock. The purchase rights represented by the warrants are exercisable by the Company, in whole or in part, at any time through December 31, 2006, at an exercise price of $3.00 per share. In March 2000, the Company made a loan of $150,000 represented by an unsecured Convertible Subordinated Bridge Note, to an unaffiliated entity. The note bears interest at 10% and matures on May 31, 2001. The Company is entitled to receive a 4% equity interest in this entity if and when it completes a public offering of its securities. The note is convertible into Series A Convertible Preferred Stock of the entity. The carrying value of the above notes receivable approximates the fair market value as estimated by management, after considering such factors as current interest rates, liquidity, conversion terms and the credit worthiness of the borrowers. The Company's management has estimated the value of the BRAI warrants to be $-0- at December 31, 2000 and 1999. This determination was made considering primarily the current value of the underlying common stock and the current illiquidity of the warrants. 21 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== (Continued) NOTE 4 - STOCKHOLDERS' EQUITY At December 31, 2000, the Company has stock warrants outstanding entitling the warrant holder to acquire 1,113,000 shares of common stock at $.50 per share expiring June 5, 2010. The Company also has outstanding Underwriter Warrants related to the initial public offering entitling the Company's president to purchase 44,545 units (five shares of common stock and five stock warrants; two warrants entitle the holder to purchase one share of common stock for $.60 per share) of the Company at a price of $2.58 per unit expiring through January 8, 2011. JAHI has authorized 5,000,000 shares of $0.01 par value preferred stock. The Board of Directors is authorized to issue preferred stock in one or more series, to determine the rights thereto, and to fix the number of shares on any series of preferred stock and the designation of any such series. The Company issued 3,000,000 shares of 8% cumulative, convertible, non-voting preferred stock to a customer of EAM in a private placement offering. In connection with this offering, 750,000 shares of common stock were given to the Company to distribute to the preferred shareholder by three officers of the Company for no additional consideration. From February 1993 until June 30, 1998, the Company made semi-annual cash dividend payments on its cumulative convertible non-voting preferred stock at a rate of 8% per annum. The Company did not make any dividend payments on this stock in 1999 and 2000. On December 29, 2000, the Company entered into a preferred stock exchange agreement (the "Agreement") with its sole preferred shareholder (the "Shareholder"). The Shareholder was the owner of 3,000,000 shares of the Company's 8% Convertible Redeemable Cumulative Preferred Stock (the "Outstanding Preferred Stock"). The Company was in arrears with respect to the payment of dividends on the Outstanding Preferred Stock, which arrearages totaled $600,000 as of December 31, 2000 (the "Dividend Arrearage"). The Agreement provided that the Company declare and pay a cash dividend of $100,000 on the Outstanding Preferred Stock and exchange 3,500,000 shares of a new 2000 Convertible Preferred Stock (the "New Preferred Stock") for the 3,000,000 shares of the Outstanding Preferred Stock and cancellation of the $500,000 balance of the Dividend Arrearages. The New Preferred Stock is convertible to JAHI common stock at the rate of one share of common stock for each $3.50 of the face amount of the New Preferred Stock and will have a dividend rate of 3% for each of the calendar years 2001 through 2003, 4% for calendar year 2004, 5% for calendar year 2005, 6% for calendar year 2006, 7% for calendar year 2007, and 8% for calendar year 2008 and thereafter. In connection with the original preferred stock offering, the Company obtained "key man" life insurance on the Company's president, in the amount of $3,750,000. The shareholder is the direct beneficiary and, upon the death of the Company's president, would receive the insurance proceeds in redemption of the New Preferred Stock. In addition, the Company maintains life insurance on certain officers aggregating $1,000,000, with the Company as the primary beneficiary. 22 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== (Continued) NOTE 5 - RELATED PARTY TRANSACTIONS The Company has a loan to an officer bearing interest at a rate of 10% and 6% per annum in the amount of $61,697 and $26,556 at December 31, 2000 and 1999, respectively. On November 30, 2000, the Company purchased certain assets of a tax preparation and tax planning services company from an officer and director of JAHI valued at $105,100 as determined by the Board of Directors of the Company. The purchase included a client database in the amount of $71,025 and goodwill of $13,478, which are included on the accompanying balance sheets as intangible assets. The Company issued 100,500 stock options valued at $20,100 as part of the purchase price. In connection with the purchase, the Company owes the officer $26,166 at December 31, 2000. In 1994, the Company's president established the Jordan Index Fund, L.P. (the "Fund"). The Fund engages in the speculative trading of stock index futures contracts, and may occasionally trade in equity securities and stock options. The Fund is administered by its general partner, Jordan Assets, Ltd. Jordan Assets, Ltd. is not a subsidiary of JAHI, although JAHI is registered as a principal of Jordan Assets, Ltd. with the Commodity Futures Trading Commission. All trading decisions for the Fund are made by Jordan Assets, Ltd. Certain administrative functions are provided to the Fund by JAHI in return for the fees earned by Jordan Assets, Ltd. No such fees were earned during 2000 and 1999. NOTE 6 - INCOME TAXES For the year ended December 31, 2000, the Company utilized approximately $980,000 of its net operating loss carryforward to offset taxes currently payable. The tax effect of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are primarily attributable to net operating loss carryforwards for U.S. income tax purposes. The difference between net income for financial statement purposes and net income for income tax purposes is primarily due to realized and unrealized losses of approximately $903,000 recognized for financial reporting purposes and not for income tax reporting purposes. As of December 31, 2000 and 1999, the Company had approximately $2,010,000 and $2,990,000, respectively in pretax U.S. net operating loss carryforwards, expiring through the year 2018. A large portion of such net operating loss carryforwards were incurred prior to the August 15, 1991 reverse acquisition of JAHI and its subsidiaries, and as such, management of the Company anticipates restrictions on the use of these carryforwards due to provisions of Section 382 of the U.S. Internal Revenue Code. 23 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== (Continued) NOTE 6 - INCOME TAXES (CONTINUED) The deferred tax assets that result from such operating loss carryforwards of approximately $680,000 and $1,016,600 at December 31, 2000 and 1999, respectively, have been fully reserved for in the accompanying consolidated financial statements. During the years ended December 31, 2000 and 1999, the valuation allowance established against the net operating loss carryforwards decreased by $336,600 and $273,400, respectively. As of December 31, 2000 and 1999, the Company also had U.S. net capital loss carryforwards of approximately $545,000 and $277,000, respectively, which expire through 2005. The deferred tax assets of approximately $185,000 in 2000 and $94,000 in 1999 that result from the capital loss carryforwards have been fully reserved for in the accompanying consolidated financial statements. During the years ended December 31, 2000 and 1999, the valuation allowance established against the capital loss carryforwards increased (decreased) by $268,000 and $(5,000), respectively. NOTE 7 - STOCK OPTIONS During August 1991, the Board of Directors of JAHI approved the Long-Term Incentive Plan (the "Plan"), a stock option plan. The aggregate number of shares of common stock that may be granted by the Company will not exceed a maximum of 2,000,000 shares during the period of the Plan. The option price per share shall be at least the fair market value (as determined by the Finance/Compensation Committee or, in lieu thereof, the Board of Directors) of the common stock on the date the stock option is granted. If at any time a stock option is granted, an employee owns more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, then the terms of the stock option shall specify that the option price shall be at least 110% of the fair market value of the stock subject to the option, and shall be exercisable for up to 5 years from the date of grant. In addition, the Plan provides for the mandatory grant of options to directors on a yearly basis commencing March 1, 1993. If for any reason a change in control of the Company occurs, or under the sole discretion of the Finance/Compensation Committee or, in lieu thereof, the Board of Directors, all shares subject to the stock option shall immediately become earned and exercisable. The Board of Directors may discontinue the Plan at any time, and may amend it from time to time. Certain amendments require stockholders' approval. 24 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== (Continued) NOTE 7 - STOCK OPTIONS (CONTINUED) The Company has also issued certain stock options outside of the Plan. Information with respect to all options is as follows:
Long-Term Weighted Incentive Other Exercise Average Plan Options Total Price Range Exercise Price ---- ------- ----- ----------- -------------- Balances at December 31, 1998 955 859 267 200 1 223 059 $0.14 - 2.00 $ 1.02 Granted 1 041 482 20 000 1 061 482 0.13 - 1.00 0.21 Forfeited (411 859) (411 859) -- -- --------- --------- --------- ------------ ---------- Balances at December 31, 1999 1 585 482 287 200 1 872 682 0.13 - 2.00 0.56 Granted 58 750 -- 58 750 0.20 - 0.35 0.31 Forfeited -- -- -- -- -- --------- --------- --------- ------------ ---------- Balances at December 31, 2000 1 644 232 287 200 1 931 432 $0.13 - 2.00 $ 0.55 ========= ========= ========= ============ ========== Number of options exercisable at December 31, 1999 1 272 082 255 700 1 527 782 $0.13 - 2.00 $ 0.55 ========= ========= ========= ============ ========== Number of options exercisable at December 31, 2000 1 422 532 257 200 1 679 732 $0.13 - 2.00 $ 0.55 ========= ========= ========= ============ ==========
At December 31, 2000 and 1999 respectively, 355,768 and 414,518 share options were available for future grant under the Plan. The following table summarizes additional information regarding all stock options outstanding at December 31, 2000:
* * Number Weighted-Average Weighted Number Weighted Exercise Outstanding at Remaining Average Exercisable at Average Prices December 31, 2000 Contractual Life Exercise Price December 31, 2000 Exercise Price ------ ----------------- ---------------- -------------- ----------------- -------------- $ 0.13 - 0.38 1 203 232 6.0 years $ 0.06 1 059 232 $ 0.16 0.57 - 1.00 1 583 200 8.5 years 0.62 1 503 000 0.65 1.02 - 1.50 283 000 5.2 years 1.17 255 500 1.18 1.56 - 2.00 75 500 3.0 years 1.87 75 500 1.87 2.58 44 545 10.0 years 2.58 44 545 2.58 --------- --------- 3 189 477 2 937 777 ========= =========
* Includes 1,258,045 stock options and warrants discussed in Notes 4 and 5. The Financial Accounting Standards Board issued statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-based Compensation" which recommends, but does not require, measuring compensation cost for stock options based on the fair value of the options at the grant date. The Company has elected not to adopt SFAS 123 but continues to apply Accounting Principles Board Opinion No. 25 and related Interpretations in accounting for the Plan and other stock option activity. 25 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== (Continued) NOTE 7 - STOCK OPTIONS (CONTINUED) Had the Company measured compensation cost based on the fair value of the options at the grant date for 2000 and 1999 consistent with the method prescribed by SFAS 123, the Company's net income (loss) and earnings per common share would have been reduced to the pro forma amounts indicated below: 2000 1999 ---- ---- Net income (loss) As reported $ (4 013) $ 1 152 749 Pro forma (19 564) 1 060 032 Basic and diluted earnings As reported (.02) .09 (loss) per common share Pro forma (.02) .08 The fair value of each option grant was estimated at the date of the grant using the Black-Scholes option pricing model with the following assumptions for 2000 and 1999: risk-free interest rate of 5.5% and 5.3%; no dividend yield; expected life of 10 and 5 years; and volatility of 99% and 84%. During the initial phase-in period of applying SFAS 123 for pro forma disclosure purposes, the results may not be representative of the effects on reported net income for future years because options vest over several years and additional grants generally are made each year. NOTE 8 - COMMITMENTS The Company leases office space from unrelated entities under operating leases expiring through 2003. Future minimum lease payments under the non-cancelable leases as of December 31, 2000 are approximately as follows: Year Amount ---- ------ 2001 $ 48 400 2002 49 500 2003 40 100 ----------- $ 138 000 Total rent expense for the years ended December 31, 2000 and 1999 was approximately $24,000 and $32,000, respectively. 26 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== (Continued) NOTE 9 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONTINGENCIES In the normal course of business, the Company's client activities through its clearing broker involve the execution, settlement, and financing of various client securities transactions. These activities may expose the Company to off-balance sheet risk. In the event the client fails to satisfy its obligations, the Company may be required to purchase or sell financial instruments at prevailing market prices in order to fulfill the client's obligations. In the Company's investment activities, the Company purchases securities for its own account and may incur losses if the market value of the securities declines subsequent to December 31, 2000. The Company's revenues are primarily derived from a percentage of the assets under management and performance fees based on the appreciation of those assets. Assets under management are impacted by both the extent to which the Company attracts new or loses existing clients and the appreciation or depreciation of the U.S. and international equity and fixed income markets. A downturn in general economic conditions could cause investors to cease using the services of the Company. The Company's financial instruments, including cash and cash equivalents, receivables and other assets, are carried at amounts that approximate fair value. The Company's marketable securities are carried at the December 31, 2000 market value. Payables and other liabilities are carried at amounts that approximate fair value. The Company has a substantial portion of its assets on deposit with banks and brokers. Assets deposited with banks and brokers are subject to credit risk. In the event of a bank's or broker's insolvency, recovery of Company assets on deposit may be limited to account insurance or other protection afforded such deposits. The Securities and Exchange Commission ("SEC") has completed an inspection of the Company's investment advisory and broker-dealer operations. As a result of the inspection, certain issues arose regarding possible violations. Management of the Company does not expect the resolution of this matter to have a material adverse effect on the Company's operations. 27 EX-3.1 2 ex31-301.txt ARTICLES OF INCORPORATON AND AMENDMENTS ARTICLES OF INCORPORATION OF CHRISTIAN PURCHASING NETWORK, INC. FIRST: The name of the Corporation is CHRISTIAN PURCHASING NETWORK, INC. (the "Corporation"). SECOND: The duration of the Corporation is perpetual. THIRD: The Corporation is organized for the purpose of transacting any and all lawful business for which corporations may be formed under Chapter 607, of the Florida General Corporation act, as amended from time to time. FOURTH: The Corporation is authorized to issue 20,000,000 shares of common stock, $.001 par value, and 5,000,000 shares of preferred stock, $.O1 par value. The preferred stock may be issued from time to time in series, with such designations, preferences, conversion rights, cumulative, relative, participating, optional or other rights, qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions providing for the issuance of such preferred stock, adopted by the Board of Directors' pursuant to the authority granted in this Articles. FIFTH: The street address of the initial registered office of the Corporation is: Court House Center, 175 N.W. First Avenue, Suite 2000, Miami, Florida 33128-9965 and the name of the initial registered agent of the Corporation at that address is: James S. Cassel, P.A. SIXTH: The Corporation shall have one director initially and the number of directors may be increased or diminished from time to time as provided in the Bylaws but shall never be less than one. The name and address of the initial director of the Corporation is: Thomas J. McElheny, 4672 McIntosh Lane, Sarasota, Florida 34232. SEVENTH: The name and address of the incorporator of the Corporation is: James S. Cassel, Broad and Cassel, Court House Center, 175 N.W. First Avenue, Suite 2000, Miami, Florida 33128-9965. EIGHTH: The Corporation shall indemnify, or advance expenses to, to the fullest extent authorized or permitted by the Florida General Corporation Act, any person made, or threatened to be made, a party to any action, suit or proceeding by reason of the fact that he (i) is or was a director of the Corporation; (ii) is or was serving at the request of the Corporation as a director of another corporation; (iii) is or was an officer of the Corporation, provided that he is or was at the time a director of the Corporation; or (iv) is or was serving at the request of the Corporation as an officer of another corporation, provided that he is or was at the time a director of the Corporation or a director of such other corporation, serving at the request of the Corporation. Unless otherwise expressly prohibited by the Florida General Corporation Act, and except as otherwise provided in the foregoing sentence, the Board of Directors of the Corporation shall have the sole and exclusive discretion, on such terms and conditions as it shall determine, to indemnify, or advance expenses to, any person made, or threatened to be made, a party to any action, suit, or proceeding by reason of the fact that he is or was an officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as an officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. No person falling within the purview of the foregoing sentence may apply for indemnification or advancement of expenses to any court of competent jurisdiction. NINTH: The Corporation expressly elects not to be governed by Florida Statute 607.108, as amended from time to time, relating to affiliated transactions. TENTH: The Corporation expressly elects not to be governed by Florida Statute 607.109, as amended from time to time, relating to control share acquisitions. IN WITNESS WHEREOF, the undersigned subscriber as executed these Articles of Incorporation this 11th day of May, 1989. /s/ James S. Cassel ----------------------------------- James S. Cassel, Incorporator -2- STATE OF FLORIDA ) ) SS: COUNTY OF DADE ) BEFORE ME, a notary public authorized to take acknowledgments in the State and County set above, personally appeared JAMES S. CASSEL, known to me and known by me to be the person who executed the .foregoing Articles of Incorporation, and he acknowledged before me that he executed those Articles of Incorporation. