UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C
AMENDMENT 3
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
ZANNWELL INC.
(Name of Registrant as specified in its charter)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to exchange act rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by exchange act
rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
1
ZANNWELL INC.
1802 N. Carson Street, Suite 212
Carson City, Nevada 89701
TELEPHONE (775) 887-0670
December 13, 2004
To Our Stockholders:
The purpose of this information statement is to inform the holders of
record of shares of our common stock as of the close of business on the record
date, December 1, 2004 that our board of directors has recommended, and that the
holder of the majority of voting capital stock intends to vote on January 3,
2005 to effect the following corporate actions:
1. Amend our articles of incorporation to change our name from
"ZannWell Inc." to "The BlackHawk Fund";
2. Approve an amendment to our articles of incorporation to increase the
authorized number of shares of our common stock from 900,000,000 to
4,000,000,000 shares;
3. Grant discretionary authority to our board of directors to implement a
reverse stock split of our common stock on the basis of one post-consolidation
share for up to each 800 pre-consolidation shares to occur at some time within
12 months of the date of this information statement, with the exact time of the
reverse split to be determined by the board of directors;
4. Grant discretionary authority to the directors to implement a proposal
for ZannWell Inc. to become a Business Development Corporation to occur at some
time within 12 months of the date of this information statement, with the exact
time of such conversion to be determined by the board of directors;
5. Ratify the removal of R. Patrick Liska from our board of directors;
and
6. Ratify the election of Steve Bonenberger and Brent Fouch as our
directors.
We have a consenting stockholder, Palomar Enterprises, Inc., a Nevada
corporation, ("Palomar"), which holds 19,000,000 shares of our series A
preferred stock, 10,000,000 shares of our series B preferred stock, and
10,000,000 shares of our series C preferred stock. The shares of the series A
preferred stock do not have voting rights. Each share of the series B preferred
stock entitles the holder to one vote of our common stock on all matters brought
before our stockholders. Each share of the series C preferred stock entitles the
holder to 100 votes of our common stock on all matters brought before our
stockholders. Therefore, Palomar will have the power to vote 1,010,000,000
shares of the common stock, which number exceeds the 167,750,000 issued and
outstanding shares of our common stock on the record date.
Palomar will vote in favor of the proposed amendments to our articles of
incorporation, to ratify the removal of a director and the election of new
directors, and for the grant of discretionary authority to the board with
respect to the stock split and conversion to a Business Development Corporation.
Palomar will have the power to pass the proposed corporate actions without the
concurrence of any of our other stockholders.
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WE ARE NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
We appreciate your continued interest in ZannWell Inc.
Very truly yours,
/s/ Steve Bonenberger
Steve Bonenberger
President
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ZANNWELL INC.
1802 N. Carson Street, Suite 212
Carson City, Nevada 89701
TELEPHONE (775) 887-0670
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A
PROXY.
This information statement is furnished to the holders of record at the
close of business on December 1, 2004 the record date, of the outstanding common
stock of ZannWell Inc., pursuant to Rule 14c-2 promulgated under the Securities
Exchange Act of 1934, as amended, in connection with the approval by the holder
of the majority of the votes of our stock intends to take on January 3, 2005 to
effect the following corporate actions:
1. Amend our articles of incorporation to change our name from
"ZannWell Inc." to "The BlackHawk Fund";
2. Approve an amendment to our articles of incorporation to increase the
authorized number of shares of our common stock from 900,000,000 to
4,000,000,000 shares;
3. Grant discretionary authority to our board of directors to implement a
reverse stock split of our common stock on the basis of one post-consolidation
share for up to each 800 pre-consolidation shares to occur at some time within
12 months of the date of this information statement, with the exact time of the
reverse split to be determined by the board of directors;
4. Grant discretionary authority to the directors to implement a proposal
for ZannWell Inc. to become a Business Development Corporation to occur at
some time within 12 months of the date of this information statement, with the
exact time of such conversion to be determined by the board of directors;
5. Ratify the removal of R. Patrick Liska from our board of directors; and
6. Ratify the election of Steve Bonenberger and Brent Fouch as our
directors.
This information statement will be sent on or about December 13, 2004 to
our stockholders of record who do not sign the majority written consent
described herein.
VOTING SECURITIES
In accordance with our bylaws, our board of directors has fixed the close
of business on December 1, 2004 as the record date for determining the
stockholders entitled to notice of the above noted actions. The amendments to
our articles of incorporation, the approval of the discretionary authority with
respect to the reverse stock split require the affirmative vote of a majority of
the shares of our common stock issued and outstanding at the time the vote is
taken. The approval of the discretionary authority with respect to becoming a
Business Development Corporation requires a simple majority of the votes cast
once a quorum is present and voting. The ratification of the removal of the
director requires two-thirds of the voting power of the issued and outstanding
stock entitled to vote. The ratification of the election of Messrs. Bonenberger
and Fouch as our directors requires the plurality of the votes cast once a
quorum is present and voting.
The quorum necessary to conduct business of the stockholders consists of a
majority of the common stock issued and outstanding as of the record date.
As of the record date, 167,750,000 shares of our common stock were issued
and outstanding, 20,000,000 shares of our Series A preferred stock were issued
and outstanding, 10,000,000 shares of our Series B preferred stock were issued
and outstanding and 10,000,000 shares of our Series C preferred stock were
issued and outstanding. We have a consenting stockholder, Palomar Enterprises,
Inc., a Nevada corporation, ("Palomar"), which holds 19,000,000 shares of our
series A preferred stock, 10,000,000 shares of our series B preferred stock, and
10,000,000 shares of our series C preferred stock. The Series A preferred stock
does not have voting rights. Each share of the series B preferred stock entitles
the holder to one vote of our common stock on all matters brought before our
stockholders. Each share of the series C preferred stock entitles the holder to
100 votes of our common stock on all matters brought before our stockholders.
Therefore, Palomar will have the power to vote 1,010,000,000 shares of the
common stock, which number exceeds the 167,750,000 issued and outstanding shares
of our common stock on the record date.
Palomar will vote in favor of the proposed amendments to our articles of
incorporation, for the grant of discretionary authority to the board with
respect to the stock split and conversion to a Business Development Corporation,
and for the ratification of the removal and election of directors. Palomar will
have the power to pass the proposed corporate actions without the concurrence of
any of our other stockholders.