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, in the State and County aforesaid, this 11th day of May, 1989. /s/ ----------------------------- Notary Public, State of Florida at Large My Commission Expires: Notary Public State of Florida My Commission Expires OCT. 15, 1990 -3- ACCEPTANCE OF APPOINTMENT OF REGISTERED AGENT I hereby accept the appointment as registered agent contained in the foregoing Articles of Incorporation and state that I am familiar with and accept the obligations of Section 607.325 of the Florida Statutes. /s/ James S. Cassel ------------------------------ James S. Cassel -4- State of Florida [LOGO] Department of State I certify that the attached is a true and correct copy of the Articles of Incorporation of CHRISTIAN PURCHASING NETWORK, INC., a corporation organized under the Laws of the State of Florida, filed on May 18, 1989, as shown by the records of this office. The document number of this corporation is K89077. Given under my hand and the Great Seal of the State of Florida, at Tallahassee, the Capital, this the 18th day of May, 1989. [SEAL] /s/ Jim Smith Jim Smith Secretary of State CERTIFICATE OF DESIGNATIONS, POWERS, PREFERENCES AND RIGHTS OF PREFERRED SHARES OF CHPISTIAN PURCHASING NETWORK, INC., A FLORIDA CORPORATION Filed pursuant to ss.607.047 of the Florida General Corporation Act The undersigned, Thomas J. McElheny, Chairman of Christian Purchasing Network, Inc. (the "Company"), a Florida corporation, pursuant to the provisions of ss.607.047 of the Florida General Corporation Act, does hereby state and certify that the Board of Directors, by written consent pursuant to ss.607.134, Florida Statutes, duly adopted as of the date hereof the following resolution providing for the issue of a $1.00 Convertible Preferred Stock, Series 1989 (as hereinafter defined) and further providing for the designations, powers, preferences, and relative, participating, optional and other special rights thereof, and the qualifications, limitations or restrictions thereof, all in accordance with the provisions of ss.607.047 of the Florida General Corporation Act: RESOLVED, that of the 5,000,000 shares of Preferred Stock authorized, 300,000 shares shall be designated $1.00 Convertible Preferred Stock, Series 1989 and shall have the rights and preferences as set forth in the attached "Statement of Designations, Powers, Preferences and Rights". IN WITNESS WHEREOF, this Certificate has been signed by -1- Thomas J McElheny, Chairman of the Company, this day of November, 1989. /s/ Thomas J. McElheny ------------------------------ Thomas J. McElheny, Chairman ATTEST: By: /s/ J. Melvin Stewart ---------------------------------- J. Melvin Stewart, Secretary STATE OF FLORIDA ) ) SS: COUNTY OF ____ ) BEFORE ME, a Notary Public, authorized to take acknowledgements in the State and County set above, personally appeared Thomas J. McElheny known to me and known by me to be one of the persons who executed the foregoing statement and he acknowledged before me that he executed the statement. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, in the State and County aforesaid, this 6 day of November, 1989. /s/ --------------------------- Notary Public State of Florida My Commission Expires: [illegible] -2- STATEMENT OF DESIGNATIONS, POWERS PREFERENCES AND RIGHTS OF $1.00 CONVERTIBLE PREFERRED STOCK, SERIES 1989 OF CHRISTIAN PURCHASING NETWORK, INC. A. Designation. An aggregate of 300,000 shares of the authorized but unissued shares of Preferred Stock of Christian Purchasing Network, Inc. (the "Company"), par value $.01 per share (the "Preferred Stock") is hereby designated as "$1.OO Convertible Preferred, Stock, Series 1989" (hereinafter referred to as "Series 1989. Preferred Stock"). B. Dividend Rate. The holders of record of shares of the Series 1989 Preferred Stock shall be entitled to receive, out of funds legally available therefor, dividends in cash equal to 12% per annum of the face amount of the Series 1989 Preferred Stock. Dividends shall be cumulative. C. Voting Rights. The holders of shares of Series 1989 Preferred Stock shall be entitled to vote upon any matter relating to the business or affairs of the Company or for any other purpose in the amount of one vote per share with the Series 1989 Preferred Stock and the Common Stock voting as a single class for voting purposes. D. Conversion Rights. The shares of Series 1989 Preferred Stock shall be convertible, in whole or in part, at the option of the holders thereof, at any time after June 1, 1991 at the office of any duly appointed transfer agent for the Series 1989 Preferred Stock, and at such other office or offices, if any, as the Board of Directors of the Company may determine, into fully paid and non-assessable shares of Common Stock of the Company at the conversion price of one share of Common Stock for each One Dollar and Thirty-Nine Cent ($1 39) of face amount of Series 1989 Preferred Stock. Unpaid and accrued dividends shall be credited to the conversion price. The rate at which the Common Stock shall be deliverable in exchange for shares of Series 1989 Preferred Stock upon conversion thereof is hereinafter referred to as the "conversion rate" for the Series 1989 Preferred Stock. The conversion rate shall be subject to adjustment from time to time in certain instances as hereinafter provided, except that no adjustment shall be made unless by reason of the happening of any one or more of the events hereinafter specified, such adjustment would require an increase or decrease of at least 1% in such rates. Any adjustment of less than 1% that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, together with any adjustment or adjustments so carries forward, amounts to 1% or more. Before any holder of Series 1989 Preferred Stock shall be entitled to convert the same as provided herein, he shall surrender the certificate or certificates for such Series 1989 Preferred Stock at the Company's duly -1- appointed transfer agent, or at the office of the Company if a transfer agent has not been appointed, which certificate or certificates shall be duly endorsed to the Company or in blank or accompanied by proper instruments of transfer to the Company or in blank, unless the Company shall waive such requirement, and shall give written notice to the Company at the aforesaid offices to convert said Series 1989 Preferred Stock, and shall state writing therein the name or names in which he wishes the certificate or certificates for Common Stock to be issued. The Company will as soon as practicable after such surrender of certificates for Series 1989 Preferred Stock accompanied by the written notice and the statement above prescribed, issue and deliver at the office of any transfer agent appointed as aforesaid, or at such other office or offices, if any, to the person for whose account such Series 1989 Preferred Stock was so surrendered, or to his nominee or nominees, certificates for the highest number of whole shares of Common Stock, as the case may be, to which he shall be entitled as aforesaid, with no cash adjustment for any fraction of a share in excess of the number of whole shares of Common Stock into which the surrendered Series 1989 Preferred Stock are converted. Subject to the following provisions of this paragraph, such conversion shall be deemed to have been made as of the date of such surrender of the Series 1989 Preferred Stock to be converted and the rights of the converting holder of the shares of the Series 1989 Preferred Stock as such holder shall cease and the person or persons in whose name or names the certificates for shares of Common Stock, as the case may be, upon conversion of such Series 1989 Preferred Stock are to be issued shall be treated for all purposes as the record holder or holders of such Common Stock at the close of business on such date. The Company shall not be required to convert, and no surrender of Series 1989 Preferred Stock shall be effective for that purpose, while the stock transfer books of the Company are closed for any purpose; but the surrender of Series 1989 Preferred Stock for conversion during any period while such books are so closed shall become effective for conversion immediately upon the reopening of such books, as if the conversion had been made on the date such Series 1989 Preferred Stock was surrendered, and at the conversion rate in effect at the date of such surrender. In the event of any liquidation, dissolution or winding up of the affairs of the Company, all conversion rights of the holders of Series 1989 Preferred Stock shall terminate on the date fixed by resolution of the Board of Directors of the Company, which date shall not be later than 10 days nor earlier than 20 days prior to such liquidation, dissolution or winding up. (1) If the Company shall at any time pay a dividend on its Common Stock in Common Stock, subdivide its outstanding shares of Common Stock into a larger number of shares or combine its outstanding shares of Common Stock into a smaller number of shares by reclassification or otherwise, the conversion rates in effect immediately prior thereto shall be adjusted so that each share of Series 1989 Preferred Stock shall thereafter be convertible into the number of shares of Common Stock which the holder of a share of Series 1989 Preferred Stock would have been entitled to receive after the happening of any of the events described above had such share been converted immediately prior to the happening of such event. An adjustment made pursuant to this subparagraph (l) -2- shall become effective retroactively to the record date in the case of a dividend and shall become effective on the effective date in the case of a subdivision or combination. (2) If the Company shall distribute to all holders of shares of Common Stock any assets, any rights to subscribe (other than those referred to in the paragraph immediately preceding subparagraph (1) above) or any evidence of indebtedness or other securities of the Company, then in each such case the number of shares of Common Stock into which each share of Series 1989 Preferred Stock shall thereafter be convertible shall be determined by multiplying the number of shares of Common Stock into which each share of Series 1989 Preferred Stock was theretofore convertible on the day immediately preceding the record date for the determination of the stockholders entitled to receive such distribution by a fraction, the numerator of which shall be the average market price per share (determined as provided in subparagraph (3) below) of the Common Stock on such record date and the denominator of which shall be such average market price per share less the then fair market value (as determined, in the case of assets other than cash, in a resolution adopted by the Board of Directors of the Company, which shall be conclusive evidence of such fair market value) of the portion of the assets or evidence of indebtedness or securities so distributed or of such subscription rights applicable to one (1) share of Common Stock. Such adjustment shall become effective retroactively immediately after the record date. (3) For the purpose of any computation under this paragraph D, the average market price per share of Common Stock on any date shall be the average of the closing bid and asked price on the day prior to the date in question. The bid and asked prices shall be those prices on the National Association of Securities Dealers Quotation System or, if the Common Stock is not traded on such system, on the National Association of Securities Dealers "pink sheets", or if not listed on the "pink sheets", the average of the closing bid and asked prices as furnished by a New York Stock Exchange member firm selected from time to time by the Board of Directors of the Company for that purpose, or if there is no market price available, at the rate determined by the Company's Board of Directors. (4) In case of any capital reorganization or any reclassification of the capital stock of the Company or in case of the consolidation or merger of the Company with another corporation (other than a merger not involving any reclassification, conversion, or exchange of Common Stock, in which the Company is the surviving corporation), or in case of any sale or conveyance of all or substantially all of the property of the Company, each share of Series 1989 Preferred Stock shall thereafter be convertible into the number of shares of stock (of any class or classes) or other securities or property receivable upon such capital reorganization, reclassification of capital stock, consolidation, merger, sale or conveyance, as the case may be, by a holder of the number of shares of Common Stock into which such share of Series 1989 Preferred Stock was convertible immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger, sale or conveyance; and, in any case, appropriate adjustment (as determined by the -3- Board of Directors) shall be made in the application of the provisions herein set forth with respect to rights and interests thereafter of the holder of the Series 1989 Preferred Stock, to the end that the provisions set forth herein (including the specified changes in and other adjustments of the conversion rates) shall thereafter be applicable, as near as reasonably practical, in relation to any share of stock or other- securities or other property thereafter deliverable upon the conversion of the Series 1989 Preferred Stock. (5) Whenever the conversion rate is adjusted as herein provided, the Company shall forthwith file with any transfer agent or agents for the Series 1989 Preferred Stock appointed as aforesaid a certificate signed by the President or one of the Vice Presidents of the Company and by its Treasurer or an Assistant Treasurer, stating the adjusted conversion rate determined as provided in this paragraph D, and in reasonable detail the facts requiring such adjustment. Such transfer agents shall be under no duty to make any inquiry or investigation as to the statements contained in any such certificate or as to the manner in which any computation was made, but may accept such certificate as conclusive evidence of the statements therein contained, and each transfer agent shall be fully protected with respect to any and all acts done or action taken or suffered by or suffered by it in reliance thereon. No transfer agent in its capacity as transfer agent shall be deemed to have any knowledge with respect to any change of capital structure of the Company unless and until it receives a notice thereof pursuant to the provisions of this subparagraph (5) and in the absence of any such notice each transfer agent may conclusively assume that there has been no such change. The Company shall at all times reserve and keep available, out of its authorized and unissued or treasury shares of Common Stock, or other stock or securities deliverable upon conversion pursuant to this paragraph D, solely for the purpose of effecting the conversion of the Series 1989 Preferred Stock, such number of shares as shall from time to time be sufficient to effect the conversion of all shares of Series 1989 Preferred Stock from time to time outstanding. The Company shall from time to time, in accordance with the laws of Florida, increase the authorized amount of its Common Stock if at any time the number of shares of Common Stock remaining unissued or treasury shares of Common Stock shall not be sufficient to permit the conversion of all the then outstanding Series 1989 Preferred Stock. The Company will pay any and all issue and other taxes that may be payable in respect of any issue of delivery shares of Common Stock on conversion of Series 1989 Preferred Stock pursuant thereto. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of Common Stock in a name other than that in which the Series 1989 Preferred Stock so converted was registered, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Company the amount of any such tax, or has established, to the satisfaction of the Company, that such tax has been paid. -4- E. Liquidation Rights. In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, before distribution or payment shall be made to the holder of any Common Stock or of any stock ranking Junior to the Series 1989 Preferred Stock in respect of distribution of assets, the holders of the Series 1989 Preferred Stock shall be entitled to receive $1.00 per share. In the event the assets of the Company available for distribution to the holders of shares of the Series 1989 Preferred Stock upon dissolution, liquidation or winding up of the Company shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to the immediately preceding paragraph, no such distribution shall be made on account of any shares of any other class or series of capital stock of the Company ranking on a parity with or junior to the shares of the Series 1989 Preferred Stock, except that a proportionate distributive amount shall be paid on account of the shares of the Series 1989 Preferred Stock and any other class of shares ranking on a parity with the Series 1989 Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation or winding up. F. No Sinking Fund. The shares of Series 1989 Preferred Stock shall not be entitled to the benefit of any sinking fund to be applied to the purchase or redemption of such shares. C. Status of Converted Shares. Any shares of the Series 1989 Preferred Stock that at any time shall have been converted pursuant to paragraph D or that have been otherwise repurchased by the Company, shall after such conversion or repurchase have the status of authorized but unissued shares of Preferred Stock, without designation as to series until such shares are once more designated as part of a particular series by the Board of Directors. H. Optional Redemption. The Series 1989 Preferred Stock may be redeemed by the Company, at the Company's sole option, in whole or in part, any time after June 1, 1991. The Series 1989 Preferred Stock shall be redeemed at the redemption price of $1.00 per share plus an amount equal to any dividends declared on the Common Stock and unpaid on the shares to be redeemed through the redemption date. The shares to be redeemed shall be selected in such a manner as determined by the Board of Directors. Notice of any redemption, specifying the time and place of redemption, shall be mailed or caused to be mailed by the Company addressed to each holder of record of Series 1989 Preferred Stock to be redeemed at his last address as the same appears on the books and records of the Company, at least thirty (30) days prior to the redemption date. During the interim between the notice of redemption and the redemption date, the shares may be converted into Common Stock in accordance with the procedures specified above. If such notice of redemption shall have been duly mailed, or irrevocable instructions to effect such mailing shall have been given to the transfer agent or agents for such stock, and if on or before the redemption date, all funds necessary -5- for such redemption shall have been set aside by the Company in trust for the account of the holders of shares of Series 1989 Preferred Stock to be redeemed so as to be available therefore then from and after the mailing of such notice or the giving of such irrevocable instruments and the setting aside of such funds notwithstanding that any certificate for shares of Series 1989 Preferred Stock so called for redemption shall not have surrendered for cancellation, the shares of Series 1989 Preferred Stock represented thereby shall no longer be deemed outstanding and the holder of such certificate or certificates shall have with respect to such shares of Series 1989 Preferred Stock no rights in or respect to the Company except the right to receive the redemption price thereof without interest upon the surrender of such certificate or certificates and after the redemption dates such shares of redeemable preferred stock shall not be transferable on the books and records of the Company. -6- [SEAL] FLORIDA DEPARTMENT OF STATE Jim Smith Secretary of State November 22, 1989 BROAD AND CASSEL KAYLA J. BISHOP 175 NW FIRST AVE., SUITE 2000 MIAMI, FL 33128 Re: Document Number K89077 Dear Ms. Bishop: This will acknowledge receipt of your Amendment to the Articles of Incorporation for CHRISTIAN PURCHASING NETWORK, INC., a Florida corporation, which was filed on November 17, 1989. We have received your remittance totaling $50.00. Enclosed please find your certificate(s). Should you have any questions regarding this matter please telephone (904) 487-6050, the Amendment Filing Section. TAWANA MCCLELLAN Division of Corporations Division of Corporations, PO Box 6327, Tallahassee, Florida 32314 CR2E042 State of Florida [SEAL] Department of State I certify that the attached is a true and correct copy of the Articles of Amendment filed on November 17, 1989, to Articles of Incorporation for CHRISTIAN PURCHASING NETWORK, INC., a Florida corporation, as shown by the records of this office. The document number of this corporation is K89077. Given under my hand and the Great Seal of the State of Florida at Tallahassee, the Capital, this the 22nd day of November 1989 [SEAL] /s/ Jim Smith Jim Smith Secretary of State ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF CHRISTIAN PURCHASING NETWORK, INC. The undersigned, President of Christian Purchasing Network, Inc., a Florida corporation (the "Corporation"), desiring to amend the Articles of Incorporation of the Corporation pursuant to Section 607.1001 of the Florida Business Corporation Act, hereby state as follows: 1. The name of the Corporation is Christian Purchasing Network, Inc. 2. The Articles of Incorporation of the Corporation are amended by adding the following Article Eleven in its place and stead: Eleven: Effective as of the annual meeting of shareholders in 1992, the Board of Directors shall be divided into three classes, designated Class I, Class II and Class III, as nearly equal in number as possible and the term of office of directors of one class shall expire at each annual meeting of shareholders, and in all cases as to each director, until his successor shall be elected and shall qualify, or until his earlier resignation, removal from office, death or incapacity. Members of all three classes will be elected at the annual meeting of shareholders in 1992. Additional directorships resulting from an increase in number of directors shall be apportioned among the classes as equally as possible. Vacancies, including vacancies created from an increase in the size of the Board of Directors, shall be filled by the affirmative vote of a majority of the entire Board. The initial term of office of directors of Class I shall expire at the annual meeting of shareholders in 1993; that of Class II shall expire at the annual meeting in 1994; and that of Class III shall expire at the annual meeting in 1995. At each annual meeting of shareholders, the number of directors equal to the number of directors of the class whose term expires at the time of such meeting (or, if less, the number of directors properly nominated and qualified for election) shall be elected to hold office until the third succeeding annual meeting of shareholders after their election. 3. The amendment to the Articles of Incorporation of the Corporation was approved by a majority of the shareholders entitled to vote thereon at the Annual Meeting of Shareholders held on May 1, 1992. There being only one voting group, the number of votes cast for the amendment by the holders of common stock was sufficient for approval. IN WITNESS WHEREOF, the undersigned have executed this Certificate this 1st day of May 1992. /s/ Thomas J. McElheny ------------------------------ Thomas J. McElheny, President ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF CHRISTIAN PURCHASING NETWORK, INC., A FLORIDA CORPORATION The undersigned, Thomas J. McElheny, Chairman of the Board of Christian Purchasing Network, Inc. (the "Company"), a Florida corporation, desiring to amend the Articles of Incorporation of the Company pursuant to the Florida Business Corporation Act, hereby states as follows: 1. The name of the Corporation is Christian Purchasing Network, Inc. 2. Pursuant to the provisions of ss.607.0602 of the Florida Business Corporation Act, the Articles of Incorporation of the Company are hereby amended to provide for the designation of 3,000,000 shares of the Company's Preferred Stock as 8% Convertible Redeemable Cumulative Preferred Stock, having the rights and preferences as set forth in the attached "Statement of Designations, Powers, Preferences and Rights of 8 % Convertible Redeemable Cumulative Preferred Stock of Christian Purchasing Network, Inc." attached hereto as Exhibit A. 3. The foregoing amendment was duly adopted by the Board of Directors on December 30, 1992. Shareholder approval of this Amendment is not required. Dated: January 5, 1993. By: /s/ Thomas J. McElheny ------------------------------ Thomas J. McElheny, Chairman STATEMENT OF DESIGNATIONS, POWERS, PREFERENCES AND RIGHTS OF 8% CONVERTIBLE REDEEMABLE CUMULATIVE PREFERRED STOCK OF CRHISTIAN PURCHASING NETWORK, INC. 1. DESIGNATION. An aggregate of 3,000,000 shares of the authorized but unissued shares of Preferred Stock of Christian Purchasing Network, Inc. (the "Company"), per value $.01 per share (the "Preferred Stock") is hereby designated as "8% Convertible Redeemable Cumulative Preferred Stock" (hereinafter referred to as the "8% Preferred Stock"). 2. RISK. All shares of 8% Preferred Stock shall rank prior to all of the Corporation's Common Stock, per value $.001 per share (the "Common Stock"), now or hereafter issued, both as to payment of dividends and as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. 3. DIVIDEND RATE. The holders of the 8% Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds at the time legally available therefor, dividends at the rate of $.06 per annum per share, and no more, which shall be fully cumulative, shall accrue without interest from the date of first issuance and shall be payable to each semi annually in arrears on June 30 and December 31 of each year commencing June 30, 1993 (except that if any such date is a Saturday, Sunday or legal holiday than such dividend shall be payable on the next day that is not a Saturday, Sunday or legal holiday) to holders of record as they appear on the stock books of the Corporation on such record dates, not more than 60 days nor less than 10 days preceding the payment dates for such dividends, as are fixed by the Board of Directors. For purposes hereof, the term "legal holiday" shall mean any day on which banking institutions are authorized to close in the City of New York. Subject to the next paragraph of this Section 3, dividends on account of arrears for any past dividend period may be declared and paid at any time, without reference to any regular dividend payment date. The amount of dividends payable per share of 8% Preferred Stock for each semi-annual dividend period shall be computed by dividing the annual dividend by two. The amount of dividends payable for the initial dividend period and any period that differs from a full semi-annual dividend period shall be computed on the basis of a 360-day year of twelve 30-day months. No dividends or other distributions, other than dividends payable solely in shares of Common Stock or other capital stock of the Corporation ranking junior as to dividends and as to liquidation rights to the 8% Preferred Stock, shall be declared, paid or set apart for payment on, and no purchase, redemption or other acquisition shall be made by the Corporation of, any shares of Common Stock or other capital stock of the Corporation residing junior as to dividends to the 8% Preferred Stock, including the full dividend for the then-current semi-annual dividend period, shall have been paid or declared and set apart for payment. If at any time dividends on any capital stock of the Corporation ranking senior as to dividends to the 8% Preferred Stock (the "Senior Dividend Stock") shall be in default, in whole or in part, then (except to the amount allowed by the terms of such Senior Dividend Stock) no dividend shall be paid or declared and set apart for payment on the 8% Preferred Stock unless any and all accrued and unpaid dividends with respect to the Senior Dividend Stock, including the full dividends for the then current dividend period, shall have been paid or declared and set apart for payment, without interest. No full dividends shall be paid or declared and set apart for payment on any class or series of the Corporation's capital stock ranking, as to dividends, on a parity with the 8% Preferred Stock (the "Parity Dividend Stock") for any period unless full cumulative dividends have been, or contemporaneously are, paid or declared and set apart for such payment on the 8% Preferred Stock for all dividend payment periods terminating on or prior to the date of payment of such full cumulative dividends. No full dividends shall be paid or declared and set apart for payment on the 8% Preferred Stock for any period unless full cumulative dividends have been, or contemporaneously are, paid or declared and set apart for payment on the Parity Dividend Stock for all dividend periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not paid in full upon the 8% Preferred Stock and the Parity Dividend Stock, all dividends paid or declared and set aside for payment upon shares of 8% Preferred Stock and the Parity Dividend Stock shall be paid or declared and set aside for payment pro rata so that the amount of dividends paid or declared and set aside for payment per share on the 8% Preferred Stock and the Parity Dividend Stock shall in all cases bear to each other the same ratio that accrued and unpaid dividends per share on the shares of 8% Preferred Stock and the Parity Dividend Stock bear to each other. Any reference to "distribution" contained in this Section 3 shall not be deemed to include any distribution made in connection with any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. 4. NO VOTING RIGHTS. The holders of shares of 8% Preferred Stock shall have no voting rights. 5. CONVERSION RIGHTS. The shares of 8% Preferred Stock shall be convertible, in whole or in part, at the option of the holders thereof, at any time after their issuance, at the office of any duly appointed transfer agent for the Preferred Stock, and at such other office or offices, if any, as the Board of Directors of the Company may determine, into fully paid and non-useable shares of Common Stock of the Company at the rate of one share of Common Stock for each $3.50 in Pace Amount of the 8% Preferred Stock. ("Face Amount" meaning for all purposes herein, the offering price per share of Preferred Stock of $1.00) Unpaid and accrued dividends shall be credited to the conversion price. The rate at which the Common Stock shall be deliverable in exchange for shares of 8% Preferred Stock upon conversion thereof is hereinafter referred in as the "conversion rule" for the 8% Preferred Stock. The conversion rule shall be subject to adjustment from time to time in certain instances as hereinafter provided, except that no 2 adjustment shall be made unless by reason of the happening of any one or more of the events hereinafter specified, such adjustment would require an increase or decrease of at least 1% in such rules. Any adjustment of less than 1% that would otherwise be required than to be made shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, together with any adjustment or adjustments so carried forward, amounts to 1% or more. Before any holder of 8% Preferred Stock shall be entitled to convert the same as provided herein, he shall surrender the certificate for certificates for such 8% Preferred Stock at the Company's duly appointed transfer agent, or at the office of the Company if a transfer agent has not been appointed, which certificate or certificates shall be duly endorsed to the Company or in blank or accompanied by proper instruments of transfer to the Company or in blank, unless the Company shall waive such requirement, and shall give written notice to the Company at the aforesaid offices to convert said Preferred Stock, and shall state in writing therein the name or names in which he wishes the certificate or certificates for Common Stock to be issued. The Company will be seen as practicable after such surrender of certificates for the 8% Preferred Stock accompanied by the written notice and the statement above prescribed, issue and deliver at the office of any transfer agent appointed as aforesaid, or at such other office or offices, if any, to the person for whose account such 8% Preferred Stock was so surrendered, or to his nominee or nominees, certificates for the highest number of whole shares of Commons Stock, as the case may be, to which he shall be entitled as aforesaid, with no cash adjustment for any fraction of a share in excess of the number of whole shares of Common Stock into which the surrendered 8% Preferred Stock are converted. Subject to the following provisions of this paragraph, such conversion shall be deemed to have been made as of the date of such surrender of the 8% Preferred Stock to be converted and the rights of the converting holder of the shares of the Preferred Stock as such holder shall cease and the person or persons in whose name of names the certificates for shares of Common Stock, as the case may be, upon conversion of such Preferred Stock are to be issued shall be treated for all purposes as the record holder or holders of such Common Stock at the close of business on such date. The Company shall not be required to convert, and no surrender of 8% Preferred Stock shall be effective for that purpose, while the stock transfer books of the Company are closed for any purpose; but the surrender of 8% Preferred Stock for conversion during any period while such books are so closed shall become effective for conversion immediately upon the reopening of such books, as if the conversion had been made on the date such 8% Preferred Stock was surrendered, and at the conversion rate in effect at the date of such surrender. In the event of any liquidation, dissolution or winding up of the affairs of the Company; all conversion rights of the holders of 8% Preferred Stock shall terminate on the date fixed by resolution of the Board of Directors of the Company, which date shall not be later than 10 days nor earlier than 20 days prior to such liquidation, dissolution or winding up. (a) If the Company shall at any time pay a dividend on its Common Stock in Common Stock, subdivide its outstanding shares of Common Stock into a larger number 3 of shares or combine its outstanding shares of Common Stock into a smaller number of shares by reclassification or otherwise, the conversion rates in effect immediately prior thereto shall be adjusted so that each share of 8% Preferred Stock shall thereafter be convertible into the number of shares of Common Stock which the holder of a share of 8% Preferred Stock would have been entitled to receive after the happening of any of the events described above had such share been converted immediately prior to the happening of such event. An adjustment made pursuant to this subparagraph (a) shall become effective retroactively to the record date in the case of a dividend and shall become affective on the effective date in the case of a subdivision or combination. (b) If the Company shall distribute to all holders of shares of Common Stock any names, any rights to subscribe (other than those referred to in the paragraph immediately preceding subparagraph (a) above) or any evidence of indebtedness or other securities of the Company, then in each such case the number of shares of Common Stock into which each share of 8% Preferred Stock shall thereafter be convertible shall be determined by multiplying the number of shares of Common Stock into which each share of Preferred Stock was theretofore convertible on the day immediately preceding the record date for the determination of the stockholders entitled to receive such distribution by a fraction, the numerator of which shall be the average market price per share (determined as provided in subparagraph (c) below) of the Common Stock on such record date and the denominator of which shall be such average market price per share less the then fair market value (as determined, in the case of assets other than cash, in a resolution adopted by the Board of Directors of the Company, which shall be conclusive evidence of such fair market value) of the portion of the assets or evidence of indebtedness of securities so distributed or of such subscription rights applicable to one (1) share of Common Stock. Such adjustment shall become effective retroactively immediately after the record date. (c) For the purpose of any computation under this Paragraph 5, the average market price per share of Common Stock on any date shall be the average of the closing bid and asked price on the day prior to the date in question. The bid and asked prices shall be those prices on the National Association of Securities Dealers Quotation System or, if the Common Stock is not traded on such system, on the National Association of Securities Dealers "pink sheets", or if not listed on the "pink sheets", the average of the closing bid and asked prices as furnished by a New York Stock Exchange member firm selected from time to time by the Board of Directors of the Company for that purpose, or if there is no market price available, at the rate determined by the Company's Board of Directors. (d) In case of any capital reorganization or any reclassification of the capital stock of the Company or is in case of the consolidation or merger of the Company with another corporation (other than a merger not involving any reclassification, conversion, or exchange of Common Stock, in which the Company is the surviving corporation), or in case of any sale or conveyance of all or substantially all of the property of the Company, each share of 8% Preferred Stock shall thereafter be convertible into the number of shares of stock (of any class or classes) or other securities or property receivable upon such capital reorganization, 4 reclassification of capital stock, consolidation, merger, sale or conveyance, as the sum may be, by a holder of the number of shares of Common Stock also which such share of 8% Preferred Stock was convertible immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger, sale or conveyance; and, in any case, appropriate adjustment (as determined by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to rights and interacts thereafter of the holder of the 8% Preferred Stock, to the end that the provisions set forth herein (including the specified changes in and other adjustments of the conversion rates) shall thereafter be applicable, as near as reasonably practical, in relation to any share of stock or other securities or other property thereafter deliverable upon the conversion of the 8% Preferred Stock. (e) Whenever the conversion rule is adjusted as herein provided, the Company shall forthwith file with any transfer agent or agents for the 8% Preferred Stock appointed as aforesaid a certificate signed by the President or one of the Vice Presidents of the Company and by its Treasurer or an Assistant Treasurer, stating the adjusted conversion rule determined as provided in this Paragraph 5, and in reasonable detail the facts requiring such adjustment. Such transfer agents shall be under no duty to make any inquiry or investigation as to the statements contained in any such certificate or as to the manner in which any computation was made, but may accept such certificate as conclusive evidence of the statements therein contained, and each transfer agent shall be fully protected with respect to any and all acts done or action taken or suffered by it to reliance thereon. No transfer agent in its capacity as transfer agent shall be deemed to have any knowledge with respect to any change of capital structure of the Company unless and until received a notice thereof pursuant to the provisions of this Paragraph 5 and in the absence of any such notice each transfer agent may conclusively assume that there has been no such change. The Company shall at all times reserve and keep available, out of its authorized and unissued or treasury shares of Common Stock, or other stock or securities deliverable upon conversion pursuant to this Paragraph 5, solely for the purpose of effecting the conversion of the 8% Preferred Stock, such number of shares as shall from time to time be sufficient to affect the conversion of all shares of Preferred Stock from time to time outstanding. The Company shall from time to time, in accordance with the laws of Florida, increase the authorized amount of its Common Stock if at any time the number of shares of Common Stock remaining unissued or treasury shares of Common Stock shall not be sufficient to permit the conversion of all the then outstanding 8% Preferred Stock. The Company will pay any and all issue and other taxes that may be payable in respect of any issue of delivery of shares of Common Stock on conversion of 8% Preferred Stock pursuant thereto. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of Common Stock in a name other than that in which the 8% Preferred Stock so converted was registered, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Company the amount of any such tax, or has established, to the satisfaction of the Company, that such has been paid. 5 6. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, before any distribution or payment shall be made to the holder of any Common Stock or of any stock ranking junior to the 8% Preferred Stock in respect of distribution of assets, the holders of the 8% Preferred Stock shall be entitled to receive $1.00 per share. In the event the assets of the Company available for distribution to the holders of shares of the 8% Preferred Stock upon dissolution, liquidation or winding up of the Company shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to the immediately preceding paragraph, no such distribution shall be made on account of any shares of any other class or series of capital stock of the Company ranking on a parity with or junior to the shares of the 8% Preferred Stock, except that a proportionate distributive amount shall be paid on account of the shares of the 8% Preferred Stock and any other class of shares ranking on a parity with the 8% Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such dissolution, liquidation or winding up. 7. NO SINKING FUND. The shares of 8% Preferred Stock shall not be entitled to the benefit of any sinking fund to be applied to the purchase or redemption of such shares. 8. STATUS OF CONVERTED SHARES. Any shares of the 8% Preferred Stock that at any time shall have been converted pursuant to Paragraph 5 or the have been otherwise repurchased by the Company, shall after such conversion or repurchase have the status of authorized but unissued shares of Preferred Stock, without designation as to series until such shares are once more designated as part of a particular series by the Board of Directors. 9. MANDATORY CONVERSION. If at any time the closing bid price per share of the Corporation's Common Stock for a period of 30 consecutive trading days exceeds $5.25 per share, then, in such event, the Corporation may at its sole option, upon 30 days' written notice to holders of 8% Preferred Stock, automatically convert the 8% Preferred Stock to Common Stock at the conversion rate. For the purposes of this Section 8, the determination of the closing bid price per share of the Corporation's Common Stock shall be as reported on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the NASDAQ Market System or, if the common Stock is not listed or admitted to trading on any national securities exchange or admitted to trading on any national securities exchange or quoted on the NASDAQ Market System, the average of the low bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Corporation for that purpose. All of the other provisions set forth hereinabove with respect to conversion provisions generally, as set forth in Section 5, including but not limited to the adjustment of the conversion rate in certain events as set forth in Section 5 hereof, shall be applicable hereto in 6 the event the Company exercises its option to cause a mandatory conversion of the Preferred Stock. Not more than 60 nor less than 20 days prior to the date of mandatory conversion, notice by first class mail, postage prepaid, shall be given to the holders of record of the 8% Preferred Stock to be so converted, addressed to such stockholders at their last addresses as shown on the books of the Corporation. Each such notice of mandatory conversion shall specify the date for conversion, the conversion rate and that on and after the date of mandatory conversion, dividends will cease to accumulate on such shares. Any notice which is mailed as herein provided shall be conclusively presumed to have been duly given, whether or not the holder of the 8% Preferred Stock receives such notice; and failure to give such notice by mail, or an defect in such notice to the holders of any shares designated for mandatory conversion shall not affect the validity of the proceedings for the mandatory conversion. On or after the date fixed for mandatory conversion as stated in such notice, such holder of the shares shall be issued a certificate or certificates for the requisite number of shares of Common Stock of the Corporation. 10. NONREDEEMABLE. The 8% Preferred Stock is nonredeemable. 11. PREEMPTIVE RIGHTS. The 8% Preferred Stock is not entitled to any preemptive or subscription right in respect of any securities of the Corporation. 12. SEVERABILITY OF PROVISIONS. Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the amount of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law. 7 ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF CHRISTIAN PURCHASING NETWORK, INC. The undersigned, President and Secretary of Christian Purchasing Network, Inc., a Florida corporation (the "Corporation"), desiring to amend the Articles of Incorporation of the Corporation pursuant to Section 807.1001 of the Florida Business Corporation Act, state as follows: 1. The name of the corporation is Christian Purchasing Network, Inc. 2. The Articles of Incorporation of the Corporation are amended by deleting the first article in its entirety and inserting the following first article in its place and stead: FIRST: The name of the corporation is Jordan American Holdings, Inc. (the "Corporation"). 3. The amendment to the Articles of Incorporation of the Corporation was approved by a majority of the shareholders entitled to vote thereof at the annual meeting of shareholders held on April, 28, 1993. 4. Holders of the Corporation's shares of Common Stock are entitled to vote as a group on this amendment. The number of votes cast by this group was sufficient for the approval of the voting group. IN WITNESS WHEREOF, the undersigned have reviewed this Certificate this 8th day of June, 1993. /s/ Thomas J. McElheny ------------------------------ Thomas J. McElheny, President /s/ Ernest J. Dean, Jr. ------------------------------ Ernest J. Dean, Jr., Secretary ARTICLES OF MERGER OF EQUITY ASSETS MANAGEMENT, INC., a Florida corporation, and JORDAN AMERICAN HOLDINGS, INC., a Florida corporation ------------------------------- Pursuant to the provisions of the Florida Business Corporation Act governing the merger of a domestic corporation with and into a domestic corporation, the undersigned corporations adopt the following Articles of Merger: 1. The names of the merging corporations are Jordan American Holdings, Inc., which is a business corporation organized under the laws of the State of Florida and which shall be the surviving corporation ("Surviving Corporation"), and Equity Assets Management, Inc., which is a business corporation organized under the laws of the State of Florida and the existence of which will cease ("Disappearing Corporation"). 2. The Surviving Corporation will continue its existence as the surviving corporation under its current name pursuant to the provisions of the laws of the State of Florida. 3. The merger shall be effective as of August 1, 1995. 4. The Agreement and Plan of Merger, a copy of which is attached hereto as Exhibit "A", was approved and adopted by the Board of Directors of the Disappearing Corporation and the Board of Directors of the Surviving Corporation by written consents dated July 27, 1995. 5. Shareholder approval of the Agreement and Plan of Merger was not required. IN WITNESS WHEREOF, the duly authorized officers of the constituent corporations have executed these Articles of Merger as of the 27 day of July, 1995. "DISAPPEARING CORPORATION" EQUITY ASSETS MANAGEMENT, INC., a Florida corporation By: /s/ Charles R. Clark --------------------------------- Name: Charles R. Clark ------------------------------- Title: Chief Operating Officer ------------------------------ "SURVIVING CORPORATION" JORDAN AMERICAN HOLDINGS, INC., a Florida corporation By: /s/ Charles R. Clark --------------------------------- Name: Charles R. Clark ------------------------------- Title: Chief Operating Officer ------------------------------ EXHIBIT A AGREEMENT AND PLAN OF MERGER OF JORDAN AMERICAN HOLDINGS, INC. AND EQUITY ASSETS MANAGEMENT, INC. THIS AGREEMENT AND PLAN OF MERGER (the "Agreement and Plan") is entered into this 27 day of July, 1995, by and between JORDAN AMERICAN HOLDINGS, INC., a Florida corporation (the "Surviving Corporation"), and EQUITY ASSETS MANAGEMENT, INC., a Florida corporation (the "Disappearing Corporation"), as approved by the Boards of Directors of said corporations: RECITALS: --------- A. Surviving Corporation is a corporation duly organized and existing under the laws of the State of Florida. B. Disappearing Corporation is a corporation duly organized and existing under the laws of the State of Florida. C. Surviving Corporation is the sole shareholder of Disappearing Corporation. D. Directors of the Disappearing Corporation and the Surviving Corporation believe that the merger of the Disappearing Corporation into the Surviving Corporation would be advantageous and beneficial to the respective shareholders, employees and customers of those corporations. E. Disappearing Corporation and Surviving Corporation have agreed that Disappearing Corporation shall merge into the Surviving Corporation upon the terms and conditions and in the manner set forth in this Agreement and Plan and in accordance with the applicable laws of the State of Florida. NOW, THEREFORE, in consideration of the mutual covenants, agreements, provisions, grants, guarantees and representations contained in this Agreement and Plan and in order to consummate the transaction described above, Disappearing Corporation and Surviving Corporation, the constituent corporations to this Agreement and Plan, agree as follows: 1. MERGER. Disappearing Corporation shall be merged with and into surviving Corporation. 2. FILING AND EFFECTIVE TIME. Surviving Corporation shall file with the Florida Department of State Articles of Merger pursuant to Section 607.1105 of the Florida Business Corporation Act (the "Florida Act"). The effective date of the merger (the "Effective Date") shall be August 1, 1995. 3. SURVIVING CORPORATION. The Surviving Corporation shall continue its existence under its current name pursuant to the provisions of the Florida Act, and shall succeed without other transfer to all the rights and properties of the Disappearing Corporation and shall be subject to all the debts and liabilities of the Disappearing Corporation in the same manner as if Surviving Corporation had incurred them in accordance with the laws of the State of Florida. 4. DISAPPEARING CORPORATION. The separate existence of the Disappearing Corporation shall cease upon the Effective Date of the merger in accordance with the provisions of the laws of the State of Florida. 5. TERMS OF THE MERGER. Each share of common stock of the Surviving Corporation outstanding immediately prior to the merger, and all rights in respect thereof, shall not be changed as a result of the merger and shall continue to be outstanding. On the Effective Date, each share of common stock of the Disappearing Corporation outstanding immediately prior to the merger, and all rights in respect thereof, shall cease to exist and be cancelled. The sole shareholder of the Disappearing Corporation is the Surviving Corporation. 6. ARTICLES OF INCORPORATION. The Articles of Incorporation of the Surviving Corporation as now in force and effect shall remain in force and effect until changed, altered, or amended as therein provided and in the manner prescribed by the provisions of the Florida Act. 7. BYLAWS. The Bylaws of the Surviving Corporation as now in force and effect shall remain in force and effect until changed, altered, or amended as therein provided and in the manner prescribed by the provisions of the Florida Act. 8. DIRECTORS AND OFFICERS. The directors of the Surviving Corporation upon the Effective Date shall continue to be the directors of the Surviving Corporation, all of whom shall hold their directorships until the election and qualification of their respective successors or until their tenure is otherwise terminated in accordance with the Bylaws of the Surviving Corporation. The officers of the Surviving Corporation upon the Effective Date shall be as follows: W. Neal Jordan Chairman of the Board, President and Chief Executive Officer Charles R. Clark Senior Vice President and Chief Operating Officer Frederick A. Whittlesey Vice President - Finance and Administration, Treasurer and Secretary All of the foregoing officers shall hold their positions until the election and qualification of their respective successors or until their tenure is otherwise terminated in accordance with the Bylaws of the Surviving Corporation. 2 Disappearing Corporation and Surviving Corporation, the proper officers of each corporation shall, and are hereby authorized and directed to, cause to be executed and filed such documents prescribed by the laws of the State of Florida and to perform all such further acts as the same may be necessary or proper to render effective the merger contemplated by this Agreement and Plan. 10. AMENDMENT. This Agreement and Plan may be amended with the approval of the Boards of Directors of the Surviving Corporation and the Disappearing Corporation at any time prior to the filing of this Agreement and Plan with the Florida Department of State. 