DISTRIBUTION AND COSTS
We will pay all costs associated with the distribution of this information
statement, including the costs of printing and mailing. In addition, we will
only deliver one information statement to multiple security holders sharing an
address, unless we have received contrary instructions from one or more of the
security holders. Also, we will promptly deliver a separate copy of this
information statement and future stockholder communication documents to any
security holder at a shared address to which a single copy of this information
statement was delivered, or deliver a single copy of this information statement
and future stockholder communication documents to any security holder or holders
sharing an address to which multiple copies are now delivered, upon written
request to us at our address noted above.
Security holders may also address future requests regarding delivery of
information statements and/or annual reports by contacting us at the address
noted above.
DISSENTERS' RIGHT OF APPRAISAL
No action will be taken in connection with the proposed corporate actions
by our board of directors or the voting stockholders for which Nevada law, our
articles of incorporation or bylaws provide a right of a stockholder to dissent
and obtain appraisal of or payment for such stockholder's shares.
GRANT OF DISCRETIONARY AUTHORITY TO THE DIRECTORS TO AMEND OUR ARTICLES OF
INCORPORATION TO CHANGE OUR
NAME TO "THE BLACKHAWK FUND."
Our board of directors has unanimously adopted a resolution seeking
stockholder approval to amend our articles of incorporation to change our name
to "The BlackHawk Fund." The board believes that this amendment is in our best
interests because it will more accurately reflect our planned business model as
a business development company with diversified interests. The proposed
amendment will not have any material effect on our business, operations,
reporting requirements or stock price. Stockholders will not be required to have
new stock certificates reflecting the change in the par value. New stock
certificates will be issued as old certificates are tendered to our transfer
agent. A copy of the proposed resolution amending our articles of incorporation
to change our corporate name is contained in Attachment A hereto. If the
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amendment is adopted, it will become effective upon filing of a certificate of
amendment of our articles of incorporation with the Secretary of State of
Nevada.
VOTE REQUIRED
The affirmative vote of a majority of the total number of shares of our
issued and outstanding capital stock is required to approve the amendment to our
articles of incorporation to change our name from "ZannWell Inc." to " The
BlackHawk Fund."
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Our board of directors recommends that stockholders vote FOR the amendment
of our articles of incorporation to change our name to "The BlackHawk
Fund."
AMENDMENT TO ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF OUR AUTHORIZED COMMON STOCK
The board of directors has determined that it is advisable to increase our
authorized common stock and has adopted, subject to stockholder approval, an
amendment to our articles of incorporation to increase our authorized number of
shares of common stock from 900,000,000 shares to 4,000,000,000 shares of common
stock, par value $0.001 per share. A copy of the proposed resolution amending
our articles of incorporation is attached to this information statement as
Attachment A.
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Authorizing an additional 3,100,000,000 shares of common stock would give
our board of directors the express authority, without further action of the
stockholders, to issue common stock from time to time as the board deems
necessary. The board of directors believes it is necessary to have the ability
to issue such additional shares of common stock for general corporate purposes.
Potential uses of the additional authorized shares may include equity
financings, issuance of options, acquisition transactions, stock dividends or
distributions, without further action by the stockholders, unless such action
were specifically required by applicable law or rules of any stock exchange or
similar system on which our securities may then be listed.
The following is a summary of the material matters relating to our common
stock.
Presently, the holders of our common stock are entitled to one vote for
each share held of record on all matters submitted to a vote of our
stockholders, including the election of directors. Our common stockholders do
not have cumulative voting rights. Subject to preferences that may be applicable
to any then outstanding series of our preferred stock, holders of our common
stock are entitled to receive ratably such dividends, if any, as may be declared
by our board of directors out of legally available funds. In the event of the
liquidation, dissolution, or winding up of ZannWell Inc., the holders of our
common stock will be entitled to share ratably in the net assets legally
available for distribution to our stockholders after the payment of all our
debts and other liabilities, subject to the prior rights of any series of our
preferred stock then outstanding.
The holders of our common stock have no preemptive or conversion rights or
other subscription rights and there are no redemption or sinking fund provisions
applicable to our common stock. The amendment would not alter or modify any
preemptive right of holders of our common stock to acquire our shares, which is
denied, or effect any change in our common stock, other than the number of
authorized shares.
The issuance of additional shares to certain persons allied with our
management could have the effect of making it more difficult to remove our
current management by diluting the stock ownership or voting rights of persons
seeking to cause such removal. In addition, an issuance of additional shares by
us could have an effect on the potential realizable value of a stockholder's
investment.
In the absence of a proportionate increase in our earnings and book value,
an increase in the aggregate number of our outstanding shares caused by the
issuance of the additional shares will dilute the earnings per share and book
value per share of all outstanding shares of our common stock. If such factors
were reflected in the price per share of common stock, the potential realizable
value of a stockholder's investment could be adversely affected.
The additional common stock to be authorized by adoption of the amendment
would have rights identical to our currently outstanding common stock. Adoption
of the proposed amendment and issuance of the common stock would not affect the
rights of the holders of our currently outstanding common stock, except for
effects incidental to increasing the number of outstanding shares of our common
stock, such as dilution of the earnings per share and voting rights of current
holders of common stock. If the amendment is adopted, it will become effective
upon filing of a certificate of amendment of our articles of incorporation with
the Secretary of State of Nevada.
Issuance of additional shares. As of the date of this information
statement, our board has no plans to issue or use any of our newly authorized
shares of common stock. The increase in the number of our authorized common
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shares is proposed by our management in order to ensure sufficient reserves of
our common stock for various capital purposes and to eliminate the need for
similar amendments in the near future, which could be costly and time-consuming.
The proposal with respect to our common stock is not being made by us in
response to any known accumulation of shares or threatened takeover.
VOTE REQUIRED
The affirmative vote of a majority of the total number of shares of our
issued and outstanding capital stock is required to approve the amendment to our
articles of incorporation increasing the number of our common shares.
Our board of directors recommends that stockholders vote FOR the amendment of
our articles of incorporation increasing the number of our authorized common
shares as described in Attachment A hereto.
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GRANT OF DISCRETIONARY AUTHORITY TO THE BOARD OF DIRECTORS
TO IMPLEMENT A ONE FOR UP TO 800 REVERSE STOCK SPLIT
Our board of directors has adopted a resolution to seek stockholder
approval for discretionary authority to our board of directors to implement a
reverse split for the purpose of increasing the market price of our common
stock. The reverse split exchange ratio that the board of directors approved and
deemed advisable and for which it is seeking stockholder approval is up to 800
pre-consolidation shares for each one post-consolidation share, with the reverse
split to occur within 12 months of the date of this information statement, the
exact time of the reverse split to be determined by the directors in their
discretion. Approval of this proposal would give the board authority to
implement the reverse split on the basis of up to 800 pre-consolidation shares
for each one post-consolidation share at any time it determined within 12 months
of the date of this information statement. In addition, approval of this
proposal would also give the board authority to decline to implement a reverse
split.
Our board of directors believes that stockholder approval of a range for
the exchange ratio of the reverse split (as contrasted with approval of a
specified ratio of the split) provides the board of directors with maximum
flexibility to achieve the purposes of a stock split, and, therefore, is in the
best interests of our stockholders. The actual ratio for implementation of the
reverse split would be determined by our board of directors based upon its
evaluation as to what ratio of pre-consolidation shares to post-consolidation
shares would be most advantageous to us and our stockholders.
Our board of directors also believes that stockholder approval of a
twelve-months range for the effectuation of the reverse split (as contrasted
with approval of a specified time of the split) provides the board of directors
with maximum flexibility to achieve the purposes of a stock split, and,
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therefore, is in the best interests of our stockholders. The actual timing for
implementation of the reverse split would be determined by our board of
directors based upon its evaluation as to when and whether such action would be
most advantageous to us and our stockholders.
If you approve the grant of discretionary authority to our board of
directors to implement a reverse split and the board of directors decides to
implement the reverse split, we will effect a reverse split of our then issued
and outstanding common stock on the basis of up to 800 pre-consolidation shares
for each one post-consolidation share.
The board of directors believes that the higher share price that might
initially result from the reverse stock split could help generate interest in
ZannWell Inc. among investors and thereby assist us in raising future capital to
fund our operations or make acquisitions.
Stockholders should note that the effect of the reverse split upon the
market price for our common stock cannot be accurately predicted. In particular,
if we elect to implement a reverse stock split, there is no assurance that
prices for shares of our common stock after a reverse split will be up to 800
times greater than the price for shares of our common stock immediately prior to
the reverse split, depending on the ratio of the split. Furthermore, there can
be no assurance that the market price of our common stock immediately after a
reverse split will be maintained for any period of time. Moreover, because some
investors may view the reverse split negatively, there can be no assurance that
the reverse split will not adversely impact the market price of our common stock
or, alternatively, that the market price following the reverse split will either
exceed or remain in excess of the current market price.
EFFECT OF THE REVERSE SPLIT
The reverse split would not affect the registration of our common stock
under the Securities Exchange Act of 1934, as amended, nor will it change our
periodic reporting and other obligations thereunder.
The voting and other rights of the holders of our stock would not be
affected by the reverse split (other than as a result of the payment of cash in
lieu of fractional shares as described below). For example, a holder of 0.5
percent of the voting power of the outstanding shares of our common stock
immediately prior to the effective time of the reverse split would continue to
hold 0.5 percent of the voting power of the outstanding shares of our common
stock after the reverse split. The number of stockholders of record would not
be affected by the reverse split (except to the extent that any stockholder
holds only a fractional share interest and receives cash for such interest).
The authorized number of shares of our common and preferred stock and the
par value of our common and preferred stock under our articles of
incorporation would remain the same following the effective time of the reverse
split.
The number of shares of our common stock issued and outstanding would be
reduced following the effective time of the reverse split in accordance with the
following formula: if our directors decide to implement a one for 800 reverse
split, every 800 shares of our common stock owned by a stockholder will
automatically be changed into and become one new share of our common stock, with
800 being equal to the exchange ratio of the reverse split, as determined by the
directors in their discretion.
Stockholders should recognize that if a reverse split is effected, they
will own a fewer number of shares than they presently own (a number equal to the
number of shares owned immediately prior to the effective time divided by the
one for 800 exchange ratio, or such lesser exchange ratio as may be determined
by our directors, subject to adjustment for fractional shares, as described
below).
Fractional share which would otherwise be held by the stockholders of our
common stock after a reverse split will be rounded up to the next whole share.
We will issue one new share of our common stock for up to each 800 shares of our
common stock held as of the record date. All fractional share amounts resulting
from the reverse split will be rounded up to the next whole new share. The
reverse split may reduce the number of holders of post-reverse split shares as
compared to
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the number of holders of pre-reverse split shares to the extent that there are
stockholders presently holding fewer than 800 shares (or such lesser number as
may be determined by our directors). However, the intention of the reverse
split is not to reduce the number of our stockholders. In fact, we do not
expect that the reverse split will result in any material reduction in the
number of our stockholders.
We currently have no intention of going private, and this proposed reverse
stock split is not intended to be a first step in a going private transaction
and will not have the effect of a going private transaction covered by Rule
13e-3 of the Exchange Act. Moreover, the proposed reverse stock split does not
increase the risk of us becoming a private company in the future.
Issuance of Additional Shares. The number of authorized but unissued
shares of our common and preferred stock effectively will be increased
significantly by the reverse split of our common and preferred stock. For
example, if we elect to implement a one for 250 reverse split, based on the
167,750,000 shares of our common stock outstanding on the record date, and the
900,000,000 shares of our common stock that are currently authorized under our
articles of incorporation, 732,250,000 shares of our common stock remain
available for issuance prior to the reverse split taking effect. A one for 250
reverse split would have the effect of decreasing the number of our outstanding
shares of our common stock from 167,750,000 to 671,000 shares.
Based on the 900,000,000 shares of our common stock that are currently
authorized under our articles of incorporation, and before the proposed increase
in our authorized common stock, if we elect to implement a one for 250 reverse
stock split, the reverse split, when implemented, would have the effect of
increasing the number of authorized but unissued shares of our common stock from
732,250,000 to 899,329,000 shares.
If we elect to implement a one for 800 reverse split, based on the
167,750,000 shares of our common stock outstanding on the record date, and the
900,000,000 shares of our common stock that are currently authorized under our
articles of incorporation, 732,250,000 shares of our common stock remain
available for issuance prior to the reverse split taking effect. A one for 800
reverse split would have the effect of decreasing the number of our outstanding
shares of our common stock from 167,750,000 to 209,688 shares.
Based on the 900,000,000 shares of our common stock that are currently
authorized under our articles of incorporation, and before the proposed increase
in our authorized common stock, if we elect to implement a one for 800 reverse
stock split, the reverse split, when implemented, would have the effect of
increasing the number of authorized but unissued shares of our common stock from
732,250,000 to 899,790,312 shares.
The issuance in the future of such additional authorized shares may have
the effect of diluting the earnings per share and book value per share, as well
as the stock ownership and voting rights, of the currently outstanding shares of
our common stock.