11. GOVERNING LAW. This Agreement and Plan shall be construed in accordance with and governed by the laws of the State of Florida, without resort to choice of law principles. 12. FURTHER ASSURANCES. Each of the parties hereto shall take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable to effectuate the merger. 13. COUNTERPARTS. This Agreement and Plan may be executed in one or more counterparts, each of which will be deemed an original and all of which together will contribute one and the same instrument. IN WITNESS WHEREOF, the duly authorized officers of the constituent corporations have executed this Agreement and Plan as of the date first above written. "DISAPPEARING CORPORATION" EQUITY ASSETS MANAGEMENT, INC., a Florida corporation By: /s/ Charles R. Clark --------------------------------- Name: Charles R. Clark ------------------------------- Title: Chief Operating Officer ------------------------------ "SURVIVING CORPORATION" JORDAN AMERICAN HOLDINGS, INC., a Florida corporation By: /s/ W. Neal Jordan --------------------------------- Name: W. Neal Jordan ------------------------------- Title: Director ------------------------------ 3 ARTICLES OF MERGER OF EQUITY ASSETS MANAGEMENT, INC., A FLORIDA CORPORATION, AND JORDAN AMERICAN HOLDINGS, INC., A FLORIDA CORPORATION --------------------------------- Pursuant to the provisions of the Florida Business Corporation Act governing the merger of a domestic corporation with and into a domestic corporation, the undersigned corporations adopt the following Articles of Merger: 1. The names of the merging corporations are Jordan American Holdings, Inc., which is a business corporation organized under the laws of the State of Florida and which shall be the surviving corporation ("Surviving Corporation"), and Equity Assets Management, Inc., which is a business corporation organized under the laws of the State of Florida and the existence of which will cease ("Disappearing Corporation"). 2. The Surviving Corporation will continue its existence as the surviving corporation under its current name pursuant to the provisions of the laws of the State of Florida. 3. The merger shall be effective as of August 1, 1995. 4. The Agreement and Plan of Merger, a copy of which is attached hereto as Exhibit "A", was approved and adopted by the Board of Directors of the Disappearing Corporation and the Board of Directors of the Surviving Corporation by written consents dated July 27, 1995. 5. Shareholder approval of the Agreement and Plan of Merger was not required. IN WITNESS WHEREOF, the duly authorized officers of the constituent corporations have executed these Articles of Merger as of the 27 day of July, 1995. "DISAPPEARING CORPORATION" EQUITY ASSETS MANAGEMENT, INC., a Florida corporation By: /s/ Charles R. Clark --------------------------------- Name: Charles R. Clark --------------------------------- Title: C.O.O. --------------------------------- "SURVIVING CORPORATION" JORDAN AMERICAN HOLDINGS, INC., a Florida corporation By: /s/ Charles R. Clark --------------------------------- Name: Charles R. Clark --------------------------------- Title: C.O.O. --------------------------------- EXHIBIT A AGREEMENT AND PLAN OF MERGER OF JORDAN AMERICAN HOLDINGS, INC. AND EQUITY ASSETS MANAGEMENT, INC. ------------------------------ THIS AGREEMENT AND PLAN OF MERGER (the "Agreement and Plan") is entered into this 27 day of July, 1995, by and between JORDAN AMERICAN HOLDINGS, INC., a Florida corporation (the "Surviving Corporation"), and EQUITY ASSETS MANAGEMENT, INC., a Florida corporation (the "Disappearing Corporation"), as approved by the Boards of Directors of said corporations: R E C I T A L S: - - - - - - - - A. Surviving Corporation is a corporation duly organized and existing under the laws of the State of Florida. B. Disappearing Corporation is a corporation duly organized and existing under the laws of the State of Florida. C. Surviving Corporation is the sole shareholder of Disappearing Corporation. D. Directors of the Disappearing Corporation and the Surviving Corporation believe that the merger of the Disappearing Corporation into the Surviving Corporation would be advantageous and beneficial to the respective shareholders, employees and customers of those corporations. E. Disappearing Corporation and Surviving Corporation have agreed that Disappearing Corporation shall merge into the Surviving Corporation upon the terms and conditions and in the manner set forth in this Agreement and Plan and in accordance with the applicable laws of the State of Florida. NOW, THEREFORE, in consideration of the mutual covenants, agreements, provisions, grants, guarantees and representations contained in this Agreement and Plan and in order to consummate the transaction described above, Disappearing Corporation and Surviving Corporation, the constituent corporations to this Agreement and Plan, agree as follows: 1. MERGER. Disappearing Corporation shall be merged with and into Surviving Corporation. 2. FILING AND EFFECTIVE TIME. Surviving Corporation shall file with the Florida Department of State Articles of Merger pursuant to Section 607.1105 of the Florida Business Corporation Act (the "Florida Act"). The effective date of the merger (the "Effective Date") shall be August 1, 1995. 3. SURVIVING CORPORATION. The Surviving Corporation shall continue its existence under its current name pursuant to the provisions of the Florida Act, and shall succeed without other transfer to all the rights and properties of the Disappearing Corporation and shall be subject to all the debts and liabilities of the Disappearing Corporation in the same manner as if Surviving Corporation had incurred them in accordance with the laws of the State of Florida. 4. DISAPPEARING CORPORATION. The separate existence of the Disappearing Corporation shall cease upon the Effective Date of the merger in accordance with the provisions of the laws of the State of Florida. 5. TERMS OF THE MERGER. Each share of common stock of the Surviving Corporation outstanding immediately prior to the merger, and all rights in respect thereof, shall not be changed as a result of the merger and shall continue to be outstanding. On the Effective Date, each share of common stock of the Disappearing Corporation outstanding immediately prior to the merger, and all rights in respect thereof, shall cease to exist and be cancelled. The sole shareholder of the Disappearing Corporation is the Surviving Corporation. 6. ARTICLES OF INCORPORATION. The Articles of Incorporation of the Surviving Corporation as now in force and effect shall remain in force and effect until changed, altered, or amended as therein provided and in the manner prescribed by the provisions of the Florida Act. 7. BYLAWS. The Bylaws of the Surviving Corporation as now in force and effect shall remain in force and effect until changed, altered, or amended as therein provided and in the manner prescribed by the provisions of the Florida Act. 8. DIRECTORS AND OFFICERS. The directors of the Surviving Corporation upon the Effective Date shall continue to be the directors of the Surviving Corporation, all of whom shall hold their directorships until the election and qualification of their respective successors or until their tenure is otherwise terminated in accordance with the Bylaws of the Surviving Corporation. The officers of the Surviving Corporation upon the Effective Date shall be as follows: W. Neal Jordan Chairman of the Board, President and Chief Executive Officer Charles R. Clark Senior Vice President and Chief Operating Officer Frederick A. Whittlesey Vice President - Finance and Administration, Treasurer and Secretary All of the foregoing officers shall hold their positions until the election and qualification of their respective successors or until their tenure is otherwise terminated in accordance with the Bylaws of the Surviving Corporation. 2 9. APPROVAL. The agreement contemplated by this Agreement and Plan has previously been submitted to and approved by the Board of Directors of the Disappearing Corporation and the Board of Directors of the Surviving Corporation. Approvals of the shareholders of the Disappearing Corporation and the Surviving Corporation are not required. Subsequent to the execution of this Agreement and Plan by the appropriate officers of the Disappearing Corporation and Surviving Corporation, the proper officers of each corporation shall, and are hereby authorized and directed to, cause to be executed and filed such documents prescribed by the laws of the State of Florida and to perform all such further acts as the same may be necessary or proper to render effective the merger contemplated by this Agreement and Plan. 10. AMENDMENT. This Agreement and Plan may be amended with the approval of the Boards of Directors of the Surviving Corporation and the Disappearing Corporation at any time prior to the filing of this Agreement and Plan with the Florida Department of State. 11. GOVERNING LAW. This Agreement and Plan shall be construed in accordance with and governed by the laws of the State of Florida, without resort to choice of law principles. 12. FURTHER ASSURANCES. Each of the parties hereto shall take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable to effectuate the merger. 13. COUNTERPARTS. This Agreement and Plan may be executed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, the duly authorized officers of the constituent corporations have executed this Agreement and Plan as of the date first above written. "DISAPPEARING CORPORATION" EQUITY ASSETS MANAGEMENT, INC., a Florida corporation By: /s/ Charles R. Clark --------------------------------- Name: Charles R. Clark --------------------------------- Title: C.O.O. --------------------------------- "SURVIVING CORPORATION" JORDAN AMERICAN HOLDINGS, INC., a Florida corporation By: /s/ W. Neal Jordan --------------------------------- Name: W. Neal Jordan --------------------------------- Title: Director --------------------------------- 3 ARTICLES OF AMENDMENT OF JORDAN AMERICAN HOLDINGS, INC. I, A.J. ELKO, a Director of JORDAN AMERICAN HOLDINGS, INC., a Florida corporation (the "Corporation"), hereby certify as follows: 1. The name of the Corporation is Jordan American Holdings, Inc.. 2. The Corporation's "$1.00 Convertible Preferred Stock, Series 1989," none of which is currently outstanding, is hereby cancelled and the 300,000 shares of preferred stock designated for that series are hereby returned to the status of authorized but unissued shares of the Corporation's preferred stock, without designation as to series, until such shares are once more designated by the Corporation's Board of Directors as part of a particular series. 3. The Corporation's "8% Convertible Redeemable Cumulative Preferred Stock," none of which is currently outstanding, is hereby cancelled and the 3,000,000 shares of preferred stock designated for that series are hereby returned to the status of authorized but unissued shares of the Corporation's preferred stock, without designation as to series, until such shares are once more designated by the Corporation's Board of Directors as part of a particular series. 4. The Corporation's Board of Directors duly adopted this amendment on December 29, 2000. Pursuant to Section 607.0602 of the Florida Statutes, shareholder approval of this amendment is not required. IN WITNESS WHEREOF, I have executed these Articles of Amendment on behalf of the Corporation as of the 3rd day of January, 2001. JORDAN AMERICAN HOLDINGS, INC. By: /s/ A.J. Elko -------------------------- A.J. Elko, Director State of Florida [LOGO] Department of State I certify the attached is a true and correct copy of the Articles of Amendment, filed on January 17, 2001, to Articles of Incorporation for JORDAN AMERICAN HOLDINGS, INC., a Florida corporation, as shown by the records of this office. I further certify the document was electronically received under FAX audit number H01000007701. This certificate is issued in accordance with section 15.16, Florida Statutes, and authenticated by the code noted below The document number of this corporation is K89077. Given under my hand and the Great Seal of the State of Florida, at Tallahassee, the Capital, this the Eighteenth day of January, 2001 Authentication Code: 101A00002786-011801-K89077 -1/1 [SEAL] /s/ Katherine Harris Katherine Harris Secretary Of State ARTICLES OF AMENDMENT OF JORDAN AMERICAN HOLDINGS, INC. I, A.J. ELKO , a Director of JORDAN AMERICAN HOLDINGS, INC., a Florida corporation (the "Corporation"), hereby certifies as follows: 1. The name of the Corporation is Jordan American Holdings, Inc.. 2. The Corporation's Articles of Incorporation are hereby amended to provide for the designation of 3,500,000 shares of the Company's authorized but unissued preferred stock as "2000 Convertible Cumulative Preferred Stock," having the rights and preferences as set forth in the attached "Statement of Designations, Preferences and Rights of 2000 Convertible Cumulative Preferred Stock of Jordan American Holdings, Inc.," which is attached hereto as Exhibit A. 3. The Corporation's Board of Directors duly adopted this amendment on December 29, 2000. Pursuant to Section 607.0602 of the Florida Statutes, shareholder approval of this amendment is not required. IN WITNESS WHEREOF, I have executed these Articles of Amendment on behalf of the Corporation as of the 3rd day of January, 2001. JORDAN AMERICAN HOLDINGS, INC. By: /s/ A.J. Elko -------------------------- A.J. Elko, Director/CFO EXHIBIT A STATEMENT OF DESIGNATIONS, PREFERENCES AND RIGHTS OF 2000 VARIABLE RATE CONVERTIBLE CUMULATIVE PREFERRED STOCK OF JORDAN AMERICAN HOLDINGS. INC. - -------------------------------------------------------------------------------- 1. Designation. An aggregate of 3,500,000 shares of the authorized but unissued shares of Preferred Stock of Jordan American Holdings, Inc. (the "Corporation"), par value $.O1 per share (the "Preferred Stock"), is hereby designated as "2000 Variable Rate Convertible Cumulative Preferred Stock" (the "2000 Preferred Stock"). 2. Rank. All shares of the 2000 Preferred Stock will rank prior to all of the Corporation's Common Stock, par value $.001 per share (the "Common Stock"), now or hereafter issued, both as to payment of dividends and as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. 3. Dividend Rate. The holders of the 2000 Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors of the Corporation out of funds at the time legally available therefor, dividends at the rate of $.03 per annum per share for each of the calendar years 2001 through 2003, $.04 per annum per share for calendar year 2004, $.05 per annum per share for calendar year 2005, $.06 per annum per share for calendar year 2006, $.07 per annum per share for calendar year 2007, and $.08 per annum per share for calendar year 2008 and thereafter, which shall be fully cumulative, shall accrue without interest from the date of first issuance and shall be payable in cash semi-annually in arrears on June 30 and December 31 of each year commencing June 30, 2001 (except that if any such date is a Saturday, Sunday or legal holiday, then such dividend shall be payable on the next day that is not a Saturday, Sunday or legal holiday), to holders of record as they appear on the stock books of the Corporation on such record dates, not more than 60 days nor less than 10 days preceding the payment date for such dividends, as are fixed by the Board of Directors. If the Company shall fail to (a) declare and pay two semi-annual dividends, whether consecutive or cumulative, on the 2000 Preferred Stock and (b) pay all dividend arrearages and the current dividends due on the 2000 Preferred Stock by the end of the 12 months following the second failure to declare and pay a semi-annual dividend, then all dividend arrearages on the 2000 Preferred Stock to such date and thereafter until paid in full would accrue at a rate equal to the higher of (a) the then appropriate rate as set forth heretofore in this Section 3 or (b) $0.6857 per annum per share. When all such dividend arrearages at the higher rate are paid in full, the dividend rate would revert back to the appropriate rate as set forth heretofore in this Section 3. For purposes hereof, the term "legal holiday" shall mean any day on which banking institutions are authorized to close in the City of New York. Subject to the next paragraph of this Section 3, dividends on account of arrears for any past dividend period may be declared and paid at any time, without reference to any regular dividend payment date. The amount of dividends payable per share of 2000 Preferred Stock for each semi-annual dividend period shall be computed by dividing the annual dividend by two. The amount of dividends payable for any period that differs from a full semi-annual dividend period shall be computed on the basis of a 360-day year of twelve 30-day months. No dividends or other distributions, other than dividends payable solely in shares of Common Stock or other capital stock of the Corporation ranking junior as to dividends and as to liquidation rights to the 2000 Preferred Stock, shall be declared, paid or set apart for payment on, and no purchase, redemption or other acquisition shall be made by the Corporation of, any shares of Common Stock or other capital stock of the Corporation ranking junior as to dividends to the 2000 Preferred Stock (the "Junior Dividend Stock") unless and until all accrued and unpaid dividends on the 2000 Preferred Stock, including the full dividend for the then-current semi-annual dividend period, shall have been paid or declared and set apart for payment. If at any time dividends on any capital stock of the Corporation ranking senior as to dividends to the 2000 Preferred Stock (the "Senior Dividend Stock") shall be in default, in whole or in part, then (except to the extent allowed by the terms of such Senior Dividend Stock) no dividend shall be paid or declared and set apart for payment on the 2000 Preferred Stock unless and until all accrued and unpaid dividends with respect to the Senior Dividend Stock, including the full dividends for the then-current dividend period, shall have been paid or declared and set apart for payment, without interest. No full dividends shall be paid or declared and set apart for payment on any class or series of the Corporation's capital stock ranking, as to dividends, on a parity with the 2000 Preferred Stock (the "Parity Dividend Stock") for any period unless full cumulative dividends have been, or contemporaneously are, paid or declared and set apart for such payment on the 2000 Preferred Stock for all dividend payment periods terminating on or prior to the date of payment of such full cumulative dividends. No full dividends shall be paid or declared and set apart for payment on the 2000 Preferred Stock for any period unless full cumulative dividends have been, or contemporaneously are, paid or declared and set apart for payment on the Parity Dividend Stock for all dividend periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not paid in full upon the 2000 Preferred Stock and the Parity Dividend Stock, all dividends paid or declared and set aside for payment upon shares of the 2000 Preferred Stock and the Parity Dividend Stock shall be paid or declared and set aside for payment pro rata so that the amount of dividends paid or declared and set aside for payment per share on the 2000 Preferred Stock and the Parity Dividend Stock shall in all cases bear to each other the same ratio that accrued and unpaid dividends per share on the shares of the 2000 Preferred Stock and the Parity Dividend Stock bear to each other. The Corporation shall not issue any Senior Dividend Stock or any Parity Dividend Stock without the written consent of the holders of a majority of the 2000 Preferred Stock. Any reference to "distribution" contained in this Section 3 shall not be deemed to include any distribution made in connection with any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. 