The effective increase in the number of authorized but unissued shares of
our common and preferred stock may be construed as having an anti-takeover
effect by permitting the issuance of shares to purchasers who might oppose
a hostile takeover bid or oppose any efforts to amend or repeal certain
provisions of our articles of incorporation or bylaws. Such a use of these
additional authorized shares could render more difficult, or discourage, an
attempt to acquire control of us through a transaction opposed by our board of
directors. At this time, our board does not have plans to issue any common or
preferred shares resulting from the effective increase in our authorized but
unissued shares generated by the reverse split.
FEDERAL INCOME TAX CONSEQUENCES
We will not recognize any gain or loss as a result of the reverse split.
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The following description of the material federal income tax consequences
of the reverse split to our stockholders is based on the Internal Revenue Code
of 1986, as amended, applicable Treasury Regulations promulgated thereunder,
judicial authority and current administrative rulings and practices as in effect
on the date of this information statement. Changes to the laws could alter the
tax consequences described below, possibly with retroactive effect. We have not
sought and will not seek an opinion of counsel or a ruling from the Internal
Revenue Service regarding the federal income tax consequences of the reverse
split. This discussion is for general information only and does not discuss the
tax consequences that may apply to special classes of taxpayers (e.g.,
non-residents of the United States, broker/dealers or insurance companies). The
state and local tax consequences of the reverse split may vary significantly as
to each stockholder, depending upon the jurisdiction in which such stockholder
resides. You are urged to consult your own tax advisors to determine the
particular consequences to you.
In general, the federal income tax consequences of the reverse split will
vary among stockholders depending upon whether they receive cash for fractional
shares or solely a reduced number of shares of our common stock in exchange for
their old shares of our common stock. We believe that the likely federal income
tax effects of the reverse split will be that a stockholder who receives solely
a reduced number of shares of our common stock will not recognize gain or loss.
With respect to a reverse split, such a stockholder's basis in the reduced
number of shares of our common stock will equal the stockholder's basis in its
old shares of our common stock. A stockholder who receives cash in lieu of a
fractional share as a result of the reverse stock split will generally be
treated as having received the payment as a distribution in redemption of the
fractional share, as provided in Section 302(a) of the Code, which distribution
will be taxed as either a distribution under Section 301 of the Code or an
exchange to such stockholder, depending on that stockholder's particular facts
and circumstances. Generally, a stockholder receiving such a payment should
recognize gain or loss equal to the difference, if any, between the amount of
cash received and the stockholder's basis in the fractional share. In the
aggregate, such a stockholder's basis in the reduced number of shares of our
common stock will equal the stockholder's basis in its old shares of our common
stock decreased by the basis allocated to the fractional share for which such
stockholder is entitled to receive cash, and the holding period of the
post-effective reverse split shares received will include the holding period of
the pre-effective reverse split shares exchanged.
EFFECTIVE DATE
If the proposed reverse split is approved and the board of directors elects
to proceed with a reverse split, the split would become effective as of 5:00
p.m. Nevada time on the date the split is approved by our stockholders, which in
any event shall not be later than 12 months from the date of this information
statement. Except as explained herein with respect to fractional shares and
stockholders who currently hold fewer than 800 shares, or such lesser amount as
we may determine, on such date, all shares of our common stock that were issued
and outstanding immediately prior thereto will be, automatically and without any
action on the part of the stockholders, converted into new shares of our common
stock in accordance with the one for 800 exchange ratio or such other exchange
ratio we determine.
RISKS ASSOCIATED WITH THE REVERSE SPLIT
This information statement includes forward-looking statements including
statements regarding our intent to solicit approval of a reverse split, the
timing of the proposed reverse split and the potential benefits of a reverse
split, including, but not limited to, increase investor interest and the
potential for a higher stock price. The words "believe," "expect," "will," "may"
and similar phrases are intended to identify such forward-looking statements.
Such statements reflect our current views and assumptions, and are subject to
various risks and uncertainties that could cause actual results to differ
materially from expectations. The risks include that we may not have sufficient
resources to continue as a going concern; any significant downturn in our
industry or in general business conditions would likely result in a reduction of
demand for our products or services and would be detrimental to our business; we
will be unable to achieve profitable operations unless we increase quarterly
revenues or make further cost reductions; a loss of or decrease in purchases by
one of our significant customers could materially and adversely affect our
revenues and profitability; the loss of key personnel could have a material
adverse effect on our business; the large number of shares available for future
sale could adversely affect the price of our common stock; and the volatility of
our stock price. For a discussion of these and other risk factors, see our
annual report on Form 10-KSB for the year ended December 31, 2003 and other
filings with the Securities and Exchange Commission.
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If approved and implemented, the reverse stock split will result in some
stockholders owning "odd-lots" of less than 100 common shares of our stock on a
post-consolidation basis. Odd lots may be more difficult to sell, or require
greater transaction costs per share to sell than shares in "even-lots" of even
multiples of 100 shares.
VOTE REQUIRED
The affirmative vote of a majority of the total number of shares of our
issued and outstanding capital stock is required to approve the grant of
discretionary authority to our directors to implement a reverse stock split.
The board of directors recommends a vote FOR approval of the grant of
discretionary authority to our directors to implement a reverse stock split, as
described in Attachment A hereto.
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GRANT OF DISCRETIONARY AUTHORITY TO THE BOARD OF DIRECTORS TO CONVERT
ZANNWELL INC. TO A BUSINESS DEVELOPMENT CORPORATION
The board of directors has recommended that the directors be granted
authority to convert ZannWell Inc. to a Business Development Corporation. Such
conversion into a Business Development Corporation would allow us to raise
additional funding for our operations and to develop a larger investor base.
Approval of this proposal would give the board authority to convert ZannWell
Inc. to a Business Development Corporation at any time it determined within 12
months of the date of this information statement. In addition, approval of this
proposal would also give the board authority to decline to convert ZannWell Inc.
to a Business Development Corporation.
We also reserve the right to proceed with the transaction if determined by
the management to be appropriate under the circumstances and in the best
interests of stockholders.
The board currently believes that becoming a Business Development
Corporation is in the best interests of our stockholders but requires the
flexibility to do what is in the best interests of our stockholders.
Accordingly, the board is seeking stockholder approval to preserve the
flexibility to move forward with this action is the board continues to believe
it is in the best interests of our stockholders to do so.
There is no assurance that becoming a Business Development Corporation will
be consummated or if consummated, that such a transaction will be on the same
terms as anticipated at this time. We reserve the right not to proceed with
such transaction or to modify its terms at any time after taking into account
all the facts and circumstances. For any transaction that would require
stockholder approval, we do not, however, intend to modify the proposed terms in
a manner that would have a material adverse impact on our stockholders without
seeking further stockholder approval of such terms.
VOTE REQUIRED
Once a quorum is present and voting, a simple majority of the votes cast is
required to approve the grant of discretionary authority to our directors to
convert ZannWell Inc. to a Business Development Corporation.
The board of directors recommends a vote FOR approval of the grant of
discretionary authority to our directors to convert ZannWell Inc. to a Business
Development Corporation, as described in Attachment A hereto.
-------------
RATIFICATION OF THE REMOVAL OF R. PATRICK LISKA FROM OUR BOARD OF DIRECTORS Our
majority stockholder intends to ratify the removal of R. Patrick Liska as our
director, effective November 23, ,2004.
Pursuant to Section 78.355 of the Nevada Revised Statutes, incumbent
directors may be removed from office by the vote of stockholders representing
not less than two-thirds of the voting power of the issued and outstanding stock
entitled to vote. on November 23, 2004,acting by written consent, Robert C.
Simpson, our then-majority stockholder, removed R. Patrick Liska as our
director, president, chairman of the board and chief executive officer . Robert
C. Simpson had more than enough votes to approve the removal in accordance with
Section 78.355 of the Nevada Revised Statutes. Effective November 23, 2004,
Robert C. Simpson was elected our sole director, president, chairman of the
board and chief executive officer.
The removal of R. Patrick Liska as our director and an officer resulted
from philosophical differences between us and Mr. Liska regarding business
operations, policies and practices.
VOTE REQUIRED
No less than two-thirds of the of the voting power of the issued and
outstanding stock entitled to vote is required to ratify the removal of R.
Patrick Liska as our director.
The board of directors recommends a vote FOR approval of the removal of R.
Patrick Liska as our director, as described in Attachment A hereto.
RATIFICATION OF THE ELECTION OF STEVE BONENBERGER AND BRENT FOUCH AS OUR
DIRECTORS
On November 29, 2004, as reported by us on a Current Report filed with the
Commission on December 1, 2004, a change in control occurred as the result of
the acquisition of our series A, series B and series C preferred stock by
Palomar.
Pursuant to that certain Capital Stock Purchase Agreement dated November
29, 2004 between Robert C. Simpson, our then-sole director and officer, and
Palomar, on November 29, 2004, Palomar acquired from Dr. Simpson 19,000,000
shares of our series A preferred stock, 10,000,000 shares of our series B
preferred stock and 10,000,000 shares of our series C preferred stock. The
shares of the series A preferred stock do not have voting rights. The voting
power of all of the shares of our preferred stock sold pursuant to the Capital
Stock Purchase Agreement equals to the vote of 1,010,000,000 shares of the
common stock.
Concurrently with the stock purchase transaction, Robert C. Simpson, our
then-sole director, elected Steve Bonenberger and Brent Fouch to our board of
directors. Steve Bonenberger was also elected President and Chief Executive
Officer and Brent Fouch was elected Secretary and Chief Financial Officer.
Following the election of Messrs. Bonenberger and Fouch as our officers and
directors , Robert C. Simpson resigned his positions as our director and officer
. Our majority stockholder intends to ratify the election of Messrs. Fouch and
Bonenberger to our board of directors.
Directors are elected by the stockholders by a plurality of the votes cast
at the election.
VOTE REQUIRED
No less than the majority of the voting power of the issued and outstanding
stock entitled to vote is required to ratify the election of Messrs. Bonenberger
and Fouch to our board of directors.
The board of directors recommends a vote FOR ratification of the election
of Messrs. Bonenberger and Fouch to our board of directors as described in
Attachment A hereto.
-------------
NOMINEES
The following table sets forth information concerning each nominee as well
as each director, officer, and each non-director executive officer continuing in
office:
NAME AGE POSITION DIRECTOR SINCE
----------------- --- ---------------------------------------------------------- --------------
Steve Bonenberger 48 President, Chief Executive Officer and director 2004
Brent Fouch 35 Secretary, Chief Financial Officer and director 2004
Our executive officers are elected annually by our board of directors.
There are no family relationships among our directors and executive officers.
Steve Bonenberger: During the past five years, Mr. Bonenberger was the
managing director of B.M.M., LLC, a corporate consulting firm. Going forward, he
intends to devote a significant portion of his time to the furtherance of our
operations.
Brent Fouch: Over the past four years, Mr. Fouch has been a corporate
consultant
BOARD MEETINGS AND COMMITTEES
During our fiscal year ended December 31, 2003, our board of directors
held four meetings, each of which was signified by a consent executed by
our directors.
Compensation Committee. Our board of directors has recently created a
compensation committee. However, no members to the committee have been appointed
and the committee has not been formally organized. The compensation committee
will make recommendations to the board of directors concerning salaries and
compensation for our executive officers and employees. Our board adopted a
written charter for the compensation committee, a copy of which is attached to
this information statement as Exhibit A. Since the compensation committee has
---------
been formed recently, there have been no meetings held or members appointed at
the time of this information statement.
Audit Committee. Our board of directors has recently created an audit
committee which will be directly responsible for the appointment, compensation,
and oversight of the work of any registered public accounting firm employed by
us (including resolution of disagreements between our management and the auditor
regarding financial disclosure) for the purpose of preparing or issuing an audit
report or related work. Our board adopted a written charter for the audit
committee, a copy of which is attached to this information statement as Exhibit
-------
B. The audit committee will review and evaluate our internal control functions.
-
Since the audit committee has been formed recently, there have been no meetings
held or members appointed at the time of this information statement.
The members of the audit committee will be independent as defined under
Rule 4200(a)(15) of the NASD's listing standards.
Executive Committee. We do not have an executive committee, although our
board of directors is authorized to create one.
Nominating Committee. Our board of directors has recently created a
nominating committee. No meetings have been held or members appointed. The
functions to be performed by the nominating committee include selecting
candidates to fill vacancies on the board of directors, reviewing the structure
and composition of the board, and considering qualifications requisite for
continuing board service. The nominating committee will consider candidates
recommended by a stockholder of Zannwell Inc. Any such recommendation for the
2005 Annual Meeting of Stockholders should be provided to our corporate
secretary by December 31, 2004.