4. No Voting, Rights. The holders of shares of the 2000 Preferred Stock shall have no voting rights. 2 5. Conversion Rights. The shares of the 2000 Preferred Stock shall be convertible, in whole or in part, at the option of the holders thereof, at any time after their issuance, at the office of any duly appointed transfer agent for the Preferred Stock, and at such other office or offices, if any, as the Board of Directors of the Corporation may determine, into fully paid and non-assessable shares of Common Stock of the Corporation at the rate of one share of Common Stock for each $3.50 in Face Amount of the 2000 Preferred Stock. ("Face Amount" means, for all purposes herein, $1.00 per share.) Unpaid and accrued dividends shall be credited to the conversion price. The rate at which the Common Stock shall be deliverable in exchange for shares of the 2000 Preferred Stock upon conversion thereof is hereinafter referred to as the "conversion rate" for the 2000 Preferred Stock. The conversion rate shall be subject to adjustment from time to time in certain instances as hereinafter provided, except that no adjustment shall be made unless by reason of the happening of any one or more of the events hereinafter specified, such adjustment would require an increase or decrease of at least 1% in such rates. Any adjustment of less than 1% that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, together with any adjustment or adjustments so carried forward, amounts to 1% or more. Before any holder of the 2000 Preferred Stock shall be entitled to convert the same as provided herein, he shall surrender the certificate or certificates for such 2000 Preferred Stock at the Corporation's duly appointed transfer agent, or at the office of the Corporation if a transfer agent has not been appointed, which certificate or certificates shall be duly endorsed to the Corporation or in blank or accompanied by proper instruments of transfer to the Corporation or in blank, unless the Corporation shall waive such requirement, and shall give written notice to the Corporation at the aforesaid offices to convert said Preferred Stock, and shall state in writing therein the name or names in which he wishes the certificate or certificates for Common Stock to be issued. The Corporation will as soon as practicable after such surrender of certificates for the 2000 Preferred Stock accompanied by the written notice and the statement above prescribed, issue and deliver at the office of any transfer agent appointed as aforesaid, or at such other office or offices, if any, to the person for whose account such 2000 Preferred Stock was so surrendered, or to his nominee or nominees, certificates for the highest number of whole shares of Common Stock, as the case may be, to which he shall be entitled as aforesaid, with no cash adjustment for any fraction of a share in excess of the number of whole shares of Common Stock into which the surrendered 2000 Preferred Stock is converted. Subject to the following provisions of this paragraph, such conversion shall be deemed to have been made as of the date of such surrender of the 2000 Preferred Stock to be converted and the rights of the converting holder of the shares of the 2000 Preferred Stock as such holder shall cease and the person or persons in whose name or names the certificates for shares of Common Stock, as the case may be, upon conversion of such 2000 Preferred Stock are to be issued shall be treated for all purposes as the record holder or holders of such Common Stock at the close of business on such date. The Corporation shall not be required to convert, and no surrender of 2000 Preferred Stock shall be effective for that purpose, while the stock transfer books of the Corporation are closed for any purpose; but the surrender of 2000 Preferred Stock for conversion during any period while such books are so 3 closed shall become effective for conversion immediately upon the reopening of such books, as if the conversion had been made on the date such 2000 Preferred Stock was surrendered, and at the conversion rate in effect at the date of such surrender. In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, all conversion rights of the holders of the 2000 Preferred Stock shall terminate on the date fixed by resolution of the Board of Directors of the Corporation, which date shall not be later than 10 days nor earlier than 20 days prior to such liquidation, dissolution or winding up. (a) If the Corporation shall at any time pay a dividend on its Common Stock in Common Stock, subdivide its outstanding shares of Common Stock into a large number of shares or combine its outstanding shares of Common Stock into a smaller number of shares by reclassification or otherwise, the conversion rates in effect immediately prior thereto shall be adjusted so that each share of 2000 Preferred Stock shall thereafter be convertible into the number of shares of Common Stock which the holder of a share of 2000 Preferred Stock would have been entitled to receive after the happening of any of the events described above had such share been converted immediately prior to the happening of such event. An adjustment made pursuant to this subparagraph (a) shall become effective retroactively to the record date in the case of a dividend and shall become effective on the effective date in the case of a subdivision or combination. (b) If the Corporation shall distribute to all holders of shares of Common Stock any assets, any rights to subscribe (other than those referred to in the paragraph immediately preceding subparagraph (a) above) or any evidence of indebtedness or other securities of the Corporation, then in each such case the number of shares of Common Stock into which each share of 2000 Preferred Stock shall thereafter be convertible shall be determined by multiplying the number of shares of Common Stock into which each share of 2000 Preferred Stock was theretofore convertible on the day immediately preceding the record date for the determination of the stockholders entitled to receive such distribution by a fraction, the numerator of which shall be the average market price per share (determined as provided in sub-paragraph (c) below) of the Common Stock on such record date and the denominator of which shall be such average market price per share less the then fair market value (as determined, in the case of assets other than cash, in a resolution adopted by the Board of Directors of the Corporation, which shall be conclusive evidence of such fair market value) of the portion of the assets or evidence of indebtedness or securities so distributed or of such subscription rights applicable to one (1) share of Common Stock. Such adjustment shall become effective retroactively immediately after the record date. (c) For the purpose of any computation under this Section 5, the average market price per share of Common Stock on any date shall be the average of the closing bid and asked price on the day prior to the date in question. The bid and asked price shall be those prices on the National Association of Securities Dealers Automated Quotation System, or if the Common Stock is not traded on such system, on the OTC Bulletin Boards(R), or if not listed on the OTC Bulletin Board(R), the average of the closing bid and asked price as furnished by a New York Stock Exchange member firm selected from time to time by the Board of Directors of the Corporation for that purpose, or if there is no market price available, at the rate determined by the Corporation's Board of Directors. 4 (d) In case of any capital reorganization or any reclassification of the capital stock of the Corporation or in case of the consolidation or merger of the Corporation with another corporation (other than a merger not involving any reclassification, conversion, or exchange of Common Stock, in which the Corporation is the surviving corporation), or in case of any sale or conveyance of all or substantially all of the property of the Corporation, each share of 2000 Preferred Stock shall thereafter be convertible into the number of share of stock (of any class or classes) or other securities or property receivable upon such capital reorganization, reclassification of capital stock, consolidation, merger, sale or conveyance, as the case may be, by a holder of the number of shares of Common Stock into which such share of 2000 Preferred Stock was convertible immediately prior to such capital reorganization, reclassification or capital stock, consolidation, merger, sale or conveyance; and, in any case, appropriate adjustment (as determined by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to rights and interests thereafter of the holder of the 2000 Preferred Stock, to the end that the provisions set forth herein (including the specified changes in and other adjustments of the conversion rates) shall thereafter be applicable, as near as reasonably practical, in relation to any share of stock or other securities or other property thereafter deliverable upon the conversation of the 2000 Preferred Stock. (e) Whenever the conversion rate is adjusted as herein provided, the Corporation shall forthwith file with any transfer agent or agents for the 2000 Preferred Stock appointed as aforesaid a certificate signed by the President or one of the Vice Presidents of the Corporation and by its Treasurer or an Assistant Treasurer stating the adjusted conversion rate determined as provided in this Section 5, and in reasonable detail the facts requiring such adjustment. Such transfer agents shall be under no duty to make any inquiry or investigation as to the statements contained in any such certificates or as to the manner in which any computation was made, but may accept such certificate as conclusive evidence of the statements therein contained, and each transfer agent shall be fully protected with respect to any and all acts done or action taken or suffered by it in reliance thereon. No transfer agent in it capacity as transfer agent shall be deemed to have any knowledge with respect to any change of capital structure of the Corporation unless and until it receives a notice thereof pursuant to the provisions of this Section 5 and in the absence of any such notice each transfer agent may conclusively assume that there has been no such change. The Corporations shall at all times reserve and keep available, out of its authorized and unissued or treasury shares of Common Stock, or other stock or securities deliverable upon conversion pursuant to this Section 5, solely for the purpose of effecting the conversion of the 2000 Preferred Stock, such number of shares as shall from time to time be sufficient to effect the conversion of all shares of the 2000 Preferred Stock from time to time outstanding. The Corporation shall from time to time, in accordance with the laws of Florida, increase the authorized amount of its Common Stock if at any time the number of shares of Common Stock remaining unissued or treasury shares of Common Stock shall not be sufficient to permit the conversion of all the then outstanding 2000 Preferred Stock. The Corporation will pay any and all issue and other taxes that may be payable in respect of any issue and delivery of shares of Common Stock on conversion of 2000 Preferred 5 Stock pursuant thereto. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of Common Stock in a name other than that in which the 2000 Preferred Stock so converted was registered, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount of any such tax, or has established, to the satisfaction of the Corporation, that such tax has been paid. 6. Liquidation Rights. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any distribution or payment shall be made to the holder of any Common Stock or any stock ranking junior to the 2000 Preferred Stock in respect of distribution of assets, the holders of the 2000 Preferred Stock shall be entitled to receive $1.00 per share. In the event the assets of the Corporation available for distribution to the holders of shares of the 2000 Preferred Stock upon dissolution, liquidation or winding up of the Corporation shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to the immediately preceding paragraph, no such distribution shall be made on account of any share of any other class or series of capital stock of the Corporation ranking on a parity with or junior to the shares of the 2000 Preferred Stock, except that a proportionate distributive amount shall be paid on account of the shares of the 2000 Preferred Stock and any other class of shares ranking on a parity with the 2000 Preferred Stock (the "Parity Liquidation Stock"), ratably, in proportion to the full distributable amounts for which holders of all such Parity Liquidation Stock are respectively entitled upon such dissolution, liquidation or winding up. The Corporation shall not issue any Parity Liquidation Stock or any other series of preferred stock which is entitled to preference over the 2000 Preferred Stock as to distribution of assets upon the dissolution, liquidation or winding up of the Corporation, without the written consent of the holders of a majority of the 2000 Preferred Stock. 7. No Sinking Fund. The shares of the 2000 Preferred Stock shall not be entitled to the benefit of any sinking fund to be applied to the purchase or redemption of such shares. 8. Status of Converted Shares. Any shares of the 2000 Preferred Stock that at any time shall have been converted pursuant to Section 5 or that have been otherwise repurchased by the Corporation, shall after such conversion or repurchase have the status of authorized but unissued shares of Preferred Stock, without designation as to series until such shares are once more designated as part of a particular series by the Board of Directors. 9. Mandatory Conversion. If at any time the closing bid price per share of the Corporation's Common Stock for a period of 30 consecutive trading days exceeds $5.25 per share, then, in such event, the Corporation may at its sole option, upon 30 days written notice to the holders of the 2000 Preferred Stock, automatically convert the 2000 Preferred Stock to Common Stock at the conversion rate. For the purposes of this Section 9, the determination of the closing bid price per share of the Corporation's Common Stock shall be as reported on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the 6 NASDAQ Market System or, if the Common Stock is not listed or admitted to trading on any national securities exchange or quoted on the NASDAQ Market System, the average of the low bid and asked price on the OTC Bulletin Board(R) furnished by any New York Stock Exchange Member Firm selected from time to time by the Corporation for that purpose. All of the other provisions set forth hereinabove with respect to conversion provisions generally, as set forth in Section 5, including, but not limited to, the adjustment of the conversion rate in certain events as set forth in Section 5 hereof, shall be applicable hereto in the event the Corporation exercises its option to cause a mandatory conversion of the Preferred Stock. Not more than 60 nor less than 20 days prior to the date of mandatory conversion, notice by first class mail, postage pre-paid, shall be given to the holders of record, of the 2000 Preferred Stock to be so converted, addressed to such holders at their last addresses as shown on the books of the Corporation. Each such notice of mandatory conversion shall specify the date fixed for conversion, the conversion rate and that, on and after the date of mandatory conversion, dividends will cease to accrue on such shares. Any notice which is mailed as herein provided shall be conclusively presumed to have been duly given, whether or not the holder of the 2000 Preferred Stock receives such notice; and failure to give such notice by mail, or any defect in such notice to the holders of any shares designated for mandatory conversion shall not affect the validity of the proceedings for the mandatory conversion. On or after the date fixed for mandatory conversion as stated in such notice, each holder of the shares shall be issued a certificate or certificates for the requisite number of shares of Common Stock of the Corporation. 10. Non-Redeemable. The 2000 Preferred Stock is non-redeemable. 11. Preemptive Rights. The 2000 Preferred Stock is not entitled to any preemptive or subscription rights in respect of any securities of the Corporation. 12. Severability of Provisions. Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law. 7 [SEAL] FLORIDA DEPARTMENT OF STATE Katherine Harris Secretary of State January 26, 2001 JORDAN AMERICAN HOLDINGS, INC. 2155 RESORT DR., STE. 108 STEAMBOAT SPRINGS, CO 80487US Re: Document Number K89077 The Articles of Amendment to the Articles of Incorporation for JORDAN AMERICAN HOLDINGS, INC., a Florida corporation, were filed on January 19, 2001. The certification requested is enclosed. To be official, the certification for a certified copy must be attached to the original document that was electronically submitted and filed under FAX audit number H01000008677. Should you have any question regarding this matter, please telephone (850) 487-6050, the Amendment Filing Section. Darlene Connell Corporate Specialist Division of Corporations Letter Number: 401A00004423 Division of Corporations - P.O. BOX 6327 -Tallahassee, Florida 32314 State of Florida [LOGO] Department of State I certify the attached is a true and correct copy of the Articles of Amendment, filed on January 19, 2001, to Articles of Incorporation for JORDAN AMERICAN HOLDINGS, INC., a Florida corporation, as shown by the records of this office. I further certify the document was electronically received under FAX audit number H01000008677. This certificate is issued in accordance with section 15.16, Florida Statutes, and authenticated by the code noted below The document number of this corporation is K89077. Given under my hand and the Great Seal of the State of Florida, at Tallahassee, the Capital, this the Twenty-sixth day of January, 2001 Authentication Code: 401A00004423-012601-K89077 -1/1 [SEAL] /s/ Katherine Harris Katherine Harris Secretary of State EX-4.5 3 ex45-301.txt SPECIMEN STOCK CERTIFICATE CERTIFICATE FOR 3,500,000 PREFERRED SHARES ISSUED TO KIRKLAND S. AND RENA B. LAMB FOUNDATION *2000 VARIABLE RATE CONVERTIBLE CUMULATIVE PREFERRED STOCK Dated December 29, 2000 - -------------------------------------------------------------------------------- From whom transferred Original Issue Dated December 29, 2000 No. of Original No. of Original No. of Shares Certificate Shares Transferred 1 3,500,000 - -------------------------------------------------------------------------------- Received Certificate No. ____ For _________ Shares on __________ 20_____ _____________________________ - -------------------------------------------------------------------------------- ORGANIZED UNDER THE LAWS OF THE STATE OF FLORIDA - -------------------------------------------------------------------------------- ============================= JORDAN AMERICAN HOLDING INC. ============================= $ .01 par value per share THIS CERTIFIES THAT Kirkland S. and Rena B. Lamb Foundation is hereby issued 3,500,00 (Three Million Five Hundred Thousand) fully paid and non-assessable Shares of the Stock of the above named Corporation transferable only on the books of the Corporation by the holder, hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed. *2000 Variable Rate Convertible Cumulative Preferred. IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be signed by its duly authorized officers and its Corporate Seal to be hereunto affixed this 29th day of December A.D. 2000. /s/ W. Neal Jordan /s/ A.J. Elko - ------------------------- ------------------------- W. Neal Jordan, President A.J. Elko, Secretary For Value Received, _________________ hereby sell, assign and transfer unto _____________________________________________________ Shares represented by the within certificate and do hereby irrevocably constitute and appoint ______________________________________________________ Attorney to transfer the said Shares on the books of the within named Corporation with full power of substitution in the premises. Dated ________________ 20___ In presence of ___________________________ ___________________________ The corporation will furnish the holder of this certificate a full statement of the designations, relative rights, preferences and limitations applicable to each class of the corporation's stock and the variations in rights, preferences and limitations determined for each series within such a class, on request and without charge. THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN ANY MANNER UNLESS THEY ARE REGISTERED UNDER THE ACT AND THE SECURITIES LAWS OF ANY APPLICABLE JURISDICTION OR UNLESS EXEMPTIONS FROM SUCH REGISTRATION ARE AVAILABLE AT THAT TIME. EX-10.3 4 ex103-301.txt ASSETS PURCHASE AGREEMENT ASSETS PURCHASE AGREEMENT BY AND AMONG IMPACT TAX AND BUSINESS SERVICES, INC.; A. J. ELKO & ASSOCIATES, LLC; AND A.J. ELKO, INDIVIDUALLY DATED AS OF NOVEMBER 30, 2000 TABLE OF CONTENTS PAGE 1. AGREEMENT TO PURCHASE AND SELL............................................1 1.1 Agreement..........................................................1 1.2 Purchased Assets...................................................1 1.3 Excluded Assets....................................................2 1.4 NO ASSUMPTION OF OBLIGATIONS AND LIABILITIES.......................2 2. PURCHASE PRICE............................................................2 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE MEMBER...............3 3.1 Organization and Standing of the Seller............................3 3.2 Company Action.....................................................3 3.3 Subsidiaries and Affiliates........................................3 3.4 Financial Information..............................................3 3.5 Ownership of Purchased Assets; Consents............................3 3.6 Trade Secrets, Proprietary Information and Know-How................3 3.7 Litigation and Investigations......................................4 3.8 Taxes..............................................................4 3.9 Contracts and Commitments..........................................4 3.10 No Default.........................................................5 3.11 Fees and Commissions...............................................6 3.12 Sensitive Transactions.............................................6 3.13 Misstatement or Omission...........................................6 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...........................6 4.1 Organization and Standing of the Purchaser.........................6 4.2 Corporate Action...................................................6 4.3 Litigation and Investigations......................................6 4.4 Fees and Commissions...............................................7 4.5 Misstatement or Omission...........................................7 5. COVENANTS OF THE SELLER...................................................7 5.1 Investor's Representation Letter...................................7 6. POST CLOSING..............................................................7 -i- TABLE OF CONTENTS (CONTINUED) PAGE 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES................................7 8. INDEMNIFICATION...........................................................7 8.1 Indemnification by the Seller and the Members......................7 8.2 Indemnification by the Purchaser...................................8 8.3 Claims Procedure...................................................9 9. FEES AND EXPENSES.........................................................9 10. NOTICES...................................................................9 11. MISCELLANEOUS............................................................10 11.1 Time..............................................................10 11.2 Entire Agreement..................................................10 11.3 Amendment.........................................................10 11.4 Assignment........................................................10 11.5 Choice of Law.....................................................10 11.6 Headings..........................................................11 11.7 Pronouns..........................................................11 11.8 Number and Gender.................................................11 11.9 Construction......................................................11 11.10 Effect of Waiver..................................................11 11.11 Severability......................................................11 11.12 Enforcement.......................................................11 11.13 Binding Nature....................................................11 11.14 Counterpart.......................................................11 -ii- ASSETS PURCHASE AGREEMENT ------------------------- THIS ASSETS PURCHASE AGREEMENT (the "Agreement") is made as of this 30th day of November, 2000, by and among IMPACT Tax and Business Services, Inc., a Florida corporation (the "Purchaser"); A. J. Elko & Associates, LLC, a Pennsylvania limited liability company (the "Seller"); and A.J. Elko, the owner of all the outstanding interests in the Seller (the "Member"). WITNESSETH: ----------- WHEREAS, the Seller engaged in the business of tax and business planning (the "Seller's Business"); and WHEREAS, the Purchaser desires to purchase and the Seller desires to sell certain of the assets and all of the Seller's Business upon the terms and conditions set forth herein. NOW, THEREFORE, in consideration of these promises and subject to the representations, warranties, covenants and conditions contained herein and for the consideration provided herein, the parties agree as follows: 1. AGREEMENT TO PURCHASE AND SELL. ------------------------------ 1.1 AGREEMENT. As of the date hereof (the "Closing Date"), the Seller hereby sells, conveys, transfers, assigns and delivers to the Purchaser the Seller's Business and certain of the assets of the Seller, such business and assets being referred to as the "Purchased Assets." 1.2 PURCHASED ASSETS. The Purchased Assets shall consist of all assets, properties, rights, privileges, claims and licenses owned by Seller and used in or relating to the Seller's Business, including without limitation, the following, but excluding those specific assets described in Section 1.3 (the "Excluded Assets"): (a) SCHEDULE OF NET ASSETS. All assets, tangible and intangible, other than Excluded Assets, reflected on Seller's Schedule of Net Assets as of September 30, 2000, which is attached hereto as EXHIBIT A. (b) INTANGIBLE ASSETS. All trademark registrations and applications therefor, trade name and names (whether or not registered or registerable), including, without limitation, the names "A.J. Elko & Associates, LLC," and the good will pertaining to any thereof. (c) CONTRACT RIGHTS. All leases, franchises, sales and other contract rights of whatever nature or description. (d) BOOKS AND RECORDS. All books and records (copies of which shall be delivered to Purchaser and originals of which shall be retained by Seller), customers lists and all other data relating to the Purchased Assets. (e) OTHER. All other assets related to the Seller's Business of every kind, nature and description, wherever located, whether tangible or intangible, including the Seller's goodwill and all rights and causes of action thereto, except for the Excluded Assets. 1.3 EXCLUDED ASSETS. Purchaser is not purchasing, and Seller is not selling, any of the following assets of the Seller, which are referred to in this Agreement as the "Excluded Assets:" (a) Cash and bank accounts. (b) Loans to Members. (c) Minute books, stock transfer records and financial records. (d) Clients listed in Exhibit A-1 as "Client Data Base Not To Be Purchased." 1.4 NO ASSUMPTION OF OBLIGATIONS AND LIABILITIES. The Purchaser shall not assume any of the obligations or liabilities of the Seller. 2. PURCHASE PRICE. Upon the sale, transfer and conveyance to the Purchaser of the Assets at the Closing, and in consideration therefore, the Purchaser shall deliver to the Seller the total sum of One Hundred and Five Thousand One Hundred Dollars ($105,100) (the "Purchase Price"). The Buyer shall pay the Seller for the Assets a purchase price consisting of $75,000 in cash, stock options and earn-out consideration. The Purchaser had already delivered to the Seller a cash deposit of $60,000. The additional purchase price shall be payable as follows: (a) Contemporaneously with the execution and delivery of this Agreement, the Buyer is paying the Seller an additional $15,000 in cash. (b) The earn-out consideration shall consist of payment to the Seller of an additional $10,000 from the first $10,000 of revenue from the Business received by the Buyer. Buyer shall pay Seller the earn-out consideration on a monthly basis within 30 calendar days after the end of the month of the Buyer's receipt until paid in full. (c) Contemporaneously with the execution and delivery of this Agreement, Jordan American Holdings, Inc., a Florida corporation ("JAHI") and the sole shareholder of the Buyer, is issuing to the Seller options to purchase 100,500 shares of JAHI's common stock (the "Option Shares") with an 2 exercise price of $0.20 per share and an exercise period of ten years after the Closing (the "Options"). 3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE MEMBER. The Seller and the Member hereby represent, warrant and covenant severally to the Purchaser, on and as of the date hereof, as follows: 3.1 ORGANIZATION AND STANDING OF THE SELLER. The Seller is a limited liability company duly organized, validly existing and in good standing under the laws of Pennsylvania with full power and authority and all requisite and sufficient licenses, franchises, permits and authorizations to own and lease its properties and assets and to carry on its business as presently conducted. The Member is the record and beneficial owner of 100% of the issued and outstanding interests in the Seller. 3.2 COMPANY ACTION. The Seller has full power and authority to enter into this Agreement and to sell, assign, transfer and deliver the Purchased Assets to the Purchaser. All member and other proceedings required to be taken by or on the part of the Seller to authorize the execution, delivery and performance of this Agreement and to authorize the Seller to sell, assign, transfer, convey and deliver the Purchased Assets to the Purchaser have been duly and properly taken. Neither the execution and delivery of this Agreement by the Seller, nor compliance with its terms, results in the breach or violation of the Articles of Organization or Operating Agreement of the Seller, or of any agreement, indenture, mortgage, lease or other obligation or instrument, or any judgment, order or decree to which the Seller is a party or by which the Seller or any of its property or assets may otherwise be subject. 3.3 SUBSIDIARIES AND AFFILIATES. The Seller owns no interests, directly or indirectly, in any other corporation or entity. 3.4 FINANCIAL INFORMATION. Attached hereto as EXHIBIT A is the Schedule of Net Assets of the Seller as of September 30, 2000. The Schedule of Net Assets discloses all liabilities and obligations of the Seller as of the date thereof, whether accrued, unliquidated, ordinary, extraordinary, absolute, contingent or otherwise. There are not any material changes to the information presented in the Schedule of Net Assets through the date of this Agreement, except for changes in the ordinary course of business. 3.5 OWNERSHIP OF PURCHASED ASSETS; CONSENTS. The Seller owns, and will transfer to the Purchaser, all of the Purchased Assets, free and clear of any mortgage, pledge, lien, conditional sale agreement, encumbrance, restriction or charge of any kind. The execution of this Agreement and the performance of the covenants herein contemplated do not result in the creation of any lien, charge or encumbrance of any kind upon any of the Purchased Assets including, without limitation, pursuant to any indenture, agreement or other instrument to which the Seller is bound or by which the Purchased Assets may be affected. All of the Purchased Assets, including claims, contracts, orders, leases, licenses and rights, are assignable without the prior consent of any third party. 3 3.6 TRADE SECRETS, PROPRIETARY INFORMATION AND KNOW-HOW. The Seller does not possess any rights with respect to patents, patent applications, trademarks, trade names, copyrights, trade secrets (whether registered or not) and applications therefor and other documented intellectual property relating to the Seller's Business. Neither the Seller nor any Member is a party to any agreement or arrangement providing for the payment of license fees or royalties in connection with the Seller's Business or has any knowledge of any claim or obligation to pay any such license fee or royalty. 3.7 LITIGATION AND INVESTIGATIONS. There are no actions, suits, legal or administrative proceedings or governmental investigations existing or, to the knowledge of the Seller or the Member, threatened against or affecting the Seller or any of its property or assets, nor any judgments, decrees, orders, rulings, writs or injunctions specifically referring to the Seller which (either by reason of adherence or default) may materially and adversely affect its business, properties or financial condition or relate in any way to the transactions contemplated by this Agreement. 3.8 TAXES. All tax returns, including, without limitation, income, sales and personal property tax returns, required to be filed by the Seller with the United States or any state or any other governmental agency or authority have been or will be duly prepared and filed, and were or will be true and correct and complete. All taxes due or to become due by reason of the operations conducted by the Seller prior to the Closing Date have been or will be paid when due. The Seller has not received any notice of assessment of additional taxes and has not executed or filed with any taxing authority any agreement extending the period for assessment of any income or other taxes. The Purchaser will have no liability whatsoever for any federal, state or local tax payments based upon or measured by the income of the Seller, the ownership of its property or the conduct of the Seller's Business prior to the Closing Date or arising out of the transactions contemplated hereby. Except for taxes not yet due and payable, there are no tax liens upon any of the properties or assets, real, personal or mixed, tangible or intangible of the Seller; there are no pending claims, examinations or proceedings by any authority or agency relating to the assessment of any taxes, interest or penalty on such properties or assets; and there is no basis for any such claim or assessment. The Seller has not been audited by the Internal Revenue Service or any other governmental agency or authority. 