The policies and procedures with respect to the consideration of such
candidates are set forth below:
The recommended candidate is to be submitted to us in writing addressed to
our principal offices in Carson City, Nevada. The recommendation is to be
submitted by the date specified in Rule 14a-8 of the Securities Exchange Act of
1934, as amended for submitting stockholder proposals to be included in the
Company's annual stockholders' meeting proxy statement.
The recommendation shall be in writing and shall include the following
information: name of candidate; address, phone, and fax number of candidate; a
statement signed by the candidate certifying that the candidate wishes to be
considered for nomination to our board of directors; and information responsive
to the requirements of Regulation S-K, Item 401 with respect to the candidate;
and state the number of shares of our stock beneficially owned by the candidate.
The recommendation shall include a written statement of the candidate as to
why the candidate believes that he meets the director qualification criteria and
would otherwise be a valuable addition to our board of directors.
The nominating committee shall evaluate the recommended candidate and
shall, after consideration of the candidate after taking account of the director
qualification criteria set forth below, determine whether or not to proceed with
the candidate in accordance with the procedures outlined under "Process for
Identifying Candidates" below.
These procedures do not create a contract between us, on the one hand, and
our security holder(s) or a candidate recommended by our security holder(s), on
the other hand. We reserve the right to change these procedures at any time,
consistent with the requirements of applicable law and rules and regulations.
Director Qualifications Criteria. A majority of the board of directors
must be "independent" in accordance with NASDAQ, the Exchange Act and SEC rules
and regulations. As minimum qualifications, all candidates must have the
following characteristics:
o The highest personal and professional ethics, integrity and values;
o Broad-based skills and experience at an executive, policy-making level in
business, academia, government or technology areas relevant to our
activities;
o A willingness to devote sufficient time to become knowledgeable about our
business and to carry out his duties and responsibilities effectively;
o A commitment to serve on the board for two years or more at the time of
his initial election; and
o Be between the ages of 30 and 70, at the time of his initial election.
Process for Identifying and Evaluating Candidates. The nominating
committee's process for identifying and evaluating candidates is:
o The chairman of the board, the nominating committee, or other board
members identify the need to add new members to the board with specific
criteria or to fill a vacancy on the board;
o The chair of the nominating committee initiates a search, working with
staff support and seeking input from the members of the board and senior
management, and hiring a search firm, if necessary;
o The nominating committee identifies an initial slate of candidates,
including any recommended by security holders and accepted by the
nominating committee, after taking account of the director qualifications
criteria set forth above;
o The nominating committee determines if any board members have contacts
with identified candidates and if necessary, uses a search firm;
o The chairman of the board, the chief executive officer and at least one
member of the nominating committee interview prospective candidate(s);
o The nominating committee keeps the board informed of the selection
progress;
o The nominating committee meets to consider and approve final candidate(s);
and
o The nominating committee presents selected candidate(s) to the board and
seeks full board endorsement of such candidate(s).
COMPENSATION OF DIRECTORS
We have not yet determined the amount of compensation for our directors and
have not yet compensated our directors for any of their services.
Vote Required
The two nominees receiving the highest number of votes are elected if a
quorum is present and voting. Our board of directors recommends a vote FOR the
ratification of the election of Messrs. Fouch and Bonenberger to our board of
directors.
Information regarding the beneficial ownership of our common and preferred
stock by management and the board of directors is noted below.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information regarding the beneficial ownership
of all shares of our common stock and preferred stock as of the record date, by:
- Each person who beneficially owns more than five percent of the outstanding
shares of our common stock;
-9-
- Each person who beneficially owns outstanding shares of our preferred
stock;
- Each of our directors;
- Each named executive officer; and
- All directors and officers as a group.
COMMON STOCK
BENEFICIALLY PREFERRED STOCK BENEFICIALLY
OWNED (2) OWNED (2)
------------------- ---------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (1) NUMBER PERCENT NUMBER PERCENT
--------------------------------------------------- ---------- ------- ------------------ -------------
Palomar Enterprises, Inc.(3) 0 0 19,000,000 (4) 95
10,000,000 (5) 100
10,000,000 (6) 100
Steve Bonenberger
Brent Fouch
All directors and officers as a group (two persons) 0 0 0 0
Robert Simpson, Ph. D 13,000,000 7.75
R. Patrick Liska 0 0 1,000,000 (4) 5
---------------
(1) Unless otherwise indicated, the address for each of these stockholders is
c/o ZannWell Inc., 1802 N. Carson Street, Suite 212 Carson City, Nevada
89701, and telephone (775) 887-0670. Also, unless otherwise indicated, each
person named in the table above has the sole voting and investment power
with respect to the shares of our common and preferred stock which he
beneficially owns.
(2) Beneficial ownership is determined in accordance with the rules of the SEC.
As of the record date, the total number of outstanding shares of the common
stock is 167,750,000, the total number of outstanding shares of the Series
A preferred stock is 20,000,000 shares, the total number of outstanding
shares of the Series B preferred stock is 10,000,000 shares and the total
number of outstanding shares of the Series C preferred stock is 10,000,000
shares.
(3) Palomar Enterprises, Inc. is a Nevada corporation which is controlled by
Brent Fouch and Steve Bonenberger, our directors and officers. Each share
of our common stock is entitled to one vote on all matters brought before
the stockholders, the shares of our Series A preferred stock stockholders
do not have voting rights, each share of our Series B preferred stock
outstanding entitles the holder to one vote of the common stock on all
matters brought before the stockholders and each share of our Series C
preferred stock outstanding entitles the holder to 100 votes of the common
stock on all matters brought before the stockholders. Therefore, Palomar
will have the power to vote 1,010,000,000 shares of the common stock, which
number exceeds the majority of the 167,750,000 issued and outstanding
shares of our common stock on the record date.
(4) Series A preferred stock.
(5) Series B preferred stock
(6) Series C preferred stock
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
Please see "Compensation of Directors," supra.
The following table provides certain summary information concerning the
compensation earned by the named executive officers (determined as of the end of
the last fiscal year) for services rendered in all capacities to us for the
fiscal years ended December 31, 2003, 2002 and 2001.
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- ----------------------------------------
AWARDS PAYOUTS
----------------------------- -------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
POSITION YEAR SALARY($) ($) ($) ($) (#) ($) ($)
------------------- ---- -------- ------ ------------ ---------- ------------ ------- ------------
Steve Bonenberger 2001 0 0 0 0 0 0 0
President 2002 0 0 0 0 0 0 0
2003 0 0 0 0 0 0
2001 0 0 0 0 0 0 0
Brent Fouch 2002 0 0 0 0 0 0 0
Chairman 2003 0 0 0 0 0 0 0
Robert Simpson 2004 0 0 0 0 0 0 0
R. Patrick Liska 2004 0 0 0 0 0 0 0
EMPLOYMENT AGREEMENTS
None.
STOCK OPTIONS AND SAR GRANTS IN THE LAST FISCAL YEAR
There were no grants of stock options to the named executive officers
during the fiscal year ended December 31, 2003.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In establishing compensation levels, our board of directors has endeavored
to ensure the compensation programs for our executive officers were effective in
attracting and retaining key executives responsible for our success and were
administered in an appropriate fashion in our long-term best interests and our
shareholders. In that regard, our board of directors sought to align the total
compensation for our executive officers with our performance and the individual
performance of each of our executive officers in assisting us in accomplishing
our goals.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive
officers and persons who own more than 10 percent of a registered class of our
equity securities, file with the SEC initial reports of ownership and reports of
changes in ownership of our equity securities. Officers, directors and greater
than 10 percent stockholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file. All such persons have filed all
required reports.
DOCUMENTS INCORPORATED BY REFERENCE
Our Annual Report on Form 10-KSB for the year ended December 31, 2003
and financial information from our subsequent Quarterly Reports for the period
ended March 31, 2004 and June 30, 2004 are incorporated herein by reference.
-10-
COPIES OF ANNUAL AND QUARTERLY REPORTS
We will furnish a copy of our Annual Report on Form 10-KSB for the year
ended December 31, 2003 all subsequent Quarterly Reports on Form 10-QSB and any
exhibit referred to therein without charge to each person to whom this
information statement is delivered upon written or oral request by first class
mail or other equally prompt means within one business day of receipt of such
request. Any request should be directed to our corporate secretary at 1802 N.
Carson Street, Suite 212 Carson City, Nevada 89701 telephone ((775) 887-0670.
By Order of the board of directors,
/s/ Steve Bonenberger
Steve Bonenberger
President
-11-
ATTACHMENT A
RESOLUTIONS TO BE ADOPTED BY THE
STOCKHOLDERS OF
ZANNWELL INC.
(the "Company")
RESOLVED, that the grant of discretionary authority to the directors to
amend the Company's Articles of Incorporation to change the name of the Company
to " The BlackHawk Fund " is hereby approved in all respects; and
RESOLVED FURTHER, that the amendment to the Company's Articles of
Incorporation increasing the number of authorized shares of common stock to
4,000,000,000 shares is hereby adopted and approved in all respects; and
RESOLVED FURTHER, that the grant of discretionary authority to the
directors to implement a consolidation of the Company's issued and outstanding
common stock on the basis of one post-consolidation share for up to every 800
pre-consolidation shares within 12 months of the Company's information statement
on Schedule 14C is hereby approved and adopted in all respects; and
RESOLVED FURTHER, that the grant of discretionary authority to the
directors to convert the Company to a Business Development Corporation within 12
months of the Company's information statement on Schedule 14C is hereby approved
and adopted in all respects; and
RESOLVED FURTHER, that the removal of R. Patrick Liska from the Company's
board of Directors is hereby ratified and approved in all respects; and
RESOLVED FURTHER, that the election of Steve Bonenberger and Brent Fouch to
the Company's board of Directors is hereby ratified and approved in all
respects; and
RESOLVED FURTHER, that the officers of the Company be, and each of them
hereby is, authorized, empowered and directed, for and on behalf of the Company,
to take any and all actions, to perform all such acts and things, to execute,
file, deliver or record in the name and on behalf of the Company, all such
instruments, agreements, or other documents, and to make all such payments as
they, in their judgment, or in the judgment of any one or more of them, may deem
necessary, advisable or appropriate in order to carry out the transactions
contemplated by the foregoing resolutions.
ATTACHMENT B
CHARTER OF
THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF ZANNWELL INC.
1. Audit Committee Purpose. The Audit Committee of the Board of
-------------------------
Directors of Zannwell Inc., a Nevada corporation (the "Company") is appointed by
the Board of Directors to assist the Board of Directors in fulfilling its
oversight responsibilities. The Audit Committee's primary duties and
responsibilities are to:
(a) Monitor the integrity of the Company's financial reporting
process.
(b) Provide systems of internal controls regarding finance,
accounting, and legal compliance.
(c) Monitor the independence and performance of the Company's
independent auditors.
(d) Provide an avenue of communication among the independent
auditors, management, and the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Company's expense, special legal, accounting,
or other consultants or experts it deems necessary in the performance of its
duties.
2. Audit Committee Composition and Meetings. Audit Committee members
------------------------------------------
shall meet the requirements of the National Association of Securities Dealers
and the criteria set forth in the Appendix 1 attached hereto. The Audit
-----------
Committee shall be comprised of two or more directors as determined by the Board
of Directors, each of whom shall be independent nonexecutive directors, free
from any relationship that would interfere with the exercise of his independent
judgment. All members of the Audit Committee shall have a basic understanding
of finance and accounting and be able to read and understand fundamental
financial statements, and at least one member of the Audit Committee shall have
accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board of Directors on
recommendation of a nominating committee. If an audit committee Chairman is not
designated or present, the members of the Audit Committee may designate a
Chairman by majority vote of the Audit Committee membership.
The Audit Committee shall meet at least three times annually, or more
frequently as circumstances dictate. The Audit Committee Chairman shall prepare
and/or approve an agenda in advance of each meeting. The Audit Committee should
meet privately in executive session at least annually with management, the
independent auditors and as a committee to discuss any matters that the Audit
Committee or each of these groups believes should be discussed.
3. Audit Committee Responsibilities and Duties.
-----------------------------------------------
(a) Review Procedures.
------------------
(i) Review and reassess the adequacy of this Charter at least
annually. Submit the charter to the Board of Directors for approval and have the
document published at least every three years in accordance with the Securities
and Exchange Commission regulations.
1
(ii) Review the Company's annual audited financial statements
prior to filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding accounting
principles, practices and judgments.
In consultation with the management and the independent auditors, consider
the integrity of the Company's financial reporting processes and controls.
Discuss significant financial risk exposures and the steps management has taken
to monitor, control and report such exposures. Review significant findings
prepared by the independent auditors together with management's responses
including the status of previous recommendations.
(b) Independent Auditors.