3.9 CONTRACTS AND COMMITMENTS. ------------------------- (a) IDENTIFICATION. Except as set forth as Excluded Assets in Section 1.3 of this Agreement, as of the Closing Date, the Seller is not a party or subject to any: (i) Pension, profit sharing, stock option, employee stock purchase or other plan providing for deferred or other compensation to employees or any other employee benefit plan, or any Contract (as defined below) with any labor union; (ii) Contract with any current or former officer, director or affiliate; 4 (iii)Contract relating to any indebtedness or the mortgaging, pledging or otherwise placing a lien on any of the Purchased Assets; (iv) Guarantee of any obligation; (v) Contract under which the Seller has advanced or loaned any person any amounts in the aggregate exceeding $1,000.00; (vi) Contract under which the Seller is lessee of or holds or operates any property, real or personal, owned by any other party; (vii) Contract under which the Seller is lessor of or permits any third party to hold or operate any property, real or personal, owned or controlled by the Seller; (viii) Assignment, license, indemnification or contract with respect to any intangible property (including, without limitation, any patents, patent applications, trademarks, trade names, copyrights, trade secrets (whether registered or not) and applications therefor and any other proprietary rights); (ix) Contract with or relating to any applicable federal, state, or local governmental entities; (x) Contract prohibiting it from freely engaging in any business or competing anywhere in the world; (xi) Employment Contracts; (xii) Contracts providing for "take or pay" or similar unconditional purchase or payment obligations; or (xiii) any other Contract which is material to its operations and business prospects. (b) PERFORMANCE AND DEFAULT. The Seller has performed in all material respects all obligations required to be performed by it and is not in default in any material respect under or in breach of nor in receipt of any claim of default or breach under any Contract; no event has occurred which with the passage of time or the giving of notice or both would result in such default or breach; the Seller has no present expectation or intention of not fully performing all such obligations in all material respects; and, to the Seller's knowledge, there exists no breach or anticipated breach by the other parties to any such Contract to which it is a party. (c) DEFINITION. As used in this Agreement, the term "Contract" means any written agreement, contract, commitment or instrument. 3.10 NO DEFAULT. Compliance with the provisions of this Agreement and consummation of the transactions contemplated hereby will not in any material respect violate or 5 result in a breach of any provision of, or constitute a default under, the Articles of Organization or the Operating Agreement of the Seller, or result in the acceleration of any obligation under, or constitute a default of, any contract, agreement, commitment, indenture, mortgage, note, bond, license, deed of trust or other instrument or obligation to which the Seller is a party or by which the Seller or any of its property may otherwise be subject. 3.11 FEES AND COMMISSIONS. Neither the Seller nor any Member has agreed to pay or become liable to pay any broker's, finder's or originator's fee or commission for which the Purchaser shall have liability by reason of services alleged to have been rendered for or at the instance of the Seller or any Member in connection with this Agreement and the transactions contemplated hereby. 3.12 SENSITIVE TRANSACTIONS. Neither the Seller nor any Member, nor any employee, agent or representative of any of them, has directly or indirectly used funds or other assets of the Seller for illegal contributions, gifts, or payments to or for the benefit of any governmental official or employee, or any other person or entity. 3.13 MISSTATEMENT OR OMISSION. No representation or warranty by the Seller or the Member in this Agreement, and no exhibit, schedule, written statement or certificate furnished or to be furnished by the Seller or the Member pursuant hereto or in connection with the transactions contemplated hereby, contains or will contain any untrue statement or a material fact, or omits or will omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading. 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby represents and warrants to the Seller and the Member, on and as of the date hereof, as follows: 4.1 ORGANIZATION AND STANDING OF THE PURCHASER. The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida. The Purchaser has full corporate power and authority to carry on the business in which it is engaged, to own the property owned by it, to acquire the Purchased Assets and to perform its obligations under this Agreement. 4.2 CORPORATE ACTION. All corporate and other proceedings required to be taken by or on the part of the Purchaser to authorize it to execute, deliver and carry out this Agreement have been duly and properly taken. Neither the execution and delivery of this Agreement by the Purchaser, nor compliance with its terms, results in the breach or violation of the Purchaser's Articles of Incorporation or Bylaws, or any agreement, instrument, judgment or decree to which the Purchaser is a party or may otherwise be subject. There is no violation or breach of, or default under, any of the foregoing that materially and adversely affects, or that may materially and adversely affect, the business, properties, assets, liabilities, consolidated operations or consolidated condition, financial or otherwise, of the Purchaser. The Purchaser is not a party to any agreement, instrument, judgment or decree that materially and adversely affects its business, properties, assets, liabilities, consolidated operations or consolidated condition, financial or otherwise. 6 4.3 LITIGATION AND INVESTIGATIONS. There are no actions, suits, legal or administrative proceedings or governmental investigations existing or, to the knowledge of the Purchaser, threatened against or affecting the Purchaser or any of its property or assets, nor any judgments, decrees, orders, rulings, writs or injunctions specifically referring to the Purchaser which (either by reason of adherence or default) may materially and adversely affect its business, properties or financial condition or relate in any way to the transactions contemplated by this Agreement. 4.4 FEES AND COMMISSIONS. The Purchaser has not agreed to pay or become liable to pay any broker's, finder's or originator's fee or commission by reason of services alleged to have been rendered for or at the instance of the Purchaser in connection with this Agreement and the transactions contemplated hereby. 4.5 MISSTATEMENT OR OMISSION. No representation or warranty by the Purchaser in this Agreement, and no written statement or certificate furnished or to be furnished by the Purchaser pursuant hereto or in connection with the transactions contemplated hereby, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading. 5. COVENANTS OF THE SELLER. The Seller hereby covenants and agrees with the Purchaser as follows: 5.1 INVESTOR'S REPRESENTATION LETTER. Contemporaneously with the execution and delivery of this Agreement, the Seller is executing and delivering to the Purchaser a letter substantially in the same form and of the same substance as the letter attached hereto as EXHIBIT B, in which the Seller acknowledges that the Options or the Option Shares have not been registered pursuant to the Securities Act of 1933, as amended, and that restrictions on the transferability of the Options and the Option Shares result from the absence of such registration. 6. POST CLOSING. The Seller and the Purchaser agree that each of them will, from time to time after the Closing Date when so requested by the other, perform, execute, acknowledge or deliver or cause to be performed, executed, acknowledged or delivered, all such further acts, deeds, assignments, transfers, conveyances and assurances as may be required for the better assigning, transferring, granting, conveying, selling, assuring and confirming to the Purchaser and its successors and assigns, and for aiding and assisting in reducing to possession, the Purchased Assets transferred to the Purchaser as herein contemplated. 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties contained herein shall be continuing representations and warranties that shall survive the Closing Date. 8. INDEMNIFICATION. --------------- 7 8.1 INDEMNIFICATION BY THE SELLER AND THE MEMBER. The Seller and the Member, jointly and severally, agree to indemnify and hold harmless the Purchaser, its successors and assigns, against any and all loss, injury, liability, claim, damage or expense (including, without limitation, reasonable attorneys' fees), court costs and amounts paid in settlement of claims, incurred or sustained by the Purchaser, or its successors or assigns resulting from any of the following: (a) any inaccuracy in, or breach or violation of, the representations and warranties made by the Seller and the Member and the covenants undertaken by them, whether or not such inaccuracy or breach or violation was known to, or should have been known by, the Purchaser, the Seller or the Member on the date of this Agreement, it being the acknowledged intention of the parties hereto that the Seller and the Member shall be completely responsible for, and the Purchaser shall be conclusively deemed to have relied upon, such representations, warranties and covenants in the consummation of the purchase and sale transactions herein contemplated; (b) any suits, actions or claims relating to sales or other transactions or activities of the Seller prior to the Closing Date; (c) any inaccuracy or misrepresentation (whether negligent or otherwise) in any certificate or affidavit delivered by the Seller in accordance with the provisions of any section hereof, (d) any claim or claims made against the Purchaser arising out of the Seller's ownership, use, sale or operation of the Purchased Assets or the Seller's Business prior to the Closing Date, including, but not limited to, any and all liabilities, losses, damages, costs and expenses (including reasonable attorneys' fees) incurred or sustained by the Purchaser due to Seller's failure to pay any liability of Seller. 8.2 INDEMNIFICATION BY THE PURCHASER. The Purchaser agrees to indemnify and hold harmless the Seller and the Member, their respective successors and assigns, against any and all loss, injury, liability, claim, damage or expense (including, without limitation, reasonable attorneys' fees) incurred or sustained by the Seller or Member or their respective successors and assigns resulting from any of the following: (a) any inaccuracy in, or breach or violation of, the representations and warranties made by the Purchaser and the covenants undertaken by it, whether or not such inaccuracy or breach or violation was known to, or should have been known by, the Purchaser, the Seller or the Member on the date of this Agreement, it being the acknowledged intention of the parties hereto that the Purchaser shall be completely responsible for, and the Seller and the Member shall be conclusively deemed to have relied upon, such representations, warranties and covenants in the consummation of the purchase and sale transactions herein contemplated; (b) any suits, actions or claims relating to sales or other transactions or activities of the Purchaser after the Closing Date; and 8 (c) any inaccuracy or misrepresentation (whether negligent or otherwise) in any certificate or affidavit delivered by the Purchaser in accordance with the provisions of any section hereof. 8.3 CLAIMS PROCEDURE. ---------------- (a) NOTIFICATION OF REQUEST. If any action, claim or demand shall be brought or asserted against any party in respect of which indemnity may be sought pursuant to this Section 8, the party seeking indemnification shall promptly notify the parties from whom indemnification is to be sought, stating the name and address of any claimant and of counsel to any claimant (if known), the amount claimed to be due and payable, the basis of the claim as alleged by any claimant and the provision or provisions of this Agreement under which such claim for indemnity is asserted. The notice shall be accompanied by copies of any documents relied on by any claimant and furnished to the party seeking indemnification. (b) RESPONSE TO REQUEST. Within ten (10) calendar days after receipt of such notice, the parties from whom indemnification is sought shall by written notice either: (i) concede liability in whole as to the amount claimed in such notice; (ii) deny liability in whole as to such amount; (iii)concede liability in part and deny liability as to the balance; or (iv) in the case of claims by third parties, assume the defense thereof, provided that if the notice required hereunder is properly given, failure by such parties to assume the defense of a third party claim for which a party is entitled to indemnity under this Agreement shall cause the indemnity obligations of the parties from whom indemnification is sought to extend to whatever outcome results from such third party claim. (c) SETTLEMENT OR COMPROMISE. Any settlement or compromise of a claim shall be agreed upon by all parties. If the party seeking indemnification declines to accept a bona fide offer of settlement which is recommended by the party from whom indemnification is sought, the maximum liability of the party from whom indemnification is sought shall not exceed that amount which it would have been liable for had such settlement been accepted. If the party from whom indemnification is sought declines to accept a bona fide offer of settlement recommended by the party seeking indemnification, the party from whom indemnification is sought shall be liable for whatever outcome results from such third party claim. 9. FEES AND EXPENSES. The Purchaser and the Seller shall each bear any and all of their respective fees and expenses (including, without limitation, legal, accounting, consulting and other professional fees and expenses) incurred in connection with the consummation of this Agreement and the transactions contemplated herein, regardless of whether such consummation occurs. 9 10. 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 overnight delivery, confirmed telecopy or prepaid first class registered or certified mail, return receipt requested, to the following addresses, or such other addresses as are given to other parties in the manner set forth herein: (a) If to the Purchaser, to: IMPACT Tax and Business Services, Inc. 333 W. Vine Street, Suite 206 Lexington, Kentucky 40507 Telecopier Number: (859) 971-7683 with a courtesy copy to: William C. Phillippi, P.A. Broad and Cassel 500 East Broward Blvd., Suite 1130 Fort Lauderdale, Florida 33394 Telecopier Number: (954) 761-8135 (b) If to the Seller or the Member, to: A. J. Elko & Associates, LLC 2993 Jacks Run Road White Oak, Pennsylvania 15131 Telecopier Number: (412) 664-0450 11. MISCELLANEOUS. ------------- 11.1 TIME. Time is of the essence. 11.2 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof. It supersedes all prior negotiations, letters and understandings relating to the subject matter hereof. 11.3 AMENDMENT. This Agreement may not be amended, supplemented or modified in whole or in part except by an instrument in writing signed by the party or parties against whom enforcement of any such amendment, supplement or modification is sought. 11.4 ASSIGNMENT. This Agreement may not be assigned by any party hereto without the prior written consent of the other party. 10 11.5 CHOICE OF LAW. This Agreement will be interpreted, construed and enforced in accordance with the laws of the State of Florida without giving effect to the application of the principles pertaining to conflicts of laws. 11.6 HEADINGS. The section and subsection headings in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. 11.7 PRONOUNS. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the context may require. 11.8 NUMBER AND GENDER. Words used in this Agreement, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate. 11.9 CONSTRUCTION. This Agreement shall be construed neither against nor in favor of any of the parties hereto, but rather in accordance with the fair meaning thereof. 11.10 EFFECT OF WAIVER. The failure of any party at any time or times to require performance of any provision of this Agreement will in no manner affect the right to enforce the same. The waiver by any party of any breach of any provision of this Agreement will not be construed to be a waiver by any such party of any succeeding breach of that provision or a waiver by such party of any breach of any other provision. 11.11 SEVERABILITY. The invalidity, illegality or unenforceability of any provision or provisions of this Agreement will not affect any other provision of this Agreement, which will remain in full force and effect, nor will the invalidity, illegality or unenforceability of a portion of any provision of this Agreement affect the balance of such provision. In the event that any one or more of the provisions contained in this Agreement or any portion thereof shall for any reason be held to be invalid, illegal or unenforceable in any respect, this Agreement shall be reformed, construed and enforced as if such invalid, illegal or unenforceable provision had never been contained herein. 11.12 ENFORCEMENT. Should it become necessary for any party to institute legal action to enforce the terms and conditions of this Agreement, the successful party will be awarded reasonable attorneys' fees at all trial and appellate levels, expenses and costs. 11.13 BINDING NATURE. This Agreement will be binding upon and will inure to the benefit of any successor or successors of the parties hereto. 11.14 COUNTERPART. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. 11 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. IMPACT TAX AND BUSINESS SERVICES, INC., a Florida corporation By: /s/ W. Neal Jordan ------------------------------------- W. Neal Jordan, Vice President A. J. ELKO & ASSOCIATES, LLC, a Pennsylvania limited liability company By: /s/ A.J. Elko ------------------------------------- A. J. Elko, President A.J. Elko ------------------------------------- A. J. ELKO, MEMBER 12 EX-21 5 ex21-301.txt SUBSIDIARIES OF THE COMPANY JORDAN AMERICAN HOLDINGS, INC. SUBSIDIARIES OF THE COMPANY EXHIBIT 21 SUBSIDIARY STATE OF ---------- -------- INCORPORATION ------------- Equity Assets Management, Inc. DE IMPACT Financial Network, Inc. FL IMPACT Administrative Services, Inc. FL IMPACT Tax & Business Services, Inc. FL EX-23.1 6 ex231-301.txt AUDITOR'S CONSENT EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We hereby consent to the incorporation by reference in the registration statements (No. 33-80690 and 33-82552) on Form S-8 and the registration statement on Form S-3 that is Post-Effective Amendment No. 4 to the registration statement (No. 33-31234) on Form S-1 of Jordan American Holdings, Inc. of our report dated March 16, 2001 accompanying the consolidated financial statements of Jordan American Holdings, Inc. and Subsidiaries as of and for the years ended December 31, 2000 and December 31, 1999, which are part of the Annual Report on Form 10-KSB for the year ended December 31, 2000. SPICER, JEFFRIES & CO. Denver, Colorado March 28, 2001 -----END PRIVACY-ENHANCED MESSAGE-----