---------------------
(i) The independent auditors are ultimately accountable to
the Audit Committee and the Board of Directors. The Audit Committee shall
review the independence and performance of the auditors and annually recommend
to the Board of Directors the appointment of the independent auditors or approve
any discharge of auditors when circumstances warrant.
(ii) Approve the fees and other significant compensation to
be paid to the independent auditors.
On an annual basis, the Audit Committee should review and discuss with the
independent auditors all significant relationships they have with the Company
that could impair the auditors' independence.
Review the independent auditors' audit plan, and discuss scope, staffing,
locations, reliance upon management and internal audit and general audit
approach.
Prior to releasing the year-end earnings, discuss the results of the audit
with the independent auditors. Discuss certain matters required to be
communicated to audit committees in accordance with the American Institute of
Certified Public Accountants Statement of Auditing Standards No. 61.
Consider the independent auditors' judgment about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
4. Legal Compliance. On at least an annual basis, review with the
-----------------
Company's counsel, any legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with applicable
laws and regulations, inquiries received from regulators or governmental
agencies.
5. Other Audit Committee Responsibilities.
-----------------------------------------
(a) Annually prepare a report to stockholders as required by the
Securities and Exchange Commission. The report should be included in the
Company's annual proxy statement.
(b) Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Audit Committee or the Board of
Directors deems necessary or appropriate.
(c) Maintain minutes of meetings and periodically report to the
Board of Directors on significant results of the foregoing activities.
(d) Establish, review and update periodically a Code of Ethical
Conduct and ensure that management has established a system to enforce this
Code.
(e) Periodically perform self-assessment of audit committee
performance.
(f) Review financial and accounting personnel succession planning
within the Company.
2
(g) Annually review policies and procedures as well as audit
results associated with directors' and officers' expense accounts and
perquisites. Annually review a summary of directors' and officers' related
party transactions and potential conflicts of interest.
By Order of the Board of Directors,
By /s/ Steve Bonenberger
------------------------------------
Steve Bonenberger,
President
3
APPENDIX 1
ZANNWELL INC.
DEFINITION OF INDEPENDENCE AS IT PERTAINS
TO AUDIT COMMITTEE MEMBERS
1. To be considered independent, a member of the Audit Committee
cannot:
(a) Have been an employee of the Company or its affiliates within
the last three years;
(b) Have received compensation from the Company or its affiliates
in excess of $60,000 during the previous fiscal year, unless for board service,
in the form of a benefit under a tax-qualified retirement plan, or
non-discretionary compensation;
(c) Be a member of the immediate family of an executive officer of
the Company or any of its affiliates, or someone who was an executive officer of
the Company or any of its affiliates within the past three years;
(d) Be a partner, controlling stockholder, or executive officer of
a for profit organization to which the Company made, or from which the Company
received payments (other than those arising solely from investments in the
Company's securities) in any of the past three years in excess of the greater of
$200,000 or five percent of the consolidated gross revenues for that year of
either organization; or
(e) Be employed as an executive of another entity where any of the
Company's executives serves on that other entity's compensation committee.
2. Subject to compliance with the listing requirements of The Nasdaq
Stock Market or any applicable stock exchange and the regulations of the
Securities and Exchange Commission, and under the limited circumstances set
forth in such listing requirements and regulations, one person (who is not a
current employee or family member of an employee) not meeting the foregoing
criteria may be appointed to the Audit Committee if the Board of Directors (i)
determines that the best interests of the Company and its stockholders so
require, and (ii) discloses, in the next annual proxy statement subsequent to
such determination, the nature of the relationship and the reasons for that
determination.
EXHIBIT A
CHARTER OF
THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
OF ZANNWELL INC.
1. Committee Composition. The Compensation Committee (the "Committee")
---------------------
of the Board of Directors (the "Board") of Zannwell Inc., a Nevada corporation
(the "Company"), will be comprised of at least two members of the Board who are
not employees of the Company. The members of the Committee, including the
Committee Chairman, will be annually appointed by and serve at the discretion of
the Board.
2. Functions and Authority. The operation of the Committee will be
-------------------------
subject to the Articles of Incorporation of the Company and applicable Florida
laws and any other applicable laws, rules or regulations, as in effect from time
to time. The Committee will have the full power and authority to carry out the
following responsibilities:
(a) To recommend the salaries, bonuses and incentives, and all
cash, equity and other forms of compensation (the "total compensation") paid to
the members of the management of the Company as may be required under Florida
law, and advise and consult with the President regarding the compensation scheme
for all executive officers.
(b) To advise and consult with management to establish policies,
practices and procedures relating to the Company's employee stock, option, cash
bonus and incentive plans and employee benefit plans and, as may be required
under applicable law, and administer any such plans.
(c) To administer the Company's employee stock option plan and
perform the functions contemplated to be performed by the management with
respect to the President and all plan participants who may be deemed "officers"
for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.
(d) To advise and consult with management regarding managerial
personnel policies and compensation schemes.
(e) To review and make recommendations to the full Board
concerning any fees and other forms of compensation paid to members of the Board
for Board and committee service.
(f) To exercise the authority of the Board concerning any policies
relating to the service by the members of management or executive officers, as a
director of any unrelated company, joint venture or other enterprise.
(g) At the Committee's sole discretion, to review all candidates
for appointment to senior managerial or executive officer positions with the
Company and provide a recommendation to the Board.
(h) At the Committee's sole discretion, to annually or
periodically interview all officers who directly report to the President.
(i) To administer the annual performance review of the President
which is to be completed by the full Board. The Committee Chairman together
with the Chairman of the Board shall review the results of the performance
evaluation with the President.
(j) To perform such other functions and have such other powers as
may be necessary or convenient in the efficient discharge of the foregoing
responsibilities and as may be delegated by the Board from time to time.
1
(k) To regularly report to the Board the activities of the
Committee, or whenever it is called upon to do so.
3. Meetings. The Committee will hold regular meetings each year as the
--------
Committee may deem appropriate. The President and Chairman of the Board, and
any other invited employees and outside advisers, may attend any meeting of the
Committee, except for portions of the meetings where his or their presence would
be inappropriate, as determined by the Committee Chairman.
4. Minutes and Reports. The Committee will keep minutes of each
---------------------
meeting and will distribute the minutes to each member of the Committee, and to
members of the Board who are not members of the Committee and the Secretary of
the Company. The Committee Chairman will report to the Board the activities of
the Committee at the Board meetings or whenever so requested by the Board.
By Order of the Board of Directors,
By /s/ Steve Bonenberger
------------------------------------
Steve Bonenberger,
------------------
President
2